Tag Archives: Currency Wars

Bill Bonner: A Monumental Change in the World’s Monetary System

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“The Chinese economy is still growing twice as fast as the US. Both are delusional figures, of course. Buying things with money you don’t have makes you no better off than making things for people who can’t pay for them.  But the delusion is only part of the story. The other part: China is poor and getting wealthier. The US is rich and getting poorer. Somewhere they will battle it out… maybe in the marketplace… maybe in a hot war. And someday the upstart (if not China, then someone else) will win.  In the meantime, Chinese stocks are in bargain territory. You can get a dollar’s worth of Made in China stock market earnings for just $7.  Each dollar of US earnings will set you back closer to $20.”

http://www.bonnerandpartners.com/a-monumental-change-in-the-worlds-monetary-system/

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Bill Bonner: Today’s Reserve Currency = Tomorrow’s Wallpaper

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“If the end of history were at hand, the dollar, the Fed and federal finances would have nothing to worry about. But between history and the greenback, if we were taking bets, we’d put our money on history.  Most likely, history will trundle forward. And the renminbi will join (or replace) the dollar as the world’s leading currency sometime before the 21st century comes to a close.  But how, exactly, will that happen? No one knows… but few imperial elites give up the No. 1 position without a fight. As they see their power, their status and their wealth challenged, they typically find a casus belli, hoping to stomp the newcomer before it is too late.”

http://www.bonnerandpartners.com/todays-reserve-currency-tomorrows-wallpaper/

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Saudi Arabia warns of shift away from U.S. over Syria, Iran

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“Saudi Arabia’s intelligence chief is vowing that the kingdom will make a ‘major shift’ in relations with the United States to protest perceived American inaction over Syria’s civil war as well as recent U.S. overtures to Iran.  The United States and Saudi Arabia have been allies since the kingdom was declared in 1932, giving Riyadh a powerful military protector and Washington secure oil supplies.  Saudi Arabia, the world’s biggest oil exporter, ploughs much of its earnings back into U.S. assets. Most of the Saudi central bank’s net foreign assets of $690 billion are thought to be denominated in dollars, much of them in U.S. Treasury bonds.”

http://www.reuters.com/article/2013/10/22/us-saudi-usa-idUSBRE99L0K120131022

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China’s planned crude oil futures may be priced in yuan

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“China, which overtook the United States as the world’s top oil importer in September, hopes the contract will become a benchmark in Asia and has said it would allow foreign investors to trade in the contract without setting up a local subsidiary.  The SHFE is awaiting Beijing’s final approval to launch the contract. That may come soon as the bourse has set up an international energy trading platform in the Shanghai free-trade zone, which is touted as a testing ground for China’s financial reforms, especially on yuan convertability and interest rates. A successful launch could pave the way for the opening of other Chinese commodities futures to more foreign investment.”

http://www.reuters.com/article/2013/11/21/china-crudeoil-idUSL4N0J62M120131121

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Is War With China Inevitable?

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“China has stopped future increases of dollar forex holdings, and has cut the use of the dollar in bilateral trade agreements with multiple countries.  Oil-producing nations are shifting alliances to China because it is now the world’s largest consumer of petroleum. And, China has clearly been preparing for this eventuality for years. So, given these circumstances, how can the U.S. government conceive of confrontation with the East? Challenging one’s creditors to a duel does not usually end well. At the very least, it would be economic suicide. But perhaps that is the point. Perhaps America is meant to make this seemingly idiotic leap.”

http://www.alt-market.com/articles/1866-is-war-with-china-inevitable

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Jim Rickards: Decline of the Petrodollar System is Good for Gold

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“The petrodollar system is collapsing for two reasons. The US has abused its privileged reserve currency position by printing trillions of dollars in an effort to create inflation. More recently, President Obama has taken steps to anoint Iran as the regional hegemon of the Middle East, and to ease the way, in stages, toward Iran’s possession of nuclear weapons capability. This is viewed as a stab-in-the-back by the Saudis and the Israelis and will lead quickly to Saudi Arabia obtaining nuclear weapons from Pakistan.  There is also a newly emerging alliance among Saudi Arabia, Israel, Egypt, and Russia. The new alignment will have no particular use for US dollars and no reason to support them.”

http://www.internationalman.com/78-global-perspectives/1057-jim-rickards-decline-of-the-petrodollar-system-is-good-for-gold

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Kyle Bass: “Everyone ‘Beggaring Thy Neighbor’; Will Be Consequences”

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“‘There are going to be consequences to central bank balance sheet expansion all over the world,’ Kyle Bass tells Steven Drobny in his new book, The New House of Money, adding ‘It’s a beggar-thy-neighbor policy, but everyone is beggaring thy neighbor.’ The Texan remains concerned at QE’s effects on wealth inequality and worries that ‘at some point this is going to ignite and set cost pressures off.’ While Gold-in-JPY is his recommended trade for non-clients, his hugely convex trades on Japan’s eventual collapse remain as he explains the endgame for his thesis, ‘won’t buy back until JPY is at 350,’ and fears ‘the logical conclusion is war.'”

http://www.zerohedge.com/news/2013-12-05/kyle-bass-warns-when-everyone-beggaring-thy-neighbor-there-will-be-consequences

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Marc Faber: ‘World Central Banks Are Going To Bankrupt The World’

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“Incredible interview with Dr. Marc Faber about how world central banks could potentially create a major world economic collapse.”

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‘I can’t look at myself in the mirror’: Hendry reveals he has turned bullish

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“Eclectica hedge fund manager Hugh Hendry has said he has been forced to leave his bearish outlook behind as he faces up to a market ‘which only makes sense through the prism of trends’.  Hendry said he is no longer fighting the ‘two-way feedback loop’ which is continuing to boost risk assets.  That centres on the currency war being played out between the US and China, in which US QE prompts dollar-denominated investment to head to China, and China fights the resulting upwards pressure on its currency by manufacturing an investment boom –  leading to falling US inflation expectations, which in turn prompts the Federal Reserve to loosen policy once again.”

http://www.investmentweek.co.uk/investment-week/news/2308814/i-cant-look-at-myself-in-the-mirror-hendry-on-why-hes-turned-bullish

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Why You Shouldn’t Write Off BitCoin Just Yet

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“BitCoin poses a pretty substantial challenge to business people: it requires sufficient understanding of computer science to appreciate its elegance and idiosyncrasies but, perhaps more importantly, it requires a sufficient understanding of finance to appreciate it vis a vis other fiat currencies and gold.  Despite this complexity, business leaders are pressured to take a stance on this fledgling techno-currency.  Most have chosen the safe approach writing it off as the latest Ponzi scheme with some even arguing that it will be the largest bubble burst in the history of Ponzi bubbles. I’m afraid I’m not so sure… And here’s why.”

http://www.wired.com/insights/2013/12/why-you-shouldnt-write-off-bitcoin-just-yet/

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