Last Lap for Bretton Woods

[metalman]

anti-anti-spin-
1. the euro has already become a reserve currency by default. nations of all political stripes all around the globe have chosen to move assets into that currency in spite of its lack of a politically cohesive home, its lack of a treasury, its lack of a centralized and standardized bond market, its overvaluation on purchasing power parity, and its inherently fractured and flawed economic basis in the eurozone. some currencies are born with reserve status, some attain reserve status, and some have reserve status thrust upon them. like it or not, the euro is already a reserve currency.

2. gave's argument, at least as stated above, makes no sense. the fact that u.s. bonds can be monetized means that indeed there will always be cash to pay them off, but also means that their value can be diminished in unlimited fashion. a deflationary threat overhanging the eurozone should makes its bonds more valuable than ever.

3. the dispersion of power, of "cards in the hands" of the various players around the world, the lack of a central overarching power or authority to provide a natural and clearly acceptable alternative to the dollar centrality as a reserve means there will be no acceptable alternative. or at least there will be no alternative for several playings and reshufflings of the cards. the dollar will decline in both value and esteem, and nations as well as individuals will scramble for assets with which to replace it. when the ecb finally bends to the political will of southern eurozone leaders, and finds an excuse to cut rates and thus cheapen the euro, we will know we are in full beggar-thy-neighbor mode. protectionist legislation in the u.s. will be another step towards geopolitical turmoil.

4. we need not worry about the power of dollar bond holders. this will not be a replay of newfoundland. as long as the u.s. functions as a market for their goods, the dollar holders dare not precipitate a crisis. by the time the u.s. no longer functions as a market for their goods, the dollar holders will not be capable of precipitating a crisis, for the value of their dollars will have evaporated into an inflationary miasma.

5. if this is a replay of the '30s we must ask which nation holds the place of germany - with its unbearable burden of war debts hindering its economic growth.

the best back seat driving on itulip, for sure!

how'd you arrive at these wisdoms? looking for, ya know, a few thousands pages of stuff over, ya know, ten years or so.

i'm no expert but let me take a crack at... anti-anti-antispin!

1. the euro has already become a reserve currency by default. nations of all political stripes all around the globe have chosen to move assets into that currency in spite of its lack of a politically cohesive home, its lack of a treasury, its lack of a centralized and standardized bond market, its overvaluation on purchasing power parity, and its inherently fractured and flawed economic basis in the eurozone. some currencies are born with reserve status, some attain reserve status, and some have reserve status thrust upon them. like it or not, the euro is already a reserve currency.

reserve currency in good times, that is. you missed the one strength of the euro: the lack of a politically cohesive home, lack of a treasury, lack of a centralized and standardized bond market = politically independent.

where's the paulson of the euro?

2. gave's argument, at least as stated above, makes no sense. the fact that u.s. bonds can be monetized means that indeed there will always be cash to pay them off, but also means that their value can be diminished in unlimited fashion. a deflationary threat overhanging the eurozone should makes its bonds more valuable than ever.

you saying gave makes no sense or ej's interpretation of gave makes no sense?

"the fact that u.s. bonds can be monetized means that indeed there will always be cash to pay them off, but also means that their value can be diminished in unlimited fashion."

huh? his point is about deflation not inflation. did you miss the point?

3. the dispersion of power, of "cards in the hands" of the various players around the world, the lack of a central overarching power or authority to provide a natural and clearly acceptable alternative to the dollar centrality as a reserve means there will be no acceptable alternative. or at least there will be no alternative for several playings and reshufflings of the cards. the dollar will decline in both value and esteem, and nations as well as individuals will scramble for assets with which to replace it. when the ecb finally bends to the political will of southern eurozone leaders, and finds an excuse to cut rates and thus cheapen the euro, we will know we are in full beggar-thy-neighbor mode. protectionist legislation in the u.s. will be another step towards geopolitical turmoil.

uh, care to unpack that for us? reads like hand waving.

4... by the time the u.s. no longer functions as a market for their goods, the dollar holders will not be capable of precipitating a crisis, for the value of their dollars will have evaporated into an inflationary miasma.

this is so unlike you. this makes no sense at all!

5. if this is a replay of the '30s we must ask which nation holds the place of germany - with its unbearable burden of war debts hindering its economic growth.

why does anyone gotta play 1930s germany? these are parallels not exact replicas. this ain't hollywood.

who stole our jk and replaced him with a mish-esque replica?

[jk]

the best back seat driving on itulip, for sure!

how'd you arrive at these wisdoms? looking for, ya know, a few thousands pages of stuff over, ya know, ten years or so.

i'm no expert but let me take a crack at... anti-anti-antispin!



reserve currency in good times, that is. you missed the one strength of the euro: the lack of a politically cohesive home, lack of a treasury, lack of a centralized and standardized bond market = politically independent.

where's the paulson of the euro?

i agree, this is attractive in a reserve currency.

you saying gave makes no sense or ej's interpretation of gave makes no sense?

i didn't track it back to its source. i'm just saying it doesn't make sense irrespective of the source.

"the fact that u.s. bonds can be monetized means that indeed there will always be cash to pay them off, but also means that their value can be diminished in unlimited fashion."

huh? his point is about deflation not inflation. did you miss the point?

the original point [not mine] was that there was a deflationary cloud over the euro. my point is that such a cloud makes sovereign euro denominated bonds more, not less, attractive. and, mutatis mutandi, the ability of the u.s. to inflate makes its bonds less attractive. more broadly, there are different populations of purchasers. the dollar drops as foreign investors, and some domestic ones as well, head for the exits. the u.s. is experiencing capital flight, just like argentina did. in the meantime institutions with domestic mandates and an inability to short seek what refuge they can by buying treasuries, spurning other debt instruments for fear of counterparty risk.

uh, care to unpack that for us? reads like hand waving. {refers to passage about the lack of a dominant player, the dispersion of power and claims, the risk of beggar-thy-neighbor and of protectionism}

unpacked, i was attempting to say that there is a huge potential for CHAOS and conflict. i am most skeptical that there can be a negotiated solution until well AFTER the shtf.

this is so unlike you. this makes no sense at all!

i expressed this poorly, but my point is that i am doubtful that our debt holders have much power over us. we will inflate away their claims. more acutely, there is the saying that if you owe the bank a million dollars, you have a problem. but if you owe the bank a hundred million dollars, the bank has a problem. or, if you prefer, the quote from john connally in the '70s, addressing our trade partners: "the dollar is our currency but your problem."

why does anyone gotta play 1930s germany? these are parallels not exact replicas. this ain't hollywood.

i slip into dark moods when i start worrying about the possible political fallout of the economic disaster that i see unfolding, and i think about the erosion of rights in the name of antiterrorism, the u.s. branded by a policy of torture, and so on. perhaps lukester, in his post above, is right-- we should look to italy, not germany, as an inspiration and guide in learning to enjoy life in the face of economic and political chaos. it provides a charming and attractive model.

who stole our jk and replaced him with a mish-esque replica?

i'm touched.

[metalman]

i agree, this is attractive in a reserve currency.



i didn't track it back to its source. i'm just saying it doesn't make sense irrespective of the source.


the original point [not mine] was that there was a deflationary cloud over the euro. my point is that such a cloud makes sovereign euro denominated bonds more, not less, attractive. and, mutatis mutandi, the ability of the u.s. to inflate makes its bonds less attractive. more broadly, there are different populations of purchasers. the dollar drops as foreign investors, and some domestic ones as well, head for the exits. the u.s. is experiencing capital flight, just like argentina did.

yeo. ej talks about capital flight under kapoom theory.

in the meantime institutions with domestic mandates and an inability to short seek what refuge they can by buying treasuries, spurning other debt instruments for fear of counterparty risk.

sorry, i dont get it.

unpacked, i was attempting to say that there is a huge potential for CHAOS and conflict. i am most skeptical that there can be a negotiated solution until well AFTER the shtf.

yep, kapoom theory again.

i expressed this poorly, but my point is that i am doubtful that our debt holders have much power over us. we will inflate away their claims. more acutely, there is the saying that if you owe the bank a million dollars, you have a problem. but if you owe the bank a hundred million dollars, the bank has a problem. or, if you prefer, the quote from john connally in the '70s, addressing our trade partners: "the dollar is our currency but your problem."

yep, kapoom again.

i slip into dark moods when i start worrying about the possible political fallout of the economic disaster that i see unfolding, and i think about the erosion of rights in the name of antiterrorism, the u.s. branded by a policy of torture, and so on. perhaps lukester, in his post above, is right-- we should look to italy, not germany, as an inspiration and guide in learning to enjoy life in the face of economic and political chaos. it provides a charming and attractive model.

the italians know how to live! great food. good looking folks. no offense to the germans but, uh, the italians have it!

i'm touched.

yes you are!

[GRG55]

the italians know how to live! great food. good looking folks. no offense to the germans but, uh, the italians have it!

Had occasion to use the Italian train system last year. Sat across from an Italian couple. Was enthusiastically describing my culinary experiences in Florence in the prior days. They told me that when it comes to preparing food "The French think they are professionals, and they aren't. The Italians think they are amateurs, and they aren't". Sez it all...