Japan announces QE8 - who's next?

derryb

Worldwide coordinated effort probably agreed upon at recent Jackson Hole economic summit. Other possibility is that everyone is devaluing to protect their trade balance and/or water down their sovereign debt. Is this the big race to the bottom?

QE Global

MsMorrisine

If a currency falls in a forest full of falling currencies, does it make a difference to the exchange rate?


I guess Russia and China do not need QE, India neither.



perhaps some Roubles for comrade ? or Rupees?

Pokermandude

Definitely a race to the bottom. I think it was you (derryb) who mentioned that it's the countries massively in debt that are staving off default by a controlled increase in inflation. Seems pretty accurate, and more countries with debt will do the same.

All I know for sure is that I am quantitatively easing the loss of my buying power by adding metals to my stack.

Konahead

<< <i>Definitely a race to the bottom. I think it was you (derryb) who mentioned that it's the countries massively in debt that are staving off default by a controlled increase in inflation. Seems pretty accurate, and more countries with debt will do the same.

All I know for sure is that I am quantitatively easing the loss of my buying power by adding metals to my stack. >>



Amen.

renman95

<< <i>If a currency falls in a forest full of falling currencies, does it make a difference to the exchange rate?


I guess Russia and China do not need QE, India neither.



perhaps some Roubles for comrade ? or Rupees? >>



Comrade like gold. Gold been very very good to comrade, no?

renman95

With this race to the bottom, how do you know if your country is the victor? What does victory look like? And would they want the spoils?

Spooly

The victor will be global depression, no one wins.

streeter

Governments will do just about anything in order to not reduce their debt load and footprint size on the economy. The more stubborn they act with regard to reducing debt, the more one should protect their own assets.

This Federal gubberment is borrowing 40 cents of every dollar it spends. Where is the end game? The state of CAL is manipulating numbers to spend more than they receive and has under projected public pension liabilities significantly. Where is that end game?

'THEY' are talking about taxing bank transactions next. There is no limit to what 'THEY' will tax to fund their insatiable need for money.

Be careful if you put all your marbles into gold and silver because if enough people do it --'THEY' will figure out a way to somehow criminalize the activity. Silver is too big and bulky to store significant wealth and I DO NOT TRUST the federals on gold. Somehow or someway, they are going to get you if you need to liquidate. They will criminalize the receiver of the bullion if it is not reported...is my guess. I believe they already do this to some extent by requiring ID on the transaction for scrap or jewelry gold in CAL where the dealer has to report every transaction to DOJ.(is supposed to)

jmski52

probably agreed upon at recent Jackson Hole economic summit.

But why would they all agree to do that? It seems that they might attempt an agreement NOT to do it, but I can't think of the reason that they would all agree to devalue all currencies.

Other possibility is that everyone is devaluing to protect their trade balance

THIS, I could understand.

and/or water down their sovereign debt

Or THIS, I could also understand.


We have a standoff between the producer nations and the consumer nations in terms of debt & who owes whom. The famous Romney quote about 47% that is being bandied about now didn't mention his other comment about a conversation he had with a former NY Fed governor concerning debt issuance:

My DSL connection is crap today, or I'd link the piece that ZeroHedge has on it. Our trading partners are no longer buying our debt, so the Fed must. The remark of note (paraphrased) was: "When the Fed has bought all of our short term debt, we will have a failed Treasury auction, and then interest rates will have to rise." For some reason, the "news" channels didn't think that part was important (to them).

Production, who pays for it, and whose rules are followed - are all issues. Note that the countries we shipped our manufacturing to do not have to comply with our labor laws, our environmental laws, the Kyoto "global warming" protocols, or any of our job-killing regulations. Currency manipulation is a finite way to deal with these points of contention without having reached any amicable understandings. Things aren't going well, apparently.

Who's next? Well, once the Fed owns all of the short term debt - if budgets aren't cut and taxes raised dramatically (not just on the top 1%, but ALL taxpayers), then I would venture to say that rates will jump the shark and hit warp speed on the way up, OR the currency will drop like a stone at warp speed to about 1/100,000,000th of its current value. Good for gold, bad for everything else.

I s'pose that's why cohodk and roadrunner are talkin' super short positions on Treasuries, because short term T-Bills are proxies for cash in this environment, (or so I read).

derryb

<< <i>probably agreed upon at recent Jackson Hole economic summit.

But why would they all agree to do that? It seems that they might attempt an agreement NOT to do it, but I can't think of the reason that they would all agree to devalue all currencies. >>


Devaluation by one country will create trade imbalances that can penalize foreign trade partners. By reaching an agreement to devalue across the board, foreign trade (imports/exports) remains somewhat balanced thus avoiding the need for trade wars and sanctions to accomplish a rebalancing. For any imbalances that are expected, there was probably agreement also reached on compensation such as limits on quantity or price of imports/exports. The agreement was probably set for the benefit of the ECB and the EU. ECB QE promises have delayed their trainwreck. Look for QE to now be a coordinated global effort. This means more QE and more often - thus the unlimited QE we now witness. Look for more QE partners to sign up.

roadrunner

I s'pose that's why cohodk and roadrunner are talkin' super short positions on Treasuries, because short term T-Bills are proxies for cash in this environment, (or so I read).

I haven't ever shorted treasuries. Wouldn't even consider that until the FED (or their primary dealers) no longer are buying unlimited treasuries. And as far as I can tell, they have an infinitie appetite for them as long as they have otc interest rate contracts to leverage/link to. This means the $50-$100 BILL that are sold each month can be "financed" with as little as $1-2 BILL. Bill Gross learned this lesson the hard way in the 1st half of 2011 when the big banks stacked another $100 TRILL in otc derivatives on to their plate. Interest rates looked to be rising as the year dawned, then plummeted due to this extra influence. Until this mechanism becomes broken, don't fight the FED. The big banks have been heavily short the US dollar most of this year. In the past several weeks they are finally able to start cashing in on those shorts and slowly building up their long positions.

derryb

<< <i>I s'pose that's why cohodk and roadrunner are talkin' super short positions on Treasuries, because short term T-Bills are proxies for cash in this environment, (or so I read).

I haven't ever shorted treasuries. Wouldn't even consider that until the FED (or their primary dealers) no longer are buying unlimited treasuries. And as far as I can tell, they have an infinitie appetite for them as long as they have otc interest rate contracts to leverage/link to. This means the $50-$100 BILL that are sold each month can be "financed" with as little as $1-2 BILL. Bill Gross learned this lesson the hard way in the 1st half of 2011 when the big banks stacked another $100 TRILL in otc derivatives on to their plate. Interest rates looked to be rising as the year dawned, then plummeted due to this extra influence. Until this mechanism becomes broken, don't fight the FED. The big banks have been heavily short the US dollar most of this year. In the past several weeks they are finally able to start cashing in on those shorts and slowly building up their long positions. >>



Well said. TBT is my ace in the hole but it is definitely the last card to be played.

cohodk

Im not ready to short them either--Japan has kept rates low for 2 decades. The 10yr yield is still in a downtrend but may be basing.

jmski52

Where was I reading that? ZeroHedge, I think. When Twist uses up all the remaining short term Treasuries and they are all bought up by the Fed and then more longterm debt keeps being issued - in addition to the short term debt that Twist is re-issuing as long term debt - that is when something's got to give. Correct?

Either the economy starts paying its way, generating enough tax revenue to PAY for the interest on the debt (and government spending), or taxes get Jacked Way Up in addition to the yield curve becoming "quite a bit" steeper, probably with the whole darned y-axis rising significantly off it's baseline as well. None of this is good for any kind of real commerce. On top of all that, God knows - they probably won't reduce spending.

This results in a major recession, and in money becoming very dear. Can't have that type of depressionary deflation, so hyperinflation is the only other option. I report, you decide.

Hint - (gold is your friend).