Rickards: The Fed Is “Triple Tightening” Into Crisis

https://dweaay7e22a7h.cloudfront.net/wp-content_3/uploads/2018/11/shutterstock_794058928.jpg

Shutterstock

 

If you have defective and obsolete models, you will produce incorrect analysis and bad policy every time. There’s no better example of this than the Federal Reserve.

The Fed uses equilibrium models to understand an economy that is not an equilibrium system; it’s a complex dynamic system.

The Fed uses the Phillips curve to understand the relationship between unemployment and inflation when 50 years of data say there is no fixed relationship.

The Fed uses “value at risk” modeling based on normally distributed events when the evidence is clear that the degree distribution of risk events is a power curve, not a normal or bell curve. Continue reading

The Biggest Threat To Dollar Dominance

dollars

 

Russian oil exporters are pressuring Western commodity traders to pay for Russian crude in euros and not dollars as Washington prepares more sanctions for the 2014 annexation of Crimea by Moscow, Reuters reported last week, citing as many as seven industry sources.

While it may have come as a surprise to the traders, who, Reuters said, were not too happy about it, the Russian companies’ move was to be expected as the Trump administration pursues a foreign policy where sanctions feature prominently. This approach, however, could undermine the dominance of the U.S. dollar as the global oil trade currency. Continue reading

US Is Negotiating With SWIFT To Disconnect Iran From Network

https://www.zerohedge.com/sites/default/files/inline-images/Rial%20Plunge.png

 

Treasury Secretary Steven Mnuchin said that unlike Obama’s 2013 Iran blockade, it would be harder for countries to get waivers on Iran oil sanctions as the US is already working on disconnecting Iran from the SWIFT network and dismissed concerns that oil prices could rise, saying the market had already factored in the output losses.

Speaking in an interview with Reuters in Jerusalem on Sunday at the start of a Middle East trip, Mnuchin said countries would have to reduce their purchases of Iranian oil by more than the roughly 20% level they did from 2013 to 2015 to get waivers. “I would expect that if we do give waivers it will be significantly larger reductions,” said the US Treasury Secretary. Continue reading

Russia And China Prepare To Ditch Dollar In Bilateral Trade

https://www.zerohedge.com/sites/default/files/inline-images/yuan%20ruble%202.jpg?itok=hsmfGfXh

 

In a time when many nations have gone public with their intention to ditch the dollar in part or in whole, in bilateral trade with non-US counterparts, either to prevent the US from having “veto power” of commerce courtesy of SWIFT or simply in response to Trump’s “America First” doctrine, attention has long focused on Russia and China – the two natural adversaries to the US – to see if and when they would accelerate plans for de-dollarization. Continue reading

Venezuela Ditches US Dollar, Will Use Euros For International Trade

https://www.zerohedge.com/sites/default/files/inline-images/2018.10.16maduro.JPG?itok=AB1s7Cl2

 

Venezuela has just taken the next step in its quest to “free” itself from the tyranny of US dollar hegemony. One year after the country said it would stop accepting US dollars as payment for its (ever shrinking) oil exports (saying the country’s state-run oil company would accept payment in yuan instead), Venezuelan Vice President for Economy Tareck El Aissami said Tuesday that Venezuela will officially purge the dollar from its exchange market in favor of euros. Continue reading

An end to the dollar’s global hegemony? The Kremlin sees an opportunity.

https://images.csmonitor.com/csm/2018/10/1070876_2_1012-Russia_standard.jpg?alias=standard_900x600nc

An exchange-office screen on a Moscow street shows the currency exchange rate of the Russian ruble and US dollar in April. The Kremlin has begun making moves to insulate the Russian economy from escalating US sanctions. (Pavel Golovkin/AP)

 

The dollar has long been the world’s reserve currency. But some countries, angered by sanctions, are challenging that status, potentially undermining one of the US’s most influential tools for shaping global policy.

For average Russians, a small personal hoard of US dollars has always represented a place of safety amid the wild ups-and-downs that continue to beset the country’s national currency, the ruble.

So it triggered a touch of panic among them when the Russian government confirmed long-standing rumors that it is working on a plan to insulate the economy from escalating US sanctions through “de-dollarization.” Continue reading

British govt report suggests US is currently winning trade war with China

https://glblgeopolitics.files.wordpress.com/2018/09/46db4-1mlvxxjwi4wbozjdxxdl9cq.jpeg?w=526&h=362

 

China has already declared its intent to retaliate against US President Donald Trump’s new tariffs on $200 billion in Chinese imports, a move set to raise prices on consumer goods for both countries.

Several analysts have demonstrated how Trump’s tariffs will blowback on the US economy. Moody’s Investment Service previously warned that the tariffs would reduce US GDP by 0.25 percent in 2019, to about 2.3 percent. The American economy could take an even bigger hit if Trump proceeds with tariffs on $200 bn worth of Chinese products, Moody’s warned. Continue reading

All Euros Gravitate To Germany

https://www.zerohedge.com/sites/default/files/inline-images/2018-09-17_18-44-58.jpg?itok=KCnMgPzg

 

The Euro has been around for almost 20 years. The Russian transfer ruble survived 25 years. As GEFIRA explains, the two currencies have something in common: they were and are not a success story…

The introduction of the transfer ruble was intended to enable free trade between the countries of the Eastern bloc. The creation of the common clearing system led to the exchange rates for the East German mark, zloty, forint, lev, and even the Mongolian tugrik being arbitrarily fixed by the Soviet Union, regardless of the purchasing power of the national currencies. In the 1960s, the Bulgarian lev was 20% undervalued and the Polish zloty about 45% overvalued. Since the transfer ruble was not yet convertible into Western currencies, it remained an illusion and a means by which the Soviet Union could enrich itself and save its budget at the expense of its satellite states: the Russians bought raw materials, goods, food for convertible currencies in the West and sold them to their “socialist friends” for transfer rubels. The international bank for economic cooperation, which sat in Moscow and handled all transactions in the transfer ruble, swept the real trade surpluses and deficits under the carpet. With the political change the common settlement currency came to to an end, and it turned out that the Soviet Union owed huge sums to its “brothers”. Continue reading

Iran Sanctions Are Damaging The Dollar

Iran

 

Painful sanctions on Iran have demonstrated the long reach of the U.S. Treasury, forcing much of the globe to fall in line and cut oil imports from Iran despite widespread disagreement over the policy. Yet, we are only in the first few chapters of what may ultimately be a long story that ends with the erosion of the power of the U.S. dollar.

The role of the greenback in the international financial system is the reason why the U.S. can prevent much of the world from buying oil from Iran. Oil is traded in dollars, and so much of international commerce is based in dollars. In fact, as much as 88 percent of all foreign exchange trades involve the greenback. Continue reading

The Global Financial System Is Unraveling, and No, the U.S. Is Not Immune

Chart

 

The “recovery”/Bull Market is in its 10th year, and yet central banks are still tiptoeing around as if the tiniest misstep will cause the whole shebang to shatter: what are they so afraid of?

The cognitive dissonance/crazy-making is off the charts:

On the one hand, central banks are still pursuing unprecedented stimulus via historically low interest rates, liquidity and easing the creation of credit on a vast scale. Some central banks continue to buy assets such as stocks and bonds to directly prop up the “market.” (If assets don’t actually trade freely, is it even a market?) Continue reading

Iran Sanctions, Emerging Markets And The End Of Dollar Dominance

https://www.birchgold.com/wp-content/uploads/spending-8-14-18-1.png

 

 

The trade war is a rather strange and bewildering affair if you do not understand the underlying goal behind it. If you think that the goal is to balance the trade deficit and provide a more amicable deal for U.S. producers on the global market, then you are probably finding yourself either confused, or operating on blind faith that the details will work themselves out.

Case in point, the latest reports that the U.S. trade deficit is now on track to hit 10-year highs, after a 7% increase in June. This is the exact opposite of what was supposed to happen when tariffs were initiated. In fact, I recall much talk in alternative media circles claiming that the mere threat of tariffs would frighten foreign exporters into balancing trade on their own. Obviously this has not been the case. Continue reading

The World Is Ganging up Against the Dollar

https://dweaay7e22a7h.cloudfront.net/wp-content_3/uploads/2018/08/shutterstock_1141332971.jpg

Shutterstock

 

The U.S. has been highly successful at pursuing financial warfare, including sanctions. But for every action, there is an equal and opposite reaction.

As the U.S. wields the dollar weapon more frequently, the rest of the world works harder to shun the dollar completely.

I’ve been warning for years about efforts of nations like Russia and China to escape what they call “dollar hegemony” and create a new financial system that does not depend on the dollar and helps them get out from under dollar-based economic sanctions.

These efforts are only increasing. Continue reading

Did Germany Win the 100-Year War?

Everything that has been mentioned on Global Geopolitics since 2011 regarding Berlin and it’s United States of Europe project is pretty much summarized within this article. The only thing missing is the end game.

Germany has once again conquered Europe and the entire world has missed it. The plan and timeline has changed but the goals once again remain the same. Instead of Nazis you have Germans running the EU through the Troika with key figures in key places, subjugating the entire continent through political sabotage and economic might. It’s been said oft here that if you’re looking for Nazis, you’re over 70 years late. It’s now a multicultural and multinational European superstate once united by a common goal, but now by force, and by Berlin. It even has its own European Army under construction.

The Fourth Reich has landed.

 

https://www.hoover.org/sites/default/files/styles/page_main/public/research/images/germany_final.jpg?itok=zoVVvRW-

 

“Periodization” is a trendy academic term for historians’ use of particular (and sometimes arbitrary) chronological terms—often in reference to wars in general, and in particular to when they started and ended.

Were there really “three” Punic Wars rather than just one that continued for well over a century from 264-146 BC, ending only with the Roman absolute destruction of Carthage? Continue reading

Germany Wants to Dump Dollar, SWIFT System

As Global Geopolitics has noted for years, Bible prophecy tells you where relations between both America and Germany are heading. No book or news outlet is as up-to-date as the Bible.

 

https://image.zype.com/593087b25d3c19148e001735/5b7d5f5714edba144b00beaa/custom_thumbnail/1080.jpg

(Photo Credit: Society for Worldwide Interbank Financial Telecommunication)

 

This would be the first tangible sign of Berlin breaking away from Washington.

In a move meant to “strengthen European autonomy” in the wake of the U.S. walking away from the 2015 Joint Comprehensive Plan of Action nuclear deal with Iran and its opposition to the Nord Stream 2 pipeline project, Germany’s government is seeking an end to the dollar’s dominance as a global exchange currency.

Continue reading

Russia Finance Minister: We May Abandon Dollar In Oil Trade As It Is Becoming “Too Risky”

Breaking the tie between oil and the U.S. Dollar means the collapse of the U.S. Dollar as the world reserve country. Collapsing of the U.S. Dollar as world reserve currency means the collapse of America. Ghadaffi attempted it, as well as Saddam Hussein and look how that worked out for them. Iran, Syria, China, Russia all want to. Economic warfare always precedes a hot war, in case you were wondering what’s around the corner.

 

https://www.zerohedge.com/sites/default/files/inline-images/TIC%20Russia.jpg

 

One month ago, the bond market and political pundits did a double take when according to the latest Treasury International Capital report, Russia had liquidated virtually all of its US Treasury holdings, selling off the bulk of its US government bonds in just two months, March and April.

And with the US threatening to impose a new set of “crushing” sanctions on Russia, including in retaliation for the alleged Novichok nerve gas attack in the UK, Russia not only intends to continue liquidating its US holdings, but to significantly reduce its reliance on the US Dollar. Continue reading