Post: #26

(01-21-2016 07:56 PM)NASA Test Pilot Wrote:  I concur that the first pop will be the equity market and I will add, then the bond market. The system in 2007-2008 was never cleansed and the risk is no longer priced into the system. Maybe there will be a new domestic (and depreciated) dollar to exist in parallel to the current (international) dollar.

I'm curious, what will a pop in the bond market look like?

Post: #27

Dollar sinks (a couple of years back) - "Fall of the US" "Collapse coming soon" "Barry Soteoro is betraying us"
Dollar rises (now) - "Fall of the US" "Collapse coming soon".....

Which one is it going to be fellas?

Post: #28

Oil is currently at $28/barrel the lowest since the credit crunch and that was only for a brief amount of time.

The dollar is strong because most other currencies boosted by their oil are getting shafted hard. The Russian economy is basically half of what it was 2 years ago.

Post: #29

(01-22-2016 08:52 AM)Cattle Rustler Wrote:  Dollar sinks (a couple of years back) - "Fall of the US" "Collapse coming soon" "Barry Soteoro is betraying us"
Dollar rises (now) - "Fall of the US" "Collapse coming soon".....

Which one is it going to be fellas?

The dollar has not risen since then, so your question is false in its pretense.

Due to Obama's out of control spending free for all, the dollar is worth less now that it was a few years back. Which is why the COL continues to go up, the dollar buys less.

But it is stronger than other currencies, which really isn't saying much given the state of the global economy and really the state of the entire world right now

Post: #30

(01-21-2016 07:56 PM)NASA Test Pilot Wrote:  Recall that that the basis of US economic power (through the USD) was at one time based on the large gold hoard of the US after WWII and then after the closing of the gold window in 1971, it was tied primarily to oil (and other commodities). This was the Petro-Dollar.

My understanding of the Petrodollar system is admittedly limited, but I wanted to delve into this topic a bit more. Please correct me if I'm wrong.

My take is that Nixon took us off Bretton woods because European governments whose currencies were tied to the dollar didn't believe we could meet our obligations, and began exchanging their currencies for gold at a rate that would ultimately leave us bankrupt. Nixon had to take action.

We cut a deal primarily with the Saudis, where we guaranteed the survival of their regime (mainly through military protection and geopolitical clout) in return for them, as the major energy producer, to demand payment of oil in dollars. This forced every sovereign to hold dollars in order to pay for oil, which is necessary for them to grow an industrial economy. This led to large dollar reserves being held, and allowed the dollar to remain the primary world reserve currency.

The arrangement doesn't seem so concrete anymore. The decline of oil prices is forcing Saudi Arabia to run deficits and eat into their sovereign wealth fund. The oil producing areas are largely Shiite, and naturally aligned with Iran, geopolitical rivals of the Arabian gulf. The Saudi regime has been able to buy off the support of its citizens through generous social welfare, financed through oil profits. Now that they're eating into those funds, the future doesn't appear as guaranteed, and the actions of the regime seem more erratic.

Saudi has been launching a pre-emptive war into Yemen this past year. More visibly, ISIS, a radical Sunni sect, is getting financing and armament from somewhere. It is destabilizing the middle east, and causing dissension within the highest levels of US government. The joint chiefs of staff are now fighting with the executive branch over the most prudent course of action and undermining each other. Russia is actively defying the petrodollar agenda in the Middle East, and calling a bluff. Saudi Arabia may start getting the idea that its security patrons aren't as committed as they once were. And we are now stepping back from pressuring their Iranian rivals.

I don't know where this will lead, but it seems to me that there is greater volatility on the horizon.

Post: #31

You're confusing fiscal inflation and price inflation. The technical term is stagflation, where you have FOREX depreciation combined with a decrease in domestic purchasing power.

Post: #32

(01-22-2016 06:21 PM)thoughtgypsy Wrote:  

(01-21-2016 07:56 PM)NASA Test Pilot Wrote:  Recall that that the basis of US economic power (through the USD) was at one time based on the large gold hoard of the US after WWII and then after the closing of the gold window in 1971, it was tied primarily to oil (and other commodities). This was the Petro-Dollar.

My understanding of the Petrodollar system is admittedly limited, but I wanted to delve into this topic a bit more. Please correct me if I'm wrong.

My take is that Nixon took us off Bretton woods because European governments whose currencies were tied to the dollar didn't believe we could meet our obligations, and began exchanging their currencies for gold at a rate that would ultimately leave us bankrupt. Nixon had to take action.

We cut a deal primarily with the Saudis, where we guaranteed the survival of their regime (mainly through military protection and geopolitical clout) in return for them, as the major energy producer, to demand payment of oil in dollars. This forced every sovereign to hold dollars in order to pay for oil, which is necessary for them to grow an industrial economy. This led to large dollar reserves being held, and allowed the dollar to remain the primary world reserve currency.

The arrangement doesn't seem so concrete anymore. The decline of oil prices is forcing Saudi Arabia to run deficits and eat into their sovereign wealth fund. The oil producing areas are largely Shiite, and naturally aligned with Iran, geopolitical rivals of the Arabian gulf. The Saudi regime has been able to buy off the support of its citizens through generous social welfare, financed through oil profits. Now that they're eating into those funds, the future doesn't appear as guaranteed, and the actions of the regime seem more erratic.

Saudi has been launching a pre-emptive war into Yemen this past year. More visibly, ISIS, a radical Sunni sect, is getting financing and armament from somewhere. It is destabilizing the middle east, and causing dissension within the highest levels of US government. The joint chiefs of staff are now fighting with the executive branch over the most prudent course of action and undermining each other. Russia is actively defying the petrodollar agenda in the Middle East, and calling a bluff. Saudi Arabia may start getting the idea that its security patrons aren't as committed as they once were. And we are now stepping back from pressuring their Iranian rivals.

I don't know where this will lead, but it seems to me that there is greater volatility on the horizon.

I'm not so sure that Saudi Arabia is running deficits right now. Back when Oil was 45-50 a barrel I read an article that stated SA could continue making money even if the price dropped to 20$ a barrel.

Also, couldn't they conceivably make just as much money by going short on oil futures if they know the price is going to drop? They pretty much control the market and know which way the price is going.

Post: #33

Guys, Saudi Arabia are one of the major proponents of these low Oil prices right now. They are keeping production high to price out Canadian Oil Sand and US upstream (shale) Oil & gas.

They are obviously trying to play a long game but I don't know how long they can keep in the chicken race. The latest tension with Iran undoubtedly has its roots in the now crumbling economies of the Middle east.

Post: #34

@The Beast1, see PM

@thoughtgypsy

This is essentially my understanding. De Gaulle really forced the hand of the US. Nixon, and more importantly, the Congress could have reduced spending and ceased the war in Vietnam. I would add the other major part of the deal was in the recycling of the petrodollars. The Saudis (and other countries) took their oil profits and channeled them back into the US financial system (particularly US Treasuries). This point is paramount to understanding US financial power. I may tie it into a post with bonds.

Consider two more points. Firstly, at $30 per barrel of oil, less dollars are needed in the system; secondly, if you are outside of the US you must earn dollars to buy things while the US does not need to earn them (work), they just print. This causes the world to be an unfriendly place.

My information is that Saudi Arabia is running through their reserves and there is significant internal unrest. Part of running through their reserves may not be deficit spending yet (although their social spending is going through the roof), but rather a sale of their US Treasuries in order to purchase (tangible) assets (some of which may be placed in newly set up Sovereign Wealth Funds). Saudi Arabia is not the only Middle Eastern country doing this and the magnitude of these funds may be on the order of 2.2+ Trillion USD.

The primary issue is the House of Saud maintaining power and secondarily turning east toward Russia (and China). They are selling oil and quite a bit of it. I contend that it is a part of a larger multi-nation plan that is combating US dollar hegemony. In this case, it is more difficult for US companies (i.e. shale) to be profitable. Not being profitable and having large hedged debts denominated in US dollars is not a positive thing for the USD. I look for the Saudis to begin to accept payment for their oil in currencies other than the dollar. When (if) this happens it will be an important world precedent and will have a significant influence in the decrease of US financial power.

Interestingly Iran is about to have a million barrels per day come into the market and that number will increase over time. This Iranian oil will not be sold in USD. There is a long game going on and I would not be surprised if China is telling Iran, Saudi Arabia and other Gulf nations who traditionally split along Sunni-Shia lines, to start playing nice with one another (at least for a while) and not allow the western powers to divide you rather focus on trade and strengthen yourselves. China has been seriously involved in Africa for well over 15 years and many rounds have been sent down-range. Look at China prepositioning around the Gulf of Aden (in both Djibouti and Yemen). I am not sure if people want to go geo-political in this thread so I will stop.

Post: #35

(01-24-2016 02:24 AM)NASA Test Pilot Wrote:  I am not sure if people want to go geo-political in this thread so I will stop.

Please do.

Post: #36

1)US interest levels are high thus causing capital migration.Banks and nations are buying US bonds.Russia and China are the biggest holders of US bonds and Russia just bought more.

2)Quantitative easing in Eurozone. In order to combat the deflationary signs the Brussels printed more Euros. This has been in all major papers since last summer- read the news (instead or writing vague and ridiculous statements of "massive debt"and "weak PIGS countries, which is actually not exactly true, for example in case of Spain and Italy)

3)With regards to China- the Chinese renminbi is not a reserve currency. Besides the Chinese economy is contracting and China printing more money too.

4)British pound is doing well, but low interest rates don't attract much capital. They were planning to raise the interest but will postpone it for now, as collapsing China is lurking behind the corner.

4)With regards to Russia-chickens are coming home to roost. Russia is a classic example of a corrupt banana republic, instead it's exporting oil in place of bananas.Think of it as Northern Nigeria.68% of Russian export is petroleum and petroleum gases. During the 15 years of incredibly high oil prices Putin channeled this money into his own pockets and pockets of his jewish elite who were buying English football clubs,foreign companies and most expensive yachts in the world,instead of investing into infrastructural projects and diversification of economy (e.g. there have been less roads built in 2012 in Russia than in 1996 for example), like Arabs and Norwegians do. As a result, Russian economy is severely contracted and Russia is probably not even a top 10 world economy any more, by some estimates.The rouble dropped 300% against USD in the last 2 years.

What to expect? Either a massive financial crisis or nothing. Europe is export oriented so weak Euro is a gift from heaven.Germany,France,Italy,Spain -they all have improved their trade balance, with Spain making record numbers since 1976.In a year or two Europe will recover and be back on track (especially with Merkel hopefully gone) . All of course depends on China,as they are the biggest export market for Europe and USA.If China collapses-the shit will hit the fan.

With regards to Russia-I would not consider it to have any economic importance anymore, as oil prices are not going to recover any time soon and Russia does not produce anything else (well maybe guns, so expect more violence in the middle east and more refugees). It all points to a Venezuela scenario (750% inflation and "special measures"in place).

Post: #37

I have a small theory that the US may try to dip out of its treasury obligations by goading Russia and China into some type of war. They can then go and cancel the notes China and Russia hold erasing the debt off of the books.

I think this is how WW3 will start.

Post: #38

(01-24-2016 05:25 AM)The Beast1 Wrote:  I have a small theory that the US may try to dip out of its treasury obligations by goading Russia and China into some type of war. They can then go and cancel the notes China and Russia hold erasing the debt off of the books.

I think this is how WW3 will start.

Isn't it easier to renounce a default rather then engaging in a potentially suicidal war with nuclear powers?

Post: #39

(01-24-2016 04:54 AM)Teutatis Wrote:  

(01-24-2016 02:24 AM)NASA Test Pilot Wrote:  I am not sure if people want to go geo-political in this thread so I will stop.

Please do.

I'd like to hear more also and geopolitics does influence the dollar. Thanks.

Post: #40

(01-24-2016 12:22 PM)samsamsam Wrote:  

(01-24-2016 04:54 AM)Teutatis Wrote:  

(01-24-2016 02:24 AM)NASA Test Pilot Wrote:  I am not sure if people want to go geo-political in this thread so I will stop.

Please do.

I'd like to hear more also and geopolitics does influence the dollar. Thanks.

Agreed. I was talking to a friend that works in equities and what he had to say was terrifying. He thinks the house of cards, this fake economic "growth" the lying liberals have been pandering, will come crashing down in 2016 or 2017. To back it up, he has been working 70 hour weeks, as they are working long hours trying to move money and protect their clients as best possible.

He said he is out of equities personally and buying up gold and silver.

It all ties together. And it is great to discuss it. Why is the USD so high v other currencies? Because the people on the inside realize the house of cards will come crashing down and they trying to find a safe place to hide it.

The Geopolitical discussion of Saudi flooding the market with oil to punish and crush Putin for daring to stand up to the elites in the west is very much tied to this discussion.

Post: #41

I know we have a stocks thread but since you mentioned your friend who is in equities. Are they selling everything off or buying puts or what? Just curious how they are doing it.

Post: #42

(01-24-2016 01:02 PM)samsamsam Wrote:  I know we have a stocks thread but since you mentioned your friend who is in equities. Are they selling everything off or buying puts or what? Just curious how they are doing it.

He didn't, and probably legally cannot, go into detail as to what his firm is doing specifically. And I didn't pry to not put him in that position.

He just told me what he is doing with his personal money. He said it probably will not happen 1st quarter 2016, but he is certain it will hit by the end of 2017 at the latest. He said they might be able to manipulate it until after the US election to try to sway voters, but that would be about as long as it would go.

He likened it to this. In 2007 it was one sector, housing, that was built like a house of cards. Today it is all sectors.

And that ties back into this thread. Why is the USD strong? Because it is considered a safe place to move money due to fears of what appears to be building in the near future.

Post: #43

So probably after the elections? I am sure a democrat doesn't want the economy tanking before the elections. Trump would benefit from that.

Post: #44

Beast1´s point may turn out to be prophetic and I concur that the US has been trying (for some time now) to goad Russia and China into war. Perhaps he could expand on ´dipping out´ of its treasury obligations.

As Krieg points out it is easier to default than to engage in (suicidal) war. But many of these guys are psychopaths. When one studies psychopathy, which is difficult to do as little information exists and some of the good work from the 1950´s and 1960´s is unavailable now (which is interesting in and of itself), it becomes clear in their animalistic alpha system, there can be only one and they will become cannibalistic. This is their ultimate downfall as there can only be one king of the world, and the crown will not be shared. The Venezuelan scenario is center of mass as a world-wide template.

I look toward Russia for its political importance now and its economic importance in the future. Watch for Germany to align more toward Russia. In Germany there are two major factions, one is political and the other is economic. Economic alliances have been deepened for the past 10 years. Here are of few examples that are not in your mainstream media. Russia is almost finished with their Nord-stream pipeline under the Baltic, this is happening while Germany has sanctions, politically. There are somewhere on the order of 4,000 German companies doing business with Russia. The heavy rail system between German and Russia has been undergoing a prolific expansion and it will continue to do so. Russia has been working diligently to change its legal system to align more with western contract law over the past 10-15 years. If this is successful, the fracture in NATO will expand.

I am of the opinion that WWIII has already started and I will start another thread to examine more of these geo-political elements. Locate here:
/thread-53234.html


We have a soft war with China in Africa which has been accelerating since Somalia (I was there flying combat support) and it has been accelerating for the past 10 years. Ukraine, Syria and now Saudi Arabia and Yemen are additions to the world war. It will be interesting to see if China can move to some type of Petro-Yuan as a counterbalance.

I do not think that nations are buying (many) US bonds, rather it is the banks and more specifically the ESF through the Federal Reserve Bank (Fed) through the New York window that is buying them. I have a longer post to follow to give some background and details.

Post: #45

(01-24-2016 01:21 PM)samsamsam Wrote:  So probably after the elections? I am sure a democrat doesn't want the economy tanking before the elections. Trump would benefit from that.

The elites in general certain do not want the economy tanking before November. It would make all the things Trump has said REALLY hit home for people asleep behind the wheel.

The elites will have trouble controlling Trump, so if they can give any extra help to Hillary/Bernie/Bloomberg, whomever, it is a win for them.

Post: #46

Quote:I do not think that nations are buying (many) US bonds, rather it is the banks and more specifically the ESF through the Federal Reserve Bank (Fed) through the New York window that is buying them. I have a longer post to follow to give some background and details.

In the case of Russia,it's Russian central bank buying American bonds.Russian CB is managed by a woman not fit for the job, who has got no independence and pretty much executes direct orders of Russian government.The reason IMO is simple- they act hostile towards US for the regular Russians on TV and papers, in reality -they consider USA as a safe heaven for any finances.They also jhave bought IMF bonds in record numbers recently.

Post: #47

(01-24-2016 05:35 AM)Krieg Wrote:  

(01-24-2016 05:25 AM)The Beast1 Wrote:  I have a small theory that the US may try to dip out of its treasury obligations by goading Russia and China into some type of war. They can then go and cancel the notes China and Russia hold erasing the debt off of the books.

I think this is how WW3 will start.

Isn't it easier to renounce a default rather then engaging in a potentially suicidal war with nuclear powers?

(01-24-2016 01:22 PM)NASA Test Pilot Wrote:  Beast1´s point may turn out to be prophetic and I concur that the US has been trying (for some time now) to goad Russia and China into war. Perhaps he could expand on ´dipping out´ of its treasury obligations.

As Krieg points out it is easier to default than to engage in (suicidal) war. But many of these guys are psychopaths. When one studies psychopathy, which is difficult to do as little information exists and some of the good work from the 1950´s and 1960´s is unavailable now (which is interesting in and of itself), it becomes clear in their animalistic alpha system, there can be only one and they will become cannibalistic. This is their ultimate downfall as there can only be one king of the world, and the crown will not be shared. The Venezuelan scenario is center of mass as a world-wide template.

Thanks for the kind words NASA Test Pilot.

A long time ago, I was reading either a forum or the comments section of a blog somewhere. Maybe Slashdot, but the point is moot.

The discussion was on the US debt and how "China" owns us. The biggest fear brought up was China calling in its debts all at once which would cause the US to have to sell off its national parks and other federal assets.

A more reasonable poster broke out and said that it was impossible to occur and was in essence declaring economic warfare on a country. He went on to say that if China or any power holding a large amount of US treasuries were to attack the United States the Treasury Department could cancel those treasury notes held by that power effectively eliminating the debt burden. It would be bad because the power in question would lose it USD treasury investment.

The "dipping out" of comment is easy since the Treasury knows who owns the notes. Simply cancel numbers 133456-235515 held by China and Russia since they blew up a few boats of ours and bam! That $18 trillion is now magically down to a more reasonable $9 trillion.

At Krieg's question of , "wouldn't defaulting be easier?"

Yes, but saving face for the history books and financial "rating" agencies is a gamble those in power are willing to make. The US has never defaulted on its treasury notes since its early beginnings (18th century notes don't count). A mark on the credit report of the country would be detrimental to the American Empire and it would be better for the psychopaths running the country to gamble the country and its people in war games rather than default and lose power.

Post: #48

(01-24-2016 01:44 PM)Krieg Wrote:  

Quote:I do not think that nations are buying (many) US bonds, rather it is the banks and more specifically the ESF through the Federal Reserve Bank (Fed) through the New York window that is buying them. I have a longer post to follow to give some background and details.

In the case of Russia,it's Russian central bank buying American bonds.Russian CB is managed by a woman not fit for the job, who has got no independence and pretty much executes direct orders of Russian government.The reason IMO is simple- they act hostile towards US for the regular Russians on TV and papers, in reality -they consider USA as a safe heaven for any finances.They also jhave bought IMF bonds in record numbers recently.

Russian bond purchases and sales varied in 2015, perhaps in an effort to mis-direct. In January 2015 they held 375 billion, down to 355 billion in April, up 370 billion in October. No denying they have currency issues, but those currency reserves are not only in US Dollars. I would put forth their reserves are in multiple currencies, particularly the Chinese Yuan. They are holding less dollars (as a percentage) in those reserves now and this percentage will continue to decrease. The idea of a dollar reserve currency unconsciously moves the masses to think that the country´s reserves are in dollars (rather than something else, gold, Yuan, oil, seashells) as they have been under the Bretton woods system.

I disagree (which is ok) that Russia considers the US as a safe-haven, rather I opine that Russia is waging financial war with the US because the US (as a puppet) has been engaged in financial war with world for some time (1971 for discussion purposes here). However, Russian and many other countries will use the US and the US Dollar when it serves their best interests

Post: #49

(01-22-2016 08:14 AM)The Beast1 Wrote:  

(01-21-2016 05:02 PM)Dr. Kahn Wrote:  I take it you are putting your money where your mouth is on this?

(01-21-2016 03:29 PM)The Beast1 Wrote:  I personally think we'll see another 2008 style stock collapse in the next few months. This will devastate most of the world with Europe being hit the hardest. Capital will flee Europe because they'll most likely go full socialist retard, be over run with muslims, or are just structurally shams in their own rights. The US stock markets will have a massive bull run leading us up until the next pop occurs.

Yes I will! My biggest regret was missing not investing 10k in cash I had back in 2008/9. I would have had at least 78k now had I put it into some stocks. Foolish foolish foolish. Equities are way too overvalued right now and I don't see the point in paying a premium when everything is trading sideways with a weak slant downward. Wait till things pop and then go in. Be smart and sit in cash. Don't actively short unless you know what you're doing.

(01-22-2016 08:02 AM)Foolsgo1d Wrote:  

(01-21-2016 03:29 PM)The Beast1 Wrote:  I personally think we'll see another 2008 style stock collapse in the next few months. This will devastate most of the world with Europe being hit the hardest. Capital will flee Europe because they'll most likely go full socialist retard, be over run with muslims, or are just structurally shams in their own rights. The US stock markets will have a massive bull run leading us up until the next pop occurs.

The last time this happened in Europe, 10 years later a world conflict started.

I think we'll see something big happen in 2024. Martin Armstrong has 2024 marked as a turning point and from the political rumblings in Europe and the M.E we're probably looking at another world war in the not sure distant future. i'm expecting Africa and the ME to try and flood Europe with socialists trying to have open arms for the Muslims hoards. WW3 will be a giant race war.

I concur. The war is tribal vs. modern world. It is going to be a death match. There are billions of people who want nothing to do with progress. They want middle ages kingdoms and rule of law. The rest of us want peace and prosperity. We are going to have to fight it to the death. One side will be exterminated.

Post: #50

(01-24-2016 12:22 PM)samsamsam Wrote:  

(01-24-2016 04:54 AM)Teutatis Wrote:  

(01-24-2016 02:24 AM)NASA Test Pilot Wrote:  I am not sure if people want to go geo-political in this thread so I will stop.

Please do.

I'd like to hear more also and geopolitics does influence the dollar. Thanks.

Oops, I just realized it sounded like I was asking him to stop when in reality I meant for him keep talking about geopolitics and economics, I also would like to hear more, just wanted to clear that up.