Monday, Jul 16, 2018

Dollar demand

Business Insider: Venezuela's inflation hits more than 40,000%

Venezuela has a population of 30 million, is oil rich, is screwed at the moment. When all the smoke settles if they every sort themselves out they will be on a dollar standard. Another 30 million to soak up federal easing side effects.

Posted by stillthinking @ 08:45 PM (1594 views)
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5 Comments

1. sneaker said...

This is a tragedy. But what has it got to do with House Price Crash? (sincere question - not sarcastic)

Thursday, July 19, 2018 08:42AM Report Comment
 

2. stillthinking said...

nothing
I have nowhere else to post! i need something like this site but devoted to general economics. at a stretch though, if the usa benefits from another 30 million people needing to use the dollar, then dollar demand goes up effectively draining dollars out of the system and so yields on dollar debt would remain low. so usa rates stay low and as we in the uk tend to follow then uk mortgages aren't curtailed by rising borrowing costs. cough

Thursday, July 19, 2018 01:31PM Report Comment
 

3. reticent said...

I don't think it was THAT much of a reach posting it here, ST.

But spell it out for the people who haven't studied macro because it's easy to forget how unobvious all that stuff was before you learned it. FWIW, I don't think it will postpone IR rises noticeably. 30m ppl dollarising is not that significant when set against an overheating US jobs market. Besides, Venezuela is particularly anti-US and may choose to adopt some other foreign currency (though which one, I couldn't guess).

Friday, July 20, 2018 06:44AM Report Comment
 

4. stillthinking said...

hi reticent, i wasn't thinking of house prices though, i read something or other being proposed that the prices are frozen for five years to allow some stability to set in. The fact that nominal property prices are basically set by government is an open secret nowadays
Currency collapse, and financial imperialism are on the other hand much more interesting, if you look at the turkish lira which although being devalued and seemingly in no risk of collapse, if it -were- to. what a get out of jail free card for the eu if turkey had to unofficially adopt the euro.

i think personally, that at the moment we are in the doldrums in terms of economic news, and i wonder if these are genuinely doldrums or perhaps finally an inflection point has been reached and some kind of tide is on the turn i.e. are yield on debt in the usa finally going to increase.

Sunday, July 22, 2018 10:41AM Report Comment
 

5. reticent said...

I think we are long past that inflection point, but the increases have yet to gather pace. They certainly haven't found their way into uk mortgage rates AFAICS, in any meaningful way.

I don't read the economist anymore but I find it strange that no one is attributing this to Trump. He talked about raising IRs and Janet Yellen doing a bad job during campaigning and he replaced her with a hawk and US govt. IRs have risen slowly even before he got rid of her.

Don't get me wrong, I'm not a fan of him, but it's somewhere that he's had an impact that might actually be commendable. (Putin must favour a normal IR environment).

I imagine that is starting to feed through to market rates on other sorts of debt in places more tied to the dollar than we are.

Sunday, July 22, 2018 08:41PM Report Comment
 

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