Archive for the Currency Category

The China-Russia Affair: Advancing The Petro-Yuan; Dictating The Future (March 26, 2018)

Posted in AIIB, China, CIPS, Cryptocurrency, Currency, Cyberactivities, Gold, Guns, INE, International Finance, International Monetary Fund, Money, Russia, SDR - Special Drawing Rights, Second Amendment, Silver, Special Drawing Rights (SDR), Sports, SWIFT, World's Reserve Currency on March 26, 2018 by e-commentary.org

. . .

K          “In the past, the United States played and promoted with some skill the tension and animosity between China and Russia.  The United States has behaved so abysmally and monstrously that even the Chinese and the Russians are flirting with each other.”

J          “The enemy of my enemy is my friend.  Yet nations do not have enemies or friends, only interests.  They have allied to advance their common interests in confronting a common enemy.”

K          “When the United States drives the Chinese and Russians to embrace and play well together, the U.S. is in trouble.”

J          “The U.S. has proudly and defiantly positioned itself to be the world’s worst enemy.”

. . .

J          “The National Security Strategy document signed by President Trumpi on December 18 unwisely exacerbates the U.S. and China-Russia divide and further alienates the U.S. from the world.” 

K          “China is launching its crude oil futures contract today at the Shanghai International Energy Exchange (INE).  China and Russia have been swiftly designing and perfecting a system described as the China Interbank Payment System (CIPS) to send and receive information about and to reconcile financial transactions.  The system will circumvent and ultimately undermine the Society for Worldwide Interbank Financial Telecommunication (SWIFT) controlled by the U.S.”

J          “They are also establishing the Petro-Yuan to replace the Petro-Dollar to facilitate transactions facilitated by the CIPS and to make investments funded by the Asia Infrastructure Investment Bank (AIIB).  That allows the Chinese and Russians, at the time of their choosing, to dump U.S. Treasuries and equities and buy up and demand the physical delivery of all gold and silver.  The Big Jolt will shift the geopolitical tectonic plates in a short time.”

K          “The U.S. will respond by dropping every bomb in its arsenal all at once everywhere and assassinating any leaders who challenge its hegemony.”

. . .

K          “The Chinese are building the One Belt One Road Initiative and uniting countries and continents, but the U.S. has a hard time tightening its economic belt and fixing one road.”

. . .

K          “The U.S. could do a whole lot more to slow or stop the wholesale theft of intellectual property by China.”

J          “His company was uneasy about filling the order from China for just a single unit.  Three years later, they discovered that an entire plant is producing dozens of them daily.”

K          “Now they do not even need to reverse engineer a product.  Just hack the computer and download the plans.”

J          “When Chinese technology was used to commandeer an American drone, I knew the situation was bleak.”

. . .

J          “A few weeks ago, someone on a lunch break called into a radio call-in show and questioned the genius of the U.S. strategy.”

K          “At some point, everyone will be calling in and asking why the prices at Walmart are suddenly what they were at Nordstroms the previous month.”

. . .

J          “The rest of the world may accept or be forced to accept a gold-backed currency for some time.  However, after securing control, the Sino-Russian Alliance will be free to impose a fiat cryptocurrency using something much more sophisticated than the rudimentary blockchain technology and perhaps a refined version of the Hashgraph technology.”

K          “But will the U.S. have enough bombs to drop on the rest of the world?”

. . .

K          “The Chinese and the Russians were playing chess and the U.S. was playing checkers; now the Sino-Russian Alliance is playing weiqi and Trumpi is playing tiddlywinks.”

J          “Trumpi is playing with himself and playing with our futures.  And they are playing doubles while the U.S. is playing singles.” 

. . .

[See “China plans to break petrodollar stranglehold” in “Asia Times” by Pepe Escobar dated December 21, 2017 and “The World Will Not Mourn The Decline of U.S. Hegemony” in “Truthdig” by Paul Street dated February 20, 2018.]

[See the e-commentary titled “World’s Reserve Currency War I = Cold War 2.0 = WW III (?) (September 8, 2014)”, “AIIB: China: 1; U.S.A. 0? (April 6, 2015)”, “The Mandibles, FRNs, SDRs, IMF, G20, WTD! (September 5, 2016)”, “USA + FRN/PD — > IMF + SDR — > NDB + UMU? The “Universal Monetary Unit” . . . Coming To a Planet Near You (January 2, 2017)” and “One World Currency? (January 8, 2018)”.]

Bumper stickers of the week:

Panda < Eagle > Bruin; Panda + Bruin > Eagle  

CIPS > SWIFT; AIIB > World Bank; INE > Brent + WTI; Petro-Yuan > Petro-Dollar:  [ergo] -> Panda + Bruin > Eagle.  Game, Set, Match.  Fin.

Currency Wars -> Trade Wars -> War Wars

America First -> American Last

Some signs at the “March For Our Lives” March on March 24:

Orange lies matter

Owner for reform

The scariest part of school should be a pop quiz

More 4.0 Less 5.56

We call BS

Hold handguns

When I grow up, I want to be alive

If I am killed by a gun, don’t bury me, just dump my body on the Capitol steps

Bullets are not school supplies

Enough / Bastante

My life is worth more than your guns

No more silence  End gun violence

Arm me with books not bullets

Need test to drive  Why not to shoot?

Protect kids not guns

Moms demand attention

Am I next?

Gun owner for gun control

No Rational Argument

21st century technology, 18th century laws

Too old to create change, step aside and we’ll do it

Never again

Some tweet  We march

NRA  Modern Day Mafia

Mental health not personal wealth

Respect our existence or expect our resistance

Thoughts Prayers Action

My students are more important than your guns

Enough is Enough

Mothers Against the NRA

#NeverAgain

Terrorized By Trumpi’s Tariffs (March 5, 2018)

Posted in Automobiles/Automobile Industry, Banks and Banking System, Blue States / Red States, Currency, Kleptocracy, South, Tariffs, Trumpi, War on March 5, 2018 by e-commentary.org

. . .

K          “In his latest Twitter tantrum, Trumpi announced that he is going to terrorize the world with tariffs.”

J          “He is a twit.  Everyone but Trumpi knows that tariffs are tarrible.”

. . .

K          “Trumpi may place tariffs on foreign cars.  The BMWs manufactured in the foreign country of South Carolina and the Volkswagens made in the foreign country of Tennessee and the Mercedes made in the foreign country of Alabama all will be tariffed.”

J          “The South is the New Germany.  Lindsay Graham is the Senator from South Carolina, New Germany.”

K          “The South is also the New Japan.  The Toyotas from the foreign country of Kentucky also will be tariffed.  Mitch McConnell is the Senator from Kentucky, New Japan.  Someone said that other countries may place a tariff on Kentucky bourbon.  That will get Mitch in a tither.”

J          “What if other nations boycott Harley-Davidson?  They are made in Paul Ryan country.”

. . .

K          “Makes you wonder if most of the Red States are actually foreign countries.  We may soon need a passport to visit and transit.”

. . .

J          “Tariffs are a toll that takes such a toll.”

. . .

K          “A boycott of Harley-Davidson . . . now them is fighin’ words.  And that’s the problem.  A trade war often becomes a war war.”

J          “Trade wars often become currency wars.  Currency wars often become trade wars.  A currency war combined with a trade war almost always becomes a war war.”

. . .

K          “Putin sent a message on March 1 to the U.S. that seems to have been lost in translation and buried in the cacophony of chaos.  If the U.S. attacks, Russia will respond.”

J          “No one is listening over the din.”

K          “No one is listening.  Too many hurricanes are hurling toward the house of cards.”

. . .

[March 8 – International Women’s Day]

[See the e-commentary at “Bankruptcy Auto Companies (December 8, 2008)” on the auto industry in the South.]

Bumper stickers of the week:

The chaos is getting even more chaotic.

Trade War -> Currency War; Currency War -> Trade War; Trade War + Currency War -> War War

One World Currency? (January 8, 2018)

Posted in Banks and Banking System, Cryptocurrency, Currency, Cyberactivities, Dollar - World's Reserve Currency, Magazine Reference, Money, Petrodollar, Special Drawing Rights (SDR), Universal Monetary Unit, World's Reserve Currency on January 8, 2018 by e-commentary.org

. . .

K          “Thirty years ago tomorrow, The Economist magazine uploaded an article titled ‘Get Ready for the Phoenix’ with a cover proclaiming ‘Get ready for a world currency’ and featuring a rising Phoenix.”

J          “Get ready.  The Phoenix, the Bancor, the S.D.R., the Universal Monetary Unit, the Bobcoin, the Something Else is likely to replace the PetroDollar in the near future.  Stay tuned.” 

. . .

K          “On a simple level, ‘cryptocurrencies’, etc. are digital and gold, etc. is analog.  Blockchain technology underlying ‘cryptocurrencies’ is likely to be supplanted by a fast, fair, sustainable, scalable, guaranteed Byzantine fault tolerant consensus digital technology using gossip protocols and virtual votes such as Hashgraph.  And Hashgraph is likely to be supplanted by even more advanced and sophisticated technologies.” 

J          “That’s what everyone is saying.  Get ready.  Stay tuned.”

. . .

[See a related and more recent article “One world, one money” in The Economist magazine dated September 24, 1998.  First published as a five-part series punctuated with reprints of paintings by Gustave Courbet, “Bitcoin Doesn’t Exist – The Full Story” written by “Dr. D” for “The Automatic Earth” project/site provides some perspective on the phenomenon known as ‘cryptocurrencies’.  The comments to the series and the comments on the sites that reprint the series provide some robust ideas and opinions.  Much is happening quickly.]

[See the e-commentary titled “‘Bitcoin’, ‘Ethereum’ . . . ‘Blockchain Technology’  Say What? (July 3, 2017)”, “The Mandibles, FRNs, SDRs, IMF, G20, WTD! (September 5, 2016)” and “USA + FRN/PD — > IMF + SDR — > NDB + UMU? The “Universal Monetary Unit” . . . Coming To a Planet Near You (January 2, 2017)”.]

Bumper stickers of the week:

Want to improve your love life?  Change your handle to “Blockchain”

. . .

The Economist, January 9, 1988, Vol. 306, pages 9-10; Cover:  “Get ready for a world currency”; Title of the article:  “Get Ready for the Phoenix”

THIRTY years from now, Americans, Japanese, Europeans, and people in many other rich countries, and some relatively poor ones will probably be paying for their shopping with the same currency.  Prices will be quoted not in dollars, yen or D-marks but in, let’s say, the phoenix.  The phoenix will be favoured by companies and shoppers because it will be more convenient than today’s national currencies, which by then will seem a quaint cause of much disruption to economic life in the last twentieth century.

. . .

At the beginning of 1988 this appears an outlandish prediction.  Proposals for eventual monetary union proliferated five and ten years ago, but they hardly envisaged the setbacks of 1987.  The governments of the big economies tried to move an inch or two towards a more managed system of exchange rates – a logical preliminary, it might seem, to radical monetary reform.  For lack of co-operation in their underlying economic policies they bungled it horribly, and provoked the rise in interest rates that brought on the stock market crash of October.  These events have chastened exchange-rate reformers.  The market crash taught them that the pretence of policy co-operation can be worse than nothing, and that until real co-operation is feasible (i.e., until governments surrender some economic sovereignty) further attempts to peg currencies will flounder.

. . .

The new world economy

The biggest change in the world economy since the early 1970’s is that flows of money have replaced trade in goods as the force that drives exchange rates.  As a result of the relentless integration of the world’s financial markets, differences in national economic policies can disturb interest rates (or expectations of future interest rates) only slightly, yet still call forth huge transfers of financial assets from one country to another.  These transfers swamp the flow of trade revenues in their effect on the demand and supply for different currencies, and hence in their effect on exchange rates.  As telecommunications technology continues to advance, these transactions will be cheaper and faster still.  With unco-ordinated economic policies, currencies can get only more volatile.

. . .

In all these ways national economic boundaries are slowly dissolving.  As the trend continues, the appeal of a currency union across at least the main industrial countries will seem irresistible to everybody except foreign-exchange traders and governments.  In the phoenix zone, economic adjustment to shifts in relative prices would happen smoothly and automatically, rather as it does today between different regions within large economies (a brief on pages 74-75 explains how.)  The absence of all currency risk would spur trade, investment and employment.

. . .

The phoenix zone would impose tight constraints on national governments.  There would be no such thing, for instance, as a national monetary policy.  The world phoenix supply would be fixed by a new central bank, descended perhaps from the IMF.  The world inflation rate – and hence, within narrow margins, each national inflation rate – would be in its charge.  Each country could use taxes and public spending to offset temporary falls in demand, but it would have to borrow rather than print money to finance its budget deficit.  With no recourse to the inflation tax, governments and their creditors would be forced to judge their borrowing and lending plans more carefully than they do today.  This means a big loss of economic sovereignty, but the trends that make the phoenix so appealing are taking that sovereignty away in any case.  Even in a world of more-or-less floating exchange rates, individual governments have seen their policy independence checked by an unfriendly outside world.

. . .

As the next century approaches, the natural forces that are pushing the world towards economic integration will offer governments a broad choice.  They can go with the flow, or they can build barricades.  Preparing the way for the phoenix will mean fewer pretended agreements on policy and more real ones.  It will mean allowing and then actively promoting the private-sector use of an international money alongside existing national monies.  That would let people vote with their wallets for the eventual move to full currency union.  The phoenix would probably start as a cocktail of national currencies, just as the Special Drawing Right is today.  In time, though, its value against national currencies would cease to matter, because people would choose it for its convenience and the stability of its purchasing power.

. . .

The alternative – to preserve policymaking autonomy – would involve a new proliferation of truly draconian controls on trade and capital flows.  This course offers governments a splendid time.  They could manage exchange-rate movements, deploy monetary and fiscal policy without inhibition, and tackle the resulting bursts of inflation with prices and incomes polices.  It is a growth-crippling prospect.  Pencil in the phoenix for around 2018, and welcome it when it comes.

“Analog Knowledge Devices” (“AKD”):  The Next “Currency” (July 10, 2017)

Posted in Analog Knowledge Devices, Collapse, Currency, Digital, Internet, Money, Technology on July 10, 2017 by e-commentary.org

. . .

K          “When they folded the book store, they unloaded the stranded volumes by the bushel basket for a dollar.  What was not unloaded by the end of the day was given away to anyone who would haul them away.  Some just recycled the paper for a few paper dollars.”

J          “Running with the big dogs was just too tough.  Prepping is nuanced.  They are always thinking ahead.  They exchanged a few sheets of paper for many sheets of paper.  Their tiny house is now an enormous storehouse and warehouse of knowledge.”

K          “They now have a private library with attached living quarters.  Preppy prepping, perhaps?  How many preppies really care about books and knowledge?”

. . .

K          “The possibility that an EMP or some such interruption in service could descend upon the land seems just surreal enough to be plausible.”

J          “Taking down the grid may not come from on high.  Someone could bring it down and not even know it.  A lowly mouse could short a sub-station and subvert everything.  A line of bad code could take down the line.”

. . .

K          “The Internet is pernicious in so many ways, yet, like life, you need to thread your way through and around the porn and propaganda and pursue the positive possibilities.  Despite all the inaccurate information along the gauntlet of the search, enough accurate information emerges.  However, when the current light goes dark, that also goes.  We revert to older technologies.  . . .  Analog Knowledge Devices.”

J          “When the current is interrupted, we may get a new paper currency.  Cash will be confiscated by the authorities, but no one may care about books as books or books as currency.  Except, however, leaving books in circulation leaves the ideas advanced in the leaves of the books in circulation.  It is inevitable when you think about it.  All paper will be banned in time.” 

. . .

K          “You may be able to exchange a copy of Catch-22 and a box of 22s for a copy of Fahrenheit 451 and a hand full of .410 bore shells.”

J          “Or a box of condoms and a copy of the The Joy of Sex for a dozen eggs and a tattered edition of the Joy of Cooking.”

K          “Gets you wondering which is the product and which is the lagniappe in the deal.”

J          “When we get there, joy of any kind and kindness in any form will be cherished.”

. . .

K          “Is the AKD mightier than the AK?”

. . .

[See the “e-commentary” at Beans and Bullets (April 6, 2009), On Entitlements (July 19, 2010) and Girding For The Going Grid (October 11, 2010).]

Bumper stickers of the week:

Analog Knowledge Devices:  The Future Of Technology

From Analog To Digital To Analog:  The Arc Of Civilization

“Bitcoin”, “Ethereum” . . . “Blockchain Technology” Say What? (July 3, 2017)

Posted in Currency, Gold, Gold Standard, Money, Silver, Silver Standard on July 3, 2017 by e-commentary.org

. . .

K          “‘I shoulda’ is my middle name.  My first and last name, really.  ‘I Really Shoulda, Jr.’  Some years ago, someone at the monthly Tuesday night ‘Bitcoin Boosters’ meeting offered me some Bitcoin for $30.  I could have and should have exchanged paper fiat for electronic fiat.”

J          “A day late and a Bitcoin short, as they say.  I have the brains of the scarecrow and the courage of the lion.  I asked myself ‘Why not’ and could not discern any reason why not to take a small risk and then did not take a small risk.”

K          “Fiat for fiat; faith for faith; dust for dust; ashes for ashes.”

. . .

K          “Those who mine for and invest in gold and silver and other precious metals are undermined by those who can manipulate the price of physical gold and silver and other precious metals via paper and electronic trades.  Bitcoin, Ethereum and the like seem to be the refuge for some because they are purported by their proponents not to be as susceptible to manipulation.  But are they?”  

J          “Are they real?  I do not know why the stuff could not be hacked or extinguished if the site goes dark.”

K          “This thing called ‘Blockchain technology’ is another newfangled nebulous technological construct that surely intrudes on our privacy and invades our pocketbooks.”

J          “They say that you can store your Bitcoins in an ‘electronic wallet’ of some sort.  From my perspective, if it is not in your hand or if it is not land, it is not real.”

. . .

J          “A percolating battle is quietly raging between and among Bitcoin, Ethereum and the other crypto-currencies that is akin to the videotape format wars that raged years ago.”

K          “Betamax versus VHS.  Will the best one win?  Who do we want to win?”

. . .

K          “The government tracks all the transactions and shortly will tax all the transactions.”

J          “The government views the stuff as a commodity not as a currency.  The government taxes any exchange of a commodity by demanding payment in its own currency.”

K          “The government will attack any viable challenge that thwarts or could thwart the monopoly of the coin of the realm.”

. . .

K          “I do not mind losing $30.  But do I want to gamble $3000?”

J          “Dollars or Bitcoin?”

. . .

K          “Hard come, easy go.”

J          “Hard come, easy go.”

. . .

K          “As they say:  ‘You’ve got to know when to hold’em, know when to fold’em,  Know when to walk away, know when to run.’”

J          “If you had anted up your two bits and purchased a Bit, would you know when to walk away?” 

K          “I am confident that I would later lament that ‘I shoulda’ sold it before it dropped precipitously in price . . . and of course before I unloaded it.”

J          “Run.”

. . .

[Listen to the interview “‘One Nation Under Gold’ Explores America’s Obsession With One Precious Metal” with James Ledbetter on “Fresh Air” with Dave Davies substituting for the legendary and celebrated Terry Gross on June 26, 2017.  Contrast the author’s criticism of a gold standard with the defense of and justification for a gold standard in “Jim Grant Explains the Gold Standard” by James Grant on the “Mises Wire” on June 27, 2017.]

[See the e-commentary at “Money” and other related topics.]

Bumper stickers of the week:

I hack charities

“Fiat” is “faith” without the “h”; “life” is “lie” with an “f.”

Fiat for fiat; faith for faith; dust for dust; ashes for ashes.

A day late and a Bitcoin short.

“You’ve got to know when to hold’em, know when to fold’em,  Know when to walk away, know when to run.  You never count your money when you’re sittin’ at the table,  
There’ll be time enough for countin’ when the dealin’s done.”  “The Gambler” written by Don Schlitz and sung by Kenny Rogers.

Hard come, easy go.