Darrell

U.S. Running Out of Ways to Cheaply Finance Debt

The only factor in our favor is that all our treasury debt is dominated in dollars thus all we have to do is print more dollars to pay down our massive debt; the foreign holders of our debt are aware of their predicament and this is the reason why they are calling for changes to the global currency system.

And this is why our policy wonks are addicted to deficit financing: the debt holders are the only players that are reaping the consequences of bad policy. Our policy wonks have been successful in “kicking the can down the road” but investors are aware that the days of unlimited deficit financing are numbered and, in all probability, it will be the unanticipated events that cause the panic selling of global currencies and these events will the catalyst for the creation of a new global currency system.

Enjoy your thanksgiving holiday.

China Nixes Obama's Balanced Trade Rhetoric

I think we are operating from a position of strength: our dollar is accepted as legal tender by most central bankers, meaning that we can use our dollar to buy goods, services and/or assets in most countries.

Our Federal Reserve Policy wonks control the production of dollars and our government policy wonks decide how foreign dollar holders can use the dollar. One saw how quickly our government policy wonks acted when China tried to use their vast dollar holdings to buy Union Oil.

Most central bankers understand that as long as global transactions are dominated in dollars our policy wonks are in the driver’s seat. We have veto powers on how foreign dollar holders can spend, invest, or save their dollar holdings.

This is why China, Frazil, Russia, France, Germany, India and other countries are pushing for a global currency system, a system that would replace the current currency system.

The above countries believe that they have “right” on their side. And, like the long march, they are patience in the execution of their plans.

The global trading community will, in time, adopt a global currency, what we are witnessing now is simply the beginning stages of negotiations between countries whose currencies are used as global currencies and countries that want to change the current currency system to a system that they think is fair to all.

I am in favor of a global currency system as I think the global community will come out the better for it. And I think our government policy wonks will recommend that we join the new currency system, simply because it will be the right thing to do.

Gold Bullion on a Tear: What Next?

Hi Alex:

From what I read in the FT and other financial publications, China is using their vast dollar holdings to buy rare earth metals.

Hoarding currencies at low interest rates are not as popular now.

The Consequences of the U.S. Monetary Base Bubble

One has to be mindful that our Federal Reserve monetary decisions are based on global needs, not on national needs. Central banks are the black hole in which stores excess dollars; currently, they are the buffer that prevents the American economy from experiencing the economic dislocations caused by too much currency in circulation.

Central bankers are legally obligated to accept the dollar as legal tender and our deficit spending policies are based on this fact. Our policy wonks perceive that changes to the global currency system are in the planning stage but don’t think anything will happen in the near future. And their thinking is that they can correct our economic problems before changes do occur therefore responding from a position of strength.

My personnel belief is that our policy wonks are addicted to deficit spending and will not change their policies until they are forced to change.

Once central bankers no longer accept the dollar as legal tender in their country then the American economy will experience the economic dislocations caused by the Federal Reserve’s policies.

In order for the central bankers to act decisively on the dollar and other national currencies used as global currency, they will have to agree to a new global currency system, one that replaces the current system.

We see that Germany, France, China, India, Russia and other central banker’s policy wonks are actively working on a new currency system. The question is will we experience a currency panic before the global economy transitions into the new currency system.

Q3 GDP: Obviously Fictional

The reason the Indian Policy Wonks gave for buying 200 tons of gold was they thought our economy will collapse so, to be safe, they want to reduce their dollar holdings; obviously the Indian Policy Wonks read your postings.

Foreign dollar holders currently have over 50% of the dollar supply; our policy wonks think that tax revenues will come in a tidal stream once these dollars are spent on American made goods, services and/or assets. These tax revenues will be used to pay down the government’s huge debt load. And once the debt load is paid off, the smoke screen numbers they gave will not even be a footnote in history books.

And once again our political leaders will be in control of events.

President Obama and Congress will revise the bankruptcy laws so that individuals can use legal means to get out from under their debt load.

And the above is the scenario that will supposedly play out in the coming months and years.

We’re Paying for Health Reform with Another 'Alternative Minimum Tax'?

What your analysis fails to take into consideration is many Americans cannot afford health care; therefore they do not seek treatment for their health problems.

My questions are: How many Americans die each year because they lack adequate health care? How many Americans suffer permanent health problems because they cannot afford the cost of medical care?

Public option is the solution to the problems of lack of financing by people with health care needs.

My suggestion is to put funding of public option health care above funding for foreign aid, funding for overseas military bases, above funding for unjust wars, and I sure your readers can list many other government programs whose funding should be below public health care

Dollar Danger: Iran's Oil Bourse Steps Up Activity

I don’t think that the Iranian Bourse would have open for business if the owners did not think they could make a profit operating the business. Being in the digital age, and being located in an area where most of the world’s oil and gas is produced, one wonders why it told them so long to begin the business.

I wish them the best.

U.S. Economy Is Growing Again?

I have owned a Ford Escort for nearly 20 years and I traded it in for a 09 Ford Focus. With the Ford Escort they recommended that I change my oil every 3,000 miles with my Ford Focus they recommend that I change my oil every 6,000 miles. Is this progress or what?

By the way, I am more than satisfied with my Ford Focus.

The dollar is accepted as legal tender by most central bankers: and, as I watch a squire climb a tree in my neighbor’s backyard, I know the central banks are the store house for excess dollars. I think that our economy is not experiencing the economic dislocations caused by too much currency because these central banks act as the black hole for excess dollars.

I also think that national currencies being used as a global currency is an un-stainable way of conducting global trade, so the global currency system must be changed in order for global trade to function effectively.

Your analysis does not take into consideration this global currency imbalance and, once the currency change does occur, the consequence to the US economy. So it is easy for you to say our economy is improving, when, in reality, our economy will imploded once the dollar is not longer accepted as global legal tender.

U.S. Dollar Now Testing $1.50 Per Euro

You made good points, but the fact still remains that the dollar is accepted by most central bankers as legal tender in their country. When I paid for my hotel bill in Prague I was paying in dollars (through my Chase Visa Card) and the hotel then converts the dollars into their currency. The central bank then keeps the dollars in their vault, to be reinvested, usually in American debt securities, and usually treasury debt.

For a long time foreign investors and foreign institutions invested in dollars because our dollar remained stable while their country’s currency depreciated.

Now the world is a-washed in dollars, and central bankers are powerless to stop the continued flow of dollars into their treasury. Our policy wonks think that eventually foreign dollar holders will be forced to spend their dollar holdings buying American made goods, services, and/or assets thus creating the tax revenues needed to pay down our large debt.

And we do see foreign dollar holders spending dollars on commodities, on goods, on services, etc. but they are buying from other countries or foreign companies so the transactions are not taxed by the IRS. At the same time we see more and more Americans retire abroad because they cannot live on their meager pensions in the US.

By now, most investors know that central bankers no longer want to use the dollar as a global currency, or, for that matter, any other national currency as a global currency. Our former enemies and now our competitors: China, Russia, etc. are leading the charge, but other countries have joined the quest to change the current global currency system into a currency system that will be independent of national control.

The dollar is now in a transition stage, and I expect at some point in this transition the American government will no longer be able to dominated debt from foreign lenders in their own currency. And, this, my friends, is why I think the dollar is going down in value.

Friday's Employment Numbers: No Visible Recovery

Hi Howard:

Your points are well taken but I think they are a consequence of the dollar being a global currency that is not subject to external economic controls. The “free world” accepted the dollar as legal tender at the beginning of the cold war, when the focus was fighting communist ideology and not on the type of currency system needed to manage global trade.

The cold war is over and our previous enemies are now our competitors, and they think, because our dollar is used as global legal tender that is not subject to any form of economic control, we have a competitive advantage over other nations participating in global trade.

I agree, as I think the central banks are the black hole that stores excess dollars, thus sparing our economy the economic dislocations that are created when too much currency circulates in the economy.

Our competitors want to change the world’s currency system so that no one nation has control over it.

The points you made are the consequence of the dollar being thought of as capital, as being wealth onto itself, and not as a currency whose value must be measured according to predetermined economic measurements. Also, Howard, you must remember that all our debt is dominated in dollars so we simply pay it off by printing more dollars, not by taxing earnings.

The US dollar is in transition, going from a global currency to a national currency only. More and more nations are committed to changing the current currency system and adopting a new system that will be faired and controlled by an international body of policy wonks that do not report to a national government. The question is not when, but how?

Friday's Employment Numbers: No Visible Recovery

For far too long the world’s central bankers have accepted the dollar as legal tender for the purposes of buying goods, services and/or assets in their country. When this practice ends, when an American consumer, an American business person, can no longer use their dollars to acquire what they need or want, then our trade deficit will end.

One has to think that our policy wonks, our political leadership understand that one cannot resolve social, political, or whatever problems by debasing the currency. Brazil and Argentina are countries that tried to resolve their problems through currency debasement. Have they learned their lesson?

One can see today that Brazil is on the road to a sustainable recovery and ongoing prosperity. Brazil, I think, understands that they acquire what they need by creating things that other people need, thus generate the earnings needed to acquire what they want.

I think the attitude of the majority of our political leadership and of our policy wonks is that central bankers, who have a large stockpile of dollars, will eventually spend the dollars, and through this spending process create a US trade surplus!

Dream on!

Xerox Bets on Services, Buys ACS

Ms. Burns made the right decision, we are in the digital age, meaning that all documents, government and otherwise, will be stored in digital format.

What do storing digital documents mean to our everyday life? It means that the traffic ticket you got 30 years ago in a different state, so you never bother to pay the fine, is now stored in a computer. If you go back to that state and a cop does a warrant check on you, you will be liable for arrest and in all probability be required to pay the fine.

With the acquisition of ACS, Ms. Burns allows Xerox the flexibility to pursue revenue creating opportunities that are still in the idea stage. Xerox’s best days are in the future.

U.S. vs. China: Has Trade War Begun?

My take is that China and all the other nations in our global commerce community cannot continue to accept the dollar as legal tender, as a medium of exchange for their goods, services and/or asset, without placing severe controls on the number of dollars that can be placed in circulation for use.

For way to long we have been prolonging our false prosperity by exchanging a valueless currency for goods, services and/or assets that continues our false prosperity; as people have stated for far too long: we have been kicking the can down the road.

Right now central bankers are acting as the black hole for excess dollars, dollars that are not needed to conduct global commerce. China is using some of their dollar stockpile to buy commodity assets all over the world with the warning that they think the dollar is valueless and it is part of a flawed global currency system.

China, France, Japan, Brazil, India, and other nations have been developing a new global currency system that will replace the existing system,

Central bankers are committed to changing the current global currency system so it is now just a matter of time before the dollar is no longer accepted as legal tender for the purposes of global commerce.

The only remaining question is will the dollar’s demise be the result of investors, institutions, central bankers, etc. manically abandoning the dollar or will the dollar’s demise be the result of planned transition.

Your guess is as good as mine.

And I agree with TheresaE, China thinks their political system is far superior to ours. And, I disagree with China’s viewpoint, the fact that we can share our views and grow and change from our ethical lapses, is the hallmark of democracy.

China Urges Citizens to Buy Gold and Silver

A lot of dollars are held by foreign investors as protection against their own currency. The investors acquired their dollar holdings in an era when the dollar was the only currency used as legal tender for international transactions. We are in a new era, but the mine set of these investors are still fixated on the past era.

China is doing the prudent thing: informing their citizens that they should reduce their dollar holdings now while it is still accepted as legal tender by the world’s central bankers.

For the last several years, Russia government leaders have been encouraging their citizens to exchange their dollar holdings for gold; In America and Canada, commentators, such as you, have been telling investors for years and years to convert as much dollars as possible to gold and silver as this is the true currency and the only currency that can withstand the ravages of inflation.

In my view, China is rather late to the game in recognizing gold and silver as a currency, but not too late in warning their citizens to convert their dollars and/or other currencies into gold and silver.

China's 'Problem': Too Much Money

Currency is simply a medium of exchange: one can invest it, one can save it or one can spend it.

When China exchanges their goods and/or services for our currency one has to ask: why? After all they have no need for the dollar; they simply use it to buy mainly US government debt. Recently, they have used their vast dollar hoard to buy minerals from other countries, exchanging the dollar for that country’s assets.

China accepted the dollar because they needed our expertise in training their managerial workforce; they needed our expertise in developing their professional class to function effectively in a global competitive environment. China is now at the edge of being able to function effectively in a global competitive environment.

Because China thinks they are no longer are dependent on American assistance for building their economy they want to break free of the dollar, they no longer want to exchange their goods and services for a worthless currency.

But the question is how?

America, on the other hand, has used creative destruction tactics, to transform their industrial economy. By transferring our industrial production overseas, we essentially broke the backs of the unions that controlled our industrial workforce. It remains to be seen if the new industrial workforce will be nonunion. But it is certain, they will be highly skilled, well educated, and be focused on outcomes.

As far as the dollar, we will tell China how they will use it. Instead of the taxpayer subsidizing the farmer, we will simply allow China use some of their dollar hoard to buy our farm products. Instead of bailing out our natural gas producers we will allow China to buy natural gas. We are in the driver’s seat; we will tell them how they can use our currency if they want to spent it or invest it. Buy our bonds, no problems. But if you want to invest it or spent it, get our permission first. Otherwise no go.

China understands their predicament and this is why they want a universal currency for global trade, a currency that will be regulated by policy wonks who is not tied to a national government. Other nations understand the problems of national currencies being used as a global currency and they want to see changes in the global currency situation.

Changes will occur, and we are in the start of a transition stage.