American Economics Thread

hullopilllw

Junior Member
Registered Member
Intriguing; can i get a source i can read further into this? Seems like a very dishonest tactic that would have most sovereign natures in an uproar.

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The Federal Reserve has taken a new step to meet the global demand for dollars, setting up a facility that would allow central banks and international monetary authorities to enter into repurchase agreements with the US central bank and trade US Treasuries for dollars. The Fed said the new facility would work in tandem with the dollar swap lines already established by the central bank with its peers across 14 different countries as the coronavirus pandemic has spread across the world.

It wont be met with uproar, because it helps to stabilise the macro econs of developing nations when there is a mad rush to sell off their local currency for USD dollars. On the front, US appears to be helping them by providing much needed immediate liquidity. But on the long term, it means that US economy is essentially living and benefitting off debt while the expense is paid for by these developing nations in forms of domestic inflation, capital flight and depreciating currency.
 
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hullopilllw

Junior Member
Registered Member
Lol. But it's not dishonest if both parties agrees! Now I empathise BOTH parties. But of course, it's an underhanded way of getting rid of your debts by...... printing paper $ to pay for it! It reduces the debt ratio, and therefore enables The US to borrow more by issuing more T-bills!

The other party shouldn't agree to this as there are no benefit to them. But I guess there will be some inducement for them to agree.

This is akin to companies wishing to reduce their debt ratio by offering share instead. As shares are "never" redeemed. Where as corporate bonds have to be repay when due!

The sooner the $ is not the world's reserve currency the better.

US has been doing that all along for decades, what I want to mention is the attempt by US Treasury to one up the game limit that set a nation's debt against its own GDP into one that allow her to print against the value of the world GDP by subtly changing the nature of T Bond.
 

hullopilllw

Junior Member
Registered Member
Imagine if US decide to declare that nations can US T-Bonds holdings as cross border settlements. Most export-depending nations, which usually hoard huge amount of T-Bonds to hedge for competitive currency, won't hate that idea since it allow them to utilise T-Bonds as payment directly instead of being merely an investment. But what does that means ? An absolute upgrade of dollar hegemony.
 

Rettam Stacf

Junior Member
Registered Member
Imagine if US decide to declare that nations can US T-Bonds holdings as cross border settlements. Most export-depending nations, which usually hoard huge amount of T-Bonds to hedge for competitive currency, won't hate that idea since it allow them to utilise T-Bonds as payment directly instead of being merely an investment. But what does that means ? An absolute upgrade of dollar hegemony.

US version of digital sovereign currency ?
 

Gatekeeper

Brigadier
Registered Member
The threat to US pre-eminence has always come from within. Most powerful nations throughout history didn't crumble because of external compitition but rather internal decay. America today is no different.

You can't create wealth through handouts. But rather you need to have savings in the economy that enable's productive investments which helps to increase incomes and the living standards of the people. The problem in the US is that they have policies in place for decades now that favours consumption and speculation and discourage savings. Those policies have created massive amounts of debts, distorted markets, sky high and overvalued asset prices. There is no easy way out for the US. At this point they only have one of two choices. They can either liquidate or inflate. If they liquidate that means they will let the chips fall where they may in the economy resulting in the short run for massive bankruptcies and mass unemployment. But it also means that all the excesses will be cleared out of the economy. That then will become a solid basis for future growth and prosperity. On the other hand if they inflate it will in the short run help to ease alot of the pain of the current crisis but will burden the economy in the future with even more distortions and debt. That will in turn prevent real productive growth and wealth creation. It seems that the Americans for now has chosen to inflate and that means the future is going to look very bleak for them.

In a democratic system. Short term gain is always preferable to long term. After all you might not be the leader in the next five years, so why invest your efforts just to make the next guy look good?
 

2handedswordsman

Junior Member
Registered Member
lol, capitalism at its best and worst same time. Totally distorted and paranoid "economics". I wander when this black humour joke will end. I can't imagine the shockwave of this particular bubble
 

PikeCowboy

Junior Member

very enlightening video for me
from an outsider's perspective givens a very good summary of the evolution of American policy post cold war
 

PikeCowboy

Junior Member
Seems like Washington would be twisting the screws on its 'allies' to accept these worthless pieces of paper, effectively treating them as vassal states to promote and enrich the imperial core.
China should be cashing in on its Treasuries into more concrete assets which i believe it has been doing since the 08 GFC.

you know the belt and road is paved with dollar bills
 

manqiangrexue

Brigadier
-4.8% to -5%, not a big difference, I guess, but still worth a post.
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US growth revised lower in first quarter, with economy shrinking by 5%

The American
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shrank more than expected in the first quarter of the year as the
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pandemic triggered an unprecedented lockdown of the nation, according to new figures published by the Commerce Department on Wednesday.

Gross domestic product, the broadest measure of goods and services produced across the economy, fell at a seasonally adjusted annual rate of 5 percent in the three-month period from January through March, the Commerce Department said in its second reading of the data Thursday.

GDP was expected to remain unrevised at 4.8 percent, according to economists surveyed by Refinitiv.
 
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