In 2013, Kyle Bass from Hayman Capital predicted a loss of confidence in the Japanese Yen, and that the dollar will consequently rise far over the 200 yen.
Kyle argued: “you have to realize when your debt is 24 times central government tax revenue, and you have a secular decline in population…what happens when you have a debt crisis? Well, your currency collapses.”
We never believed this would happen, and as we wrote in February, we expect the Japanese Yen regain value. Since then the yen rose more than 10%.
We cannot understand how Japanese public debt can crush the Yen as long as foreign investors do not hold Japanese debt. Japanese fiscal and monetary policy kept the Yen relative cheap and Japanese authorities struggled to prevent the Yen from gaining value. We cannot follow Kyle Bass reasoning. Unless you assume the Japanese public debt was issued to foreign creditors to keep the Yen expensive as is the case with the dollar, Japanese government debt cannot crush the currency. Continue reading
The US alternative media rightly like to point out how the big banks buy their influence in Washington, but they purposely fail to mention another more powerful interest group, with much more influence. For every dollar a lobby group donates, it wants something in return. According to our analyses, the big banks are not the principal contributors who pull strings in Washington. The money trail shows another influential group that have put their wealth and money behind both candidates.
Presidential candidates have always had their political action committees (PACs). These collected money from donors and used it for the campaign. Traditional PACs must abide by strict limits: the money can only be accepted from individual contributors (corporations and labor unions excluded) and its amount is strictly limited.Super PACs differ from traditional PACs in that they are allowed to collect money in all amounts, from individuals as well as corporations and labor unions on condition that (i) this money will not be given directly to the candidate nor (ii) will the expenditure of the money be consulted with the candidate.This has opened up quite new possibilities to the presidential candidates. Continue reading
Since Turkey has become a hostile country to Europe, Turkish citizens in Germany, Belgium and in the Netherlands as well as Germans, Belgians and the Dutch of Turkish descent may be used by the relentless President Recep Tayyip Erdoğan against European governments and states. The Turkish diaspora in Germany alone makes up three million people and most of them support the presidential AKP party. The political clout of Turks living in Europe could be seen in Cologne, where 40 or even 50 thousand Erdoğan’s supporters gathered, waving Turkish flags. It was the Turkish President’s test or show of force, whose message to Angela Merkel was: “Watch out what you are doing, because refugees are not my only weapon”. Continue reading
China is by far the most powerful contestant. Neither the Philippines, nor Malaysia nor Vietnam can compare, though they, especially Hanoi, dare to put up a fight and stave off the encroachment on its sovereignty. China, true, is willing to sit down to the negotiation table, yet insists on bilateral talks; the smaller contestants prefer group talks. And they all look to the United States, if for different reasons. China is trying to expand its regional clout, the smaller countries are defending their rights. And the United States? Failure to respond to the Chinese challenge entails serious consequences such as damage to Washington’s status of the world superpower and loss of American credibility, not only in the eyes of the few South-East Asian nations concerned but also others, like Japan. The eyes of the world are thus focused on the South China Sea.
Author: Tomasz Gruszecki
Gold has always been and remains a measure of trust in currencies, especially since we have fiat money, money that is backed up by trust. That is the reason why during crises it becomes a benchmark of the value of money. The present-day monetary world cannot be regarded as anything but normal.
The main world central banks appear to have come to the end of interest rate easing and stimulating growth. Some of them have entered in a weird world of negative interest rates. Continue reading
Holding US assets is not as safe as it is thought to be since interest rates are artificially low, and the US dollar is artificially high as a result of the coordinated actions by central banks. The Bank of Japan’s and the European Central Bank’s monetary policies such as sub-zero interest rates and quantitative easing not only drive down yields, but it also drive up the price of the dollar and US Treasuries.
The strength of the dollar cannot be explained from the US trade balance nor the health of the American economy or the predicted worsening of the US deficit. Americans have been consuming more than they have been producing for decades. Such a comfort cannot last for ever: one of these days debtors (consumers) will have to pay back their creditors. When investors start to withdraw their investments from the US, the dollar will lose its value rapidly. Many have wrongly prophesied the demise of the dollar: it has not happened as yet, but that is not to say it never will.