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72% of the dollar's purchasing power was destroyed in just four episodes

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Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#111

Post by noboostforyou »

radlad wrote: post #68
thisislife2 wrote: post #30

Earlier quoted context omitted.

Iran is also playing its own Uno card here by saying that it would consider allowing some oil and gas shipments through the Strait if they have been bought with Chinese Yuan, than the US dollar. ( The Islamic Republic may grant safe passage to oil tankers if the cargo is traded in Chinese yuan - https://www.lbc.co.uk/article/iran-allow-chinese-ships-hormu... ).

I've never heard the expression "to play one's Uno card." Is this a play on "to play one's Trump card"? I can understand why this phrasing could cause confusion, but want to make sure I'm not missing something.

https://knowyourmeme.com/memes/uno-reverse-card

Trump attacked Iran thinking that this would somehow be good for the US, except it's weakening the petrodollar because it's pushed Iran to simply accept Yuan for oil.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#112

Post by joelwilliamson »

raincole wrote: post #45
cperciva wrote: post #44

Note that most of this period falls before the modern inflation target was established in 1995. In the past 30 years we've had 75% accumulated annual inflation (aka prices have increased be a factor of exp(0.75) = 2.1) of which 16% (aka 21% of the total) took place during an inflation excursion (which lasted 2.5 years aka 8% of the total time period). If anything the data points at "inflation targeting works and is p…

The devaluation also mostly happened during the periods that everyone calls good old times now.

Who calls WWI, stagflation or Covid good old times? Only the post-WWII boom was really a good time.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#113

Post by maxglute »

d3ckard wrote: post #43
thisislife2 wrote: post #30

Earlier quoted context omitted.

Iran is also playing its own Uno card here by saying that it would consider allowing some oil and gas shipments through the Strait if they have been bought with Chinese Yuan, than the US dollar. ( The Islamic Republic may grant safe passage to oil tankers if the cargo is traded in Chinese yuan - https://www.lbc.co.uk/article/iran-allow-chinese-ships-hormu... ).

This is particularly funny if you consider petrodollar to be a bad deal for US, not a good one. Ironically, if yuan becomes new petroleum currency, it might hurt Chinese long term.

Petro-yuan =/= reserve currency.

USD reserve = print USD for everything liquidity to sustain debt financed existence where Triffin hollows out industry, and financialize everything because having stupid amount of liquidity incentivizes certain behaviors.

Petro-yuan = PRC gives swap lines to trusted partners to buy oil denominated in yuan in exchange for things like resources. Hormuz ships ~1 trillion USD worth energy that needs "swapping" - incidentally PRC imports around ~2-3 trillion, more than enough to cover.

So think petro-yuan = PRC gives trusted countries with resources that PRC bonds credit lines to buy yuan denominated energy (possibly at discount), in return they guarantee PRC resources or other commercial/geopolitical arrangements. It will be narrow, not like USD brrrting reserves.

This benefits PRC because get to have leverage over "need" transactions (countries need energy to survive, it's no negotiate) while US keeps supporting "want" transactions by reserve debt servicing blackhole that US cannot extricate itself from until it debases / technical defaults. PRC best game plan is... assume privileged part of exorbitant privilege, while leaving US the exorbitant.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#115

Post by mulmen »

senderista wrote: post #65
unstatusthequo wrote: post #27

Earlier quoted context omitted.

I think the idea is crash the stock market to force interest rate drop to refinance the massive debt.

Huh? Wouldn't bond yields go up if stocks went down?

It doesn’t have to make sense to be the plan.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#116

Post by FpUser »

siruwastaken wrote: post #88
cyanydeez wrote: post #63

Earlier quoted context omitted.

I believe the broader reason for an inflation target is to increase the value of "doing something" as opposed to "doing nothing" with money. Of course, like most policies, this acts on people with way too much of it and skews the perception of control and locus of control to those entities with too much.

Not to reply against you, just to add clarification. This is the reason why a slightly positive inflation rate is normally targeted. Theoretically, it would be entirely possible to target 0% inflation, but then you are so close to possible deflation, that most people would simply save up money instead of buying things from the economy.

>"that most people would simply save up money instead of buying things from the economy."

And making it not an option leads to the situations where rich buy assets that are only go up and become richer. Average Joe meanwhile does not own assets and gets poorer and poorer

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#117

Post by roncesvalles »

skywhopper wrote: post #61
leche wrote: post #50

Earlier quoted context omitted.

One of the goals of the Heritage Foundation is a weak dollar. They believe they can bring manufacturing back to the US this way. I don't think they're right. I do think they will continue weakening the dollar.

The bigger question is, why is that even the primary goal?

I'll dig down 3 levels of "why".

The endemic anti-intellectualism among white communities (especially rural and southern) has resulted in a steady decline of white people in well-paying professions in America. If you count the Jewish as a separate group, white people are likely a minority in corporate America. Combined with social upliftment of other groups ("wokism") and the opioid crisis (that has disproportionately affected hinterland communities but immigrant groups seem immune to), white people are sliding down the American totem pole. Trumpism, alt-right, anti-woke, and the general resurgence of racist rhetoric are basically just reactions to all this.

These people want manufacturing because manufacturing is largely considered a "white people sport". If America becomes a manufacturing-first society, the hope is that it puts white people at the front and center of American society again.

JD Vance wrote a book about this.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#118

Post by whynotmaybe »

dandanua wrote: post #101
znnajdla wrote: post #13

This supports my hunch that the current Iran war creates a lethal trifecta that could potentially cause a dollar collapse. 1. Massive military overspend. 2. Petrodollar squeeze (Strait of Hormuz). 3. Allies pulling out: Europe and the Gulf diversifying both their investments and defense purchases. #1 creates oversupply of dollars and #2 and #3 lower demand. This study supports the idea that wars can indeed destroy pu…

It is by design. How else can you make trillionaires?

Zimbabwe did make a 100 trillion note.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#119

Post by mekdoonggi »

ImJamal wrote: post #89
tharmas wrote: post #54

Earlier quoted context omitted.

>Ironically, if yuan becomes new petroleum currency, it might hurt Chinese long term. Agreed. Which is why the Chinese do NOT want their currency to become the Petrodollar or world's reserve currency. They know that that is what destroyed US Manufacturing. China wants to maintain their manufacturing dominance. They've seen what de-industrialization has done to the US.

How are you connecting the petrodollar and US manufacturing? US manufacturing was destroyed because companies closed their factories in the US and used factories in China because labor was cheaper and they were less regulated.

Petrodollar creates demand for dollars. This is demand that no other currency gets. That's why US production is expensive vs other countries. China labor is cheaper and it is less regulated, but the petrodollar exacerbates the problem.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#120

Post by mothballed »

The most notable anomalous event if you zoom back to more like 1814 instead of 1914 is that ever since the US completely decoupled from the gold standard, it switched into purely inflationary mode rather than often bouncing back. From the 1800-1900 pretty much the entire time was spent at worst 1/2 to 2x the average value. Far less variance than after the introduction of federal reserve and taking off the gold standard, where purchasing power was destroyed to something like <1/10th of the century average.
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