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From my fav currency guru, Chuck Butler, from the Daily Pfennig newsletter



The currencies had a good day yesterday, adding onto their gains from the night beforeâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚¦ I have to say that this is the first time Iâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢ve seen a good trading day for the currencies following good overnight trading for the currencies, in what seems like a month of Sundays! Iâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢ll tell you one thing, economists and analysts are split down the middle, with Ãâہ¡ÃƒÆ’‚½ of them saying the dollar is King, will remain King, no questions asked, and the other Ãâہ¡ÃƒÆ’‚½ of them saying that once the Oil contracts begin to take the dollar out of the picture, and trading countries us their own currencies, then the trap door springs on the dollar, and suddenly, everyone begins to fret about all the debt the U.S. accumulatedâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚¦.


So, go ahead and pick your sideâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚¦. Iâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢m of the opinion that weâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢re going to see a change in the financial system, and that dollars wonâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢t play as big a part as they do nowâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚¦. This has been going on for some time now folksâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚¦. You see, the Fed, was bailing out foreign entities, without Congress or the public knowing about it, back in 2008âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚¦. Well, the President has put a stop to that, and even with the Fedâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s new Unlimited amount that they can buy, they had better make sure itâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s only from U.S. Corporations/ banksâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚¦. This lack of dollars overseas has become a real problemâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚¦ Thereâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s a ton of dollar denominated debt coming due overseas, and they donâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢t have enough dollars to pay them offâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚¦. So, what will these foreign entities do? They will search for ways to go around dollars, so that this never happens againâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚¦. Uh-ohâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚¦.. And that will be the beginning chip to be thrown on the poker table, that will lead to a big pot, that causes a collapse of our financial systemâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚¦. Iâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢m just sayingâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚¦



HONG KONG âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€šÃ‚ Companies in the Asia Pacific need to raise a near record $69.3 billion to refinance their existing borrowings in the second quarter, Refinitiv figures show, as the region's capital markets remain turbulent due to the coronavirus pandemic.


The level of U.S. dollar corporate debt due to mature in the region, including Japan and China, is the second highest on record and only slightly behind the $71.4 billion that was due during the same time last year.


Some of China's largest state-owned enterprises are the leading contenders to refinance debt with oil giant Sinopec Group, which has a 5-year bond worth $2.48 billion maturing in April while power utility State Grid has a three-year $898.5 million bond expiring at the same time, according to Refinitiv.


The data shows a Soft Bank Group bond worth $2.48 billion due to mature on April 18, and the conglomerate flagged it planned to carry out $41 billion worth of asset sales to buy back shares and pay down debt.


Of course the other option is to default on Debt. According to the WSJ, Lebanon is about to do just that


Lebanon said it would default on its dollar-denominated debt, intensifying the Middle Eastern stateâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s financial turmoil and setting up a possibly messy negotiation with foreign investors.


Beirutâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s failure to honor its massive debt load was long expected and not related to the economic turmoil caused by the coronavirus outbreak. But it comes at a time when the global financial system is on edge.


Argentina may well follow suit fromBuenos Aries


Argentina is already admitting that it cannot meet its original March 31 deadline for debt restructuring, the Bloomberg news agency reported Friday, saying the government intends to roll it over until May 7, when a major payment of US$ 1.4 billion falls due.recent series of conversations between bondholders and government officials have converged towards that date as the moment of truth for avoiding default, according to sources privy to those meetings.


Restructuring talks could stretch to the end of May or even several months in a context of global crisis and coronavirus, according to other sources.


Furthermore, there are fears that continually plunging bond values will eventually place them in the hands of the holdouts âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ more commonly known in Argentina as the los fondos buitre, or âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“vulture funds.âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‚ÂÂ


A payment of US$ 1.9 billion to the Paris Club will also be falling due in May but the government is confident that an extension can be negotiated, Bloomberg reported.


And from the Institute of International Finance

The following is a quote, but the SS limits the numbers of block of quoted texts.


Global debt across all sectors rose by over $10 trillion in 2019, topping $255 trillion. At over 322% of GDP, global debt is now 40 percentage points ($87 trillion) higher than at the onset of the 2008 financial crisisâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€šÃ‚a sobering realization as governments worldwide gear up to fight the pandemic.


FX debt in EMs now exceeds $5.3 trillion. Excluding China, FX debt makes up 20% of EM debt outside the financial sector.


Over $20 trillion of global bonds and loans come due through end-2020; $4.3 trillion of that in EMs. Emerging markets will need to refinance $730 billion in FX debt through end-2020.


With the COVID-19 fiscal response in full swing, the global debt burden is set to rise dramatically in 2020; gross government debt issuance soared to a record high of over $2.1 trillion last month, more than double the 2017-19 average of $0.9 trillion.


As social distancing becomes the norm across most mature economies, global recession looms: a recession which would begin with $87 trillion more in global debt than at the onset of the 2008 financial crisis.


Using a simple top-down estimation, if net government borrowing doubles from 2019 levelsâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€šÃ‚and there is a 3% contraction in global economic activity (nominal terms)âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€šÃ‚the worldâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s debt pile would surge from 322% of GDP to over 342% this year.



Just another reason to be wary.


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  • 8 months later...

From Chuck Butlers daily email

I read last week that Twenty-five percent (25% or 1/4 ) of all US Dollars to ever be in existence were created in the last nine months. And that’s before they added another $900 Billion!


I decided to check on this one, and the closest I could get to was the graph at The Street that suggested 23.6% of all USD in history were created in the past year.

Reasonably close to Chucks claim.


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Was more than a little surprised at the rally of the USD in recent days.

Its not like the fundamentals are anything to write home about.

Apart from the massive deficits the US government is running (and about to increase by 2 trillion if congress gets its way), the COVID induced decline in jobs, US consumer confidence taking a battering, and US home sales declined last month, everything is rosy.

Just can't seem to work out reasons for the love for the USD.


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  • 2 weeks later...

From Goldmoney


The most important event in the new year is likely to be the Fed losing control of its iron grip on markets. The dollar’s declining trend is already well established against other currencies and commodities, leading to this outcome.


Events in 2021 will be the consequence of a developing hyperinflation of the dollar. Foreign holders of dollars and dollar assets — currently totalling $27.7 trillion — are sure to increase the pace of reducing their exposure. This is a primal threat to the Fed’s policy of using QE to continually inflate assets in the name of promoting a wealth effect and continuing to finance a rapidly increasing federal government deficit by supressing interest rates.


Bubbles will then pop, leaving establishment investors exposed to a combined collapse of fiat currencies, bonds and equity markets, which could turn out to be very rapid. The question remaining is what will replace collapsing fiat currencies: limited issue distributed ledger cryptos, such as bitcoin, or precious metals, such as gold?


The above quote is but a synopsis of the rather long article, but well worth a read IMHO.

I am not convinced about the conclusions , that Gold will be paramount over the other asset classes, I think there is an equal chance that Bitcoinn or some other VC will be paramount, I just don't know.


To be forced to raise more through monetary inflation than by taxation in one year is unfortunate, but to have to do it two years on the trot is venturing down the path to hyperinflation


One of the interesting charts is the increases in commodities and other asset classes since the trigger point in March.

The cryptos have been many timers more successful than anything else.

The Commodities choses have all outstripped gold in the time frame, and gold has in turn outstripped the other major currencies.

If the CB's decide to all go down the crypto path, I can't see how they will not be tempted to merely make them a digital fiat currency.

I can see bigger increases for both gold and BTC.



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We are on that path: No doubt.

But I suspect he's premature.

As I've watched over the last 20 years, bubbles (in this case, faith in the currency) last far beyond what any 'sane' person believes possible: Our Australian Housing bubble being the most astounding thing I've ever seen: Even in the face of a first recession in 30 years, the deepest on record, the worst unemployment on record, and the chance of rates for borrower lowering further are near zero: House prices continue to RISE!!!!!

And I believe this is why currency collapses are so sudden and spectacular: most people can't believe it will happen, until it does.

I agree with jacsar: Gold could be the trade of our lifetimes at present.

My position is all in: All in on:Profit spewing companiesCritical InfrastructureCash/liquid equivalents

The 'crash' of 2020 wasn't complete: There was never the panic of 2009 or the dot com era: I didn't see people panicking about their future: there was no despair.

I'm poised to scoop up the bargains when they come: My 'trader' mate tells me it's 2021 that it will come.Then we'll see the most outrageous boom in asset prices.... all due to government and central bank interference of course (capitalism and the real economy are long dead).

Then by the end of the decade it all falls apart: Properly. In a way 95% of people simply can not understand or believe is possible: They are so used to the government and central banks rescuing them, they will scream in the streets for help: But it will be too late: We will have past the point of new $$$$ being able to create the illusion of growth or stability.

Their house prices and their superannuation accounts will be steaming piles of worthless gunk, that they won't be able to off load.

And it's all on track: Doesn't matter if you're a 4th turning guy, or a jefferson guy "first by inflation, then deflation, the children will find themselves homeless".... The only theory doesn't have this collapsed ending is MMT... and don't get me started on that rot: There's nothing modern about governments printing and spending money they don't have.


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  • 1 month later...

From Zero Hedge

Did Powell give everyone the green light to just keep buying stocks for the next two years?


Just hours after the latest CPI number came in lower than expected, with core inflation printing unchanged, and sparking a 10Y Treasury short squeeze which sent yields sharply lower, the Fed’s Powell then said that we will probably see an increase in inflation readings in coming months... but “that won’t mean much.†So, as Rabo's Michael Every says "getting hotter – but please let’s focus on the colder parts."


But here is the punchline: Powell explained that the latest 6.3% unemployment rate is not indicative of the economic reality, and underlined that the US economy is 10 million jobs down from where it was a year ago.


So, as Every notes, to replace all these lost workers by end-2022 - when consensus expects the first rate to take place - and accounting for natural labor-market growth, means we will need an average payrolls figure of over 500,00 every month through to next December

As the Rabo strategist notes, "that’s an awful lot of heating up."


And since it is virtually assured that the US economy won't be adding half a million people per month for a long time, it is safe to assume that the Fed's rate hikes - as per Powell's guidance - have been put on indefinite hold.


Which is why Every concludes that "markets will continue to do all the heating for the labor market, and very happily. Like a microwave meal, we are overheating some parts and leaving others cold: no central-bank rhetoric is capable of stirring things - is the government?".


So, with no rates increase, its game on. t

The stock market will keep going up, which of course is inhabited by the rich, so their already bulging pockets will be even "bulgier" (is that a word???). As I have said before, doesn't matter who is the POTUS, who runs the two houses, who runs the media, in the end the elites who have the power and the wealth only get more of each.

As for the poor, well they will continue to rely on government handouts, so of course will continue to vote for whoever promises them the most.


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