[threadbear]

$this->bbcode_second_pass_quote('DoubleD', 'T')hreadbear - I think we are talking the same thing. I said if it were me, I would opt for the recession - by which I mean an inflationary recession (stagflation) because the alternative as I see it would be a severe recession/depression.

I do not profess to know everything there is to know on the subject (you should all give a few folks a break around here - really shuts down conversation with the bitter/snarky attacks) - just explaining where it seems the situation is from what I understand. If you have better insight - then please share - as I requested.

[threadbear]

$this->bbcode_second_pass_quote('Scactha', '')$this->bbcode_second_pass_quote('threadbear', 'J')apan, had a housing bubble bust about 15 years ago, give or take, and they responded by lowering interest rates to zero.

[JustWatch]

$this->bbcode_second_pass_quote('DoubleD', '
')Granted the interest rates for each Need are from different actions/markets - but the overall picture is one of competing pressures.
If it were me, I would opt for the national recession.Your thoughts?

[catbox]

Interesting read:

http://www.guerrillanews.com/articles/2 ... _S_Economy

cb

[Revi]

The Chinese want to get something from the catalog before their coupons (dollars) become worthless. Hmmm, what do they want? Wait, how about all that oil under Iraq? They'll take that. Thanks!

http://www.iraqdevelopmentprogram.org/i ... ew1518.htm

[MrBill]

$this->bbcode_second_pass_quote('threadbear', '')$this->bbcode_second_pass_quote('Scactha', '')$this->bbcode_second_pass_quote('threadbear', 'J')apan, had a housing bubble bust about 15 years ago, give or take, and they responded by lowering interest rates to zero.

[Scactha]

Glad there was a response to the other effect. I find Liu a good read but am also increasingly wary about his political (and cultural)concerns and find the "blame USA" attitude abit to popular sometimes.

Simple protectionism sound a...saner explanation.

[Euric]

Sat 2007-03-24 10:46 ET



BERLIN (Reuters) - The International Monetary Fund will say further depreciation by the U.S. dollar is needed to help correct global imbalances in its latest World Economic Outlook (WEO), Germany's Sueddeutsche Zeitung said on Saturday.

Quoting from a draft of the WEO, the paper said the Washington-based fund argued "extraordinarily aggressively" for a correction in exchange rates, above all so as to reduce the massive U.S. current account deficit.

The dollar, which slid to a 2-year low against the euro last week, should continue to depreciate in the mid-term, while the yen, the Chinese yuan and currencies of oil-exporting countries in the Middle East should all appreciate, the draft WEO said.

The WEO, which is due to be published in mid-April, will add that there is no great need for further interest rate increases by the European Central Bank, according to the paper.

Thanks to solid growth in the 13-nation euro zone, the ECB would not create problems by raising its main lending rate to about 4.0 percent from 3.75 percent at present, the IMF said.

http://news.yahoo.com/s/nm/imf_dollar_report_dc

[eXpat]

Another straw for the camel's back, China shifts to euros for Iran oil, link

[Euric]

$this->bbcode_second_pass_quote('eXpat', 'A')nother straw for the camel's back, China shifts to euros for Iran oil, link

[Revi]

Here's a great article on the dollar. He explains the petrodollar better than any article I've read:

http://www.cpa.org.au/garchve07/1314iran2.html

[MrBill]

$this->bbcode_second_pass_quote('Revi', 'H')ere's a great article on the dollar. He explains the petrodollar better than any article I've read:

http://www.cpa.org.au/garchve07/1314iran2.html

[Revi]

Sounds like people don't want to dump the dollar because they have so many of them, and their own currencies are tied to the dollar. From the article:

This is presumably a particular concern during periods of dollar weakness.  If my theory is right, some oil exporters who are paid in dollars may conclude that they have to hold the dollars they get, because selling the dollars would weaken their own currency. 


That's good, because those of us who have to use dollars don't want them to turn into worthless paper.

[evilgenius]

The worst thing that can happen to the world economy is a dollar that weakens against the yen. China is not big enough and does not have a developed, Goldman Sachs' efforts to date aside, enough banking system to handle the international speculator borrowing that Japan does. The yen carry trade must not be allowed to unravel too quickly or speculators all over the world will be forced to sell their assets in order to cover their Japanese debts. This would start a viscious cycle because it would over value the yen. Less borrowing means less money, even if that money is not in local circulation. Econ101, borrowing creates money. Japan is enjoying being the world's speculator bank. They are in that position because America can't resist whoring itself out as the main counterpoise to the yen internationally, even if it means a housing crisis and multi-generational wage stagnation. The show only keeps the little guys happy, it isn't run for them.

The Fed needs to raise rates in order to compete for the money borrowed in Japan. Too fast or too high, though, and they risk a confidence crisis by those stuck in bonds. That could potentially hurt things on the Japanese end. It would act like a high fee structure on the Japanese as they sought to convert over a near-term cycle. High fees are okay if most of the money is illegal or third world, but not if it is pension fund money seeking to placate the herd with some kind of positive return.

That being said, I think the Fed should already have jacked rates up by 50 basis points. Fry the Mugabes of this world and send a massive warning to investors that blindly trust institutions that cheat them every chance they can get.

[dr_doom]

Revi...I'm pretty much on board with what you say.

MrBill...the world is round...the sooner you accept that fact the better it will be for you.

The problem as I see it, is the US dollar for the last 30+ years has been the magic currency, i.e. the federal reserve can produce as many as it wants without destroying the purchasing power catastrophically.

This is because central banks will hold the USD predominantly as their reserve currency. The US banking system creates new money to buy things from overseas, and the money disappears into foreign central bank vaults. Therefore limiting the dilution of the USD purchasing power.

It's ultimately the actions of foreign central banks that will determine when the USD dies.

And considering pretty much all central banks are NWO controlled, it's up to the NWO when they crash the dollar, and it seems they have decided it isn't a good idea, yet anyways.

I think the problem for the NWO is that applying their standard formula, to create a conflict between the US and China was untested, flawed, and poorly implemented.

They can't credibly claim that they war with Iran is necessary, and that the USD dollar crashing is then China's fault. And they are now stuck with the majority of the world's central banks holding devaluing US Dollars, and trying to think of a way out of this predicament which doesn't mean losing control and credibility.

What happens next is anyones guess, but to deny that the USD is skating on thin-ice is really beyond ignorant.

[Euric]

$this->bbcode_second_pass_quote('MrBill', '
')
I have debunked this petrodollar/IOB/oil in euros argument so many times here on peak oil dot com that it is simply boring to try to do it again. So why don't I just post something from someone else instead to save me the time & effort.

$this->bbcode_second_pass_quote('', 'I')ran indicated that it plans to reduce the dollar share of its portfolio to below 20%.. Something tells me it might not want to shift into pounds – a fairly popular alternative to the dollar – right about now either. And for that matter, if it has euros on deposit in London …

[Euric]

$this->bbcode_second_pass_quote('dr_doom', '
')This is because central banks will hold the USD predominantly as their reserve currency. The US banking system creates new money to buy things from overseas, and the money disappears into foreign central bank vaults. Therefore limiting the dilution of the USD purchasing power.

What happens next is anyone's guess, but to deny that the USD is skating on thin-ice is really beyond ignorant.

[Kingcoal]

$this->bbcode_second_pass_quote('Euric', '
')
The US dollar doesn't just sit in foreign vaults. At least that is not what it is suppose to do. Dollar hegemony (also know as petrodollar recycling) is suppose to have these central banks send the money back to the US as a cheap loan. That money is suppose to buy treasuries and stocks. If the US could just depend on the rest of the world buying treasuries, they would never have to tax one citizen. They could float all their financial needs in the form of bonds, print the money, exchange it for goodies, and have the world buy US debt with it.

What a perfect plan. If you could keep the charade going forever, you could literally get real goods for nothing but the cost of the paper and ink to make the IOU.

But, darn, those nasty Europeans devised the euro to get into the game. They are taking away the free ride from the US. Now if more decide to join the game, the future for the dollar will look even more dismal.

It isn't so much when the world decides to tank the dollar, it is how many players enter the hegemony game and start competing with the dollar (and the euro too) for investment funds. when the dollar economy can no longer rely on international funding or not enough of it to maintain their wasteful lifestyle, then a collapse is imminent. The only thing to prevent a collapse is reform with in the US. But arrogant people don't reform. So collapse is the only alternative.

The cancer is already spreading, it is just a matter of time before the patient dies.

[CrudeAwakening]

From the article linked to by MrBill:

$this->bbcode_second_pass_quote('Steve Kyle', '�')��What really matters is what denomination they choose to HOLD their wealth in. After all, if an oil exporter accepts dollars and then converts them to euros 10 seconds later in order to hold them in that form it is the euro that ends up stronger and the dollar that gets weaker. So what really matters to the value of the dollar is whether the central banks of oil exporters like to have a portfolio heavy in dollar assets or heavy in other currencies.”

[CrudeAwakening]

Ok, on further reading I think I've answered my own question. Still not sure about Russia though. Isn't the rouble no longer closely pegged to the dollar?