Friday, April 17, 2009

World Reserve Currency. V.

Today I elaborate on the prospects for the future of the World Reserve Currencies [sic].

Since World War II the United States of America has been the engine of growth for world trade and economic development. What evidence is there for this ? The US decadal trade deficit proves that conclusion. The people of the US have been willing, and the government has permitted them to, buy everything they wished to buy from the other nations of the world. Those nations received dollars that they used to buy the goods of other nations or to invest in US government debt to provide a base of value for their own local currencies. Or they could buy US real estate, stocks, or even whole companies. The high relative freedom in, to and from America gave confidence to all those dollars were worth something. The stable US republic and its military might gave confidence to all that the US was going to be there - period, full stop.

Now due to demographics and barring a new boom in immigration, the US population will level off and slowly age in future decades. From Marketing 101, the prime spending years of households is in the 25 to 49 age bracket. Some might say 54 is the upper limit to relatively high spending. In either case, growth in numbers in that age cohort will stop. The US over time will certainly stop importing more goods and services from other nations. The recent US trade deficit numbers show this fact and the trend rather clearly to anyone who wishes to look with an open mind.

That means fewer dollars flowing overseas to other nations' central banks. That means lower growth in their monetary bases. That means overall, lower growth in the world's money supply. And from simple monetary economics, that means lower world economic growth. Money supply growth is a necessary condition to economic growth - read Milton Friedman's work. Yes, lower ... unless other nations step up and start buying with their currencies.

What will that do ? That will provide a start to multiple world reserve currencies. This is a good thing, but will take decades to occur as the confidence in those currencies like the Euro or yen will take a long time to build. [Forget about the Chinese yuan until China becomes a stable democracy - maybe in 100 years. Ditto the Russia and the ruble.]

What about the IMF's "special drawing rights? Laughable. Does anyone have "confidence" in the UN ? Hahahahahaha.

For all the talk about other world reserve currencies, the simple truth is that the ball is in the court of other nations. If a nation (or nations) wants its (their) currency to be a reserve currency, prove it. Hello Europe, China ? Make yourself into a stable republic. Build up your own military ... for defensive purposes. Encourage your citizens to expand there horizons and BUY ! That goes to Japan, too. Prove you have staying power and are trustworthy. And economically expansive and free. Stop bloviating. You can do it in ... in 50 years, perhaps.

Markets

Why does receipt of a Nobel Prize for some sophisticated work in economics make these guys experts on banking ? I guess that alternate name for that prize might be the "Great Badge of Ego".

Word of the Day

"Tenebrous" - adjective [$10] literary; many adjective, verb and noun $1000 variations with the root, tenebr- exist, such as "tenebrity".
Tenebrous means dark, gloomy.
Sentence: Bunkerman is sick and tired of hearing endless tenebrous bloviations about the world economy, that all just seem to say, it's bad out there so it will stay bad. If that was true, the world would still be in the Great Depression of 1893 [sic !!!].

Le Mot Du Jour

"Homard" - noun, masculine.
Homard means lobster.
La Phrase: Selon l'homme du bunker, le homard est simplement un véhicle pour mettre de buerre dans la bouche.
Sentence: According to Bunkerman, lobster is simply a vehicle for putting butter into the mouth.

51 comments:

Bunkerman said...

Cleveland Indians crush Yaknees, 10-2 !!!

I'm an Indians fan first.

Yayyyyyyyyyyy Indians !

Go Tribe !!!

Scalp'em !

Bud said...

nuthin tenebrous about C or GE earnings


wither armageddon ?



PS...GS goin to 200 ???

Bud said...

scalp 'em



LMAOOOOOOOOOOOOOOOOOOOOOOOOOOOO

Bud said...

IMF


what a bunch of bureaucratic know-it-all pompous america-haters


of course our new president bends over for them

Bud said...

oh man

checked my private email..........no ops expo open interest spreadsheet............how am i going to put food on my table today

i guess i'll have to stick to l'aquarium de requin..........and what an incredible week it has been



'merci jim'

Spin-em said...

"crazy azz market"

mfl59 said...

I repeat...."jim" couldnt find his dick with 2 hands and a map...

name the movie for a case of rocks...

Bunkerman said...

I heard yesterday from my shooting buddy that Ruger, the gun maker, also makes many golf clubs for the brand names, etc. They have the shills in casting high qualits steels.

Bud said...

shooting buddy ?? travis bickle ?


name that movie

Bud said...

speaking of travis bickle

saw Observeandreport.......with seth rogen

entertaining movie......ronnie barnhardt sort of a travis type character........the scene at the shooting range reminded me of the Bman

Frosty said...

GE and C not ripping higher this morning wtf...you can make up your own #'s, mark to profit...they don't get it, pay back tarp, big bounus time...gesh...is that guy that runs C a Paki...he looks like a Paki.

Bunkerman said...

oops .. skills

Bunkerman said...

frosty being tenebrous ...

Bunkerman said...

those were good earnings ... contradicting the "Depression" doomsters.

mfl59 said...

Yes C very impressive....it only took a billion in bailout $ to turn a profit....

Bunkerman said...

mfl tenebrific [$1000], too.

tenebrific -> producing darkness.

Bunkerman said...

hmmm this blog seems to be a study in contrasts of light and dark.

Now I have Monday's word of the day ... hehe from the art world.

Frosty said...

Uh Bunky...hardly tenebrous...for GE the seasonally adjusted loan-loss provision stood at $9 billion, or about $3 billion less than the base case articulated in the company's investor day last month...if you are going to make it up, do a better job than that.

Bunkerman said...

uh ... I suppose the losses couldn't be as bad as a conservative "base case" ?

Frosty said...

GE sold half...these guys need to learn how to cheat...they should take a lesson from aazzhead, certain his yhoo hcp headed to scratch to justify recent expenditures.

Bunkerman said...

uh .. so what's so bad about selling half and taking the loss ?

All is not tenebricose.

tenebricose [$1000 ADJ rare ] = full of darkness; dark; gloomy; obscure

mfl59 said...

Bunkerman is Joe the Plumber a hero to every native Ohioan?

Bunkerman said...

nope.

He never came up on my visit there over the holidays.

Spin-em said...

loool

mfl59 said...

yes that makes sense...the country club crowd tends to eschew ($10) such folks

Bunkerman said...

country club ... hahaha

more like the rifle range crowd.

Bunkerman said...

WASHINGTON -- The Federal Bureau of Investigation earlier this year launched a nationwide operation targeting white supremacists and "militia/sovereign-citizen extremist groups," including a focus on veterans from Iraq and Afghanistan, according to memos sent from bureau headquarters to field offices.

The initiative, dubbed Operation Vigilant Eagle, was outlined in February, two months before a memo giving a similar warning was issued on April 7 by the Department of Homeland Security.

Disclosure of the DHS memo this week has sparked controversy among some conservatives and veterans groups. Appearing on television talk shows Thursday, Homeland Security Secretary Janet Napolitano defended the assessment, but apologized to veterans who saw it as an accusation

My shooting buddy was really pissed off about this. This really stinks.

Bud said...

that was disgraceful Bman


she should have been fired for that comment........ya...let the dirtbags in gitmo go free........and suspect the veterans coming home

mfl59 said...

Joba Chamberlain...lmaoooo

have another drink son.....

Bunkerman said...

sheesh, it's ridiculous the pay of a lot of these CEOS - I'm voting against most of them.

Frosty said...

Bunky..everyone on CNBC worried about BAC earnings...Ken Lewis knows how to lie cheat and steal...he could even teach the paki bros aazzhead/pandit a thing or two.

Bunkerman said...

true re Ken the Cad - there's a big movement to vote agasint him as a director.

He's got to make earnings look good to save his job & fat pay.

I suspect he'll put lots of filler in that sausage.

Bud said...

listen bob

i heard you the first time......that pandit 'joke' wasn't funny in the morning.........and it ain't funny now

anyway , shouldn't you be workin on your stupid ops expo trades

Bud said...

what an incredible run sharkinvesting.com has had


shippers ....nailed

solars....nailed

banks...nailed


reits....nailed




'merci jim'

Bunkerman said...

For all that, Bud, you should be saying ->

Merci beaucoup, Jim. Puis-je baiser votre pieds?

Or

Puis-je faire briller votre chaussures?

Bunkerman said...

translations:

Thanks very much, Jim. May I kiss your feet?

May I shine your shoes ?

Bud said...

no problem


Merci beaucoup, Jim. Puis-je baiser votre pieds?


anyone who lets me eat 3 warm meals a day......a roof over my head.......i am ever thankful for

Bunkerman said...

Even more sincere ->

Puis-je baiser votre cul ?






***Bman is dying laughing typing !

Bud said...

once again , no problem


Puis-je baiser votre cul ?



i'm not a proud know-it-all pompous ass like you pricks......i give credit where it's due........what a f'ng bunch of sore losers


l'aquarium de requin c'est magnificique !!!!!

Bud said...

joba chamberlain gettin lit up



LET'S GO YANKEES !!!!!!!!!!!!!!!!!

Frosty said...

LMAOOOO ...double paki smack...very JJ Putz like indeed.

mfl59 said...

"i'm not a proud know-it-all pompous ass like you pricks..."

is that the witty strategy or the humor strategy?

Frosty said...

OIH and RTH break out together...is it ops expo...I think so.

Bunkerman said...

not sore loser ... Obama Fund and Fido Fund are doing very well this year.

Have all those except solar (which I despise on principal), plus more big winners.

Bunkerman said...

btw, "cul" means "ass" (just to be open).

Lêche-cul measn ass-kisser.

But honestly, for any reader of this blog who subs to the tank, Jim really should kick back $1K to you for the great work on his behalf.

Here is the link:

http://www.sharkinvesting.com/

Tell them Bud sent you.

And don't mention Krypto or Bunkerman - he hates me.

Bunkerman said...

L'homme du bunker, il est magnanime.

Frosty said...

sure not seeing protecton rolling into May...note your ops expo worksheet aazzhead...odd indeed.

Bunkerman said...

azzhead ... hmmm ...

I wonder if that's tête de cul ?

Bunkerman said...

Homemade sausage pizza and bunktinis tonight ... after the circus dog party.

Good week ... sitting on my butt.

Enjoy the weekend all.

Spin-em said...

THE YANKEES WIN

THE YANKEES WIN

THEEEEEEEEEE YANKEES WIN!!!!!!!

HAPPY BIRTHDAY MFL!!!!!

Spin-em said...

i'm not a proud know-it-all pompous ass like you pricks......i give credit where it's due........what a f'ng bunch of sore losers

geez....what a low life...excuse us for taking pride in having the confidence in or own abilities. Son, we live in a world that has walls and those walls need to be guarded by men that take responsibility for their own futures.. Who's gonna do it? You? You, Bud? We have a greater responsibility than you can possibly fathom. You weep for "Jim" and curse the Bunker you have that luxury. You have the luxury of not knowing what we know: that "Bunky's" blog, while tragic to you.. probably saved lives and that our existence, while grotesque and incomprehensible to you, makes us money. You don't want the truth because deep down in places you don't talk about at parties you want me on that wall, you need me on that wall. We use words like honor, code, loyalty. We use then as the backbone of a life trying to defend something. You use them as a punchline. I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very freedom we provide and then questions the manner in which we provide it. I would rather you just said "thank you," and went on your way. Otherwise, we suggest that you take a position on your own and stand a post. Either way, we don't give a damn what you think you are entitled to.