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Credit deflation and the reflation cycle to come (part 3)

spunko

By spunko
in Property Prices & Economy

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DurhamBorn

DurhamBorn

Posted
Posted
2 hours ago, BurntBread said:

Speaking out of ignorance DB, but I thought the underlying problem was that the issuer of the global reserve currency no longer dominates world trade, so the exclusive use of the dollar is mostly continuing because of inertia (or coercion).

In that case, forcing Russia/China to create a non-dollar-denominated, parallel, international trade system would be like seeding a crystal in a super-saturated solution, leading to the new financial system growing to reflect natural trade flows. In that picture, it doesn't destroy the dollar-based system, but could become a substantial rival.

There has also been discussion here that Putin might have the power to force the world onto a gold-backed system, by demanding payment for oil & gas in physical gold.

Are you saying that both of those scenarios are unlikely from the point of view of your models? If so, is that because they are both based on the idea that the West is fragile because of debt, but in fact the Western financial system is less fragile than many suppose, as the debt can now be serviced once the new liquidity gets flowing into productive things?

Im saying there is no chance of Russia or China doing that,or i should say very little.The US financial system for the real economy,ie regional banks is stuffed with liquidity.The Fed is doing things to release the funds from the repo market etc.It knows the liquidity is enough,just needs putting to work.To do that they raise rates slowly,but dont QT and that is exactly what they are saying and doing.Chinas banking system is under lots of stress,Russia has energy,but dont come in to anything really.The one thing where the risk remains is derivatives and something could easily blow up there and the stress could easily create some black swan failures,but there is no chance the dollar is replaced this cycle IMO.

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CannonFodder

CannonFodder

Posted
Posted
46 minutes ago, Bricormortis said:

Shits gettin' real....

pornhub have pulled out of Russia. O.o

Does this mean the Russians wont be as chill going fowards?

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Majorpain

Majorpain

Posted
Posted
1 minute ago, Noallegiance said:

It's all a bit 'ner-nicky-ner-ner' innit

Gas was off the table until now, Europe is about to freeze.  How long before a leader goes crawling to Moscow to plead for energy?

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ste

ste

Posted
Posted
18 minutes ago, Errol said:

 

 

Smart - he can completely tank the market and bring it down if he wants

No bypassing or selling to China instead - just stop exporting and publicly announce the fact. The house of cards will soon fall... one thing will lead to the other.

They've already halted the LME and even cancelled trades already done today - unprecedented, it cannot have much more life left in it..

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Lightscribe

Lightscribe

Posted
Posted

https://www.zerohedge.com/commodities/one-chinas-largest-banks-unable-pay-margin-call-after-todays-monster-nickel-squeeze
 

My take on todays activity is that we not only have a conventional war on our hands but a financial one.

That nickel move today was not natural at 68% but to squeeze the China banks on shorting positions. This would naturally be the way as we go into stagflation that demand for nickel would reduce (EV, batteries,tech) when more people are concerned about heating and food. Speculation out the door necessities in. Flow from growth to value. 

Problem is this guy mis-timed the short waaay too early and got caught with his trousers down. The financial system will destroy itself through leverage wars to the BK before Joe Bloggs even realised he’s paying £3 a litre for petrol at $200 barrel (quick calculation).

0117C17B-78A6-4BB4-90C3-CE887B5B5146.thumb.png.190e73cd4fac354bc57d07adc617f151.png

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Loki

Loki

Posted
Posted
9 minutes ago, M S E Refugee said:

I wonder if the NPC's can handle food and fuel rationing.

If it is sufficiently couched in virtue they will

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Bobthebuilder

Bobthebuilder

Posted
Posted
3 minutes ago, Ash4781b said:

A quiet day on the markets was it today ?

Gold was really fun this afternoon, I don't normally watch real time charts, but today was interesting.

At the moment, I do not have a single PM miner in the red.

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