AuthorTopic: Hyperinflation or Deflation?  (Read 120855 times)

Offline RE

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Dollar is now caught in a tug-of-war between the Fed and Trump
« Reply #615 on: February 15, 2017, 03:55:06 AM »
Da Fed RULES!  Trumpty-Dumpty is Toothless in Washington.  He's a pathetic marionette who will do as he is told by his Puppet Masters.

RE

http://www.cnbc.com/2017/02/15/dollar-is-now-caught-in-a-tug-of-war-between-the-fed-and-trump.html

Dollar is now caught in a tug-of-war between the Fed and Trump
Gemma Acton   | @GemmaActon   

The U.S. dollar spiked to a more than three-week high in the wake of the comments on Tuesday from Federal Reserve Chair Janet Yellen that prompted markets to assign a higher probability to the prospect of an interest rate hike as early as March.

The dollar index posted its fourth positive session in a row and its highest level since January 20 before slipping back only marginally in early trade on Wednesday as Yellen's remarks were interpreted as placing greater emphasis on the possibility of a hike at each upcoming meeting.

This although Yellen "danced it very well and avoided making any committal statement whatsoever," according to Jan Halper-Hayes, a Republican commentator and the former worldwide VP for Republicans Overseas, speaking on CNBC Wednesday.
Raymond Kleboe Collection | Getty Images

The reaction of the Fed funds futures market showed relatively muted optimism, with the read across from market levels indicating odds of 23 percent for a March hike, versus 16 percent earlier in the day, and a jump in expectations for a May hike to 50 percent from 38 percent, according to investment bank Jefferies.

While the upwards move in the dollar makes sense in the context of the latest news from the Fed, the near-term outlook for the dollar is uncertain given the conflicting force of President Donald Trump's anticipated economic policies, Richard Falkenhäll, senior FX strategist at SEB, told CNBC Wednesday via emailed comments.

As the new administration is likely to turn more expansionary due to lower taxes, the Fed may be propelled to tighten policy more rapidly, he suggests. This in addition to other potential changes such as the introduction of a border adjustment tax and a reduction of earnings retained from overseas should also be positive for the dollar, posits Falkenhäll.

"On the other hand, the Trump administration seems to prefer a weaker dollar and the behavior of the president since the inauguration probably motivates a political risk premium on the USD for now," he countered.

Indeed, Halper-Hayes cites President Trump's and Treasury Secretary Steve Mnuchin's attempts to talk down the dollar as one of her primary concerns.

"They don't believe in holding to the strong dollar policy … How are they going to abandon the strong dollar policy? If that happens what is that going to do? I see corporate earnings for global corporations, it would be very good but on the other hand what is it going to do to the domestic economy?" she asked, spelling out her apprehensions.

The ongoing debate over the dollar's strength follows an international flare-up last month, during which Peter Navarro, Trump's selected director of the National Trade Council, accused Germany of exploiting other countries by keeping the euro "grossly undervalued". Although Germany robustly defended the independence of the rate-setting European Central Bank (ECB), many commentators – including Germany's own Finance Minister Wolfgang Schäuble - did agree that the exchange rate was too low for Europe's largest economy.
Buy weakness in US dollar: Pro
Buy weakness in US dollar: Pro 
6 Hours Ago | 02:15

Indeed, Germany's exchange rate is 15 percent undervalued, according to research released Tuesday by World Economics, whose World Price Index compares the fundamental purchasing power parity (PPP) values of currencies against market exchange rates. PPP looks at the cost to buy a hypothetical basket of goods in different countries and suggests currencies are in equilibrium when the basket is priced the same in each country.

The same research indicates that sterling is 9 percent undervalued following its slump in the wake of last June's Brexit vote and that the carefully managed Chinese yuan is 24 percent undervalued.

Weighing the conflicting factors, there is still a risk that the dollar could weaken in the near-term if the administration fails to deliver on the high expectations resting on it and causes an equity market sell-off, says SEB's Falkenhäll.

"However, medium term strong growth prospects for the U.S. and further tightening by the Fed this year are likely to maintain support for the dollar, which is why we expect it to trade between parity and 1.05 against the euro in the second half of this year," he concluded.
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Offline RE

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MOAR DEBT! GIMMEE MOAR!
« Reply #616 on: February 27, 2017, 01:26:14 AM »
Pop Goes the Weasel.


RE

http://wolfstreet.com/2017/02/25/desperation-over-europe-banking-system-senior-non-preferred-bonds/

Is that Desperation Hanging Over Europe’s Banking System?

by Don Quijones • Feb 25, 2017 • 21 Comments   

Turns out, Italy’s banking crisis is not fixed.
By Don Quijones, Spain & Mexico, editor at WOLF STREET.

Many of Europe’s and America’s biggest banks have begun begging, cap in hand, for a new, innovative way of raising vast sums of dirt-cheap debt on Europe’s financial markets.

The Association for Financial Markets in Europe (AFMA), an organization that prides itself on serving as “the voice of Europe’s wholesale financial markets,” just sent a strongly worded letter to the European Central Bank, urging for the prompt creation of EU-wide regulation allowing banks to sell a newfangled class of bail-in-able debt called “senior non-preferred bonds.”

“A swift agreement is essential to enable banks to continue increasing their loss-absorbing cushions and improve their resolution capacity,” says the letter (translated from Spanish).

In its own words, the AFMA represents “leading global and European banks and other significant capital market players.” Its board includes representatives of the biggest banks, from US megabanks like Citi, Goldman, JP Morgan Chase, Morgan Stanley, Bank of America Merrill Lynch and BNY Mellon to European behemoths like Deutsche Bank, HSBC, Lloyds TSB, Barclays, Unicredit, ING, BNP Paribas, Credit Agrcole, Crédit Agircole, and Credit Suisse.

Many of these banks and a few others not directly represented on AFMA’s board (such as Spain’s Santander) are facing heightened regulatory pressure, both at the regional and global level, to issue increasingly more bail-in-able debt so as to ensure that the next time a banking disaster strikes, part or all of the debt can be used to “bail in” those investors before taxpayers are called upon to cough up the rest.

It’s the way it should have been from the very inception of this global banking crisis. Instead, governments and central banks have injected trillions of dollars, euros, pounds, yen, and yuan of public funds into banks to keep the banks upright and make most bondholders whole, including those holding subordinated, or junior, debt, which is theoretically designed to bear losses in times of stress.

global-banking_300x250

The “senior non-preferred bond” is the financial system’s latest effort to finally change all of that. Also known as senior junior, senior subordinated or Tier 3, this newfangled class of bank debt is a hybrid creation that combines the biggest drawback (for investors) of senior debt (i.e. low yields) with the biggest drawback (once again, for investors) of subordinate debt (i.e. virtually no protection in the event of a banking collapse).

It’s what makes senior non-preferred bonds so attractive to capital-starved TBTF banks: the bonds pretend to be simultaneously one thing (senior), in order to keep the yield (and the cost for the bank) down, and another (junior) in order to qualify as bail-in-able. It’s a way for big banks to bamboozle bondholders – usually institutional investors like pension funds – into buying something with other people’s money that doesn’t yield nearly enough to compensate them for the risks they’re taking. But that hasn’t stopped yield-starved institutional investors from gobbling them up.

The European Commission has already endorsed the financial instrument, rating agencies have also lent their approval, and the ECB can’t wait to come up with “a common framework at Union level.” However, the legislation permitting its issuance, both at the regional and national level, is taking a long time to complete. And one thing many of the banks appear to be rather short of is time.

The only jurisdiction where big banks can issue, 100% legally, senior non-preferred debt is France, where the debt instrument was initially created as a means of helping the country’s big four banks (BNP Paribas, Crédit Agricole, Groupe BPCE, and Société Générale) spruce up their balance sheets at minimal cost.

Elsewhere in Europe there is no legal framework for issuance of the new debt instrument but that hasn’t stopped some banks, including Holland’s ING and Spain’s Santander, from issuing senior non-preferred bonds. Spain’s second biggest bank, BBVA, which is not even officially too big to fail, is also expected to dip its toes in the non-quite-legal market in the coming months.

Santander, BBVA and Spain’s third biggest bank, La Caixa, have been on a spectacular debt binge since this fledgling year began, issuing more combined debt in the first six weeks of 2017 than at any other time since 2007, the year that Spain’s spectacular real estate bubble reached its climactic peak.

Even more ominous, Italy’s fragile megabank, Unicredit, has also expressed an interest in issuing non-preferred bonds, though it will probably have to wait for Italy’s banking crisis, in which it is has a major role, to blow over (assuming it actually can) before joining the party. That could be a long time coming: there continues to be widespread disagreement between the ECB and the European Commission over whether to allow Italy to go ahead with its more or less illegal bailout of the banking sector.

In the meantime, Italy’s Target2 imbalance continues to grow. The Banca d’Italia now owes a record €364 billion to the ECB – the equivalent of 22% of GDP, its highest point since the creation of the euro, and the figure keeps rising. It’s testament to an ongoing — and accelerating — capital flight out of Italy’s banking system, as investors lose faith not only in the possibility of a workable solution being found to Europe’s most serious and arguably most complex financial threat but in the long-term viability of the single currency itself.

If Italian and European authorities don’t soon find a workable solution to Italy’s intractable banking problem — and preferably one that is more or less palatable for the German electorate, which is already up in arms at the latest Target2 imbalances — there is a very real risk that Italy will suffer sudden bank runs and disorderly failures, at which point the chances of Unicredit raising €13 billion of new capital by its June deadline will fade to zero. And at that point, as even the FT has admitted (behind paywall), it will probably be game over. By Don Quijones.

The law finally catches up with some big bankers. Read…  Two Former Bank CEOs and Dozens of Former Bank Execs Just Got Sentenced to Jail in Spain
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Offline RE

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Petrodollar faces growing threat from the East
« Reply #617 on: May 01, 2017, 03:54:35 AM »
http://www.atimes.com/loss-petrodollar-domination-beginning-form/

Petrodollar faces growing threat from the East

Andrew Brennan
By Andrew Brennan April 27, 2017 2:51 AM (UTC+8)

Asia Times is not responsible for the opinions, facts or any media content presented by contributors. In case of abuse, click here to report.

While the recent raft of Sino-Saudi trade agreements benefited Chinese soft power in protecting Xinjiang, and the Saudis by diversifying their economy, China’s slow intertwining with Saudi Arabia complements the Sino-Russo alliance. Primarily, its benefits could lead to a realistic threat to the petrodollar.
The Persian rival who showed ‘the way’

In 2012/2013, the US Treasury Department, under the Obama administration, initiated a raft of sanctions in an amateurish fashion against the Central Bank of Iran. As we were told, it was done to tire and bleed Iranian economic and social life enough to draw Tehran into negotiations concerning its nuclear programme. The argument of were they/weren’t they pursuing a weaponized nuclear program isn’t important; how the Iranians circumvented these sanctions is.

The sanctions were meant to be stifling, but the Iranians loosened this problematic liquidity noose by using all their banks that weren’t sanctioned, and sold rich Iranian oil to India. Of course, the Indians couldn’t pay Tehran directly. Neither could they pay bilaterally in rupees due to sanctions and infrastructure needed to trade in a bilateral currency. Instead, Iran requested that India pay in gold so India paid Turkey, the Middle East’s gold market, and Turkey gave Turkish gold to Iranian banks, which then swapped with the Central Bank of Iran.

Turkey, for its part, may soon be the gold payment intermediator across Asia, and is already nationalizing the sector with a demand for private confiscation occurring to support the Turkish economy, but this has scarcely been reported.

This clever evasion was known as the Iran-India-Turkey triangle. Iran was escaping the dominance of the US dollar and trading in real money, not a hegemonic fiat currency that was being printed hot-off-the-press all day. They were dealing in gold; not something that could be strangled through SWIFT and electrons traded on a screen easily. A simple intermediator and precious metals could break Obama’s heralded “crippling” sanctions.

Iran ideologically, as well as practically, wants nothing to do with the US dollar but rather it wants to be free of monetary pressures by the US on its domestic policies. The effectiveness of this evasion was a preview to what countries like China, Russia, and to a lesser extent India and South Korea, have all been trying to do: increase their independence from the US dollar. The Iranian gold triangle showed successful independence from US dollar reliance.

The Chinese usurpers and their yellow metal

Fast forward to March 2017; the Russian Central Bank opened its first overseas office in Beijing as an early step in phasing in a gold-backed standard of trade. This would be done by finalizing the issuance of the first federal loan bonds denominated in Chinese yuan and to allow gold imports from Russia.

The Chinese government wishes to internationalize the yuan, and conduct trade in yuan as it has been doing, and is beginning to increase trade with Russia. They’ve been taking these steps with bilateral trading, native trading systems and so on. However, when Russia and China agreed on their bilateral US$400 billion pipeline deal, China wished to, and did, pay for the pipeline with yuan treasury bonds, and then later for Russian oil in yuan.

This evasion of, and unprecedented breakaway from, the reign of the US dollar monetary system is taking many forms, but one of the most threatening is the Russians trading Chinese yuan for gold. The Russians are already taking Chinese yuan, made from the sales of their oil to China, back to the Shanghai Gold Exchange to then buy gold with yuan-denominated gold futures contracts – basically a barter system or trade.

The Chinese are hoping that by starting to assimilate the yuan futures contract for oil, facilitating the payment of oil in yuan, the hedging of which will be done in Shanghai, it will allow the yuan to be perceived as a primary currency for trading oil. The world’s top importer (China) and exporter (Russia) are taking steps to convert payments into gold. This is known. So, who would be the greatest asset to lure into trading oil for yuan? The Saudis, of course.

All the Chinese need is for the Saudis to sell China oil in exchange for yuan. If the House of Saud decides to pursue that exchange, the Gulf petro-monarchies will follow suit, and then Nigeria, and so on. This will fundamentally threaten the petrodollar.

Now the argument is that if China does this it will put a slam on Chinese exports, but China is undergoing an intentional metamorphosis from a producer and exporter to a service and consumer economy of internal products. Look to China’s technology sector, e-commerce sector, and other domestic sectors that will provide a large market for sustainable service and growth.

A second argument against this train of thought is that maybe China doesn’t want the yuan to be a world reserve currency but just have a strong currency; a gold-backed yuan currency. Having a gold trade note may not hurt Chinese exports as it transforms its economy and its future exports.

Beijing may also have thought that if Saudi Arabia is persuaded to trade in yuan or gold-backed yuan, etc, South Korea and Japan may follow suit, as both have been looking to detach from the US dollar.

China and Iran were the first to initiate bypassing the dollar, followed by Russia circumventing the SWIFT system and then India beginning to move away from the US dollar and starting bilateral trade deals. China and Japan made moves to trade directly, as did Japan with India, bypassing the dollar.

The use of alternative payment systems like gold, yuan, rupees, rubles and other monies, fiat and not, to evade the potential of sanctions and seizures of the US dollar, or its decline, are seen as favorable.

    Everyting is pointing towards a declining West and a rising East.

What decline?

Well, we can look at the historic East-West cycle, the baby-boom demographic in the West, the growing inequality in the wealth distribution cycle, the ratio of household debt as a percentage of disposable income, and for you history buffs, the Kondratiev wave are all peaking and are descending into a deflationary wave.

Wait, what?

Okay, all of those mentioned cycles are economic swings of wealth. Everything is pointing towards a declining West and a rising East. But we can equally blame central bankers’ quantitative easing policies of printing to prosperity. The idea is a falsity that also has only benefited the wealthier classes, and can’t beat back cyclical pressure. A shift in world monetary systems is occurring.

The Chinese economy has begun an economic restructuring and focus on domestic production and services. The Trump administration thinks weakening the US dollar will help American exports and likewise respectfully grow the US economy (or “grow” within the confines of the current monetary system). However, the overvalued dollar has subsidized the cherished “American standard of living,” and any weakening will now have detrimental effects.

The US needs to also restructure its economy to one that is based on production. It can no longer continue to run a debt-serviced economy that imports all goods it doesn’t produce. It’s unsustainable, and the continuous mistake of many. The wealth of the world is shifting eastwards.

The petrodollar is the last vestige of that “American standard of living” middle America cherishes, and if the gold trade bonds fly and yuan changes hands as the oil flows, the US is going to get a shock when Saudi Arabia likes the look of red paper as much as green, or worse yet, yellow metal, a lot of which is moving east.
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Offline Eddie

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Re: Petrodollar faces growing threat from the East
« Reply #618 on: May 01, 2017, 06:47:12 AM »
http://www.atimes.com/loss-petrodollar-domination-beginning-form/

Petrodollar faces growing threat from the East

Andrew Brennan
By Andrew Brennan April 27, 2017 2:51 AM (UTC+8)

Asia Times is not responsible for the opinions, facts or any media content presented by contributors. In case of abuse, click here to report.

While the recent raft of Sino-Saudi trade agreements benefited Chinese soft power in protecting Xinjiang, and the Saudis by diversifying their economy, China’s slow intertwining with Saudi Arabia complements the Sino-Russo alliance. Primarily, its benefits could lead to a realistic threat to the petrodollar.
The Persian rival who showed ‘the way’

In 2012/2013, the US Treasury Department, under the Obama administration, initiated a raft of sanctions in an amateurish fashion against the Central Bank of Iran. As we were told, it was done to tire and bleed Iranian economic and social life enough to draw Tehran into negotiations concerning its nuclear programme. The argument of were they/weren’t they pursuing a weaponized nuclear program isn’t important; how the Iranians circumvented these sanctions is.

The sanctions were meant to be stifling, but the Iranians loosened this problematic liquidity noose by using all their banks that weren’t sanctioned, and sold rich Iranian oil to India. Of course, the Indians couldn’t pay Tehran directly. Neither could they pay bilaterally in rupees due to sanctions and infrastructure needed to trade in a bilateral currency. Instead, Iran requested that India pay in gold so India paid Turkey, the Middle East’s gold market, and Turkey gave Turkish gold to Iranian banks, which then swapped with the Central Bank of Iran.

Turkey, for its part, may soon be the gold payment intermediator across Asia, and is already nationalizing the sector with a demand for private confiscation occurring to support the Turkish economy, but this has scarcely been reported.

This clever evasion was known as the Iran-India-Turkey triangle. Iran was escaping the dominance of the US dollar and trading in real money, not a hegemonic fiat currency that was being printed hot-off-the-press all day. They were dealing in gold; not something that could be strangled through SWIFT and electrons traded on a screen easily. A simple intermediator and precious metals could break Obama’s heralded “crippling” sanctions.

Iran ideologically, as well as practically, wants nothing to do with the US dollar but rather it wants to be free of monetary pressures by the US on its domestic policies. The effectiveness of this evasion was a preview to what countries like China, Russia, and to a lesser extent India and South Korea, have all been trying to do: increase their independence from the US dollar. The Iranian gold triangle showed successful independence from US dollar reliance.

The Chinese usurpers and their yellow metal

Fast forward to March 2017; the Russian Central Bank opened its first overseas office in Beijing as an early step in phasing in a gold-backed standard of trade. This would be done by finalizing the issuance of the first federal loan bonds denominated in Chinese yuan and to allow gold imports from Russia.

The Chinese government wishes to internationalize the yuan, and conduct trade in yuan as it has been doing, and is beginning to increase trade with Russia. They’ve been taking these steps with bilateral trading, native trading systems and so on. However, when Russia and China agreed on their bilateral US$400 billion pipeline deal, China wished to, and did, pay for the pipeline with yuan treasury bonds, and then later for Russian oil in yuan.

This evasion of, and unprecedented breakaway from, the reign of the US dollar monetary system is taking many forms, but one of the most threatening is the Russians trading Chinese yuan for gold. The Russians are already taking Chinese yuan, made from the sales of their oil to China, back to the Shanghai Gold Exchange to then buy gold with yuan-denominated gold futures contracts – basically a barter system or trade.

The Chinese are hoping that by starting to assimilate the yuan futures contract for oil, facilitating the payment of oil in yuan, the hedging of which will be done in Shanghai, it will allow the yuan to be perceived as a primary currency for trading oil. The world’s top importer (China) and exporter (Russia) are taking steps to convert payments into gold. This is known. So, who would be the greatest asset to lure into trading oil for yuan? The Saudis, of course.

All the Chinese need is for the Saudis to sell China oil in exchange for yuan. If the House of Saud decides to pursue that exchange, the Gulf petro-monarchies will follow suit, and then Nigeria, and so on. This will fundamentally threaten the petrodollar.

Now the argument is that if China does this it will put a slam on Chinese exports, but China is undergoing an intentional metamorphosis from a producer and exporter to a service and consumer economy of internal products. Look to China’s technology sector, e-commerce sector, and other domestic sectors that will provide a large market for sustainable service and growth.

A second argument against this train of thought is that maybe China doesn’t want the yuan to be a world reserve currency but just have a strong currency; a gold-backed yuan currency. Having a gold trade note may not hurt Chinese exports as it transforms its economy and its future exports.

Beijing may also have thought that if Saudi Arabia is persuaded to trade in yuan or gold-backed yuan, etc, South Korea and Japan may follow suit, as both have been looking to detach from the US dollar.

China and Iran were the first to initiate bypassing the dollar, followed by Russia circumventing the SWIFT system and then India beginning to move away from the US dollar and starting bilateral trade deals. China and Japan made moves to trade directly, as did Japan with India, bypassing the dollar.

The use of alternative payment systems like gold, yuan, rupees, rubles and other monies, fiat and not, to evade the potential of sanctions and seizures of the US dollar, or its decline, are seen as favorable.

    Everyting is pointing towards a declining West and a rising East.

What decline?

Well, we can look at the historic East-West cycle, the baby-boom demographic in the West, the growing inequality in the wealth distribution cycle, the ratio of household debt as a percentage of disposable income, and for you history buffs, the Kondratiev wave are all peaking and are descending into a deflationary wave.

Wait, what?

Okay, all of those mentioned cycles are economic swings of wealth. Everything is pointing towards a declining West and a rising East. But we can equally blame central bankers’ quantitative easing policies of printing to prosperity. The idea is a falsity that also has only benefited the wealthier classes, and can’t beat back cyclical pressure. A shift in world monetary systems is occurring.

The Chinese economy has begun an economic restructuring and focus on domestic production and services. The Trump administration thinks weakening the US dollar will help American exports and likewise respectfully grow the US economy (or “grow” within the confines of the current monetary system). However, the overvalued dollar has subsidized the cherished “American standard of living,” and any weakening will now have detrimental effects.

The US needs to also restructure its economy to one that is based on production. It can no longer continue to run a debt-serviced economy that imports all goods it doesn’t produce. It’s unsustainable, and the continuous mistake of many. The wealth of the world is shifting eastwards.

The petrodollar is the last vestige of that “American standard of living” middle America cherishes, and if the gold trade bonds fly and yuan changes hands as the oil flows, the US is going to get a shock when Saudi Arabia likes the look of red paper as much as green, or worse yet, yellow metal, a lot of which is moving east.

Same story we were hearing 6-7 years ago. Is it closer to happening now? Probably, but I still have no idea what the real timeline will be on the loss of petrodollar status. Wish I knew.
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Offline Palloy2

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Re: Hyperinflation or Deflation?
« Reply #619 on: May 04, 2017, 07:44:29 AM »
I'm sure the Saudis would love to trade oil for Chinese mass produced goods, mediated by yuan or gold, but the trouble is they have a deal with the US to only sell for Dollars, and in return they can buy weapons and receive other protection.  If they break that deal the US will turn very nastily against them, and the royal family is weak and divided against itself, so they stick to it.

When the implosion happens though, all the US's "good allies" will heave a sigh of relief and start dealing with China without blinking.
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💸 In Tehran, Economic Protests Flare As Iran's Currency Plunges
« Reply #620 on: June 27, 2018, 01:29:31 AM »
https://www.npr.org/2018/06/26/623522943/in-tehran-economic-protests-flare-as-irans-currency-plunges


World
In Tehran, Economic Protests Flare As Iran's Currency Plunges

June 26, 20184:51 PM ET

Sasha Ingber


Demonstrators filled the streets of Tehran on Monday to protest economic downtown in Iran.
Atta Kenare/AFP/Getty Images

Iran's capital has been racked by protests this week over a plunge in the value of the country's currency, the rial. Crowds at one point shut down Tehran's sprawling Grand Bazaar, an economic center and a place where the 1979 revolution gained footing.

Protesters called for shop owners to close their businesses as the demonstrations ramped up on Monday. They marched to the gates of Iran's parliament, and police tried to quell them with what multiple news outlets said appeared to be tear gas. Videos purportedly showing clashes between security forces and protesters were put up online Tuesday. BBC Persian posted footage of people running as security forces approached.

The rial has fallen to a new low — 90,000 against the U.S. dollar on the country's black market, Iranian media said, despite government efforts to control the currency rate. The official exchange rate is about 42,000 rials to the dollar.

Anti-government demonstrations driven by economic troubles erupted across the country last December and January. But they didn't gain traction in Tehran. This week's demonstrations in the capital were the biggest in years, multiple media outlets have reported.

Abbas Milani, director of Iranian studies at Stanford University, tells NPR via email that these demonstrations are different. "They have taken place amongst the regime's hitherto reliable basis of support — the members of the bazaar and the working classes. For over a hundred years, strikes in bazaars have been harbingers of change and invariably the clergy were allied with these merchants. Now the ruling clergy are the subject of the merchants' wrath."

President Hassan Rouhani addressed the protests on state television Monday night, telling the Iranian people that the United States is to blame for the country's economic difficulties. He said the spontaneous demonstrations were caused by "foreign media propaganda."

He was also quoted as saying that the government would be able to endure the rial's downward spiral and upcoming sanctions, which the Trump administration plans to impose after announcing a withdrawal from the Iran nuclear deal in May. "Even in the worst case, I promise that the basic needs of Iranians will be provided. We have enough sugar, wheat, and cooking oil. We have enough foreign currency to inject into the market," Rouhani said, per Reuters.

Iran's economy was lagging before President Trump announced the exit from the Iran nuclear deal, and it has grown weaker in anticipation of U.S. sanctions, NPR's Peter Kenyon reports. The country's buying power and retail sector have suffered.

The Central Bank of Iran reportedly announced that it will create a secondary currency market to relieve pressure on the country's currency.

Citing economic security, Iran is also clamping down on foreign products by banning imports of more than 1,300 items, according to Reuters.

It wasn't immediately clear who led the Tehran protests. Some observers believe that conservative factions in the government may have encouraged the demonstrations in an attempt to undermine the more moderate Rouhani. But some protests evolved into chants with anti-government slogans, according to the U.S.-government funded Voice of America.

Milani said that Rouhani faces pressure not just from the angered public, but radical conservatives such as the leaders of the Islamic Revolutionary Guard Corps.

"The hardliners clearly think they can ride public dissent into more consolidated power for themselves," he said. "But they might well have underestimated the seriousness of the crisis and its possible outcome."
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Offline RE

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💸 But Who Pays the Price of All This Inflation?
« Reply #621 on: July 14, 2018, 03:53:14 AM »
https://wolfstreet.com/2018/07/12/but-who-pays-the-price-of-all-this-inflation/

But Who Pays the Price of All This Inflation?
by Wolf Richter • Jul 12, 2018 • 61 Comments   
We already know who.

Inflation “looks quite good,” Chicago Fed President Charles Evans said so eloquently in an interview even before today’s Consumer Price Index was released.

Today, by his standards, inflation looks even better. In June, the Consumer Price Index for all urban consumers rose a brisk 2.9% compared to a year ago, the sharpest increase since February 2012::


Without the volatile food and energy groups, which weigh about 21% in the index, “core” CPI rose 2.2% in June compared to a year ago.

And the purchasing power of the dollar – which the Bureau of Labor Statistics also provides as a helpful reminder of what consumer price inflation actually is – dropped 2.7% from a year ago. In May and June, the dollar’s purchasing power reached, as it just about always does, a new record low. The chart below shows what the purchasing power of the dollar has been doing over the past decade:


Inflation is good for companies and landlords because it means they’re raising prices and rents, and they can report higher revenues without having sold a single extra thing. Their input costs may also rise, but they’re hoping that those increases will be less, and that in this manner, inflation will inflate their earnings. For that reason, they and their Wall Street hype jockeys love consumer price inflation. But they hate wage inflation because it eats into the hard-earned inflation profits. And the Fed has been trying to help out.

So the question arises: Who is paying for this inflation that the Fed has been strenuously trying to obtain over the last few years and that it now has obtained to the satisfaction of even its doves, such as aforementioned Mr. Evans?

Average hourly earnings for all employees in the private sector in June, according to the Bureau of Labor Statistics, rose 2.7% from a year ago. This was at the upper end of the miserably slow growth range that has prevailed since 2010. The range peaked at a year-over-year increase of 2.8% in September 2017 and bottomed out with an increase of 1.5% in October 2012. It doesn’t take much inflation – however inflation is measured – to turn these feeble nominal wage increases into real-wage declines.

And this is precisely what happened in June. Mr. Evan should be pleased.

The nominal wage-increase of 2.74% was more than eaten up by inflation as measured by CPI of 2.87%: Real wages fell by 0.13% from a year ago. Workers pay for consumer price inflation:


Wage inflation, if it were allowed to exist, could more than compensate workers for consumer price inflation. Wage inflation would also help consumers pay off their debts. But wage inflation is precisely what the Fed fears the most.

The Fed understands that declining real wages, if they decline long enough, will eat into consumption in a consumption-based economy, and will further diminish consumers’ ability to pay credit card debts, auto loans, and the like, in a credit-dependent economy. Hence the Fed’s mixed feelings about consumer price inflation: If it gets just a little too high, it triggers broader effects that might turn the corporate party into a mess. And in this manner, today’s data will embolden even the doves to nudge interest rates up further.

And the last doves are coming around to more rate hikes. Read…  With this Inflation, What Will the Fed Do? 
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Offline Golden Oxen

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Re: 💸 But Who Pays the Price of All This Inflation?
« Reply #622 on: July 14, 2018, 04:55:41 AM »
https://wolfstreet.com/2018/07/12/but-who-pays-the-price-of-all-this-inflation/

But Who Pays the Price of All This Inflation?
by Wolf Richter • Jul 12, 2018 • 61 Comments   
We already know who.

Inflation “looks quite good,” Chicago Fed President Charles Evans said so eloquently in an interview even before today’s Consumer Price Index was released.

Today, by his standards, inflation looks even better. In June, the Consumer Price Index for all urban consumers rose a brisk 2.9% compared to a year ago, the sharpest increase since February 2012::


Without the volatile food and energy groups, which weigh about 21% in the index, “core” CPI rose 2.2% in June compared to a year ago.

And the purchasing power of the dollar – which the Bureau of Labor Statistics also provides as a helpful reminder of what consumer price inflation actually is – dropped 2.7% from a year ago. In May and June, the dollar’s purchasing power reached, as it just about always does, a new record low. The chart below shows what the purchasing power of the dollar has been doing over the past decade:


Inflation is good for companies and landlords because it means they’re raising prices and rents, and they can report higher revenues without having sold a single extra thing. Their input costs may also rise, but they’re hoping that those increases will be less, and that in this manner, inflation will inflate their earnings. For that reason, they and their Wall Street hype jockeys love consumer price inflation. But they hate wage inflation because it eats into the hard-earned inflation profits. And the Fed has been trying to help out.

So the question arises: Who is paying for this inflation that the Fed has been strenuously trying to obtain over the last few years and that it now has obtained to the satisfaction of even its doves, such as aforementioned Mr. Evans?

Average hourly earnings for all employees in the private sector in June, according to the Bureau of Labor Statistics, rose 2.7% from a year ago. This was at the upper end of the miserably slow growth range that has prevailed since 2010. The range peaked at a year-over-year increase of 2.8% in September 2017 and bottomed out with an increase of 1.5% in October 2012. It doesn’t take much inflation – however inflation is measured – to turn these feeble nominal wage increases into real-wage declines.

And this is precisely what happened in June. Mr. Evan should be pleased.

The nominal wage-increase of 2.74% was more than eaten up by inflation as measured by CPI of 2.87%: Real wages fell by 0.13% from a year ago. Workers pay for consumer price inflation:


Wage inflation, if it were allowed to exist, could more than compensate workers for consumer price inflation. Wage inflation would also help consumers pay off their debts. But wage inflation is precisely what the Fed fears the most.

The Fed understands that declining real wages, if they decline long enough, will eat into consumption in a consumption-based economy, and will further diminish consumers’ ability to pay credit card debts, auto loans, and the like, in a credit-dependent economy. Hence the Fed’s mixed feelings about consumer price inflation: If it gets just a little too high, it triggers broader effects that might turn the corporate party into a mess. And in this manner, today’s data will embolden even the doves to nudge interest rates up further.

And the last doves are coming around to more rate hikes. Read…  With this Inflation, What Will the Fed Do?

The Fed will continue to jerk each other off as to their wisdom and elite status as guardians of the Dim. They will sit around in their circle jerk and enjoy escargot, lobster, and champagne for lunch on our dime, giggling to themselves what a great time they are having as they plan their next Jackson Hole outing while the dim shuffle bills and rob Peter to Pay Paul when the bankster usury bill arrives.

It is not the worker who suffers most from this. It is the poor, the elderly, the crippled and maimed, the uneducated who know nothing of how to protect themselves from these bankster pricks.

"Let them eat cake" or I guess Ramerron noodles will do in today's world.

                                     


                                     

Offline Eddie

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Re: Hyperinflation or Deflation?
« Reply #623 on: July 14, 2018, 09:38:43 AM »
It was always the only politically palatable solution to the unpayable debt. So it had to happen, as you and I discussed here five years ago,or longer, now.

The only unknown was whether they could really make it happen in the face of so much deflationary pressure from so many different sources.

Bad as it is, I view it as better than a massive depression, which could have happened, and still can, if the banks lose control of the bond markets. 

Be glad you saved and invested your way to financial freedom. It didn't happen by accident, but by your patience, your willingness to delay gratification, and by sticking to your plan. Don't let the banksters eat all the lobster. Order one for yourself, and don't even ask what today's market price is. It doesn't matter.

What makes the desert beautiful is that somewhere it hides a well.