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Ghana plans to buy oil with gold instead of dollars

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Re: Ghana plans to buy oil with gold instead of dollars

#311

Post by lossolo »

danielschonfeld wrote: post #304
unboxingelf wrote: post #294

Earlier quoted context omitted.

Spoiler - we didn’t print nearly as much as you think we did. And we generally haven’t even scratched the surface of how much more a normal growth of the currency since 2008 was needed. What are you talking about? Aside from the indoctrinated belief that money printing is good and normal, in the past 2 years alone the US has printed nearly 80% of USD in existence. Our debt to GDP is over 130%. If by “normal” you mean…

> in the past 2 years alone the US has printed nearly 80% of USD in existence Often cited and incorrect metric. The fed changed how the count M2 I believe because they started paying interest on reserves during their response to the COVID crisis. Either way the chart often cited showing an increase in M2 is not telling the whole story, namely that not nearly enough USD has been “printed” to satisfy world hunger and n…

> Read about trade deficits as they relate to a country who’s currency is a global reserve currency.

US has around 1 trillion USD trade deficit every year, that money needs to come from somewhere and GDP seems to go up every year.

US also has budget deficit of around 1-1.4 trillion USD per year. So US is also printing 1.4 trillion to finance the budget.

So we are at around -2 trillion USD every year with debt of around 130% GDP.

Seems like the rest of the world is financing that debt? Or how does it work?

Re: Ghana plans to buy oil with gold instead of dollars

#312

Post by jen20 »

UltraViolence wrote: post #129
pirate787 wrote: post #100

Earlier quoted context omitted.

LOL Bitcoin is a joke, its down 65% against the dollar this year

FTX's collapse has left its mark, but this will only be temporary. Bitcoin is already demonstrating its usefulness by helping countries evade economic sanctions. There are a truckload of nations who're fed up with the West's financial dominance and are actively seeking alternatives.

> FTX's collapse has left its mark, but this will only be temporary

Bitcoin was down well in advance of the FTX collapse. The reason it is down is because it's a Ponzi scheme, and an unconscionable waste of resources so that cryptobros can LARP at being a libertarian.

Re: Ghana plans to buy oil with gold instead of dollars

#313

Post by analog31 »

notahacker wrote: post #200
analog31 wrote: post #167

Earlier quoted context omitted.

It shouldn't be hard for the miners to guess that margin, given that the market price of gold can be looked up. Gold is, for all intents and purposes, usable as money, at least between sophisticated parties such as governments. It lacks some of the features of USD, but if Ghana is out of USD, then those features don't matter to them.

Oh, the mining company management will know what the spot price in dollars is and if the spot price offered in cedis doesn't seem fair. But "we've found a cunning new way to exploit our gold reserves" is a better PR line to the general public than "we're fudging the figures a bit in our favoir* Look at HN's somewhat sophisticated audience heralding it as a power move against the dollar rather than a country scrabblin…

It strikes me as a tax on gold mining. I can't think of any principled reason why they shouldn't do that, to raise money for their government.

Indeed, having a better engineered money system is one of the things that make rich countries richer.

Re: Ghana plans to buy oil with gold instead of dollars

#314

Post by kasey_junk »

georgeplusplus wrote: post #299
kasey_junk wrote: post #295

Earlier quoted context omitted.

The Chinese are demanding Russia trade in yuan because the Russian currency has, through a series of impressive self owns, become completely useless. If the Russian position was even a little less weak it wouldn’t fly because Russians don’t want yuan for the same reason Chinese people don’t, it’s an illiberal currency unsuitable for trade. That’s getting worse not better, because there is a moderate chance if China r…

China demands payment in useless currency. What part of this narrative makes sense to you?

I will buy your car in kasey_junk bucks to explain my point if you want.

Re: Ghana plans to buy oil with gold instead of dollars

#315

Post by rsj_hn »

kasey_junk wrote: post #295
ShivShankaran wrote: post #286

Earlier quoted context omitted.

because it's not the case at all. de-dollarization is picking up rapidly across most neutral/anti-US countries and this is the start of it. China is trading with Russia in yuan and even India has allowed small players to bypass USD and trade in INR directly https://www.reuters.com/world/india/india-allows-internation... Something I have been shouting hoarse is that this war in Ukraine is going to have multi-generatio…

The Chinese are demanding Russia trade in yuan because the Russian currency has, through a series of impressive self owns, become completely useless. If the Russian position was even a little less weak it wouldn’t fly because Russians don’t want yuan for the same reason Chinese people don’t, it’s an illiberal currency unsuitable for trade. That’s getting worse not better, because there is a moderate chance if China r…

> because the Russian currency has, through a series of impressive self owns, become completely useless.

Huh. Checks forex rates. Not worthless, USD/RUB went from 100 to 60. It's worth 167% what it was before Feb 2022. How do you explain that?

So many people forget that the value of a currency derives from considerations of supply and demand. When Russia said it demands to be paid in Rubles for some commodities, then this created a demand for Rubles. You may not like the demand, but it is a real demand.

A net exporting nation is not going to have a worthless currency, rather it will be able to control the value of its currency by either insisting that a portion of its exports be bought with its own currency, or -- equivalently -- allowing its exports to be bought with a tradeable currency and then selling that for rubles.

So the strength or weakness of the currency is going to be decided by the net export situation, and as Russia's trade surplus is much higher in 2022 than in 2021, earning roughly $330B in energy exports in 2022, a roughly ~40% increase from last year, it's currency is going to appreciate unless Russia takes steps to devalue it. And that's just energy. Russia is also a major global supplier of fertilizer, wheat, diamonds, gold, titanium, etc. That's what makes the ruble valuable, not what you think of Russia's geopolitical strategy. Currency markets don't reflect the moral value of a nation, they don't reflect their foreign policy, they reflect the net supply and demand for the nation's production. The world is hungry for oil, gas, coal, wheat, fertilizer, wood, titanium, potassium, gold, and diamonds. It is the value of these commodities that gives the Ruble its value.

In terms of China, Russia runs large trade surpluses against China because it is a major energy and food supplier to China. It has therefore accumulated a large amount of CNY reserves, just as the record of all those surpluses. It makes sense that it would use some of these reserves to purchase output from CNY or other countries willing to be paid in CNY. That use of foreign reserves does not mean that the Ruble is worthless, it means that Russia is spending some of its foreign reserves. Nothing particularly special going on here - China is more than eager to sell goods to Russia to reduce its trade deficit with that country.

Re: Ghana plans to buy oil with gold instead of dollars

#316

Post by georgeplusplus »

kasey_junk wrote: post #314
georgeplusplus wrote: post #299

Earlier quoted context omitted.

China demands payment in useless currency. What part of this narrative makes sense to you?

I will buy your car in kasey_junk bucks to explain my point if you want.

I don't want Kasey junk bucks. Which is why I'm scratching my head at youre reasoning the largest economy in the world would accept worthless currency.

Re: Ghana plans to buy oil with gold instead of dollars

#317

Post by ilammy »

lottin wrote: post #271
Ekaros wrote: post #222

Earlier quoted context omitted.

There is essentially loans of USD that happen on balance sheets that is paper between institutions outside of USA. So such trading and settlement is possible. But if there is block of actually getting this money in real dollars, that is rather pointless even more monopoly money.

What do you mean real dollars? Dollar deposits in bank accounts outside the US are as real as dollars deposited in US banks.

Oh sweet child, try transferring your “dollars” out of your country first – especially into US – before you claim they are real.

Re: Ghana plans to buy oil with gold instead of dollars

#318

Post by kasey_junk »

rsj_hn wrote: post #315
kasey_junk wrote: post #295

Earlier quoted context omitted.

The Chinese are demanding Russia trade in yuan because the Russian currency has, through a series of impressive self owns, become completely useless. If the Russian position was even a little less weak it wouldn’t fly because Russians don’t want yuan for the same reason Chinese people don’t, it’s an illiberal currency unsuitable for trade. That’s getting worse not better, because there is a moderate chance if China r…

> because the Russian currency has, through a series of impressive self owns, become completely useless. Huh. Checks forex rates . Not worthless, USD/RUB went from 100 to 60. It's worth 167% what it was before Feb 2022. How do you explain that? So many people forget that the value of a currency derives from considerations of supply and demand. When Russia said it demands to be paid in Rubles for some commodities, the…

And what are the currency volumes? What mechanisms can you use to turn rubles into other currencies that are legal in Russia? Can a bank or investor trade rubles currently? What are the interest rates charged to loan rubles? Those currency controls have the direct impact of making imports expensive or unattainable.

Russia is now mulling issuing yuan denominated bonds. As if they were a client state of China. That’s not because their economy is strong. Their trade surpluses are largely because their imports have collapsed.

The ruble/yuan pair is quite simply China taking advantage of a Russian economy that is teetering. Extrapolating out anything beyond that about global reserve currencies is folly.

[edit] went looking for detailed trade data for Russia and it turns out it’s no longer published by the Russian authorities https://www.reuters.com/article/ukraine-crisis-russia-import...

Re: Ghana plans to buy oil with gold instead of dollars

#319

Post by kasey_junk »

georgeplusplus wrote: post #316
kasey_junk wrote: post #314

Earlier quoted context omitted.

I will buy your car in kasey_junk bucks to explain my point if you want.

I don't want Kasey junk bucks. Which is why I'm scratching my head at youre reasoning the largest economy in the world would accept worthless currency.

And if I held a gun to your head and demanded that you accept kasey_junk bucks?

China has some of the strictest currency controls in the world. To the point if you are doing treasury operations for an international business there you can’t use your normal financial rails to accomplish day to day tasks like manage payroll.

No one, including Chinese citizens, want to keep their cash there. For corporations this manifests in added costs, but for individuals (with even moderate means) it becomes a game of hide the assets. So much so that cities in the west are dealing with asset inflation specifically attached to Chinese buyers.

China doesn’t have a problem with western citizens over paying for property there.

Until a currency liberalizes it can’t become a reserve currency for international trade. So for the yuan we have 2 choices, it liberalizes (and perhaps tanks their leadership) or it stays second class. The current Chinese leadership believes the former is worse than the latter.

Re: Ghana plans to buy oil with gold instead of dollars

#320

Post by ilammy »

immibis wrote: post #281
UltraViolence wrote: post #120

Earlier quoted context omitted.

I believe the war in Ukraine has permanently damaged the USD's dominance in the medium to long term. The use of a supposedly neutral financial network (SWIFT) as a sanction weapon will make other nations who aren't on good terms with the U.S. and the West (and not just the "usual suspects" but many nations in Africa and South America too) seeking alternatives. As previously mentioned, Bitcoin is a viable alternative.…

Why would countries that don't plan to commit genocide need to be bothered by SWIFT cutting off countries that commit genocide? In fact, this is a good thing for countries that don't want to be genocided as it provides an additional incentive against genocide.

Because who knows what’s on the list of excommunicatable offenses. Today it’s war of aggression, 40 years later on not enough diversity and inclusion could qualify, or the eagle knows what else. Hope for the best prepare for the worst.
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