Mish's Global Economic Trend Analysis: Ridiculous Hype Over Secret Oil Meetings
[...] 5) It takes less than a second for Forex trades to take place. 24 hours a day, 7 days a week, one can sell any currency they want and buy any other currency.6) The above logic applies to any currency and any commodity.7) Nothing is stopping anyone at any time anywhere from selling dollars for whatever currency they want to hold. Nor is anything stopping anyone anywhere at any time from selling any major currency for U.S. Dollars.8) Because currency conversion is instantaneous no one has to hold U.S. dollars to buy oil, copper, gold, iron, lead, wheat, soybeans, or anything else. [...]
If this is a blessing or curse is another thing... Peak oil is not an energy crisis. It is a liquid fuel crisis.
The US stopped exporting oil in the 70's and much of anything else since then. But old habits die hard.
The question is whether people believe BRIC will remain the world's exporter of last resort, as well as be unlikely to default on their sovereign debt. Brazil and Russia have a history of that, not so India or China, but they also don't have a long history of issuing bonds in their own currency. China just issued Yuan bonds internatinally for the first time.
Now people are talking about making the IMF the world's central bank, possibly using SDR as a global reserve currency. Maybe that will give us another 30 years or 5 before it goes bankrupt in its turn, and then what? En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
you are the media you consume.
The US is the world's #3 exporter.
-- World (sum of all countries) $ 16,280,000,000,000 2008 est. -- European Union (minus internal trade) $ 1,690,000,000,000 2007 1 Germany $ 1,530,000,000,000 2008 est. 2 People's Republic of China $ 1,465,000,000,000 2008 est. 3 United States $ 1,377,000,000,000 2008 est. 4 Japan $ 776,800,000,000 2008 est.
List of countries by current account balance - Wikipedia, the free encyclopedia
Rank Country CAB USD, bn 1 People's Republic of China 371.833 2 Germany 252.501 3 Japan 210.967 4 Saudi Arabia 95.762 5 Russia 76.163...177 Italy -52.725 178 Australia -56.342 179 United Kingdom -105.224 180 Spain -145.141 181 United States -731.214 [2]
But as far as balance of trade - all I'm concerned with is the level of imports required to give the US a North/Western European style quality of life (and yes, I know, economic measures are no a good measure of quality of life, but they're a really good place to start). Consumer culture in the US needs to be replaced with something more likely to result in human happiness.
can you illustrate what you mean a little more, please?
you mean a new currency, or any currency, but with a different value?
right now a banknote is a promissory statement, and as fungible a symbol as can exist.
is there any other kind of symbol that could supplant it, that took into consideration the 'externalities' blithely dismissed with the 'deemed' value currencies presently enjoy?
i guess it will be 1's and 0's whatever form it takes in meatspace, and i guess money will not be a simple reward for creating wealth short term, but will also include an appreciation of its (symbolic) value to future generations.
my grandpa always said 'you have to learn the value of money', then when i heard how much one unit of british sterling has devalued since his time, i was really puzzled as to what he really meant.
conversations like this somewhat assuage this bewilderment. though i fumble to language exactly what i think, listening to you all is a great learning... ~Government budget deficits are not nearly as dangerous as the deficits we have created in vital and complex natural systems.~ Naomi Klein.
Everyone knows it's not about rational actors, or even - particularly - about credit and useful things happening because of credit.
We have an interesting situation now where stock market value seems to exist even though economic activity doesn't, much.
This makes no sense - supposedly.
I think in fact it makes perfect sense - but only if you understand what's really being traded, what the motivation for trade is, and why what happens to people who don't trade on the markets doesn't actually matter a damn.
(Except in the limit, when they start starving, rioting and burning things down.)
From there it's possible - eventually - to create new theories of value that are less subjective than the ones we have now.
We have an interesting situation now where stock market value seems to exist even though economic activity doesn't, much. This makes no sense - supposedly. I think in fact it makes perfect sense - but only if you understand what's really being traded, what the motivation for trade is, and why what happens to people who don't trade on the markets doesn't actually matter a damn.
Having read the book for a second time I think it is very relevant to out current predicament (it also contains an explanation of the business cycle as speculative bubbles, of recession as a psychological phenomenon of the business class, etc). En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
This doesn't seem to be the case, given that the dollar is the global resver currency.
As for issuing bonds internationally, this has to do with the expectation that sovereign default won't happen, not only because you're a net exporter but also because the principle of free contract is deeply ingrained in your country's laws and mores.
More like being so important that if you default, nothing else is secure and anything might happen. Which is why the price of gold (=hedge against systemic financial breakdown) surges when the US weaken. Peak oil is not an energy crisis. It is a liquid fuel crisis.
Because you can always print more. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
either "more of the same-old same old" or something that consists of genuine reform taking account of hard-"learned" (?)-lessons.
For further reading,
Nicolas Bouleau:
Mathématiques et risques financiers
"Has the application of mathematics to finance contributed to the financial crisis?"
http://www.odilejacob.fr/0207/2647/Mathématiques-et-risques-financiers.html
and Paul De Grauwe:
Economics is in crisis: it is time for a profound revamp
By Paul De Grauwe
Published: July 21 2009 22:27 | Last updated: July 21 2009 22:27
link: http://www.ft.com/cms/s/0/478de136-762b-11de-9e59-00144feabdc0.html?nclick_check=1 "In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge
The currency actually used to make the payment makes very little difference as long as the underlying currency to value the trade is the dollar.
"To value" here must mean to price such that USD is a unit of measurement to express transaction value of any commodity Q ("trade") which is not the use-value or production cost of or demand for the commodity Q. USD is the price of the currency of settlement. USD still dominates currencies of settlement in part because of FRB glut policies. However, if USD is not the currency of settlement, the transaction event yields ForEx profit (loss).
Elsewhere Chris is promoting a unit of measurement other than currency to express transaction value as well as demand for commodity Q, e.g. work, kWh.
Where did Jerome comment, "it doesn't matter what currency oil prices are denominated in"? Diversity is the key to economic and political evolution.
Where did Jerome comment, "it doesn't matter what currency oil prices are denominated in"?
Chris is promoting a unit of measurement other than currency to express transaction value as well as demand for commodity Q, e.g. work, kWh.
Indeed, and I'm pointing out that this distinction already occurs in any barter system which involves credit.
So in the Swiss WIR system no Swiss Franc credit objects (ie fiat currency Units) change hands. Instead, goods and services change hands on trade credit terms (time to pay) by reference to Swiss Francs as a purely abstract "Value Standard" or unit of measure.
The framework of trust needed (to police debit balances) comes from property backing - ie WIR members have to give a charge over their property. The WIR accounting/monetary system works, and has worked since 1934.
I advocate extending such credit clearing more widely (ie to individuals as well as businesses) within new frameworks of trust, backed by provisions into default pools.
This requires currency units which are generally acceptable in exchange, (ie fungible) and in my view, Units redeemable in the use value of location, and of energy, are natural candidates. It also requires Credit-Service-Providers-Formerly-Known-As-Banks. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
