Friday, January 20, 2017

Dollar Days in Paradise

It is interesting to note the disparity between Trump's comments about the "strong dollar problem" and Mnuchin feeling comfortable with backing up and qualifying Trump's statement. This seems to indicate just who is indeed confidently "in charge" of the global dollar system, as well as who benefits from the status quo.

While that may seem obvious to some, I think it bears mentioning that ALL the FED's primary dealers (Wall Street) benefit from their inside track on the currency which their FED (whom they legally own) controls. And while that too may seem obvious to all but the oblivious, let's consider this in the context of the disparity between Trump's statement and Mnuchin's "short term outlook" qualifier.

Does Trump truly believe that a strong and prosperous middle class is the correct path to regaining America's greatness? In other words is he really going to walk that talk? And does he think we can accomplish middle class job (and wage) growth with a continuing strong dollar? It seems so, yet the man is not without contradictions ... Does Trump think that Wall Street's systemic advantage can remain intact with a weak dollar?

These would be the kind of questions a "Come to Jesus" meeting between Wall Street and the White House would entail ... but then ... Trump did load the cabinet with tentacles from Goldman.

The potential to really go after big sovereign fish with the dollar system's global advantage elevates Goldman from securities fraud and bankrupting backwater municipalities (even small countries) to becoming a strong ally in dealing with China and Russia (their banks and fledgling system).

At least, it seems, that was the feeling of the last US Administration. And increasingly, while traditional military forces are still tactical, most global war is fought financially, as with today's heated financial war between the US and Russia. As I have mentioned before, Trump does seem poised to flip some of that heat from Russia to China in order to shake up the forming Eurasian threat - which of course extends dollar system hegemony.

Global derivatives are quite political these days by their very nature, a de facto byproduct of any global corporatist or neo-fascist system. When financial warfare is the primary means of global warfare, the true definition of fascism - a merging of corporate and political interests into one controlling authority - becomes all too clear. You will find the definitions in Wki's and Google to have been conveniently changed (quite recently actually) to broaden "corporations" into a wider array of "social" groups.

But by far the principle corporation which aids the US Government is in fact the corporate conglomeration of the US FED's primary dealers (again Wall Street). One can surely see that Wall Street and the US Government are a formidable foe as partners against "other interests" in the global Eurodollar system.

But where Mnuchin's "interest" in Goldman's global derivative positions may conflict with Trump's "short term" position, I'm sure a compromise can be reached. It's what the families and their politicians do after all.

Donald must realize that various interest rate, commodity, equity and FX positions involve mostly 5 year terms, so any big change to the status quo not already calculated into the global derivative futures markets could upset the system - as well as it's primary beneficiary exorbitant advantage.

The dollar itself? There are more than 700 trillion invested in either the status quo, or systemic changes to it. And most of this is denominated in dollar or dollar equivalents (though currency composition is changing, as alluded to in earlier posts and now finally here). The current IMFS is much bigger than the Titanic by any relative comparison. And that ship turns slowly my friends.

After all, US President's only have 4 year terms. The last one to have 8 years was a much more predictable and better behaved ally of Wall Street than many prior. We will see what this horse can do in four years, to appease the masses, while the families carry out their usual business of increasing wealth, as usual.


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    1. Kissinger struck a deal with China in the 70s against Soviets. History rhymes. Instead of China it seems like US - Russia deal might be on the table. Trump and Putin meeting in Reykjavik this month, correct?

      On the side note, I'm curious, what are the chances that some US multinationals would move their plants from China to Russia?

    2. It seems that incentives will be offered to USMs that relocate back to the US. I doubt it would be cost effective to move from China to Russia unless there was a strong profit incentive.