However, you acknowledge that part of the story of falling USD is because of divestment in the USA. So there is a relationship in "losing faith in the USA," at least as it relates to trade. I feel like this can be translated into losing faith in the USD. Admittingly it's a chicken before the egg conversation. But If trade partners no longer want to invest in the USA, making deals with India or China instead as an example, they do not need as many dollars or US treasuries. Thus lower demand for USD with same USD outstanding. This creates velocity, which, in turn, can become speculative, causing more momentum, and a shit into other assets such as gold. So it's all related. There is a supply and demand story here unrelated to credit.
In the middle of reading, right now. I am here: "Roughly 98% of dollars in existence are not green pieces of paper. They are commercial bank deposit liabilities. They exist because someone borrowed them into existence."
One should point out that he means here that, back in 1903 or whenever this saying was come up with, ninety-eight percent of money is not physical cash, but deposits. Says nothing about how much of that comes from private sector banks and how much of deposits come from government spending (matched by bond issuance), though perhaps he is saying that all "deposits are a form of credit."
Edit: If one looks at "ninety trillion" in credit and compare that to say eight trillion in U.S. government created dollars deposits, then perhaps it's ninety percent worldwide is credit?
Interesting perspective; makes sense. However, historically every empire whose currency acts the world reserve has followed the same cycle - inflation, eventual decline, and collapse at different “velocities” and for the same reasons.
The incentives of fractional reserve banking appear to be rather perverse. The effects of empire and its related obsession with comfort and wealth have to consistently induced, spiritual degradation, social atomization, and cultural balkanization. Another aspect is the empire’s competitors attack it indirectly indirectly.
Will it happen to the US? Eventually, it is likely. Is there a way out? There has to be, but I have no idea what it is. When? Not sure. Next year 10 years 50 years?
This was great and makes a lot of sense.
However, you acknowledge that part of the story of falling USD is because of divestment in the USA. So there is a relationship in "losing faith in the USA," at least as it relates to trade. I feel like this can be translated into losing faith in the USD. Admittingly it's a chicken before the egg conversation. But If trade partners no longer want to invest in the USA, making deals with India or China instead as an example, they do not need as many dollars or US treasuries. Thus lower demand for USD with same USD outstanding. This creates velocity, which, in turn, can become speculative, causing more momentum, and a shit into other assets such as gold. So it's all related. There is a supply and demand story here unrelated to credit.
Excellent commentary and analysis as usual.
solid framing
In the middle of reading, right now. I am here: "Roughly 98% of dollars in existence are not green pieces of paper. They are commercial bank deposit liabilities. They exist because someone borrowed them into existence."
One should point out that he means here that, back in 1903 or whenever this saying was come up with, ninety-eight percent of money is not physical cash, but deposits. Says nothing about how much of that comes from private sector banks and how much of deposits come from government spending (matched by bond issuance), though perhaps he is saying that all "deposits are a form of credit."
Edit: If one looks at "ninety trillion" in credit and compare that to say eight trillion in U.S. government created dollars deposits, then perhaps it's ninety percent worldwide is credit?
Interesting perspective; makes sense. However, historically every empire whose currency acts the world reserve has followed the same cycle - inflation, eventual decline, and collapse at different “velocities” and for the same reasons.
The incentives of fractional reserve banking appear to be rather perverse. The effects of empire and its related obsession with comfort and wealth have to consistently induced, spiritual degradation, social atomization, and cultural balkanization. Another aspect is the empire’s competitors attack it indirectly indirectly.
Will it happen to the US? Eventually, it is likely. Is there a way out? There has to be, but I have no idea what it is. When? Not sure. Next year 10 years 50 years?
Is anybody lending money “into existence” for the small businesses that were forced into bankruptcy in 2020? Small farmers?