Partial De-Dollarization is Possible

The world could soon see the dominance of the US dollar start to wane, amounting to a partial de-dollarization of the global economy, according to JPMorgan, but that doesn't mean it's at risk of being replaced by a competitor like the yuan.

In a recent note, strategists at the bank explained that even if China's economy surpasses that of the US, it is still unlikely that the hegemony of the greenback would take much of a hit, and history suggests that any shift would happen at a glacial pace.

"While the US surpassed Great Britain as the world's largest economy in the latter part of the 19th century, the US dollar is commonly perceived to have overtaken the British pound as the world's foremost reserve currency only by the end of WWII," JPMorgan strategists wrote. 

"Historical experience thus suggests that if China were to overtake the US as the world's largest economy around 2030, dollar dominance may persist even into the second half of the 21st century."  READ MORE...

Dark Times Ahead

Economist Nouriel Roubini paints a bleak future for a world facing ‘megathreats’ – including global economic meltdowns.


In a world faced with threats and challenges, many cynical politicians would rather kick the can down the road – and win votes – than make the tough decisions needed now.


At the same time, billions of people would happily trade globalisation for their old way of life, with nations embracing a “me first” attitude and eschewing inter-country cooperation and compromise for the collective good – even in dealing with pandemics and natural disasters.


Economist Nouriel Roubini, nicknamed “Dr Doom” for predicting the 2008 crash of the United States economy years before it happened, tells host Steve Clemons how a US “debt trap”, artificial intelligence and deglobalisation are part of the bleak future that awaits humanity within the next 20 years.

Logistical Challenges for Tesla

Model Y cars are pictured during the opening ceremony of the new Tesla Gigafactory for electric 

cars in Gruenheide, Germany, March 22, 2022. Patrick Pleul/Pool via REUTERS/File Photo

Oct 2 - Tesla Inc (TSLA.O) on Sunday announced lower-than-expected electric vehicle deliveries in the third quarter, as logistical challenges overshadowed its record deliveries.

The top electric car maker said "it is becoming increasingly challenging to secure vehicle transportation capacity and at a reasonable cost," but some analysts were also concerned about demand for high-ticket items due to the weakening global economy.  READ MORE...

China Controlling Global Economy

China wants its currency, the yuan, to replace the U.S. dollar as the world's global currency. That would give it more control over its economy.

As China's economic might grows, it's taking steps to make that happen. A slim majority of institutional investors see it as inevitable, but don't say when.1 Could we see a switch from a greenback- to a redback-dominated world? If so, how and when would that happen? What would be the consequences?

Before the yuan can become a global currency, it must first be successful as a reserve currency. That would give China the following five benefits:

1. The yuan would be used to price more international contracts. China exports a lot of commodities that are traditionally priced in U.S. dollars. If they were priced in yuan, China would not have to worry so much about the dollar's value.
2. All central banks would have to hold yuan as part of their foreign exchange reserves. The yuan would be in higher demand. That would lower interest rates for bonds denominated in yuan.
3. Chinese exporters would have lower borrowing costs.
4. China would have more economic clout in relation to the United States.
5. It would support President Jinping's economic reforms.

READ MORE

Our National Debt

Our government acquires money through a variety of sources:

• Individual Taxes
• Corporate Taxes
• Gasoline Taxes
• Sales Taxes
• Capital Gains Taxes
• Estate Taxes
• Import/export Tariffs 
• Fines and Fees
• Selling Treasury Securities (bills, notes, bonds)

Treasuries have different maturities and are seemingly stable.  Banks are required to hold a certain quantity of Treasuries as a provision against market collapse.  Treasuries are popular in the global marketplace because the US dollar is the world's reserve currency...  and, got that status because of all the spending that the US did during WWII.

Foreign investors own half the US debt and the majority foreign investor is CHINA which owns about $1.1 Trillion.

HOWEVER...

if the US debt gets too big or the rest of the world loses faith in the US and the dollar is no longer considered as the world's reserve currency, the the US will have a problem paying the interest it owes or much worse lose its ability to borrow more money.

Another scenario might be numerous countries selling off their Treasuries all at once...  if that happens then it would be more difficult for the US to borrow money and the money that it did borrow would be most costly.

The biggest concern with growing debt is the potential for inflation that might become inflation out of control and that would cause the global to reassess its view of the US and the strength of that economy.  Since China has the second largest global economy, the world could turn to China for stability, turning their backs on the US.

UNFORTUNATELY, no one seems to be concerned that an outcome like this will ever take place in the US in the near future.

Our Shifting Global Economy

COLUMN-China and the world economy's shifting centre of gravity: Kemp
By John Kemp
(John Kemp is a Reuters market analyst. The views expressed are his own)

Some Excerpts from his article dated March 2020:

LONDON, March 5 (Reuters) - Most western policymakers and journalists view the world economy through a framework that is 10-15 years out of date, failing to account fully for the enormous shift in activity towards China and the rest of Asia.

Most economic commentators and policy analysts cling to a world view that puts the United States and the North Atlantic countries at the core of the global economy, with Latin America, Africa and Asia on the periphery.....

That might have been a useful representation of the global economy in the 1980s and early 1990s, but it has become increasingly inaccurate in the 2000s and 2010s.

Rather than economic and financial changes originating in the United States and Western Europe and radiating out to the periphery, shock transmission has become bi-directional.....

Intuitively, in the 1980s and early 1990s, global economic activity was concentrated in North America and Western Europe, with outposts in Japan and the Asian Tigers (South Korea, Taiwan, Hong Kong and Singapore).

But since then, Asia’s economies, especially China, have grown much faster than their western counterparts, pulling the centre of gravity steadily deeper into the eastern hemisphere and Eurasia.....

China’s share of the global economy has quadrupled to 16% in 2018 from 4% in 2002, according to the International Air Transport Association (“Updated impact assessment of the novel coronavirus”, IATA, March 5)......

The trade war of 2018/19 demonstrated it was not possible to damage China without inflicting widespread collateral damage on other countries (“Trade war rebounds on the United States”, China, July 9, 2019).

Medium-sized economies with a high share of imports and exports in their gross domestic product, including Germany and South Korea, were hit especially hard as they became caught in the cross-fire......

China’s rapid urbanisation, industrialisation and emerging middle class have been the principal drivers of world economic growth in recent years (“China has replaced U.S. as locomotive of global economy”, Reuters, Nov. 5).

China accounted for 28% of all global output growth in 2013-2018, more than twice the share of the United States or India, and dwarfing other countries, according to data from the International Monetary Fund.

If China’s economic growth is to be restrained, somehow, it is not clear what would replace it as a driver of rising global incomes......

China’s economy is far larger than the Soviet Union’s and much more deeply integrated into the global economy as both a producer-exporter and consumer-importer.

For most countries in Europe, Latin America, Africa, the Middle East and Asia, prosperity depends on growing exports to China and maintaining good relations with the United States.

Forcing them to choose is forcing them to become poorer......

**********

Now I am not an economic expert or forecaster of what be ahead of us in the future, but if you read the excerpts that I posted, you can see that the US in no longer the main driver of the GLOBAL ECONOMY...  it would appear that CHINA has a greater influence on the global economy than we first might have suspected and the rapid growth of the economy of INDIA will help shift the focus of the global economy from the WEST to the EAST...

And, while that might be very good for the rest of the world, it is certainly not good news for the United States of America and her economic future.

What Have You Got To Lose?

 Here's my thought...

If you have killed someone, not in self defense, then what have you got to lose by killing more people?  Killing more people might get you the death penalty in a court trial but again, THE HANGMAN can only kill you ONCE...

• One life for one life
• One life for 5 lives
• One life for 10 lives

With this type of mentality, politicians can explore all kinds of things to do to their opponents but if caught then they can only be punished ONCE.

DOES THE ENDS JUSTIFY THE MEANS?

Perhaps it does, but what does that do for the country in the process?

What have you got to lose if Biden wins the election in November?

1. You will get higher taxes
2. Business will get the restrictions that Trump took off
3. Democrats will want to limit the second amendment
4. Democrats will want to censor conservative viewpoints
5. The stock market will decline
6. Democrats will try to increase the number on the Supreme Court
7. Democrats want to make DC and Puerto Rico States increasing seats in House/Senate
8. Democrats will create open borders
9. Democrats will lose respect of global countries like Russia, China, North Korea
10. Democrats will allow Iran to become a nuclear power

Are you like the killer of one person who has NOTHING TO LOSE by killing more people or are you like the conservatives who want our country to grow economically and be the global deterrent of communism???