Will Dollar Assets Be Caught In The Undertow?

Posted by straightlinelogic 11 years, 9 months ago to Economics
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An excerpt from the latest on straightlinelogic, "Will Dollar Assets Be Caught In The Undertow?" For the complete article, click the link above.

The Russians and Chinese are also keen on a “de-dollarization” of the global economy, and intend to move towards trade between themselves in rubles and yuan. Their good buddy Iran has stepped away from oil trades denominated in dollars. If the petroleum market shifts away from our currency, it will remove an important prop for not just the dollar, but for the US government’s debt. (Although US oil imports have diminished with the success of fracking, oil exporting nations receive dollars from whomever they export to, and those dollars must be recycled.) As the US’s global military commitment shrinks, so too will the world’s appetite for dollars and dollar-denominated assets, which implies an “adjustment” in US financial asset prices that could prove quite painful.

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  • Posted by johnpe1 11 years, 9 months ago in reply to this comment.
    no; it has collector value + it may help us design
    ours when the time comes!!! -- j

    p.s. the Federal Reserve Note should be
    called the T.P.
    except ... that does toilet paper a disservice.

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  • Posted by preimert1 11 years, 9 months ago in reply to this comment.
    But even the price of Gold fluctuates, although now its market-driven and not by the government price-fixing. At one time, when it backed our currency, it was pegged at a steady $35 per troy ounce. Somebody tried to corner the Gold market during FDR's reign and I think I read that was why he made it illegal for US citizens to own Gold except as jewelry.

    Humorous little aside--while I was at TRW I noticed that one of the component housings on a spacecraft was gold-plated for thermal considerations. I jokingly asked the thermal engineer why he didn't use solid Gold and his response was he didn't want to incur a weight penalty.
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  • Posted by straightlinelogic 11 years, 9 months ago in reply to this comment.
    Yes, I think the century-plus impetus towards centralization is reversing, and technology is certainly leading the other way.
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  • Posted by dbhalling 11 years, 9 months ago
    About the first part of you article, I think the industrial revolution was a time of centralization. Many of the projects required large amounts of capital and a large number of employees. Then of course with WWII, income tax withholding, and Social Security the government learned it liked people to be employees. It makes them easier to control. Since the 1970s the government has been actively working to force people into large organizations and to not let them be independent contractors. But technology is pushing the other way.
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  • Posted by edweaver 11 years, 9 months ago in reply to this comment.
    I will post reviews. I realize the "fiction" just like AS but I believe there were true stories just like in GP that did happen in the day. Kind of like how AS is coming true now. I meant this with the highest praise. Awesome read!
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  • Posted by $ jbrenner 11 years, 9 months ago in reply to this comment.
    The last time I sent out the newsletter was 5/15. You'll be on the next one when it happens.
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  • Posted by straightlinelogic 11 years, 9 months ago in reply to this comment.
    I take it as the highest praise when I'm mentioned in the same post as AS. Thanks! If it's not too much trouble, could you post reviews on Amazon and the Gulch? Although it's historical fiction, the novel has a message that is vitally important today and virtual and old-fashioned word of mouth is great advertising. Thanks.
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  • Posted by straightlinelogic 11 years, 9 months ago in reply to this comment.
    Thanks! I sent you an email about subscribing to your newsletter and also requesting a review of The Golden Pinnacle when you're finished. Enjoy the last 3/4s.
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  • Posted by $ jbrenner 11 years, 9 months ago in reply to this comment.
    I just started The Golden Pinnacle last night and am already 1/4 through it as well. I just started a chapter that involves my favorite producer of all time. He literally invented a field for which I am teaching an elective course this summer.
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  • Posted by straightlinelogic 11 years, 9 months ago in reply to this comment.
    I would not peg dollars to GDP because that's a number the government has no problem manipulating (they do it now by understating inflation to get a higher "real" GDP). I think that if you leave the government with power to determine the quantity of money, they will inevitably produce too much of it because they have every incentive to do so (please see Chapter 27, "Fools' Gold," of my novel, The Golden Pinnacle, for the full argument). Government control of money is both economically destructive and, by substituting government "fiat" for objective value, morally wrong. My idea would be to get the government entirely out of the money business and see what developed in the private market.
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  • Posted by $ jbrenner 11 years, 9 months ago in reply to this comment.
    Pegging the dollar to GDP, if not Au, would be the way to go if I had anything to say about it. I had not made a connection to the "full faith" part on our dollar since coming to the Gulch. I wonder what Ayn Rand would have had to say about that.
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  • Posted by preimert1 11 years, 9 months ago in reply to this comment.
    SL, any thoughts on my previously posted notion that the quantity of dollars be pegged to the US GDP? Like bitcoin it would provide a finite, quantifiable value to the dollar rather than the nebulus "full faith and credit of the US." Your thoughts please.
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  • Posted by $ jbrenner 11 years, 9 months ago in reply to this comment.
    I enjoyed Pendulum of Justice thoroughly. As someone who does some biomedical engineering and has had one patent bought by the company who sponsored the work only to shelve it, I definitely had plenty to relate to.
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  • Posted by $ jbrenner 11 years, 9 months ago
    Straightlinelogic, thanks for the reminder to read your book. I just finished the Hallings' book. I have yours and those of a couple of other Gulchers to read next.
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  • Posted by straightlinelogic 11 years, 9 months ago in reply to this comment.
    If by priceless you mean lacking value, you are correct. Zimbabwe suspended use of their dollar in 2009, so it has no value at all.
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