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War Of Minds - Battle For The Dollar

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Over the past few months I have read several investor insights from John Mauldin and I see a pattern that worries me.

I would be highly suspect about the views JM espouses. They are imperialist and aimed at scaring the world so that the Dollar retains it hegemonic position. Make no mistake, he has repeatedly failed to characterise this whole crisis as US manufactured, and over the past six months his focus has been on self serving often bizzare 'insights'.

Remember, his living, frequent golf tournaments, and church contributions, all rely on his making everyone outside the USA think they are going to (and should) suffer more. Look at the garbage he spouts on Germany and France and its clear he is way off the mark.

If you want a more reasoned view of what is happening then listen to Peter Schiff. Also bear in mind how 70% of the toxic debts were sold overseas - this was deliberate, and done with the complicity of the City of London. The vampire octopus has many tentacles and JMs evangelising lies are one sucker.

For the record JM - lets see how much debt is accumulated on a per capita basis in each State in the USA. Then compare that with Germany, France, etc. Much of his misleading crap is focused on the smallest economies (e.g. the recent insights on the Balkans). Many of those countries are smaller than Lousiana, so lets make some more sensible comparisons. Louisiana vs. Albania and Germany vs. California. You probably see my point.

Then also remember the implications of raising taxes in the USA - the rednecks will arm up, and rise up, if Obama tries to practice what he preaches. Think that's harsh? Go see what is happening in California's schools, charity hospitals, and LA gang warfare zones.

There is weakness in the EU, for sure, but it's in a far better situtation than the USA which is run by moral bankrupts. The way forward now is for the EU, Russia, India and China to make agreements to protect themselves from the second wave of toxic finance from the USA (commercial real estate CMBS, AltA, Option ARM CDOs etc.) This means preparing to dump the dollar, and then buy US assets at a discounted price to offset the loss on remaining reserves. Doing this would be legal, and entirely justified given what has happened over the past ten years.

J Mauldin knows this is the real risk, and spins a cloud of misleading nonsense to divert attention from the USA.

Sadly, US Financial Institutions are not representative of the US population. True American Patriots have learned the hard way that in America you privatise the gains and socialise the losses.

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Also what about the UK - countries that depend on banking for a large part of their economy all run large external debt. The UK is a case in point and others have reminded me its net debt that you should focus on.

BTW - go to switzerland and see how they live. Lets see Reding vs. Lugano, hmmmmm sh1thole vs paradise.

so the swiss banks aren't leveraged at 70:1.

what a relief!

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There is weakness in the EU, for sure, but it's in a far better situtation than the USA which is run by moral bankrupts. The way forward now is for the EU, Russia, India and China to make agreements to protect themselves from the second wave of toxic finance from the USA (commercial real estate CMBS, AltA, Option ARM CDOs etc.) This means preparing to dump the dollar, and then buy US assets at a discounted price to offset the loss on remaining reserves. Doing this would be legal, and entirely justified given what has happened over the past ten years.

I caught the tail end of a US radio (internet feed) show on Thursday. Some economist claimed that Chinese newspapers are hinting at China staying away from US treasury auctions from now on. He expects the shit to hit the fan in the next couple of months as a result.

I wish I'd heard the whole interview.

It seems the recent shambolic 3 and 5 year US treasury auctions could be the start of something really nasty.

I hope he's wrong but you have been warned.

Edited by MOP

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I caught the tail end of a US radio (internet feed) show on Thursday. Some economist claimed that Chinese newspapers are hinting at China staying away from US treasury auctions from now on. He expects the shit to hit the fan in the next couple of months as a result.

I wish I'd heard the whole interview.

It seems the recent shambolic 3 and 5 year US treasury auctions could be the start of something really nasty.

I hope he's wrong but you have been warned.

It would seem that the rest of the world is fast coming to the conclusion that the US is now directly attempting to montize it's debts. Their perception of UK monetary policy can't be far behind.

http://www.marketoracle.co.uk/Article12573.html

The bit that scares me is when the word dollar and US military is used in the same sentence.

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We should all try and hunt the radio broadcast down and post a link here. Any other details?

I have been pondering how the BRICs will respond to US policy which is clearly based on tenets that are thirty years old: the main one being that the US is the engine of the world, and that its democracy, role as protector, and fair financial systems are just reward for allowing it to borrow long from everyone else while at the same time devaluing the dollar. The net effect is the world has been lending to the USA at a negative interest rate since the 1970s. Times are a changin' tho. Their democracy has been corrupted by an American elite who now resemble the greedy merchants of Victorian Britain, their army, navy and airforce are mired in pointless wars that could have been avoided, finally, NO ONE thinks their financial systems are fair and transparent. The scoundrels and liars in New York and Chicago (home of derivatives) have bribed their way into the Senate and Congress in the most insidious way. The average American is slowly waking up to the fact that their cushioned lifestyles are are threatened, and the extreme right wing are ever more vocal in their hatred of:

LIBERALs (all Europeans are liberal in their minds),

the undeserving poor,

immigrants,

gays,

blacks,

indians

pro abortionist

and the list goes on. To understand how the extreme right here in America think listen to the hate radio show jockeys like Michael Savage, Glenn Beck etc. You will be shocked to know how many agree and parrot the same thoughts:

http://www.pbs.org/moyers/journal/09122008/watch.html

Those with no real experience of America (other than TV culture) fool themselves into thinking the future of Britain lies in its special relationship (a hilarious misnomer). Don't believe me? Read what Douglas Hurd said about it. While the average Brit gets along well with the average American, it's not the average american running the county (sadly). The real views of those in power are revealed by Stink Tanks like the PNAC (Cheney, Rumsfeldt, et al.) who now fear the strength of the European Union which has been a dazzling success. Who could have imagined twenty years ago that the EURO would have bought security to member states during the recent crisis and that countries like Denmark and Iceland are now realizing the folly of isolationism. It was also noted here in the USA that the Senate and Congress response to the crisis was botched (total failure of TARP) and that the European model for bank bailouts was eventually adopted. It was also notable that the multi-faceted EU parliament arrived at a smarter solution to the banking crisis (without Gordy B saving the world). There are many other examples including the cash for clunkers program which originated in the EU.

Coming back to the main point. Everyone in Europe, the ME and Asia should realise there is a grand game of cat and mouse being played with the major currencies. With the USA threatening to sulk if they are faced with the prospect of paying back their debts at par and not some discounted value. Toads like Ambrose E-P might want to bend over, but you should carefully weigh up the changes underway in the USA and Asia. South Korea transformed into a modern economy in a period of 30 years and I suspect this will happen in India and China. If so are you going to 'side' with a country grossly in debt to Asia and yet unwilling to make the monthly payments with real currency? I suspect Asia feels more at home with the European social model than the American compete or die model. Do you think China will abandon universal health care, social contracts, and state funded industry? Will they abandon state schools for the young? It's more likely that China will look like a cultured, exotic, sophisticated Europe, instead of a Big Mac'd, hormoned, GM modified, starbucked, strip mall. The stakes are literally a way of life.

I suspect China knows it has to stop lending to the credit junky, and let it go 'cold turkey'. Ironically, this will benefit the average american and with any luck the octopus stop strangling the eagle and die.

The question is when.

I caught the tail end of a US radio (internet feed) show on Thursday. Some economist claimed that Chinese newspapers are hinting at China staying away from US treasury auctions from now on. He expects the shit to hit the fan in the next couple of months as a result.

I wish I'd heard the whole interview.

It seems the recent shambolic 3 and 5 year US treasury auctions could be the start of something really nasty.

I hope he's wrong but you have been warned.

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This means preparing to dump the dollar, and then buy US assets at a discounted price to offset the loss on remaining reserves. Doing this would be legal, and entirely justified given what has happened over the past ten years.

... but possibly impractical following such a game-changing event, just as it was impractical for China's creditors to swoop in and buy up cheap Chinese assets after their repudiation of pre-Revolutionary debt.

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This quote is I think relevant here.

Nations holding reserves in US dollars are effectively being taxed by the global superpower’s inflationary monetary policy. Governments have always taxed their subjects, but the history of empires is that they tax other nations. Traditionally, this took the form of gold, natural resources, slaves or soldiers. However, as the economist, Krassimir Petrov, argues, the taxation of other nations by today’s superpower, the US, is more subtle:

“It did not enforce the direct payment of taxes like all of its predecessor empires did, but distributed instead its own fiat currency, the US Dollar, to other nations in exchange for goods with the intended consequence of inflating and devaluing those dollars and paying back later each dollar with less economic goods – the difference capturing the US imperial taxâ€.

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It would seem that the rest of the world is fast coming to the conclusion that the US is now directly attempting to montize it's debts. Their perception of UK monetary policy can't be far behind.

http://www.marketoracle.co.uk/Article12573.html

The bit that scares me is when the word dollar and US military is used in the same sentence.

not sure what you mean...monetize the debts?

they are attempting to borrow money from abroad to pay their debts...I think you might mean demonitize their debts.

course, new debt is monetized.

old debt could be defaulted.

confused of Colchester.

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Guest UK Debt Slave
I reckon $ is still king for years to come. Schiff is interesting, but China may fall apart rather quickly.

I think you underestimate the Chinese

The relationship between the Federal reserve and China's central bank is the one to look out for

It's a symbiotic relationship, an embrace of death

Who will blink first?

We'll soon find out

America has the military muscle

China has the manufacturing and industrial capacity......and lots of people

If it goes badly wrong, it's going to be one almighty bun fight

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I think you underestimate the Chinese

The relationship between the Federal reserve and China's central bank is the one to look out for

It's a symbiotic relationship, an embrace of death

Who will blink first?

We'll soon find out

America has the military muscle

China has the manufacturing and industrial capacity......and lots of people

If it goes badly wrong, it's going to be one almighty bun fight

At the end of the day, China is not a threat to the US.

The biggest threat in this depression is probably that posed by the Chinese people to the Communist Party

IMO.

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I think you underestimate the Chinese

The relationship between the Federal reserve and China's central bank is the one to look out for

It's a symbiotic relationship, an embrace of death

Who will blink first?

We'll soon find out

America has the military muscle

China has the manufacturing and industrial capacity......and lots of people

If it goes badly wrong, it's going to be one almighty bun fight

China also has the hackers... I think the USA military might be surprised by how many of their toys might malfunction..

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This quote is I think relevant here.

Nations holding reserves in US dollars are effectively being taxed by the global superpower’s inflationary monetary policy. Governments have always taxed their subjects, but the history of empires is that they tax other nations. Traditionally, this took the form of gold, natural resources, slaves or soldiers. However, as the economist, Krassimir Petrov, argues, the taxation of other nations by today’s superpower, the US, is more subtle:

“It did not enforce the direct payment of taxes like all of its predecessor empires did, but distributed instead its own fiat currency, the US Dollar, to other nations in exchange for goods with the intended consequence of inflating and devaluing those dollars and paying back later each dollar with less economic goods – the difference capturing the US imperial taxâ€.

Ponzi Americana. :rolleyes:

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I reckon $ is still king for years to come. Schiff is interesting, but China may fall apart rather quickly.

As long as the Yuan is effectively pegged to the dollar, and other currencies "manage" their currencies, the dollar will not collapse. I am not sure why most consider the US dollar index important, or some objective standard, when it is measured mostly by the Euro. As is widely known, the Euro has its own problems. It looks very likely that the dollar will spike in the near future and remain volatile. I believe the index has never been below 76.

Competitive devaluation anyone?

Edited by roman holiday

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