On Bitcoin and recent price action

April 11, 2013 by · Leave a Comment
Filed under: Currency News 

First off I want to apologize for the delay.  College has been utilizing my schedule along with growing involvement in the Bitcoin community.  I start experimenting with Bitcoin in 2010, after reading about it in an article.

I really sat back and read and watched the media and experts describe Bitcoin in every which way possible.  What is clear is the Bitcoin is yet to be defined for it’s highest use value to society, if any.  I am in the camp that  believes “Bitcoin” or some other alternative decentralized currency will be around no matter what.   Is it a currency or is it savings?    The same question I ask about the precious metals.  It is both, but at different times it does one or the other better than most domestic currencies.  That is not to say domestic currencies don’t have their place, because they do.  I pay taxes and wages in one but I that doesn’t mean I have to save or denominate transactiosn in it all the time either.

If you have been paying attention, price volatility and media hype has been at stratosphere levels.    What we are going through right now is the weakest link in Bitcoin (exchanges) are going through the “growing pains” needed for them to professionalize their operations to the level that is needed to handle something of such value.

We have the normal profit herd along with professional operators (that likely some are doing the DDOS action) to cause panics and do things that irrational crowds love to do.  My best advice (not investment advice), is the ask yourself, are you in Bitcoin for the short term gains or long-term building process?  If so, you should operate under that modus operandi so the strong hands can take charge and continue with the building process, we have a lot of building ahead.

Japan’s PM prepares to print money for the whole world

December 18, 2012 by · Leave a Comment
Filed under: Currency News 

Looks like the Japanese Yen carry-trade will be getting a fresh boost by Japan’s Prime Minister Shinzo Abe.  Instead of allowing deflation and defaults happen to get debt levels down to sustainable levels, instead we are going to crank them up to unprecedented levels.  In the end this will not work because your debasing your currency and it is a race to the bottom that ends in making a formerly valued currency, valueless.   Enter in, a new currency.

Here are a few interesting quotes I wanted to point out:

We think this could be the beginning of a fresh reflation cycle for the global system, combining with the US recovery to mark a turning point in the crisis

And

It is tremendously important for global growth, and markets are starting to take note

I read the second quote to say, we have to have more credit creation or we will face debt deflation which we want to avoid at all cost.  It will not be pretty when the music stops.

The Telegraph – Japan’s incoming leader Shinzo Abe has vowed to ram through full-blown reflation policies to pull his country out of slump and drive down the yen, warning Japan’s central bank not to defy the will of the people.

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U.S. Dollar replaced as China Oil trading currency with Yuan

September 17, 2012 by · Leave a Comment
Filed under: Currency News 

This is major news.   Lately with U.S. politics in full swing, I have not found too much worthy news for posting.  Now the summer is coming to a close, more interesting information is pouring out.    It has been covered here before about different non-dollar trading blocks being created.  This will be one of the final nails in the Dollar long-term.

The single most important aspect that has allow us to deficit spend over the decades is the fact that we have (had) the world reserve currency and most important was the Oil was traded almost exclusively in the good old greenback.   It looks like that is now changing and it is changing with the most important player in this arena other that Saudia Arabia…. CHINA.

What is so crucial is that China produces goods for basically the entire world on a massive scale.  That means there is DEMAND for Yuan, just like there is demand for Dollars.   People need to pay Chinese suppliers with Yuan and if they can do it without exchanging them for Dollars first, this can significantly decease the demand for the currency and serious strengthen the demand for Dollar.

Another serious thought for any Geo-political guys / gals that read my blog, there are far fewer options for trying to enforce compliance with the Dollar regime that exists in D.C., Langley and New York.  I believe this is China’s non-military way to force our hand to stop this massive spending spree we have undertaken since the crisis of 2007 to current.   Time will tell if China are completely serious and has the resolves to stick to this.  I thought you would find this interesting.  Please post your comments below on this.

Examiner - On Sept. 11, Pastor Lindsey Williams, former minister to the global oil companies during the building of the Alaskan pipeline, announced the most significant event to affect the U.S. dollar since its inception as a currency. For the first time since the 1970′s, when Henry Kissinger forged a trade agreement with the Royal house of Saud to sell oil using only U.S. dollars, China announced its intention to bypass the dollar for global oil customers and began selling the commodity using their own currency.

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Australia seeking to expand Australian dollar to yuan trading

July 9, 2012 by · Leave a Comment
Filed under: Currency News 

If you have been following our posts, we have covered other countries like the BRICs working on deal to do yuan-based commodity denominated deals.    This is just latest one of these deals.   Being that Australia is so geographically close this makes sense and we will see all countries in that east Asian region do the same over time.   This is a serious challenge to U.S. dollar hegemony.   China is growing and they are taking plays for the American play-book during our industrial rise that peaks after WWII.

Something has to give, I can not see how long U.S. politicians and regulator are going to allow this behavior while China basically operates a closed market and undervalues it currency.   This could even be considered economic warfare in some circles.   I think it is good that we are forced to play nice with other but at the same time, others need to be also brought forward to account for their actions.   I believe some form of protection for native markets is not a bad thing, just as I believe other countries should focus on building their local markets and consumption.

Yes, we need to develop parts of the world so they have better footing, but at a point, national interests are still very important and need to be addressed if we are going to continue this globally competitive world.   If not, we will see more conflict that could turn into more shooting wars or hardcore economic warfare.    That is not a good scenario for any0ne.    If the U.S. good just get to the fact that there is no free lunch and start making the hard choices so we are not so vulnerable to these changes like the ones mentioned in this article.

Business Day - Australia is seeking to deepen trading between the local dollar and the yuan as demand for commodities drives exports to China to record highs.  The yuan’s internationalisation “is clearly in the interests of Australian businesses and the broader Australian economy,” Treasurer Wayne Swan, who will co-host a forum on the matter in Hong Kong next week, said today in a statement. “Both governments are very keen to see us deepen and broaden this important market.”

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China to ‘liquidate’ US Treasuries, not dollars

September 20, 2011 by · Leave a Comment
Filed under: Currency News 

We have two choices, we either need to make the hard choices ourselves or they will be made for us, that is for sure.   Do we want to do it on our terms or not?  This article is troubling is that this could signal a significant decrease in debt buying from our largest purchaser of U.S. Treasuries and obvious are largest trade partner unless you count Europe as a whole.

If this actually come to fruition then we will see disorderly auctions for our debt and in that event, the Federal Reserve will be forced to come in as the buyer of last resort to prop up our debt markets.  Personally, I think this would be healthy for the long-term.  We need some sort of wake-up call to let our government know that they can not continue to keep running deficits and we need to bite the bullet and cut entitlement programs and scale back the size of government.   I do not affiliate myself any particular political party, so please don’t read this and try and box me into some group.

What I am speaking about is just basic math.  For every dollar of debt we have to create beyond what we take in as taxes, either goes into some asset class and that raises prices or into inflation once the economy picks up speed.  We need to live within our means and encourage savings and investment on a major scale.  I have been working on a list of items that would greatly help fix America and get us back into a leadership role on the economic scene.   A major portion of this list addresses entitlements, basically it sets cut-off for the younger generation so we can keep our obligations to our citizens who don’t have enough time to create an alternative plan.   Remember, when you try to help everyone, then you help no one because we will be broke trying.

The Telegraph (Ambrose Evans-Pritchard) -  The debt markets have been warned.

A key rate setter-for China’s central bank let slip – or was it a slip? – that Beijing aims to run down its portfolio of US debt as soon as safely possible.

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