cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Veteran Advisor

world currency stuff

Well the fix is still in. Everyone wants to bash USDA but it seems little attention is placed into the Monetary Manipulations of the powers that be.

 

http://www.marketwatch.com/story/thank-europe-for-the-stock-markets-next-rally-2014-04-02?dist=befor...

 

an excerpt:

 

 

Even the hardliners on the Bundesbank are coming to the conclusion that the time to act has arrived.

Last week, the Bundesbank President Jens Weidmann argued that the ECB might soon have to start buying bank assets or government debt directly in the market. The widely held view that the ECB’s mandate prevented it from printing money was wrong, he argued. “This does not mean that a QE program is generally out of the question,” Weidmann told Market News International.

There’s nothing too surprising about that. Even the high-priest of monetary conservatism Friedrich Hayek warned that deflation could be as dangerous as inflation. Still, with the Bundesbank on board, the chances of the ECB launching a monetary blitz have increased dramatically.

Whether the ECB moves immediately or waits another month remains to be seen. The ingrained conservatism of Europe’s central bank suggests it may well sit on its hands for another month or perhaps two. But some form of QE is now a done deal. Once prices are falling across the continent, and now that the legal argument has been dismissed, what possible reason can there be for holding back? The arguments about how deflation can crucify highly indebted nations — such as all the peripheral euro-zone countries — are too familiar to need to be rehashed. The single currency won’t survive a sustained period of falling prices and everyone knows it. The ECB’s mandate is stability — not a collapse in prices.

 

So in the fashion of all pre magna carta powers these guys just make up the laws. They don't apply to them so to speak.  The situation is so dire many will say that we must suspend the laws that govern our monetary policy and do what is best for the moment.

 

Hogwash!

 

 

More from the article.

 


How much QE will the ECB unleash? Germany’s DIW economics institute came up with the number of $60 billion a month. That is probably on the low side. At its peak, the Federal Reserve was pumping $85 billion into the American economy. Given that the euro-zone economy is about the same size, it will take at least as much QE to have any impact. You could argue for more — the euro-zone is in worse shape than the U.S. ever was. Whatever the final decision, it will have to be a lot to have any chance of working.

 

Well his number is a little low but that was the published rate.

Now he states so much truth it will blow your mind.

 


The one thing we know for sure about QE is that it boosts asset prices — and not just in the region where the money is being printed. It spills into markets around the world.

 

The reason for $7 dollar corn? You betcha!

 

SO what happens next?

 

 

This bull market has been driven by central banks printing money, mainly in the U.S. but also in Japan and the U.K. The Fed is gradually winding down its program, and the U.K. is unlikely to roll out the presses again given the strength of its recovery this year.

But the ECB has so far stayed out of the game. If it starts its own QE blitz, that will inevitably give the markets a fresh boost. It will help stock markets in Europe, of course, since that is one of the main ways printing money boosts the economy. But it will flood into the emerging markets, the U.K. and U.S. just as much, in the same way the Fed’s program boosted other markets around the world. It might even boost world markets more than Europe’s. Investors will take the ECB’s money and put it into economies with stronger growth prospects than Germany, France or Italy.

 

And the US is gonna have to figure a way to get some of that money here!

 

But like all fairytales and monopoly games good things come to an end.

 


The bull market will come to an end at some point — they all do. But the ECB is about to extend its life by another 12 to 18 months.

 

For those that haven't ben following China and Russia have dumped huge amounts of US treasuries and the fed has been buying them up.

 

So it will be interesting to see what things calamity Janet and her merry band of outlaws do to fight this one. If the ECB does this, it willl probablycause a low to come in somewhere about the middle of July to the first of Sept. as the hedge funds start to move to the off shore gaming table. Our dollar will become stronger as the euro weakens in the face of this new policy change.

 

So if you need cash from your crop next fall better lock in prices before the ECB announces that they will be cranking up the Xerox machine.  Other wise be sold out of old crop this spring and wait for next winter for new crop sales.

 

OR not.

0 Kudos
19 Replies
Highlighted
Honored Advisor

Re: world currency stuff

Hey Jr, there are some black schwanns out there for the US dollar though.  If we tick Putin off too badly, he may sell his oil and gas for other things besides the "petro-dollar".  China will dump the petro-dollar the moment that they see it`s to their advantage.  Right now, there rest of the world sees a strong US dollar as a good thing, it makes it easier to sell us their Walmart junk.   But, they have to really be miffed that we can just print up money whenever we need to bail ourselves out.

0 Kudos
Highlighted
Honored Advisor

Re: world currency stuff

JR: I was with you up until the last paragraph about grain marketing. The results of fiat currency creation are widely known and understood by all with investable (+$1mil) assets. It is just that most believe they can beat the game by switching to something other than paper right before the paper implodes. Maybe they will, doubtful, but everyone dreams.

 

The last paragraph about grain marketing just confused me. Care to elaborate.

0 Kudos
Highlighted
Honored Advisor

Re: world currency stuff

QE, when it comes from a large player in the world economy has fallout and increases prices not only in it's area but in others as well. If that is the case wouldn't grain prices in real terms also be bouyed too?

 

The prices of real goods and services always get more expensive in real terms. Only debt is easier to service. (for a while)

0 Kudos
Highlighted
Veteran Advisor

Re: world currency stuff

BA that is why I said corn would make a low this summer............The Dollar will continue to get stronger hence the price of corn WILL go lower.  Reasoning behind the lower dollar is that with the heavy influence of the euro on the index that currencies weakness will drasticaly lower our dollar.

 

Yea Puttin is out there,  The Russian, China, Iran, and India alliance is certainly in it's infancy but I think it will need 12 months or more to really mature. If it happens ooner all our prognostications and projections will be wasted as in cyber space you can't even use the paper for its best "end use".

0 Kudos
Highlighted
Veteran Advisor

Re: world currency stuff

Oh fudge cicles....... I didn't explain myself real well. Had to talk to wife before she went off towork and lost my train of thought.

 

My inclination is that when the ECB starts the QE thier currency will get weaker. The short term effect is that our dollar gets stronger. As it does our commodity prices will fall as they are priced in dollars. it will be exaserbated by the fact that Hedge funds will take thier money to another market where the return is greater. Wether that is Europe or an EM I don't know. So for a time things are unbalanced.  So this year like so many in the past it will be a good thing to have bins.

 

Yes there will be local opportunities to make some money on late summer corn and bean sales I am talking about the big picture and the futures mkt.

 

May still not have explained myself real well.

0 Kudos
Highlighted
Veteran Advisor

Re: world currency stuff

OK maybe a better answer for time is this.

 

I think fall prices will be higher now so if you need cash this fall Do a contract or use a futures position for those bushels. If not be aware that price may be at the peak now and will grind lower till after harvest and then will move back up. 

 

I need more coffee!

0 Kudos
Highlighted
Contributor

Re: world currency stuff

It is amazing the impact QE has throughout the world.  I recently watched a BBC report on Thailand economics.  Their #1 economic problem by far was what will happen to their economy when our QE ends.

0 Kudos
Highlighted
Honored Advisor

If there isn`t enough `isms`, now `creditism`.

This from Bill Bonner could be kind of a companion piece for your thread, Jr. 

http://www.dailyreckoning.com.au/how-the-us-economy-changed-the-nature-of-money/2014/04/01/ 

 

 

To keep things vertical, credit has to grow at 2% annually, there`s alot of things that can knock that off course and the danger is Janet will "over correct".   I`m scared to committ to a new crop sale, given the ify spring and the petro-dollars that I`d be contracting to recieve.   But I have to admit, $5 would git my trigger finger itchy.

0 Kudos
Highlighted
Advisor

Re: If there isn`t enough `isms`, now `creditism`.

Probably best to put the general dislike of the Kenyan Socialist Muslim and admiration of Vlad on a side shelf for purposes of analysis.

 

The central credit fact of the last 5+ years is the historically unprecedented expansion in China.

 

Chinese communist party technocrats have been remarkably capable in handling the economy thus far and I don't really have a clue how it will play out or in what timeframe.

 

Although if anyone happens to actually believe in any of that old Adam Smith or OMG, Von Mises/Hayek stuff they might find it troubling.

 

BTW, was visiting with a fellow who advises Chinese university students. He said that those kids who have Maseratis and such, their parents aren't entrepreneurs, so much. They are mid-level party officials.

 

 

0 Kudos