It looks like the dollar is losing value

[antagon]

there's draconian restrictions on currency demand in china to affect a peg to the dollar. this peg is deflating our economy.

...That would put pressure on the yuan to increase in value, not to suppress it...

but what if the renminbi were pegged to the dollar?

can the fed's need to ease so aggressively to maintain inflation really be seen as ineffective if china's deflationary drag on the dollar is not accounted for?

 

[loosecannon]

yes, or no, depending on whether the dollar does or doesn't inflate.

The feds efforts have been futile in the face of that peg, which is my recurring point. The stimulus was also futile in the face of that peg. Resistance is futile.

 

[KissMy]

Alan Greenspan made waves at the CFR last week when he said "Fiat money has no place to go but gold."

 

[loosecannon]

wow

 

[antagon]

china has no control over the currency exchanges.

"making a big move on reserves shakes things up. the tsunami after the quake affects the adjustment. "

exactly my point. Somebody made a big move, just as Japan did a week earlier.

meh, i think the fed announcement would do in terms of a big move. it coincided with an econ forecast and a dip in crude oil prices. i maintain that hype is easily as effective as other means to indicate a panic.

china monopolizes the exchange of the yuan. currency is severely restricted in and out of the country, exaggerating the effect of your billion a day diet of reserve consumption. i'm not sure how you could say china's got no control over exchanges. futures are settled by a declaration from the PBoC. not saying that the rate is arbitrary, but it is in the grasp of their government like no where else i could think of.

 

[william the wie]

Alan Greenspan made waves at the CFR last week when he said "Fiat money has no place to go but gold."

Well silver is also in the running but Gold has a big lead.

 

[loosecannon]

china monopolizes the exchange of the yuan.

No they don't, it is a commodity traded on Forex. CNY, look it up.

China monopolizes the flow of yuan within China. That has little to do with it's international volume.

And believe what you want about public sentiment driving extremely irregular recent shifts in the value of the yen and dollar. A 1% drop in the dollar in 30 minutes is rare and nothing of any significance happened that day that I am aware of. Certainly nothing that could account for that sudden a drop.

 

[loosecannon]

Alan Greenspan made waves at the CFR last week when he said "Fiat money has no place to go but gold."

Well silver is also in the running but Gold has a big lead.

Greenspan may be going soft or trying to make up for his role in our recent collapse. But I haven't heard anybody outside China and Russia speaking of a return to a gold standard. Even the IMF special drawing rights were to be only lightly backed by gold.

There isn't enough gold and silver to do the job.

 

[Charles_Main]

china monopolizes the exchange of the yuan.

No they don't, it is a commodity traded on Forex. CNY, look it up.

China monopolizes the flow of yuan within China. That has little to do with it's international volume.

And believe what you want about public sentiment driving extremely irregular recent shifts in the value of the yen and dollar. A 1% drop in the dollar in 30 minutes is rare and nothing of any significance happened that day that I am aware of. Certainly nothing that could account for that sudden a drop.

Actually there is some validity to the claim that China has been deliberately manipulating the value of there currency to keep a massive trade deficit in their favor running with the US and other countries.

 

[william the wie]

china monopolizes the exchange of the yuan.

No they don't, it is a commodity traded on Forex. CNY, look it up.

China monopolizes the flow of yuan within China. That has little to do with it's international volume.

And believe what you want about public sentiment driving extremely irregular recent shifts in the value of the yen and dollar. A 1% drop in the dollar in 30 minutes is rare and nothing of any significance happened that day that I am aware of. Certainly nothing that could account for that sudden a drop.

Actually there is some validity to the claim that China has been deliberately manipulating the value of there currency to keep a massive trade deficit in their favor running with the US and other countries.

Yeah, China is dealing with a rapid run up in wages caused by their growing shortage of skilled labor and rapidly aging population. Given that four retirees on average have three descendants between them even the ridiculously low state pensions in China are causing tax problems. I don't know the cost of children in China but the US is above ZPG (barely) because of our relatively low cost per child at 1.46 median houses = 1 median child in cost. (Marketwatch had adjoining columns about real estate and the cost of children so I did the math, any computational error is mine.) So it will most likely be real expensive for China to go to a two child policy to solve the labor force problem and results will not be seen for at least 16.75 years. If the Central Committee does not want their own heads on pikes then they are manipulating the Yuan to manage this transition.

 

[loosecannon]

Actually there is some validity to the claim that China has been deliberately manipulating the value of there currency to keep a massive trade deficit in their favor running with the US and other countries.

Of course. I have been arguing the same. But they exercise that manipulation via buying US dollar denominated assets not by influencing Forex.

 

[antagon]

china monopolizes the exchange of the yuan.

No they don't, it is a commodity traded on Forex. CNY, look it up.

China monopolizes the flow of yuan within China. That has little to do with it's international volume.

And believe what you want about public sentiment driving extremely irregular recent shifts in the value of the yen and dollar. A 1% drop in the dollar in 30 minutes is rare and nothing of any significance happened that day that I am aware of. Certainly nothing that could account for that sudden a drop.

you can only maintain that a miracle happened if you play down my argument about flight to quality. something happened. i argue it is in the domain of market psychology in response to the dip that oil took and the fed's announcement. it is my more narrative-analysis approach, but i think it is more plausible than the math on the matter. certain thresholds were crossed which lent to others -- a (small) snowball.

back to china, i suggest a reexamination of the implications of china's internal currency policy on the CFETS grip on the yuan. by suppressing domestic yuan demand artificially in an otherwise high-demand economy, the utility of the currency outside the manipulation of the central bank is also impaired. no carry trade, capped convertibility for commerce... then one state participant putting out $1 billion a day at times. this is my meaning of monopoly. if the PBoC had to contend with their peg in a conventional market, the cost would be even greater, i contend. multiples greater and considerably more volatile, considering what demand naturally exists with china's reasonable interest rates and growth in commerce amid a depressed global economy.

 

[loosecannon]

'you can only maintain that a miracle happened if you play down my argument about flight to quality"

hardly. The running narrative for the last two years is that capital flees to and from the dollar based on risk aversion/appetite and seeking a safe haven.

Today the dollar is down to 79.36 on Forex, from the mid 83 range last week. That's a 5% drop in a week. And no indication yet that the Fed has pulled the trigger on new QE.

 

[Norman]

Hey!

The FOMC just came, Ben bernanke and other members of open market committee said that inflation target is not high enough for it's mandates. (which I guess was supposed to be price stability, but now that's officially thrown out of window).

Anyway this means lower interest rates, at least till the inflation kicks in. So this long term is very negative for the dollar. But even more negative is the fact that the longer the rates stay low, the harder it's going to be to raise them. I don't think US can pay it's debt if the rates get higher, so after the inflation forces the rates higher, FED is going to be forced to buy the bonds, because US can't really lift taxes nor cut government due to political pressure. They have pretty nice debt pyramid scheme going on.

This is VERY dollar negative. And why on earth is US government doing this really deserves a discussion of its own. But anyway, this is very good news for those who own gold.

 

[loosecannon]

a weak dollar is a good dollar in an export based world economy.

 

[antagon]

'you can only maintain that a miracle happened if you play down my argument about flight to quality"

hardly. The running narrative for the last two years is that capital flees to and from the dollar based on risk aversion/appetite and seeking a safe haven.

Today the dollar is down to 79.36 on Forex, from the mid 83 range last week. That's a 5% drop in a week. And no indication yet that the Fed has pulled the trigger on new QE.

this is exactly my point cannon, again, easing and talk about easing takes the same effect. if you insist on looking for the act itself without recognizing that the rhetoric has the same impact, you'll remain dumbfounded by the depreciation.

 

[loosecannon]

You think as if the entire financial sector is a bunch of skittish cats on the 4th of July.

The widely distributed pov that markets respond to each and every news report is all just a ploy of the media, by the media, for the media.

In reality the markets are not rational but they are driven by sophisticated software and strategies.

Not knee jerk reactionary waffling over Fed sneezery.

But please believe anything you want. I just won't follow.

 

[Norman]

a weak dollar is a good dollar in an export based world economy.

I think this is kind of funny actually.

The dollar is trying to devalue, but other C. banks prevent it by devaluing at the same peace. The problem is then investors view dollar as the safest, and dollar gains value, even though it is debased.

But the inflation in long term just wrecks economy, so this isn't very good for global economy as a whole.

It's almost starting to look like global economy doesn't work too well, because of the central banking. Might be better to just stop manipulating the rates and let market restructure... maybe.

 

[loosecannon]

it may wreck the economy but it allegedly is the only thing that makes it possible to:

>pay down our debts
>rescue the housing markets
>install a stealth wage cut making American exports more attractive

therefore "rescuing" our economy.

Recessions require corrections usually in the form of dramatic inflation. But like you said, being locked into low interest rates 10 years out is gonna be harsh on the Fed.

 

[antagon]

You think as if the entire financial sector is a bunch of skittish cats on the 4th of July.

The widely distributed pov that markets respond to each and every news report is all just a ploy of the media, by the media, for the media.

In reality the markets are not rational but they are driven by sophisticated software and strategies.

Not knee jerk reactionary waffling over Fed sneezery.

But please believe anything you want. I just won't follow.

this is how i think.

with respect to computer managed trading, this was my point earlier about the small snowball and trading thresholds. whether reactionary traders or computerized ones, a steep trend will exacerbate itself. through software, computers are directed to panic, too. by no means does strategy and automation preclude the skittish cat characterization. it plays out in the market, cannon. the performance speaks for itself: there is always a narrative justification for swings in a market, even where as you have demonstrated, nothing else seems to justify the market's response.

you've cuddled up to denial on the matter.