Sunday, July 8, 2018

Your Dollar is Changing

That's right. And everyone that matters agrees to the change.

Though the war machine will be continually fed, it will never need to be put to use in a big way. Because the countries who enable the delicate balance of power required to maintain the great global standoff are doing as needed, and expected, to enable a more equitable international monetary and financial system.

Oh, the secondary land grabs, migratory inter-cultural chess moves, color revolutions and strategic pipeline disruptions are still in a state of constant flux. Old habits die hard. But the most important change that needs to take place - this disablement of the international monetary system as a political weapon - is being addressed.

"Liquidity is a bitch." says the world's Uncle to the producer nations. "You are trapped."

But the families disapprove of any full press flogging of their most promising emerging middle classes. There is no great action to take. Wealth finds a way. As thoughts change ... the importance of dollar liquidity fades away. Old contracts expire. New ones are written differently.

"Quite an interesting problem to solve." came the rhetorical comment from the East wing smoking room ...
"And yet, it always seems as if the problems of the ruling class tend simply to solve themselves..." came the snide retort. A retort which, by the way, seemed slightly elevated by the unbridled consumption of Lafite Rothschild Très Vieille Réserve.

And yet the insinuation was pure "House of Roacheforque" no doubt. In essence it bears repeating:
As our trade wars evolve, our artificial debt-money will begin to make less and less sense. We will begin to realize certain answers, as thoughts change.
And now, Russel Napier observes:
Investors need to think not about the long tradition of the RMB link to the USD, but whether today such a policy makes sense. 
China will clearly rethink its peg to the USD. And if the markets do not respond as benefits China and its trading partners, the FX market itself will suffer. Profits will still be made from it, even as the credibility of its currencies dwindles. Which is more important we may ask: the dollar or the fiat currency concept as a marketplace of relative exchange differential? And does the former predicate the latter?

As these questions are asked, cherished thoughts begin to change. As these thoughts change, your dollar is slowly changing along with everything connected to it. It always inflated away the value of your skills and experience, but now it has a "nationality". Now it competes on a different level. It will begin to inflate against some things more quickly and others it will maintain a deflationary correlation with.

But it will take time (we hope). It took decades for the dollar to become the debutante of currencies and then the matriarch that it is today, Few noticed much over time. The changes that go unnoticed the longest, create the least disruption after all.


6 comments:

  1. That's wishful thinking. US is playing the hard ball with China now.
    Trump recent comments on situation in Ukrain / Crimea only confirm the fact that after meeting with Putin, serious deal with Russia is on the table. The puny state of Ukraine served its purpose and can now be safely disposed of in one way or the other.
    Watch as central European countries are sacrificed in the similar manner.

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  3. Mr Roacheforque, what we are about to witness is replay of Kissinger's trip to China in the 70s. This time one that has to be contained is China, not CCCP. Whether it'll work? We'll see.

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  4. "Though the war machine will be continually fed, it will never need to be put to use in a big way."

    That is, in essence, the point. A reset favors the customer NOT the kitchen. Those gadget factories are one iteration away from obsolescence and the US holds all of the cards. If you build it China...They will not come...

    Hope you enjoy the paper...

    In short, Trump is collapsing the system so as to loot it for the new oligarch class he and Mr Plankton (Wilbur Ross) are designed to do like the an ex Soviet Union Script. Even though the US wins, this is not to be confused with Americans winning.

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    1. Sadly Sir G, Summers is not yet in his grave, such that he might turn over in it.
      -R

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