Haven't I been claiming that Trump was such a buffoon that he might very well wreck the incredible economic advantage that the US enjoys by having the dollar be THE #1 reserve of wealth in the world?

Well, I just read, it's happening!!

Quote:

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President-elect Donald Trump on Saturday lashed out at the BRICS group of emerging market countries, threatening to impose 100% tariffs if they try to "move away" from the US dollar.

BRICS comprises nine countries Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates which are aiming to flex their economic power in a world where the US dollar continues to reign supreme as the leading global reserve currency.

ADVERTISEMENT

Amid Russia's push for BRIC nations to curb the international dominance of the US dollar, Trump took to his Truth Social platform to decry such a move.

"The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER," he wrote. "We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy."

The president-elect continued: "They can go find another 'sucker!' There is no chance that the BRICS will replace the U.S. Dollar in International Trade, and any Country that tries should wave goodbye to America."

During an October summit of the BRICS nations, Russian President Vladimir Putin accused the United States of "weaponizing" the dollar.

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The news article mentions nothing of the threat to the dollar that cryptocurrency is, a movement which he aligned himself with.

There is no threat to the USD.
And certainly not from the BRICS.

That's been a terribly false narrative all along.

PS. The USD hit a 2-year high last week.

DiabloWags said:

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There is no threat to the USD.
And certainly not from the BRICS.

That's been a terribly false narrative all along.

PS. The USD hit a 2-year high last week.

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Recent return rates are meaningless, as history shows:


Historical evidence supports your claim that stock market bubbles often culminate in a dramatic upward surge, or crescendo, before crashing. This behavior has been observed in several notable market collapses:

1. **Dot-Com Bubble (1990s2000)**: Leading up to the crash, the Nasdaq Composite rose an astounding 400% from 1995 to its peak in March 2000. The sharp acceleration in prices during 1999 and early 2000, fueled by speculation on internet companies, was followed by a 49% drop in the S&P 500 by October 2002.

2. **Global Financial Crisis (2008)**: Before the collapse, U.S. housing prices and financial markets experienced rapid gains. From 2003 to 2007, the S&P 500 grew by over 80%. The dramatic decline began after financial institutions, overexposed to subprime mortgages, failed, resulting in a 57% drop in the index by March 2009.

3. **Black Monday (1987)**: The Dow Jones Industrial Average surged over 40% between January and August 1987, driven by speculative trading. This rapid rise was followed by a single-day decline of 22% in October 1987, marking the largest single-day percentage drop in history.

4. **1929 Stock Market Crash**: During the Roaring Twenties, stock prices soared, with the Dow Jones rising almost 500% between 1921 and its peak in September 1929. This euphoria led to a sudden and catastrophic crash, initiating the Great Depression.

In each case, speculative optimism drove prices to unsustainable levels, often characterized by narrowing market participation and concentrated gains in specific sectors or stocks. These upward crescendos were typically followed by rapid and significant declines, signaling the end of the bubble.

Understanding these patterns can offer insights into current market dynamics and help investors identify potential bubbles before they burst [oai_citation:1,Asset Bubbles Through History: The 5 Biggest](https://www.investopedia.com/articles/personal-finance/062315/five-largest-asset-bubbles-history.asp) [oai_citation:2,What Is a Stock Market Bubble? Causes and Effects - XS](https://www.xs.com/en/blog/stock-market-bubble/) [oai_citation:3,The Biggest Stock Market Crashes in Modern History](https://www.visualcapitalist.com/the-stock-market-declines-of-u-s-recessions-since-1970/).




People cling to what they know, are familiar with, until eventually the confidence collapses and they scramble for something new. I mean, the vast majority of the established institutional investment universe is unprepared to think any differently.

And yet…
How much is the federal deficit ?


I wrote this post because if Trump is even having to talk about it, with empty threats… that's a sign.
it doesn't mean it's imminent, as 88 says. But it's certainly not the America Great era which saw the dollar as unrivaled.

Everything comes and goes.

I was clearly talking about the USD and its primary role in the world..

And yet you somehow conflated that with examples of "bubbles".

DiabloWags said:

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I was clearly talking about the USD and its primary role in the world..

And yet you somehow conflated that with examples of "bubbles".

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Precisely!

You don't think a currency is subject to a bubble?

Let's ask Mr Computer.


Currency bubbles, while less common than equity bubbles, occur when a currency's value becomes excessively inflated due to speculation or unsustainable economic conditions, leading to a sharp devaluation or collapse. Here are notable examples:

### 1. **German Hyperinflation (1920s)**
- **Background**: Post-World War I, Germany printed excessive amounts of the Reichsmark to pay war reparations under the Treaty of Versailles.
- **Bubble Dynamics**: Speculators bet against the Reichsmark as inflation soared. By late 1923, the currency was virtually worthless, with prices doubling every few days.
- **Collapse**: The hyperinflation ended when Germany introduced the Rentenmark to replace the Reichsmark.

### 2. **British Pound (1992 - Black Wednesday)**
- **Background**: The UK entered the European Exchange Rate Mechanism (ERM) to stabilize its currency but faced speculative attacks due to weak economic fundamentals.
- **Bubble Dynamics**: Speculators, including George Soros, bet against the pound, believing it was overvalued relative to its ERM peg.
- **Collapse**: The UK withdrew from the ERM on September 16, 1992, leading to a sharp devaluation.

### 3. **Asian Financial Crisis (1997-1998)**
- **Thai Baht and Others**:
- **Background**: Several Southeast Asian countries pegged their currencies to the U.S. dollar, attracting foreign capital during a period of rapid growth.
- **Bubble Dynamics**: Overvaluation and speculative attacks led to the collapse of the Thai baht, followed by other regional currencies like the Indonesian rupiah and Malaysian ringgit.
- **Collapse**: The crisis resulted in severe economic downturns across Asia.

### 4. **Argentine Peso Crisis (2001)**
- **Background**: Argentina pegged its peso to the U.S. dollar in the 1990s to curb hyperinflation. However, the fixed exchange rate became unsustainable as public debt ballooned.
- **Bubble Dynamics**: Speculative pressure mounted as investors doubted the government's ability to maintain the peg.
- **Collapse**: In 2001, Argentina defaulted on its debt, abandoned the peg, and the peso rapidly devalued.

### 5. **Turkish Lira Crisis (2018-2020)**
- **Background**: The Turkish economy faced high inflation, growing debt, and political tensions with the U.S.
- **Bubble Dynamics**: Speculators drove up the cost of borrowing the lira, causing a sudden crash in its value.
- **Collapse**: The lira lost significant value, sparking inflation and eroding public trust in the currency.

### Characteristics of Currency Bubbles:
- **Overvaluation**: Often caused by pegged exchange rates or speculative bets.
- **Speculation**: Traders exploit perceived weaknesses in economic fundamentals.
- **Rapid Collapse**: When confidence erodes, devaluation can occur almost overnight, leading to financial crises.

These examples highlight how speculative behavior and structural economic vulnerabilities can create unsustainable currency values that ultimately collapse.


Greece and Ireland both faced severe financial crises during the European debt crisis (20092015), but these were more debt and banking crises than classic currency bubbles. Here's an analysis of their situations:

---

### **Greece: The Sovereign Debt Crisis**
- **Background**: Greece joined the Eurozone in 2001, gaining access to low borrowing costs. However, government overspending, tax evasion, and underreported deficits created unsustainable debt levels.
- **Crisis Dynamics**:
- Greece's debt-to-GDP ratio surged, and by 2009, it was revealed that Greece had misrepresented its financial position.
- Investors lost confidence, leading to soaring bond yields and effectively locking Greece out of financial markets.
- **Collapse**:
- The crisis peaked in 2010 when Greece required a bailout from the EU and IMF.
- The country implemented austerity measures but suffered a severe economic contraction.
- **Currency Dynamics**:
- Since Greece used the euro, it couldn't devalue its currency to regain competitiveness, exacerbating the crisis.

**Why It's Not a Currency Bubble**: Greece's crisis was tied to sovereign debt and structural economic issues rather than speculative overvaluation of a currency.

---

### **Ireland: Banking Crisis**
- **Background**: Ireland experienced a housing bubble in the mid-2000s, fueled by easy credit and speculative real estate investment. Irish banks were heavily exposed to bad loans.
- **Crisis Dynamics**:
- The housing bubble burst in 2008, leading to massive losses for Irish banks.
- To stabilize the financial system, the Irish government guaranteed bank liabilities, which significantly increased public debt.
- **Collapse**:
- By 2010, Ireland required a bailout from the EU and IMF.
- The crisis led to severe austerity measures and a prolonged economic downturn.
- **Currency Dynamics**:
- Like Greece, Ireland used the euro, so it couldn't devalue its currency to stimulate recovery.

**Why It's Not a Currency Bubble**: Ireland's crisis was a banking collapse caused by a housing bubble and overleveraged financial institutions, not a speculative currency situation.

---

### Key Comparison to Currency Bubbles
Both Greece and Ireland struggled with structural economic vulnerabilities but were part of the Eurozone, where currency value is controlled by the European Central Bank. Their inability to adjust currency value limited their response to the crises. While not currency bubbles, their experiences highlight the systemic risks of fixed exchange rate systems or shared currency zones during financial crises [oai_citation:1,Asset Bubbles Through History: The 5 Biggest](https://www.investopedia.com/articles/personal-finance/062315/five-largest-asset-bubbles-history.asp) [oai_citation:2,What Is a Stock Market Bubble? Causes and Effects - XS](https://www.xs.com/en/blog/stock-market-bubble/) [oai_citation:3,The Biggest Stock Market Crashes in Modern History](https://www.visualcapitalist.com/the-stock-market-declines-of-u-s-recessions-since-1970/).

Yawn.
More conflation.

I repeat: The USD is at a 2-year high

And the Ruble is at a 32 - month low.

Listening.

China is playing the long game, (except with their birth rate, but that can easily change quickly - it's only natural!). China forgoes current consumption in exchange for long term wealth accumulation. That is the current trade with USA, which trades wealth for current consumption (see Jeremy Siegel).

China has become the world's manufacturer.
They are developing inroads in Africa through something called the BELT AND ROAD INITIATIVE.

USA is in long term fade. We harken back to an imaginary time when we felt stronger in order to feel better about ourselves. Just like Putin with Soviet power longings.

DiabloWags said:

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I repeat: The USD is at a 2-year high

And the Ruble is at a 32 - month low.

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This popped up in a scroll.
Thought you'd like it.

To be square, allow me to add, I am certainly not bullish on the Russia ruble or economy. I do not fear any economic threat from them.


FORTUNE MAGAZINE

Russia's ruble is still worth less than a penny, and the Kremlin's piggy bank for propping it up is running low


The ruble has come off its lows from earlier in the week after the central bank halted all foreign currency purchases for the remainder of the year, but it remains batteredand resources for preventing a further collapse are shrinking.
On Friday, the central bank set the official rate at about 108 to the U.S. dollar. While that's improved from Wednesday's rate of 114 on the spot market, that's still means one ruble is worth less than a penny.

The ruble has tumbled 9% against the dollar since Nov. 21, when the U.S. sanctioned some 50 Russian banks, including Gazprombank, which has emerged as a top linchpin for Russia in currency markets. And for the year to date, the ruble has crashed about 20% against the greenback.
While that could boost Russia's exports by making them cheaper, it will likely stoke inflation further by making imports more expensive. Even though Western nations have largely cut off trade with Russia, products from China have replaced many imports, and the ruble has fallen against the yuan as well.
Over the summer, Russian businesses and banks were already suffering from a shortage of yuan, which is the most traded foreign currency in the country and a critical lifeline for the economy.
Meanwhile, Russia's sovereign wealth fund has been tapped repeatedly to prop up the ruble, leaving the Kremlin with less firepower to battle another currency collapse.

Just before the latest crash, liquid assets in the National Wealth Fund were $55 billion as of last month, according to Bloomberg. That's down from $140 billion before Russia invaded Ukraine in 2022.
Russia can still earn foreign currency by selling its oil and gas, but the shrinking sovereign wealth fund leaves Moscow at the mercy of energy prices, which have been falling amid weakening global demand.
The central bank can also hike benchmark rates further to fight hot inflation while also creating more demand for ruble-denominated assets. But rates are already at a sky-high 21%, meaning additional increases would tighten the screws even more on Russia's economy.
On Friday, the central bank said no emergency steps are needed to support the ruble, after President Vladimir Putin said Thursday that the situation was under control.
Russia's currency crisis comes as analysts have predicted that the economy will not be able to sustain Putin's war on Ukraine past next year. For example, Russian factories can't make enough key weapons systems to replace battlefield losses, and old Soviet stockpiles are running out.

Zippergate said:

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Trump's tariff threats against BRICS are idiotic and completely unworkable. But he is merely vocalizing long-standing US policy to punish nations who seek to escape dollar hegemony. Trump's tariff idea is a lot less menacing than what HRC did to Libya.

The REAL damage to the dollar was when Biden went economic nuclear on the Russians excluding them from the banking system and confiscating all their assets. Every country in the world now knows that their US dollar reserves and access to SWIFT are valid only as long as the country is in the good graces of the US president. As Obama said, never underestimate Joe's ability to eff things up (or something to that effect).

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Everything Trump says to the international community is pretty much a tactic when negotiations take place. I wouldn't bet the farm on the worst case scenarios. Usually its his way to shift the starting point of negotiations closer to what we want. For example, maybe he uses BRICs negotiations as a place to end the ukraine war.

Quote:

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>.. old Soviet stockpiles are running out.

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yes, please, hopefully

Ray Dalio charts empire rise and fall,



leading and lagging indicators of this empire change cycle:



I came upon this via this talk which I'm listening to now.






Dalio had presented his own talks with videographics which I'll watch next.

US Dollar at the highest level against six rivals since November 2022.

Just the Facts.

https://www.reuters.com/markets/currencies/dollar-steady-against-peers-fed-rate-cut-looms-2024-12-18/#:~:text=The%20U.S.%20dollar%20index%20%2C%20which,highest%20level%20since%20November%202022.

For some strange reason, you conveniently ignore the fact that the 10-year Treasury Bond Yield is at 4.60% in anticipation of Trump policies (ie. tariffs) that will most likely fuel inflation. Hence the Fed's forecast of only 2 more interest rate cuts in 2025 instead of the 4 previously forecasted in September.

DiabloWags said:

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US Dollar at the highest level against six rivals since November 2022.

Just the Facts.

https://www.reuters.com/markets/currencies/dollar-steady-against-peers-fed-rate-cut-looms-2024-12-18/#:~:text=The%20U.S.%20dollar%20index%20%2C%20which,highest%20level%20since%20November%202022.

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Maybe a good time to sell, then.
At the peak!?

Watch the video presentation and let me know what you think.
40 minutes of well thought out and researched and prepared with one of the world's premier investment minds.
Worth your time.

If ou believe that Trump wants to see a more competitive USD and it is going to weaken as a result, then you will most likely want to be long the yen and short the Magnificent Seven tech stocks that have benefitted from the yen carry trade.

DiabloWags said:

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If ou believe that Trump wants to see a more competitive USD and it is going to weaken as a result, then you will most likely want to be long the yen and short the Magnificent Seven tech stocks that have benefitted from the yen carry trade.

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Trump could care less about the USD.
He's shorting it and going long crypto.
He's going to install crypto as legal tender as soon as he has some 20 year old programmer, who will be subsequently executed, turn over the encryption key.

But I appreciate the response.

concordtom said:

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DiabloWags said:

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If ou believe that Trump wants to see a more competitive USD and it is going to weaken as a result, then you will most likely want to be long the yen and short the Magnificent Seven tech stocks that have benefitted from the yen carry trade.

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Trump could care less about the USD.
He's shorting it and going long crypto.

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Ridiculous.

DiabloWags said:

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concordtom said:

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DiabloWags said:

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If ou believe that Trump wants to see a more competitive USD and it is going to weaken as a result, then you will most likely want to be long the yen and short the Magnificent Seven tech stocks that have benefitted from the yen carry trade.

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Trump could care less about the USD.
He's shorting it and going long crypto.

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Ridiculous.

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I agree. He is ridiculous.

Cal88 said:

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Global dedolarization already is ongoing, but it's a slow process that will unfurl over the next couple of decades.

The first stage, which is already happening, is that bilateral trade is increasingly being conducted in local currencies, and institutions/mechanisms are being put in place to go around SWIFT or trade commodities, buy insurance policies outside of the Chicago, NYC or London exchanges. The global energy and grains trade is already happening.

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Let us all know when the renminbi is a currency that can be used for large scale issuance in deep, liquid markets by non-Chinese borrowers.

We're a very , very long way from that.

I agree, but let me know when the next cliff arrives.
We've propped up things through foreign wars to maintain the petro hegemony and the US financial system 2x with govt bailouts.

China is making inroads in many (EM) foreign markets, and we are $36T in debt. It's a problem!!