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Dazedandconfused

7,389 Posts.

2018

18/09/19

18:50

Post #: 40471846
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Originally posted by madbutcher ↑

@Dazedandconfused this is my ham fisted understanding of that macro voices podcast you’re talking about:

- If you want to trade in the world you need US Dollars
- The US Fed reserve makes official US Dollars
- International Banks make perfect counterfeits that the US Fed accepts
- Both parties only make more of them when there is a financial incentive to do so
- At the moment if the US Fed makes more there are very negative effects to the US economic situation
- At the moment if the international banks make more with interest rates as low as they are they wont turn a buck
- If continued economic growth is to occur the world needs more dollars but no one has an incentive to make more.
- As a result the cost of US dollars will rise making the difficult task of economic trade impossible.
- The end result is international trade conducted in US dollars will not be able to continue unless interest rates increase, but this means the US defaults on it debts.
- To solve the problem a new global system of trade settlement needs to be found.

I absolutely love that podcast. Ive not missed an episode in 2 years.

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Hi madbutcher

That's how I understand it as well. Also, I found the bit about China buying oil in Yuan as a way to mitigate their shortage of dollars and how gold fits into that as very helpful in understanding some of what underpins the gold price on an FA basis [as opposed to safe haven reasons].

XAO Value at posting: 6,791.2
6 Upvote

0 Great analysis

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