Author Topic: Money/inflation, the Fed, Banking, Monetary Policy, Dollar, BTC, crypto, Gold  (Read 671364 times)

Crafty_Dog

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Webserver down at the moment.

ccp

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Ram on BTC
« Reply #2601 on: May 26, 2023, 08:28:56 AM »
https://finance.yahoo.com/news/u-presidential-candidate-ramaswamy-takes-211928829.html

of course Democrat partisan propaganda  yahoo finance displays Ram's criticism of DeSantis about BTC (get DeSantis ! NOW)

where as the real story is :

https://www.cbsnews.com/news/gop-presidential-candidate-vivek-ramaswamy-bets-big-on-bitcoin-in-2024-race/

Crafty_Dog

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Vivek is an interesting guy.  I hope he generates some attention , , , unless it leads to Trump getting the nomination , , , ugh.


ccp

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budget agreement
« Reply #2604 on: May 30, 2023, 07:24:02 AM »
https://www.nytimes.com/2023/05/29/business/debt-ceiling-agreement.html

"Jan. 2025. Suspending the debt limit for a period of time is different than setting it at a new fixed level. It essentially gives the Treasury Department the latitude to borrow as much money as it needs to pay the nation’s bills during that time period, plus a few months after the limit is reached, as the department employs accounting maneuvers to keep up payments.

That’s different than the bill passed by House Republicans, which raised the limit by $1.5 trillion or through March 2024, whichever came first."

 :x :x :x


G M

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Re: budget agreement
« Reply #2605 on: May 30, 2023, 07:38:03 AM »
The destruction of the FUSA has been a bipartisan effort.


https://www.nytimes.com/2023/05/29/business/debt-ceiling-agreement.html

"Jan. 2025. Suspending the debt limit for a period of time is different than setting it at a new fixed level. It essentially gives the Treasury Department the latitude to borrow as much money as it needs to pay the nation’s bills during that time period, plus a few months after the limit is reached, as the department employs accounting maneuvers to keep up payments.

That’s different than the bill passed by House Republicans, which raised the limit by $1.5 trillion or through March 2024, whichever came first."

 :x :x :x

ccp

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what is "FUSA"
?

G M

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ya

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Must read, Arthur Hayes. It is dense reading, but worth the 15-20 min.

https://cryptohayes.substack.com/p/patience-is-beautiful

ya

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Well worth a listen, on BTC cycles.

https://youtu.be/AsT55mpG_G0

ya

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And then they fight you.


ya

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Blackrock files for a redeemable spot BTC "ETF" Trust Gary Gensler will probably approve.

https://twitter.com/BitcoinMagazine/status/1669449336642588672/photo/1
« Last Edit: June 15, 2023, 06:06:23 PM by ya »

ccp

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we can either trim around the edges to preserver SS or watch it crash
« Reply #2613 on: June 16, 2023, 02:14:47 PM »
THAT IS the option

yet boomer news
a supposed finance economic stock business news company

does zero to offer the support for the clear and present danger we are in if government does nothing :

https://www.yahoo.com/finance/news/major-cuts-social-security-back-154637458.html

BTW : this is where I got the nick name "boomer"

https://en.wikipedia.org/wiki/Ron_Blomberg

I remember listening the Yanks games on radio and reading the daily box scores

boomer was their best pitch hitter
over .300

at the time
the rest of the team was not so good
post Mantle
Murcer , a good solid ballplayer could never live up to the Mantle comparisons

Thurman Munson was just getting started
back in '69 to '72 era
« Last Edit: June 16, 2023, 02:18:31 PM by ccp »

ya

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If you have been wondering why BTC is making moves. Here's a good explainer on the proposed Blackrock BTC ETF.

https://twitter.com/i/status/1669849717679742977

The thinking is, the market opens up for Institutional investors to get exposure to BTC, which many are not allowed to purchase for various reasons. Below is how Gold behaved, once the ETF was approved. With the upcoming BTC halvening in April 2024, this is likely to be very bullish, if approved.



You may also want to listen how Larry Fink from BlackRock lied, before they were ready to roll out the ETF. https://twitter.com/i/status/1669817373627408385
« Last Edit: June 17, 2023, 07:08:37 AM by ya »

ccp

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Federal debt now 161% of total economic output
« Reply #2615 on: June 29, 2023, 09:02:10 AM »
 :-o

Bidenomics ->

https://www.msn.com/en-us/news/politics/federal-debt-to-soar-cbo-predicts-despite-gop-led-spending-standoff/ar-AA1db0Rq

how high does it have to go before libs msm begin to make this a topic worth of discussion

their response - make the rich pay
                        more taxes


ya

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Those with a longer time horizon, may want to consider a 1-5 % allocation to BTC. In recent times Blackrock, Fidelity etc with 27 Trillion in assets have filed for a spot BTC ETF. If it gets approved, BTC is expected to sky rocket. the earliest date for approval is 45 days and latest is 240 days, or Feb 2024 just before the BTC halving.

Pl. do your own research, BTC is volatile with 85 % downdrafts!!

ya

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1 BTC=465 mill Lebanese Pounds, Slowly then Suddenly.


ccp

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Howard Kurtz - > "bidenomics"
« Reply #2618 on: July 04, 2023, 06:42:40 AM »
watch first 2.21 minutes:

https://www.foxnews.com/video/6330468200112

As if Jimmy Carter ran on "Jimmynomics"    :wink:

So the  left that bashed "dumb" Reagan with the term Reaganomics
now tries to emulate that with Bidenomnics

Joe, your no Reagan .

Ask yourselves, are you better off now after 4 yrs of Biden?

Crafty_Dog

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SEC vs. Crypto
« Reply #2619 on: July 07, 2023, 09:44:47 AM »

ya

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BTC
« Reply #2620 on: July 09, 2023, 07:17:57 AM »
Watch this, if interested in BTC. eye opening

https://www.youtube.com/watch?v=AsT55mpG_G0
« Last Edit: July 09, 2023, 07:44:59 AM by Crafty_Dog »

ya

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ccp

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proposed Credit Card Competition Act
« Reply #2622 on: July 21, 2023, 03:32:05 AM »
https://thepointsguy.com/news/credit-card-competition-act/

this will save merchants a bit
but consumers will not see benefits and may lose rewards programs

Crafty_Dog

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Seems like quite recently gold was threatening to go below $1800 and now I see it above $2000.



Crafty_Dog

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WSJ: Stablecoins can keep the dollar as the world's currency
« Reply #2626 on: August 09, 2023, 01:04:16 PM »
Stablecoins Can Keep the Dollar the World’s Reserve Currency
Blockchain-based assets could be to finance what Voice of America has been to U.S. diplomacy.
By Brian P. Brooks and Charles W. Calomiris
Aug. 9, 2023 12:35 pm ET



Stablecoins, blockchain-based assets backed by bank deposits and Treasury securities, are at the heart of a dollar-based revolution happening throughout the developing world. Their price is supposed to stay steady, often at $1. Think of them as digital versions of prepaid cards with the potential to be important tools of American soft power in a world where the role of the dollar is in question.

Stablecoins aren’t merely a more efficient means of electronic payments. With some economists and policy makers worrying about “de-dollarization”—the eclipse of the U.S. dollar the world’s reserve currency—stablecoins could bolster the postwar arrangement in which the dollar’s dominance helped foster global trade and the biggest reduction in global poverty ever. But that can happen only if Congress implements a sound and stable regulatory framework.

That is why House Financial Services Committee Chairman Patrick McHenry’s bill to regulate stablecoins is vital. It would establish federal and state oversight for stablecoin issuers, impose qualifications for reserve assets, and implement rules on redemptions and public disclosure. It’s hard to argue with these seemingly bipartisan goals, and Mr. McHenry (R., N.C.) had collaborated on the bill with Rep. Maxine Waters (D., Calif.) for more than a year. Yet at last week’s vote on the measure, Ms. Waters and most of her Democratic colleagues pulled their support, with no clear reason for the sudden change of heart. Did they suddenly decide stablecoins aren’t important?

Any tool that could boost the U.S. dollar should be considered. Dollars as a share of reserves held by foreign central banks have fallen in the past generation. In 2000 dollars represented almost 73% of global central bank reserves; today the share is around 59%. Though much international trade and many commodity transactions are still settled in dollars, this year large countries including Brazil and Argentina entered bilateral agreements with China to use the yuan and their local currencies for trade settlement.

Rumors abound that a summit next month including Brazil, Russia, India, China and South Africa will consider creating a new currency arrangement. While leaders of the so-called Brics countries deny an impending currency union, Anil Sooklal, South Africa’s ambassador-at-large for Asia and Brics, said “the days of a dollar-centric world” are “over” and Brics nations intend to settle trades in their local currencies in the near future. This year, Saudi Finance Minister Mohammed al-Jadaan said Riyadh is open to settling oil trades in currencies other than dollars—once an unthinkable idea.

U.S. policy hasn’t boosted global confidence in the dollar.. The asset freeze on dollar holdings in Russia’s central bank imposed after Russia invaded Ukraine, while understandable politically, shocked investors and central bankers, who realized for the first time that the dollar may not be the safe store of value it once was.

A de-dollarized world would damage the U.S. The dollar’s reserve status reduces U.S. borrowing costs, which is crucial in an era when government borrowing and spending are at a record high and still climbing. Reserve status also insulates the U.S. government, banks and the general public from foreign-exchange risk. All things being equal, reserve status also allows American consumers to buy foreign goods more cheaply, since foreign producers would rather have dollars than other currencies.

The nationalist and anticolonialist impulses behind de-dollarization in the developing world aren’t likely to help citizens of those countries. Argentina’s decision to price trade deals with China in yuan and pesos may reflect Argentina’s national pride, but the country’s 114% annual inflation rate means that workers there will still see their purchasing power quickly decline. And that’s nothing compared with Zimbabwe’s 175% rate or Venezuela’s 400%. At the end of last year, 17 countries had inflation rates above 20%, and 57 had rates above 10%.

This is where stablecoins come in. Faced with the dismal prospect of saving their wages in local currency stored in local bank accounts, more citizens of high-inflation countries are opting to use dollar-backed stablecoins as a synthetic savings account. Dozens of startups offer stablecoin savings and payment options in Latin America and Africa—often in countries whose leaders are vocally and visibly moving away from the dollar.

Dollar-backed stablecoins have market capitalizations in the hundreds of billions of dollars, and they support transaction volumes many multiples of that amount. These offerings are attractive to ordinary people in those countries because they don’t require an account at a local bank, only an internet connection. In addition, many stablecoins pay interest and have no minimum-balance fees and low or no transaction fees. Most important, they free people from tyrannical developing-world monetary policy and allow them to store the value of their hard work in relatively stable dollar form.

Stablecoins could be to finance what Voice of America has been to diplomacy. They can communicate U.S. monetary policy directly to the people living in other countries, when American efforts to engage other governments aren’t succeeding. If stablecoins flourish, citizens of other countries will increase the demand for dollars independent of (and perhaps contrary to) their governments’ political decisions. But for stablecoins to succeed, U.S. politicians need to agree that re-dollarizing the global economy is important.

The McHenry bill is a good place to start.



Mr. Brooks is a partner at Valor Capital Group. He served as acting U.S. Comptroller of the Currency, 2020-21, and was chief legal officer of Coinbase, 2018-20. Mr. Calomiris is dean of economics, politics and history at the University of Austin. He served as chief economist of the Office of the Comptroller of the Currency, 2020-21.

ya

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Bitcoin ETF is coming, before Feb 2024. When it comes, there will be a God green candle.


Crafty_Dog

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GPF: Why Russia wants a Digital Ruble
« Reply #2628 on: August 14, 2023, 07:37:41 AM »
August 14, 2023
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Why Russia Wants a Digital Ruble
The benefits are particularly enticing as its traditional currency weakens.
By: Antonia Colibasanu

Last week, the Bank of Russia's first deputy chairman said that Moscow will soon begin to test digital ruble transactions and that the clients of participating banks will be able to apply to engage in real-world testing. This follows legislation passed in July that designated Russia’s central bank as the operator of the digital ruble platform.

What Are Digital Currencies?

Little has changed in the way people pay for goods today compared to centuries ago. Currency is simply an object-based payment that holds a universally accepted value. At a base level, the biggest difference between then and now is the ubiquity of transferring a claim on value existing elsewhere – that is, swiping our debit or credit cards to send information to our banks that we wish to purchase something. That action is the simplest form of digital money – what the International Monetary Fund calls “b-money” –  issued by a commercial bank and covered by deposits. This is the only kind of digital money that is guaranteed and fully regulated by central banks (insofar as central banks regulate commercial banks).


(click to enlarge)

All other digital currencies are claim-based payments. “I-money” is issued by private investment funds. “E-money” is issued by private sector providers. Cryptocurrencies are issued publicly, by private individuals or private sector providers. And so on. Importantly, the technology used to settle payments differs from one currency to another. B-money settlements are centralized – meaning transactions go through a central proprietary server. If you pay by debit or credit card, your name and other information will be known to the shop and banks involved in the transaction. Other digital money payments may be centralized, or they may be decentralized and settled among several servers. The servers themselves can be public or private.

All object-based payment settlements are decentralized; no one needs to know your name when you pay for, say, a coffee with cash. And though object-based payments can’t be “guaranteed” by a financial institution – a bank can’t help it if you steal a coffee without paying – they are “guaranteed” by government regulations and business norms.

Claim-based payments, on the other hand, must be guaranteed, and the practice of doing so is hardly new. During the Renaissance, merchants traveled with letters of credit issued by their banks instead of giant bags of gold. By issuing a letter of credit, a bank guaranteed the redemption of payments. New technologies simply speed up this process. Cash is useful because it’s known, it’s issued by a central bank, and payments are settled in a decentralized fashion. Credit or debit cards are useful because payments are guaranteed by rules and regulations. Cryptocurrencies and other digitalized methods of payment are preferred by those who want to rely on business norms and innovation to guarantee payment. They are usually considered riskier by those who trust the banking system. Importantly, crypto and other digital currencies are more of an asset than a traditional currency, in the sense of instruments for settling payments (and are treated as such in capital markets).

What Are Central Bank Digital Currencies?

A central bank-issued digital currency, on the other hand, is essentially a digital version of the cash central banks offer, holding many of the same attributes as the cash issued by central banks, with the obvious exception that the holder of the CBDC would be sharing data. In other words, the central bank would be responsible for selecting and developing the technology used for settling payments. All transactions would go through either the central proprietary server or, with the help of blockchain technology, a trusted few servers. Digital currencies are a fundamental rethinking of payment processes, one in which the central bank alone manages all its customers’ data. Holding central bank-issued digital currency is similar to holding currency bills except that your identity and what you do with the digital currency would be known to the central bank at all times.

CBDCs have some undeniable advantages for issuers. For one, they are more efficient than traditional currencies; they cost nothing to “print” and are apparently more difficult to forge. For another, CBDCs make it possible for the government to know all transactional information of digital currency holders. Instead of keeping actual currency, holders would have digital currency units. Like cryptocurrencies, CBDCs would be built on blockchain technology, but unlike crypto they would be controlled by central banks or governments. Governments would therefore need to adopt new ethics and standards, especially since CBDCs would provide some policy incentives central banks haven’t had. Consider a hypothetical situation. A government could, say, bring its country out of recession by putting digital money into everyone's accounts. It could be programmed to have an expiration date, forcing holders to spend it faster than they otherwise would to goose growth. CBDCs would also give governments a valuable tool with which they could manipulate inflation by making it easier for them to impose negative interest rates and financial repression.

According to a report issued by the Atlantic Council at the end of 2022, some 130 countries representing 98 percent of the world economy are now considering digital versions of their currencies. More than half are in advanced development, pilot or launch stages. China is leading the charge with the implementation of its own CBDC called the CN-Y. The United States, the eurozone and others are investigating the issues raised by digital currency, including data privacy issues and the technological consequences. In some emerging economies, a dependence on developed economies and the complexity of cross-border payments that may result from the use of CBDC have stalled similar measures.

Those who oppose CBDC measures tend to focus on privacy issues – that the government will be able to observe every transaction and could not only crack down on tax evaders but also implement certain policies without necessarily having a political mandate to do so. (Currently, central banks implement monetary and fiscal policy, after consulting with governments, which are generally accountable to parliament and, ultimately, the voters. CBDC would incentivize central banks to become creative in applying corrective measures without necessarily notifying the public each time corrections are made.) The degree of control given to the government and the way technology may enforce or avoid it has stalled the progress of CBDC in most developed countries.

CBDCs could also cause disintermediation; CBDC holders would effectively have accounts directly with the central bank instead of commercial banks. In other words, the authority commercial banks once held would be given to central banks and, ultimately, to governments. Every aspect of every transaction could be tracked in real-time, which is particularly problematic in countries with bad human rights records. And governments could freeze the wallets of people they deem to be threats.

For its part, Russia is going forward with digital currency not necessarily because it wants to abuse CBDCs. The global economic war and Western sanctions against it have left the government with fewer options to manage its economic affairs. CBDCs would, in theory, make it a lot easier and cheaper for the central bank to lower inflation. As an early adopter of blockchain, Moscow already has a lot of the necessary technology in place to effectively rethink banking.

Moscow also has the advantage of working with China, the most advanced country in the world with regard to central bank-issued digital currency, and of being severed from SWIFT. There’s opportunity in every crisis, so the fact that the ruble is weakening so much is likely the best chance the government will get to introduce a digital currency and centralize the Russian financial system. But rethinking and restructuring a national financial infrastructure is no easy job, and it won’t be achieved overnight.

ya

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The GBTC's case against the SEC is expected to get a decision soon, over the next couple of months. SEC is expected to lose, that will open up the way for GBTC to convert to an ETF. Earliest that this ruling could come is today at 11 am.

ya

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Here are the possible BTC ETF approval dates. Blackrock is the most important one. Latest by March 15 2024, just in time for the halving in April 2024. I cannot imagine that the ETF will not be approved. People in the know are watching Jan 10, 2024 when the Ark ETF is due, at which point the SEC could approve enmasse, or in the next 45 days or so when the GBTC court decision is due, which could also force the SEC to take a lenient stance. 3 current US Presidential candidates, plus the one in Argentina are strong supporters of bitcoin.

A BTC ETF could send the price soaring..

« Last Edit: August 15, 2023, 05:56:08 PM by ya »

Crafty_Dog

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For those thinking of placing a bet, what would be the best way to play?

ya

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The simplest is to buy BTC and hold. If ETF is approved, it will go to above 100K quickly. If it is not approved, that would mean BlackRock has been denied, perhaps the second time. They have a record of roughly 565 approvals to 1 denial so far. In this instance, BTC will rise after the halving in April 2024-2025. Options, futures etc are losing propositions.

ya

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Hurdle rate
« Reply #2633 on: August 17, 2023, 05:07:40 AM »
Pl. also see this and the links in it. Just buying and holding is required.

https://www.onceinaspecies.com/p/bitcoin-wrecks-your-hurdle-rate
« Last Edit: August 17, 2023, 06:37:10 AM by Crafty_Dog »

ccp

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Space X out of bitcoin
« Reply #2634 on: August 18, 2023, 09:17:43 AM »

Crafty_Dog

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Thank you YA.

Crafty_Dog

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August 22, 2023
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The Future of the BRICS
The grouping has lofty goals but little to back them up.
By: Antonia Colibasanu
On Aug. 22-24, members of the BRICS grouping will hold a summit in Johannesburg. They’re expected to discuss two key issues: enlargement and the possibility of adopting a common currency. Both issues are critical to the future of this partnership of five large developing nations: Brazil, Russia, India, China and South Africa. Discussion of these two issues in particular is meant to validate the group as an international force, though little progress has been made so far on either front. Views on the grouping’s future trajectory differ according to one’s perspective. Some believe it will play a growing role in international affairs as the West declines, while others see it as largely irrelevant given the lack of convergence on key political and economic concerns among its members.

To understand how the grouping could develop in the future, we need to first understand how it got here. In 2001, former chief economist at Goldman Sachs Jim O’Neill first coined the term “BRICs,” which at the time did not include South Africa, to describe growing markets that he predicted would eventually surpass the West. At the time, the countries didn’t see a need to form a formal bloc to promote cooperation among them. It was only in 2009 that Russia hosted the first BRIC summit and declared that the 2008 global financial crisis was proof that the world’s top emerging economies needed to collaborate to prevent the West from controlling the destiny of the global economy and their own development. It’s important to note that 2008 was also the year that Russia invaded Georgia, announced its dissociation from the Western values system, and began trying to restore power over former Soviet states while cultivating allies in Asia and beyond. From Russia’s perspective, the BRICs became an anti-Western political platform that it wanted to support.

Amid the global economic downturn, China, too, saw a need to decrease its dependence on Western markets and, in particular, on the U.S. dollar. It saw the BRICs as a venue through which it could diversify its trade portfolio. Brazil and India, meanwhile, saw an opportunity to influence global politics and promote their own perspectives on the global stage. Each member, especially China and Russia, saw Africa as the key continent through which it could diversify away from the West. Thus, they invited South Africa to join the grouping in 2010.

As time went on, China’s focus increasingly became monetary policy. In 2015, China supported the creation of the BRICS’ two economic institutions, the Contingent Reserve Arrangement and the New Development Bank, which were meant to be alternatives to the International Monetary Fund and the World Bank. China is the main source of funds for the CRA and holds 40 percent of its voting rights. Also in 2015, it launched its own yuan-based interbank messaging and settlement system, called the Cross-Border Interbank Payment System, to reduce use of the dollar in its economy and promote the yuan as an international currency.

The focus on de-dollarization grew in 2022 as increased commerce between Russia and China, combined with Russia’s financing of a parallel trading system, led to growth in the share of the yuan in the Russian financial market. Sanctioned by the West, Russia pivoted to China, adopting the yuan as one of its primary currencies for international reserves, overseas trade and even some personal banking services. At the same time, Russia needed to expand its influence abroad to gain access to alternate trade routes. While China is the economic leader of the grouping, Russia is its political leader. It’s therefore only natural that the BRICS discuss the potential for establishing a common currency and expansion now, more than a year after the global economic war started following Russia’s invasion of Ukraine and the West’s imposition of sanctions on Moscow.

It's important to note, however, that decreased use of the dollar over the past year was a result not of Russia choosing to use the yuan over the dollar but of U.S. measures to make the dollar less available to the Russian market. De-dollarization, as a policy rather than a reaction to Western sanctions, could be achieved only if the BRICS adopt a common currency – something similar to the euro, which was launched in 1999 by participating European Union members. However, introducing a new currency doesn’t just require issuing bank notes and declaring them ready for use. It requires genuine economic convergence among participating nations through a common market – which will be prohibitively difficult for the BRICS to establish considering the deep divergences among their economies. They lack a common economic structure and governance system. They don't even occupy the same continent, let lone share borders. Developing an efficient common market would require building new infrastructure, including security and insurance systems to protect trading routes, which is nearly impossible for the BRICS because none of its members are global naval powers.

More fundamentally, sharing a currency also requires participants to have a high degree of trust in one another so that they can set the rules for the currency’s issuer – an institution that they jointly coordinate (like the European Central Bank). Users of the dollar and the euro trust that the issuers of these currencies will print enough bills to guarantee payment and ensure access and convertibility. This level of trust isn’t apparent among the BRICS, and it is unclear how a common currency would be issued.

It is clear, however, that BRICS countries would not agree to adopt an existing currency of one of their fellow members. Though India has reportedly used the Chinese yuan in trading with Russia, only some oil refiners have been willing to make payments this way so far. The yuan is not freely convertible on the global foreign exchange market, making its availability a subject of Beijing’s policies. Russia’s central bank currently has to ask Beijing for permission to make any large transactions in yuan – which India’s central bank is unlikely to do any time soon. Ongoing disputes between Beijing and New Delhi on a number of issues will make coordination on anything very difficult.

Since "yuanization" isn't a possibility for the BRICS, adopting a new currency seems to be the only way members can supplant the dollar. Though the possibility has been widely discussed in the media, there’s no indication of any progress being made. Several key questions remain unanswered. What would it take for India and China to work together so closely that they would integrate their economies? What would it take for Russia, Brazil and South Africa to integrate with them? What economic interests do they share? And given that none of the BRICS countries have convertible currencies, how would a financial institution create a BRICS coin and guarantee its availability to international businesses and individuals?

Thus, even Russia, which has been the biggest BRICS advocate, says creating a unified currency is a long-term goal. But even this seems like wishful thinking. It’s unlikely that BRICS members can resolve their differences and build enough trust to issue a single currency. In fact, they don’t appear to share anything more than a distrust of the West – and even on this, they aren’t completely unified.

Membership expansion is another issue on which the grouping is looking for consensus. Members have discussed the possibility of a BRICS+ since 2017, and China raised the issue last year while hosting the BRICS summit. According to one South African official, 23 countries have officially requested to join the BRICS, while 40 have informally expressed interest in membership. This may seem like an impressive amount of potential members, but formal accession is complicated because there’s no official process for joining, except by invitation by all member states, as happened with South Africa in 2010.

With a war raging in Ukraine, enlargement now seems more urgent. With Western countries no longer willing to do business with Russia, Moscow has looked to expand its influence in countries that have remained neutral on the war, including through the BRICS, which was meant to serve as a platform through which members could exert influence internationally from the beginning. Neutral countries have reaped the rewards of lobbying efforts from both sides, making statements about the need for calm while also using this as an opportunity to advance their strategic positions.

In Moscow’s lobbying push, its fellow BRICS members were a natural place to start. In addition to increasing trade with China, Russia improved ties with Brazil, which it saw as a potential new market for its fertilizers and oil products. Trade between the two countries increased by at least 7 percent in 2022, facilitated in part by China, which transported goods between both nations, mostly by rail.

Over the past five years, trade between Brazil and China has also increased. Brazil took advantage of China’s trade tensions with the United States by boosting exports, especially of food products, to its BRICS partner. Still, it remains heavily dependent on the U.S., which is a major market for Brazil’s high value-added goods. It’s also the top foreign buyer for Brazil’s mining sector, which accounts for 50 percent of the country’s overall exports and about 3 percent of the total labor force.

Meanwhile, Russia also found a key alternate market (and route) for its oil in India. India has purchased discounted Russian oil for its own domestic use while also becoming a sort of conduit for Russian energy exports to reach Western markets despite sanctions. Moscow’s plans to invest in port infrastructure in India as part of the North-South Transport Corridor could help in this regard.

But no matter how much Russia works to develop their economic ties, India, like Brazil, is still reliant on the United States as its top trade partner, as well as its main strategic ally. New Delhi is a member of the Quad security grouping – which includes the U.S., Japan and Australia. From a security perspective, then, India’s relationship with Russia can only go so far. It needs the U.S. (and the West more broadly) to secure shipping lanes in the Indian Ocean, on which its economy depends.

Moreover, the BRICS countries’ support for enlargement is divided. For instance, while all five countries agreed to discuss Argentina’s potential membership, Brazil reportedly opposes discussing any further expansion. Like India, Brazil wants to maintain close ties with the U.S., while seeking to improve its ties with Europe. It uses the BRICS to voice its stance on global affairs, but it fundamentally follows a non-alignment strategy, while focusing on its top imperative: to integrate its own northern and southern regions and achieve socio-economic stability.

Courted by the U.S., China and Russia, Brazil, India and others in the Global South see an opportunity to improve their posture globally. However, their chronic domestic instability limits their capacity to capitalize on current opportunities, which are themselves rapidly shifting. Moreover, even if the BRICS are pursuing coordination more actively now than in the past, most meaningful interactions among BRICS members and with potential new members are taking place at a bilateral level. With their relationships limited by economic, political and security concerns, the possibility of expanding membership, just like the possibility of establishing a common currency, seems distant at this time.

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WSJ: BRICs
« Reply #2639 on: September 02, 2023, 12:36:53 PM »
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Bigger Brics Won’t Make a Stable Building
Already riven with a Sino-Indian rivalry, the group will become even less coherent by expanding.
Sadanand Dhume
Aug. 31, 2023 1:24 pm ET


Last week’s announcement that Brics—an acronym for Brazil, Russia, India, China and South Africa—will induct six new members has renewed chatter about China eclipsing the West. The new members—Iran, Saudi Arabia, the United Arab Emirates, Egypt, Ethiopia and Argentina—supposedly give Brics the heft to rival the industrialized democracies in the Group of Seven and reshape global geopolitics.

In reality, expansion will make the already incoherent group less coherent. Nothing binds the 11 nations except their self-identification as non-Western and their failure to become prosperous liberal democracies. China, the group’s putative leader, is in a protracted standoff with India, its most populous nation and second-largest economy. Adding more countries of varied interests makes it more likely that the group will remain “a formless sack of potatoes,” in the words of the Indian strategic thinker C. Raja Mohan.

The case for taking an expanded Brics seriously relies on crude tabulations of collective economic heft. The 11 Brics nations account for 46% of the world’s population and 37% of global gross domestic product (in purchasing power parity terms). This exceeds the G-7’s 30% share of GDP, though at market exchange rates the G-7 remains larger. Brics also now includes six of the world’s 10 largest oil producers and five of its top 10 oil consumers. It contains 75% of the world’s manganese reserves, 72% of rare earths and 50% of graphite.

These impressive-sounding stats feed faulty analysis. According to Julian Borger of the Guardian, Brics expansion represents “an attempt to reshape the global world order and provide a counterweight to the U.S. and its allies.” The Indian journalist Suhasini Haidar says it makes Brics “a more representative coalition of the Global South” and a “better vehicle” for global governance.

But a group that can’t even rally behind a common vision can hardly expect to rise above photo-ops and empty summitry. It certainly won’t rival the G-7, which represents nations united by both liberal democracy and economic achievement. All G-7 members share principles—none would jail someone for likening a leader to Winnie the Pooh—and the common goal of upholding a U.S.-led international order. Every G-7 state is a longstanding treaty ally of Washington’s and has figured out how to harness free enterprise to generate wealth. Japan, the least wealthy G-7 member, has a higher per capita income than any Brics country except the oil-rich U.A.E.

Brics is a weird mix of democracies (India, Brazil, Argentina and South Africa), autocracies (China, Russia, Iran, Egypt and Ethiopia), and monarchies (Saudi Arabia and the U.A.E.). The poorest Brics member (Ethiopia) has a per capita income only 3% that of the richest (U.A.E.). South Africa has trouble keeping the lights on. Iran’s thuggish clerics beat up women for baring their heads. Argentina can’t keep a lid on inflation—currently over 100%. Ethiopia just ended a brutal civil war against the rebellious Tigray region.

Sino-Indian rivalry made Brics unviable from the get-go. Three years after clashes on their disputed 2,200-mile boundary killed 20 Indian soldiers and at least four Chinese, the two nations remain at odds. Earlier this week, China released a map that showed land claimed by both nations, including the Indian state of Arunachal Pradesh, as Chinese. Indian Foreign Minister Subrahmanyam Jaishankar retorted: “Making absurd claims doesn’t make other people’s territory yours.”

In a phone interview, Gautam Bambawale, a former Indian ambassador to China, says Beijing has willfully alienated India by violating a slew of border agreements. “The Chinese are so self-centered that they don’t understand the sensitivities of others,” he says. “And even if they do, they are so steeped in realpolitik that they think India should just lump whatever they do because China is a much bigger economy.”

Unfortunately for Beijing, India sees no reason to act like a vassal state. Surging Indian nationalism may not make sense to China, but it’s very real to Indians. During last week’s Brics summit in Johannesburg, India became the first nation to land a craft on the south pole of the moon and the fourth to land on the moon at all. This month Indians celebrated as 18-year-old chess prodigy R. Praggnanandhaa advanced to the finals of the world championship, and an Indian army noncommissioned officer, Neeraj Chopra, won India’s first gold medal (in javelin) at the World Athletics Championships.

China will also struggle to turn Brics in an explicitly anti-Western direction despite the addition of Iran. Brazil and Argentina are culturally Western. Saudi Arabia and the U.A.E. depend on the U.S. for security. And India needs U.S. help to modernize its economy and narrow the large technological gap with China. “There is no way that India will allow Brics to become anti-Western,” Mr. Bambawale says.

Nobody can deny that China has emerged as a formidable rival to the U.S. But Brics seems destined to remain more a punch line than a harbinger of a new global order.

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WSJ: Blindenomics
« Reply #2642 on: September 14, 2023, 03:28:26 PM »
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The Census Exposes Bidenomics
Its annual report shows how inflation has gutted real household incomes.
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Sept. 13, 2023 6:32 pm ET




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You almost have to admire the brass of the Biden White House. The Census Bureau reported Tuesday that Americans are poorer under Bidenomics, and the President quickly changed the subject to blame Republicans for rising child poverty on his watch. As usual, too many in the press corps bought the spin.

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Mr. Biden is trying to avoid the real story, which is that the Census Bureau says median household income adjusted for inflation fell last year by $1,750 to $74,580. It is down $3,670 from 2019. Households in the fourth income quintile—those making $94,000 to $153,000—lost $4,600 in 2022 and $6,700 since 2019. Middle-class Americans who think they’re losing ground are right.

***
The reason is that inflation has outpaced the earnings growth from work. Real median earnings for full-time workers last year fell $3,620 for men and $2,880 for women despite a tight labor market that had companies paying more to attract and keep workers. The female-to-male earnings gap declined to 16% from 18% in 2019, but mainly because inflation has eroded men’s wages more than women’s. Wages in industries with more female workers such as healthcare and hospitality rose faster than those with more male workers such as manufacturing. But neither men nor women kept pace with the cost of living.

By most statistical measures, income inequality also declined last year. Even when excluding capital gains, higher earners saw a bigger drop in real incomes than Americans at the lower end. One reason is the latter group includes many seniors whose Social Security checks are adjusted for inflation.

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Real incomes at every decile were lower and income inequality was greater than in 2019. Americans in the bottom 10% of earners were 6.3% poorer last year than in 2019 while those in the top 5% saw their incomes decline 4.1%. Inflation invariably punishes lower-income Americans more than the affluent.

These numbers don’t take into account most transfer payments that Congress enacted or expanded as part of its $6 trillion in Covid relief. These include $3,200 a year in stimulus payments per adult and $2,500 per child; a $3,600 per child tax credit whether or not you paid any taxes; larger health insurance, earned income and child-care tax credits; and more generous food stamps.

These provided temporary income boosts in 2020 and 2021, but at the cost of fueling the historic inflation surge that gutted real incomes. Thus after-tax median real income last year fell $6,220 as some, but not all, Covid transfer payments lapsed. Americans with college degrees last year saw the biggest after-tax real income decline ($9,860), perhaps because they benefited most from the expanded tax credits.

Democrats passed their $1.9 trillion Covid bill in March 2021 with the goal of hooking the middle class on bigger government. But the big political surprise is that Americans weren’t thrilled with the handouts. A Hill-HarrisX poll in July 2021 found that 60% of voters, including nearly half of Democrats, thought the child tax credit expansion was too expensive and no longer needed.

Yet there Mr. Biden was on Tuesday lashing Republicans in Congress for not extending the expanded the child tax credit.

“We cut child poverty by nearly half to record lows for all children in this nation largely by expanding the Child Tax Credit,” he declared. “The rise reported today in child poverty is no accident—it is the result of a deliberate policy choice congressional Republicans made to block help for families with children while advancing massive tax cuts for the wealthiest and largest corporations.”

The child poverty rate did jump to 12.4% from 5.2% in 2021, but that is roughly the same as before the pandemic. The expiration of the expanded child credit accounted for about a quarter of the increase in the child poverty rate, though its impact was offset by an increase last year in food stamps, free school lunches and housing subsidies. Most of the increase in child poverty owed to the end of stimulus payments, inflation and higher taxes.

Mr. Biden has apparently forgotten that Republicans didn’t control either branch of Congress in 2021 or 2022. West Virginia Democrat Joe Manchin blocked an extension of the expanded child tax credit because it was estimated to cost $1.2 trillion over a decade.

And which tax cuts for the wealthy and corporations is he talking about? Maybe he’s confused and is referring to the Inflation Reduction Act’s green-energy corporate welfare and subsidies for electric vehicles and solar panels that largely benefit the affluent.

The annual census data tell the real story of Bidenomics: A gusher of unprecedented and unnecessary social-welfare spending helped to produce the highest inflation in 40 years that has made Americans poorer. The last thing Congress should do is heed Mr. Biden’s demand to do it all again.

DougMacG

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Re: WSJ: Blindenomics
« Reply #2643 on: September 15, 2023, 04:32:29 PM »
"after-tax median real income last year fell $6,220"

  - How do you find an exclamation point big enough for that?  We are coming out of covid, spent trillions extra, and real incomes are collapsing. 

Who could have seen this coming?

Better question, how did 80 million Biden Pelosi voters not see this coming?

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Bloomberg video..US debt spiral and BTC

https://twitter.com/i/status/1708147949619020026

Crafty_Dog

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WSJ: Pay attention to 10 year Treasury bills
« Reply #2645 on: October 05, 2023, 02:59:39 AM »
The Bond Market’s Message
The yield that matters is on 10-year Treasurys, which is up 1.5 percentage points so far this year.
By Kevin Warsh
Oct. 4, 2023 5:56 pm ET




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Hold short-term interest rates at current levels, and threaten to raise them if inflation morale doesn’t improve. That’s current Federal Reserve policy. The trouble is that the central bank doesn’t set interest rates anymore. The bond market does.

The Fed has increased its short-term policy rate by only 0.25 percentage point since May 3. The interest rate that matters most to households, businesses and governments, however, is set by the 10-year Treasury note. And it’s up nearly 1.5 points since the spring, and up about 0.75 point in the past month. I expect the most significant tightening to the real economy in the cycle to begin around the end of the year.

At about 4.75%, the benchmark Treasury yield is at its highest level since 2007. That date is no coincidence. The global financial crisis caused a regime change in the conduct of economic policy. For most of the past 16 years, policy makers muscled the bond market into obedience. The Fed wasn’t happy with the risk of rising long-term yields, so it bought Treasury bonds and mortgage-backed securities to tame them. When the Fed finally turned to fight inflation last year, the Treasury took matters into its own hands. To keep rates low, it used the cash it held at the Fed and shortened the duration of its bond issuances.

Economics is the business of making choices amid uncertainty. But with long-term bond rates so low for so long, there has been nothing but a nagging conscience to keep many policy makers from acting irresponsibly. Don’t choose between A and B—choose both. That’s why we are in this fix.

The U.S. is courting trouble. The federal government is 43% larger than it was four years ago, and its reach is expanding mightily. More than a third of the surge in investment spending can be traced to government subsidies, credits and handouts. The chosen corporate recipients of the government’s largess ostensibly benefit, but the rest of the private economy will be burdened by significantly higher rates and rising costs of doing business.

The coming supply of Treasury securities required to fund U.S. government deficits will likely be substantially larger than official estimates. And purchasers of Treasury debt will demand higher yields, at least until something breaks in the economy.

First, on the supply side. The government currently funds $33 trillion of outstanding debt at an average interest rate of about 2.9%. Funding costs on the growing debt burden are forecast to average only a fraction of a percentage point higher over the next 10 years, according to the Congressional Budget Office. I’ll take the over.

The bond market is signaling heightened uncertainty about the range of possible outcomes. If the Fed’s recent rosy economic forecasts for growth and inflation are wrong and a recession ensues, there will be a gusher of new debt. Every additional 1-point increase in interest rates will add more than $2.5 trillion of expense in the next decade.

Next, on the demand side. After the global financial crisis, four of the largest purchasers of Treasury debt were price-insensitive. That is, they were buying Treasury debt for policy reasons—economic, geopolitical or regulatory. Price didn’t matter. How fortunate. These buyers, however, have largely exited the market. The Fed bought about a quarter of all Treasury debt in the past decade but warns that its Treasury holdings will shrink for at least another year.

China, another massive buyer in recent years, is unlikely to sell its existing holdings at a loss. But don’t expect Chinese leadership to do the U.S. any favors by showing up in size at the next Treasury auction. Japan’s domestic growth profile is the most robust in decades. The lion’s share of its excess savings will stay closer to home. And after the banking debacle in March catalyzed by Silicon Valley Bank, the largest banks—firmly overseen by their regulators—are no longer keen to load up on “risk-free” long-dated Treasury bonds.

Yields on the benchmark bond can rise for good reasons. Maybe markets are expecting a stronger economy and a tame business and financial cycle. Perhaps, with luck, the inflation surge will pass without a trace. Maybe policy makers in the White House and Congress will cut a grand bargain to bring an end to the fiscal folly. Perhaps the U.S. economic engine will overpower the recessionary trends elsewhere in the world. But it would be Pollyannaish to bet the country’s future on any of it.

The U.S. economy has proved particularly resilient in the past year, a testament to its residual dynamism. The bigger story, however, is the insulation of large parts of the economy from the Fed’s increases in short-term rates. About 90% of single-family residences are sitting on fixed-rate mortgages, and more than two-thirds of auto loans are locked in at materially lower rates. On the business side, the overwhelming majority of investment-grade corporate debt is fixed at low rates. All of these loans, and lower-quality companies with weaker credit profiles, are likely to require refinancing in a much tougher macro environment.

Many on Wall Street and in Washington are focused on whether the Fed will raise interest rates another quarter-point. It matters little when compared with changes in the benchmark Treasury rate—the most consequential price of the most important asset anywhere in the world.

Mr. Warsh, a former member of the Federal Reserve Board, is a distinguished visiting fellow in economics at the Hoover Institution.

ya

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Oct 13 is a crucial date. That is the date by which the SEC must decide if they will allow GBTC to convert to a BTC ETF or not (create additional hurdles). The courts have lambasted the SEC and ruled in favor of GBTC. If they allow GBTC to be converted, they will also allow other BTF spot ETF's to proceed. This could ignite a BTC rally for the ages.

My reading of what's happening is that a spot BTC ETF will be approved, either this year or early next year before the halving.

« Last Edit: October 05, 2023, 04:38:39 AM by ya »

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breakdown of jobs gains
« Reply #2647 on: October 06, 2023, 01:22:14 PM »
https://www.marketwatch.com/story/u-s-gains-strong-336-000-new-jobs-labor-market-is-still-hot-189e68c9

government , low paying "leisure and hospitality",
nursing home aides (health care )

wonder how many are illegals ?

funny how jobs "created" goes up but unemployment stays put.

DougMacG

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Re: breakdown of jobs gains
« Reply #2648 on: October 06, 2023, 02:19:24 PM »
Wonder where all these people are coming from, it's not from a booming birth rate.
https://www.nytimes.com/2022/02/05/us/immigration-census-population.html

Crafty_Dog

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Paywalled.

BTW a lot of those jobs are part time, labor participation of over 65s, people working two jobs-- wage growth less than inflation.