the petro dollar

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the petro dollar

Post by bentech »

19 May, 2018 07:23

Which countries are dumping the dollar and why?

The European Union is considering switching payments from the US dollar to the euro after Washington threatened to target European firms working in Iran, according to reports.
The measure may help the EU to retain one of the world's largest markets, which was opened for trade after the historic nuclear deal signed by Tehran and the P5+1 powers (China, France, Russia, UK, US, plus Germany) in June 2015.
Read more
Europe to ditch US dollar in payments for Iranian oil – source
The idea to eliminate the role of the greenback in international settlements is not new. Aside from the EU, a number of nations have been mulling the idea. RT discussed with analysts how realistic the prospect of countries ditching the dollar is.
In light of the recent developments Iran is the most pressured nation to drop the dollar with Tehran having partially adjusted trade without the US currency, Alexandre Kateb, president of Competence Finance SAS, told RT.
"When Iran was previously under sanctions from 2012 to 2015, it established new mechanisms to bypass US-related financial institutions, such as barter exchange and to replace the dollar with other currencies, such as the renminbi in its bilateral trade with China or the euro in its trade with European countries," the economist said.
At the same time, China's recent move to trade oil in yuan is seen as an initial step to challenging the dollar dominance, Stephen Innes, Head of FX Trading for OANDA in Asia Pacific told RT, stressing that the number of bilateral trade agreements, signed amongst Asia Pacific nations, will settle in yuan.
"Mainland it is laying the ground for the Belt and Road Initiative, and China is even sweetening the pot by offering swap facilities to local countries to promote the use of the yuan," he added.
Experts are unanimous on the point that bi- and multi-lateral pacts between various nations could become the major drivers on the way toward decreasing the dependence on US currency in international trade.
Read more
China urges ditching dollar & euro trade with Russia in favor of national currencies
"This would depend on the leverage the EU, the UK, Russia and China deploy. The likely scenario is diversification – bilateral arrangements between trading partners, or regional arrangements, substituting for multilateral arrangements that supported dollar dominance," Ramaa Vasudevan an Associate Professor at the Department of Economics, Colorado State University told RT.
At the same time, analysts admit that getting rid of the greenback is not an easy task. It took the US dollar nearly a century to unsettle the British pound that had been enjoying its preeminence through the 19th century and the first half of the 20th as the global reserve currency.
"Old habits are hard to break as most of the global hedging is still done on US exchanges like Nymex or ICE," Innes said. "The issues are working out the deliverable to hedge ratio factors which could put many off from breaking long-held settlement in US dollar."
"The US dollar is still, for many reasons, the international trade and reserve currency of choice," according to Kateb. "The whole international financial system is currently structured around the United States and around the central role of the dollar."
However, the expert noted that the international system will change dramatically. Rapid development of blockchain technology along with rooting of virtual currencies is reportedly set to bring about the changing process.
Read more
China can succeed with petro-yuan where Gaddafi failed – killing the US dollar in oil trade
"Eventually, the evolution of global finance will be very much related to the evolution of the global balance of power," the economist told RT. "This will not happen overnight. It will take time and many more crises and balance shifts. None really knows what the new system will look like."
The experts agreed that expelling the greenback from its dominant position in the international monetary system will take much more effort than just replacing it with the euro or other domestic currencies.
"Dollar dominance does not depend simply on its use to denominate trade, but on the dollar's role as the pivot of the international financial system – the fact that about 88 percent of the average daily turnover of foreign exchange instruments is against the dollar, in contrast to the share of the euro which is only about 31 percent," said Vasudevan.
The researcher highlighted that the recent impulse for dislodging the US currency is a symptom of a wider discontent with the rules of the dollar system, but is not a cure for the dollar problem.



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the petro dollar

Post by bentech »

The share of yuan-backed crude oil contracts has soared to 12 percent of global trading since the US withdrawal from the Iran nuclear deal, compared to eight percent in March, when they were launched.


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Post by Butcher Bob »

Wow....we could get fukked. I'm curious to see where we stand after a years time.

Wait a minute.....when was Tillerson fired?

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Post by bentech »

seen this?

“Basically every country creates their own narrative story,” Stengel said. “My old job at the State Department was what people used to joke [call] the chief propagandist job. I’m not against propaganda, every country does it and they have to do it to their own population and I don’t necessarily think it’s that awful.”

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Post by bentech »

Vice President Dick Cheney cynically quipped, “debt doesn’t matter; Reagan proved that.” Up to a point that appeared so. Now we are getting dangerously near to that “point” where debt does matter.

Since 2009, US corporate debt has increased by 49%, hitting a record total of $8.8 trillion. Much of that debt has been used to fund stock repurchases by the companies to boost their stock price, the main reason for the unprecedented Wall Street stock market bubble.

we are overdue for our next recession and given the interest rate is only 1 point something the fed doesn't have any room to stimulate effectively...

https://journal-neo.org/2018/06/01/usa- ... th-spiral/" onclick="window.open(this.href);return false;
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Post by bentech »

Russia dumps half of its US Treasury bonds
16 Jun, 2018

Russia has held a major selloff of US Treasury bonds, dumping some $47bn-worth of papers and momentarily dropping six places on a list of major foreign holders of US securities, recently released statistics for April have shown.

In just one month, Russia proceeded to sell $47.4 billion out of the $96.1 billion the country had in US treasury bonds in March. The latest statistics released by the US Treasury Department on Friday showed that, in April, Russia had only $48.7bn in American assets, occupying 22nd place on the list of “major foreign holders of Treasury securities.”

China, which holds the most US Treasury bonds, also sold off some seven billion-worth of its American assets, from March to April, and now has $1.18 trillion invested in securities. Japan, which is positioned second on the list, in the same timeframe sold off some $12 billion, leaving just over a trillion dollars in US coffers. Ireland, which had $300.4 billion in April also managed to ditch over $17 billion in US assets.

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Post by Butcher Bob »

Less than .4% of total debt...trivial, insignificant.
Japan and Ireland shouldn't be included...down to aboot a quarter of a percent now.
Average daily trading...over half a Trillion.

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Post by bentech »

i though the change in their position was worth note
its easy to forget that Russias
s economy is about the size of italy's

a couple years ago I heard an economist say that Russia had so much gold reserve the economic recession the west was forcing on it made its total debt so cheap that it might repurchase it outright...
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Post by bentech »

Russia & India ditching US dollar in defense deals

Moscow and Delhi are seeking to bypass US sanctions by using the rupee and the ruble in facilitating military deals, according to Indian daily, the Economic Times.
The paper reports that US sanctions are hampering $2 billion in defense deals between Russia and India, as payments are getting stuck. The countries are seeking to avoid this by switching to settlements in domestic currencies and ditching the greenback.


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Post by bentech »

The idea that a trade war between US and China is good for the dollar is complete nonsense, according to investor Peter Schiff. He believes that greenback will only depreciate.

"The thinking is – at least when it comes to trade - is that the dollar is going to benefit from a trade war, which I think is wrong. I think it's just as wrongheaded as the concept that the dollar is going to benefit from larger budget deficits," Schiff said.

According to Schiff, while one may think that a trade war or US budget deficits can create a dollar deficit that will prop up the greenback, in reality the world will be flooded with American currency. "The thinking is this is going to absorb all the dollars out there and there is going to be a dollar shortage, which is complete nonsense."

He explains that the excessive amount of dollars will be provided by the mint of US treasury bonds. "You've got a treasury, you've got a dollar. I mean, what's the difference between a 30-day treasury bill and a dollar? You know, they're pretty much the same thing. The only difference is people don't readily spend their treasuries, right? They don't go into a store and purchase something with a treasury. But they can. They can cash it in and buy something. But they're effectively dollars. So, even though the Federal Reserve, in theory, will be shrinking its balance sheet, the US government will be expanding its balance sheet."

Schiff says as the supply of dollars is going to grow and grow, the demand for the American currency can fall, while the US Fed will be unable to stop the dollar glut. “Eventually, what's going to happen is it's going to be the demand for those dollars is going to collapse, not the supply. And when the demand for dollars collapses, then the price of the dollar collapses. You get massive inflation. That is what is coming."


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