Dollar Losing Steam as Reserve Currency?

The confluence of events the last year, layered on top of a structurally compromised economic system that incentivizes corruption and graft, has pushed the American financial system into even more risky territory. Perhaps we shall see if a global currency can remain in circulation through sheer force or arms or not. I’m sure a sure-to-be disputed election or Biden Harris Presidency will do wonders for consumer confidence. The VIX confirms as much. The sky is not going to fall, but forewarned is forearmed.

“While equities and gold benefited from the trillions of dollars in fiscal spending and monetary injections, those efforts are debasing the currency and have raised the possibility that the U.S. will go too far in testing the limits of government stimulus, [Ray] Dalio said Tuesday in an interview with Bloomberg Television.

The Bloomberg Dollar Spot Index has dropped 10% from its peak in late March as investors responded to the pandemic and efforts by central bank and government officials to contain the economic fallout. All of the world’s major developed currencies have gained against the dollar as have precious metals such as gold, silver and platinum.

Dalio said in July that investors should favor stocks and gold over bonds and cash because the latter offer a negative rate of return and central banks will print more money.”

Source

 

“In the history of the VIX futures contracts, we’ve never had an event risk command this sort of premium into forward-dated vol at a specific tenor,” Bloomberg macro strategist Cameron Crise wrote in a blog post. “That obviously suggests that markets anticipate some pretty incredible fireworks.” He excluded a higher premium on March 18 of this year since front-month futures expired that day, when the S&P 500 fell 5.2%.

If it starts trading above where it ‘ought’ to be, particularly given the risk premium lavished on the election, that could be a sign that punters are worried about 2000-style uncertainty,” Crise wrote, referring to the presidential contest between George W. Bush and Al Gore, which ultimately was decided by the U.S. Supreme Court. “You don’t need a particularly vivid imagination to think that that could get pretty ugly this time around.

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About the Author: Jesse James

The Millennial your professor warned you about. Incontrovertibly opposed to neoliberalism and post-modernism, including their roots, on a theological, philosophical, economic and political basis. My curriculum vitae spans chemistry, biology, law, and western jurisprudence. Juris Doctorate. Recovering libertarian and ivory tower resident. Reluctant monarchist because I read too much history, and watched CSPAN one too many times. Christian in the vein of Augustine and the Five Solas, advocate for patriarchy, western and Christian tradition, and the nuclear family. Avid hunter, fisherman and outdoorsman. Described as a ‘food snob.’ Lover of old bourbon and old books. Happily married to my favorite redhead…my helpmeet and the one that makes it all worth it. I live in Virginia but will always be a Texan.

15 Comments

  1. Matt Bracken September 19, 2020 at 10:08

    CHINA IS KILLING THE DOLLAR
    Pull quote from way down the long monetary article:
    “Since then, China has moved gradually but surely to gain control over physical gold markets and to become the world’s largest miners, both in China and through the acquisition of foreign mines. The Shanghai Gold Exchange dominates physical markets both directly and through ties with other Asian gold exchanges. Joining these dots leaves one dot concealed from us; and that is the true extent of physical gold owned by the Chinese state.”

    https://www.zerohedge.com/geopolitical/china-killing-dollar

    • wwes September 19, 2020 at 12:31

      Mr. Bracken, how long do you think it’ll take before the dollar throws in the towel?

    • vyt1az September 20, 2020 at 16:44

      Matt, I have a lot of respect for your opinion, but Zero Hedge is way off on this and Michael (below) is absolutely right. Blaming China for ruining the dollar is like cigarette manufacturers complaining that “health nuts” are trying to destroy their business.

      I deeply despise communist China but this is actually pure capitalism at play. I’ve dropped the dollar myself in favor of hard assets and would advise anyone else to do the same.

      China not too long ago was only a growing 3rd world economy and had to back their currency with the USD in order to trade on the international stage. Every other growing 3rd world economy had to do the same thing. They simply bought more treasuries because they had the biggest economic boom that _we_ funded by outsourcing our industries to “MAxImiZE sHareholdEr vaLuE.”

      The USD has been toxic garbage for a long time and _we_ are responsible for the excess money printing that has robbed and impoverished our own citizens and every other country that holds USD.

      China has done a lot of damage to us by funding Marxism / Atheism, IP theft, outsourcing, etc. but we, and we alone, are 100% to blame for this.

  2. Anonymous September 19, 2020 at 10:46

    5

  3. James September 19, 2020 at 12:20

    Food/tools/clothing at moment still reasonably priced,you will always need this stuff,so,get buying while the dollar does you some good.

    While we would live without a lot of foreign made garbage(is that a bad thing)and would be challenging this country has the resources to survive on it’s own,but,all would have to be productive which might be a big issue.

    • johnyMac September 19, 2020 at 12:51

      Amen James…Amen.

      OK ammo is in short supply. Now buy commodities like what James mentioned plus, underwear, socks, work gloves, heirloom seeds for 2021, canning jars, canning lids, strike anywhere matches….You get the idea.

      73 & God Bless Brother

      • James September 19, 2020 at 20:10

        Yep,”Ammo in short supply”.

        Well,excepting at moment(and can change quickly)the old 7.62×39,bet a few folks getting on this.

        That said,all other items mentioned also a go,perhaps some PRI for the gas ect.,would rather gradually change to a low/no go fuel moment then go from chainsaw to 2 man saw!

        Ah,we know the drill,look for holes and to our best fill em while we can.

        • Johnny Paratrooper September 20, 2020 at 11:13

          The 7.62×39 has gone up 10% in the last week. My friends and I just purchased 2,000 rounds of it yesterday. I should just Buy 2,000 more and put it on the card. BECAUSE WHY NOT. What else am I doing with my life. I can eat eggs, cheese, fruit, cereal, and bread for the next three months. It’s not gonna kill me.

          Every couple of hours about 10,000 rounds of 7.62×39 is sold in the U.S. Which is pretty interesting.
          If I was the ammo manufacturing companies I would stop making any and all calibers except 5.56, because that would net the highest return on investment.

          Don’t expect the prices to come down, and the boutique calibers to come back any time soon. There is not a snowballs chance in hell that they are making .300 blackout or 6.5 Creedmore when they can make 5.56 and triple their money.

          • James September 20, 2020 at 20:29

            Johnny P,a friend just yesterday ordered 6 more cases,absolutely nothing wrong with eggs/cheese/fruit ect.,so,do yourself and friends a favor and order more,well……,now.

    • Pineslayer September 20, 2020 at 22:24

      Thanks for mentioning clothing. All ‘hard to replicate items’ are essential to acquire.
      A Costco warehouse is better than a bank to be in control of.

  4. Michael September 19, 2020 at 13:54

    There is an old saying “Don’t interrupt your enemy when they are doing something really stupid”.

    Matt while I respect your opinions China isn’t killing the Dollar. Congress and the Federal Reserve (Which is neither Federal NOR A Reserve) are killing the Dollar with “Instant Cash” for the big boys in the system.

    China is only trading those ever depreciating Treasury Bills for REAL STUFF before they become WORTHLESS by Congress and the Feds actions.

    While RIGHT Now we are least Dirty Shirt in the Fiat money system it’s all about perception of Financial SAFETY. WHEN NOT IF the rest of the world decides our INSANE Congress and Governmental War with it’s self is risking their wealth the Dollar will turn into Venezuela’s “Strong Bolivar” where Shopkeepers don’t bother counting it, they WEIGH the pile of cash to see if you have enough for a small sack of groceries.

    Inflation is simply explained as “Too many dollars chasing that loaf of bread”. Hyperinflation is when the Store Owner cannot even sell that loaf of bread because they don’t know the REPLACEMENT Cost to restock the shelves. A small hyperinflation you and I can see is the shortage of ammo and the prices rising every day. My sellers are pricing by the day as they check the replacement cost, just like buying Gold, they check the SPOT price as they do the deal.

    When the Civil War occurred the value of the Southern “Dollar” started out strong enough but rapidly fell to nearly worthless in trade with England as they had to trade Bales of Cotton for Guns and Ammo. So it shall be when our Civil War goes hot across our Republic. The “Full Faith” of the US Dollar will be the “Who Owes You” Dollar to the rest of the world.

    Buy real stuff ASAP. Never going to be cheaper than today.

  5. SemperFido September 19, 2020 at 14:05

    Soap. I know how to make soap bars with animal fat and wood ash lye and it is a pain in the ass. Soap is cheap. Buy some extra now.

    • Johnny Paratrooper September 20, 2020 at 11:08

      This is correct. Soap is an absolute pain in the ass to make, and is quite dangerous to handle.
      I personally have about 10 gallons of soap, bleach, and laundry detergent. It would behoove me to double that next payday.
      I am also am going to purchase generous amounts of Lice and Flea soap because that’s what happens when you sleep in the woods.

      • James September 20, 2020 at 20:38

        Johnny P,get pool shock for bleach making,5 pounds for under 20 bucks,makes a boatload of bleach.You are looking for 65-70% Calcium Hypochlorite,all other ingredients inert,no algicides ect.Bleach when made up good full strength only about 3 months.I use this as a back up water purifying system but have made up amounts when also just need bleach for me clothes ect.Poolseason closing soon in many parts of country so get some now,along with the Wolf.

  6. Johnny Paratrooper September 20, 2020 at 11:05

    “Our economy is based on buying cheap crap, with money we don’t have, from hostile foreign nations, and paying 28% interest on that crap, for absolutely no reason other than to give rich people more money, and hostile foreign nations more power”
    -BG Robert Spalding.

    “The Chinese system is brilliant because they aren’t making the same mistake of all dying empires in history; They keep their money inside their borders, and any decisions to allow it to leave the country are PLA military and CCP politburo joint decisions, because they should be. China considers their money leaving the border to be a national security threat”
    -BG Robert Spalding

    As you can see, we aren’t long for this world… FYI, I butchered these quotes, but they are true to the original form.

    https://www.thedrive.com/the-war-zone/36543/mysterious-russian-mi-171sh-hip-assault-helicopters-are-bound-for-china

    China has a new helicopter… It looks like it would make a good airframe for a Sub Hunter-EWIS-Commando craft…

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