US Dollar

[TankTop5]

A couple days ago announced they will not renew the agreement to trade oil against the US Dollar. Other countries are sure to follow and we going to see the end of American dominance in global financial markets with a steep decline in the value of the Dollar. How fast this will occur is anybody’s guys but it is happening, I have mixed feelings on it but I’m curious what others think. I will put one thought out and I don’t like it but if the dollar slips just enough it could be the tipping point on the trillions of our nations debt but I’m not an economist.

 

[Oddball]

Dollar is still pretty strong by historic measure. I don’t see a reason to panic. There is only one currency remotely possible to replace USD and that is EUR. However, EUR is linked to a much less vibrant economies and overall not as agile. Dollar has been very strong for a while and would not be surprised if it slips. At the lowest point it took almost 1.6 USD to buy 1 EUR and now it is less than 1.1. The strongest USD was at the time EUR was introduced was only 0.8 USD could buy a EUR.

I think BRICs are being a bit too optimistic. Their currencies are a challenging trade and definitely do not offer certainty and protection of USD or EUR. Once they start getting burned they might reconsider.

 

[TankTop5]

Dollar is still pretty strong by historic measure. I don’t see a reason to panic. There is only one currency remotely possible to replace USD and that is EUR. However, EUR is linked to a much less vibrant economies and overall not as agile. Dollar has been very strong for a while and would not be surprised if it slips. At the lowest point it took almost 1.6 USD to buy 1 EUR and now it is less than 1.1. The strongest USD was at the time EUR was introduced was only 0.8 USD could buy a EUR.

I think BRICs are being a bit too optimistic. Their currencies are a challenging trade and definitely do not offer certainty and protection of USD or EUR. Once they start getting burned they might reconsider.

I’m not preaching overnight calamity and doom by any means but I do think we’re seeing the beginning of a global economic shift that will have significant impact on the US. China is at the heart of BRICS and they play the long game so we’ll see. In any event Saudi not renewing the Petrodollar agreement should be front page news everywhere is a much more significant event than the minuscule attention it’s getting which is concerning.

 

[cpp]

The old Petrodollar, but appears the Saudis want to utilize the petroyuan . Same subject, interesting read https://www.currencytransfer.com/blog/expert-analysis/saudi-arabia-petrodollar

 

[TankTop5]

The old Petrodollar, but appears the Saudis want to utilize the petroyuan . Same subject, interesting read https://www.currencytransfer.com/blog/expert-analysis/saudi-arabia-petrodollar

Great article and I appreciate the input. Looks like it was written in 23, now 24 with Saudi’s announcement. They haven’t made any announcements about the petroyuan yet but I’m sure there’s significant negotiations behind the scenes. China along with many nations would love to knock the dollar off its pedestal and if they can achieve the petroyuan it would significantly move them closer to that goal as many nations would follow. This definitely needs to be a part of our national conversation as November approaches and how each side plan to address it. Sadly I think the news will be dominated by Sideshow Bob

 

[Oddball]

IMO this is politics, not economics, although to certain extent they are connected. Saudi's were apparently close to a very comprehensive deal package with the US before the recent escalation in the Middle East as they were close to brokering a Middle East peace. Some local and potentially regional players disrupted the peace at the late hour, potentially to derail the deal and undermine Saudi which is probably the dominant nation in the region by many measures and obviously undermine US influence.

To that extent, Saudi got nothing for the effort, while perhaps they think they should have gotten at least something. This could be a back-door to getting some of it, rather than really trying to get a mountains of Yuans that still have limited use. I am pretty neutral, so just putting the pieces of the puzzle together best I can. They don't match perfectly as they were not meant to.

Yuan is possibly the only credible BRICS currency. The risk levels associated with other BRICs currencies are very high. If the entire block backs Yuan, that could mean something on a global scale, but given the countries involved it might be difficult to impossible to get there. Them bartering in their own currencies will be interesting experiment, but sooner or later some of them will get burned.

 

[TankTop5]

Damnit, it’s already happening, this spells the end for sure!!!!

Sorry, I got jokes… lol

 

[Oddball]

They were already deep in Yuan with not much FX volume in USD and EUR. This is a blow to them rather that USD or EUR and response to the latest round of US sanctions. Nothing that would not be expected. With Russia being less than 2% of global GDP, this does not seem like anything related to where USD is going. More to do with tightening the rope over Ukraine war and current Russian regime.

 

[TankTop5]

They were already deep in Yuan with not much FX volume in USD and EUR. This is a blow to them rather that USD or EUR and response to the latest round of US sanctions. Nothing that would not be expected. With Russia being less than 2% of global GDP, this does not seem like anything related to where USD is going. More to do with tightening the rope over Ukraine war and current Russian regime.

It’s a death cry from Putin. China definitely doesn’t have Russian interests in mind any more than they can further Chinas and if China believes backstabbing Putin is in their best interests they’ll do it in a heartbeat. Putin is finished and let’s hope it’s quick but I have my doubts. As soon as Russians realize how weak Putin has become they will put a bullet in him

 

[ski2xblack]

Yuan is possibly the only credible BRICS currency

And China's economy is a house of cards, like Enron on steriods, so in the big picture the yuan isn't credible petro or global currency at all.

 

[Oddball]

I think that is the idea. But he still has some bullet-proof tricks left in him, so might take a bit more time. The propaganda he has spread is rooted deep and people are easy to manipulate, especially in such a restrictive regime. The poison pill he gave to the Russians is wearing out but might take some more time. I think the West is doing the right thing and slowly increasing the grip to bring this forward. It will be interesting what he sets as OTC exchange rate for USD and EUR, as that might effect lots of Russians. While that will not necessarily dictate the real life personal exchange rate for the Russians, but it could lead into significant premium to exchange into the hardest of currencies.

 

[TankTop5]

I think that is the idea. But he still has some bullet-proof tricks left in him, so might take a bit more time. The propaganda he has spread is rooted deep and people are easy to manipulate, especially in such a restrictive regime. The poison pill he gave to the Russians is wearing out but might take some more time. I think the West is doing the right thing and slowly increasing the grip to bring this forward. It will be interesting what he sets as OTC exchange rate for USD and EUR, as that might effect lots of Russians. While that will not necessarily dictate the real life personal exchange rate for the Russians, but it could lead into significant premium to exchange into the hardest of currencies.

They manipulated the exchange rate about 5% since yesterday raising interest rates 5% to 20.9%. It’s just a temporary fix though and will hurt Russia more in the short and long term

 

[TankTop5]

Saudi Prince excuses skips G7 summit but attended BRICS 2 days earlier.

This is getting interesting, weeeee

 

[rnatalli]

The U.S. is hardly perfect, but has a very diverse and robust economy. What's the alternative economy for the world, China, Russia? Their economies are garbage by comparison. There's also a lot of fear regarding a trade war with China, but trade wars always favor those showing a trade deficit. Anything is possible, but more likely than not those moving away from the dollar today will regret in the not too distant future.

 

[mtrycrafts]

The U.S. is hardly perfect, but has a very diverse and robust economy. What's the alternative economy for the world, China, Russia? Their economies are garbage by comparison. There's also a lot of fear regarding a trade war with China, but trade wars always favor those showing a trade deficit. Anything is possible, but more likely than not those moving away from the dollar today will regret in the not too distant future.

Yep, who will pay the import taxes, tariffs? We will. Who will it hurt the most? The lower and middle class as mostly they don't have enough itemized deductions to overcome standard deductions. The well to do itemize mostly and deduct.

 

[lovinthehd]

Yep, who will pay the import taxes, tariffs? We will. Who will it hurt the most? The lower and middle class as mostly they don't have enough itemized deductions to overcome standard deductions. The well to do itemize mostly and deduct.

Duties are a bit different from taxes. Never saw a deduction for duties. I spent my career in the biz, am/was a licensed US Customs Broker fwiw.

 

[rnatalli]

Yep, who will pay the import taxes, tariffs? We will. Who will it hurt the most? The lower and middle class as mostly they don't have enough itemized deductions to overcome standard deductions. The well to do itemize mostly and deduct.

Casualties are part of any kind of war and as usual, the lower and middle classes will pay as you point out. With their lives in actual war and with their hard-earned dollars in a trade war. Nothing new as it has been this way for millennia.

 

[davidscott]

So, can Tariffs actually negate the Federal income tax and pay for the bills that the US is responsible for?

 

[lovinthehd]

So, can Tariffs actually negate the Federal income tax and pay for the bills that the US is responsible for?

At one point duties/customs were the only federal income. We'd need a serious/severe uptick in duties to get anywhere near that these days. Many items are simply duty-free either due its tariff status or special program status.

 

[davidscott]

At one point duties/customs were the only federal income. We'd need a serious/severe uptick in duties to get anywhere near that these days. Many items are simply duty-free either due its tariff status or special program status.

Seems like a bad idea.