An secondary effect of “trying” to opt out of the dollar system for the reasons mentioned is that it cause appreciation not depreciation to those still in the system
Great conversation. I have a couple of problems with Brent's view. While it's true that the dollar index has gone up, I think it's fundamentally incorrect to claim that the dollar has appreciated. The dollar is depreciating faster than it has in the last 40 years. That is what inflation is. The dollar lost 7% of its purchasing power in just the last year. So all the dollar index is telling us is that the dollar is falling slower than the euro and the yen, but they are all falling against hard assets like gold and commodities. In the final analysis it's very easy to understand that there are finite amounts of commodities, but no limit to the endless printing of fiat currency. This is why Zoltan Pozsar's Breton Woods III is most likely on the right track.
You may be viewing the dollar appreciation from the wrong angle. I'll paint you an over simplification picture. What Brent is describing as dollar appreciation dynamic is that dollar appreciates not only on the USD asset side but also the liabilities. If you have a position where you hold more liabilities (debt with interest rate higher than cash flow ie your average American) than assets (income, alternative cash flows) which are not giving you a net return, then appreciation chokes you out (insolvency, homelessness, etc). Appreciation inversely will benefit the person whom is the large holder of highly liquid instruments so that you have insurance against downturn especially when you have a financial position of high liquid assets or cash flow that gets you out of a ditch incase you go zero on your income or one of your other assets. Think of liabilities in an inverse manner to assets in appreciation. How far badly or great appreciation works is soley based on what is your current financial positioning (income to debt), how levered you are and the time of the dollar appreciation.
IE if I have income from a job and your marginal return relative to my liabilities(non paying debt, expenses, etc) is very thin (2-3% positive) or negative(you're in deep debt), then dollar appreciation for me(or anyone in this position) it's just going to destroy them.
Pre reserve currency status when some other country got a bunch of USD they would come bother you about gold. Now USD is their reserve and they can inflate their currency on top of it, making their goods cheaper to offset your USD central bank dilution. That's the point of the reserve currency scheme
I don't understand why the DXY is conflated with "the dollar". Several disparate currencies, all in different proportions seems like an odd benchmark. For example, "the dollar" (DXY) is strong but it takes more FRNs to buy gasoline than ever before. PPI is through the roof. So "the dollar" is "strong"? And weak? Help a brother out.
Dollar is reserve currency, so when USD dilutes & becomes weaker, dollars pile up at foreign Central banks & they issue their own currency with USD as the reserve. So they automatically make their own currency weaker which offsets the dollar weakening and makes the dollar look stronger vs other currencies
Dollar is strong relative to other currencies because other countries are debasing their currencies relatively more than the United States. And the purchasing power of the Dollar is eroding, but other currencies are eroding more.
@@Rainy_Day12234 Yeah yeah, cleanest dirty shirt, etc. I still think the DXY is a flawed metric and shouldn't be referred to as "the dollar". Record inflation, record trade deficits, businesses struggling... Now take the Ruble. THAT'S showing strength.
@@geedoubleu641 from wikipedia: The U.S. Dollar Index is calculated with this formula: USDX = 50.14348112 x EURUSD^-0.576 x USDJPY^0.136 x GBPUSD^-0.119 x USDCAD^0.091 x USDSEK^0.042 x USDCHF^0.036 where number1^number2 is number1 to the power number2, so EURUSD dominates
@@edubmf Yeah, I know all about what "Dixie". What I don't know is why I should care that the Euro, Yen, etc. are down against "the dollar". I'm saying that the DXY is not "the dollar".
Brent is speaking from both corners of his mounth. He is missing some vital knowledge that can bridge the disparities and discrepancies between both corners of his speak.. He is very vague for me.. So his probablities are not quite rational.
Immensely useful in finally making Brent explain his theory and repercussions, blow by blow. Thanks.
One of the best interviews I've seen in a month. I'm drinking this milkshake for sure. Just look at the dollar price.
Brent is a great listen. Love euro dollar info. Excellent questions. Thanks
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An secondary effect of “trying” to opt out of the dollar system for the reasons mentioned is that it cause appreciation not depreciation to those still in the system
I owe you a milkshake Brent for the heads up on the dollar. 🥤🙏
why not develop other forms of collateral in the euro dollar market? or Fed offering treasurie directly to euro dollar market at negative rates?
Very interesting insights...
Great conversation. I have a couple of problems with Brent's view. While it's true that the dollar index has gone up, I think it's fundamentally incorrect to claim that the dollar has appreciated. The dollar is depreciating faster than it has in the last 40 years. That is what inflation is. The dollar lost 7% of its purchasing power in just the last year. So all the dollar index is telling us is that the dollar is falling slower than the euro and the yen, but they are all falling against hard assets like gold and commodities. In the final analysis it's very easy to understand that there are finite amounts of commodities, but no limit to the endless printing of fiat currency. This is why Zoltan Pozsar's Breton Woods III is most likely on the right track.
I believe Brent regards dollar appreciation as a relative term, relative to other, weaker fiat options.
@@RustyCohle which is why the USD collects investors, many of them foreigners. A safe haven?
Temporarily. Where will it top out?
daddy snider would disagree
You may be viewing the dollar appreciation from the wrong angle. I'll paint you an over simplification picture.
What Brent is describing as dollar appreciation dynamic is that dollar appreciates not only on the USD asset side but also the liabilities. If you have a position where you hold more liabilities (debt with interest rate higher than cash flow ie your average American) than assets (income, alternative cash flows) which are not giving you a net return, then appreciation chokes you out (insolvency, homelessness, etc). Appreciation inversely will benefit the person whom is the large holder of highly liquid instruments so that you have insurance against downturn especially when you have a financial position of high liquid assets or cash flow that gets you out of a ditch incase you go zero on your income or one of your other assets. Think of liabilities in an inverse manner to assets in appreciation. How far badly or great appreciation works is soley based on what is your current financial positioning (income to debt), how levered you are and the time of the dollar appreciation.
IE if I have income from a job and your marginal return relative to my liabilities(non paying debt, expenses, etc) is very thin (2-3% positive) or negative(you're in deep debt), then dollar appreciation for me(or anyone in this position) it's just going to destroy them.
Still watching Frank G Melbourne Australia 🇦🇺 ❤️
Pre reserve currency status when some other country got a bunch of USD they would come bother you about gold. Now USD is their reserve and they can inflate their currency on top of it, making their goods cheaper to offset your USD central bank dilution. That's the point of the reserve currency scheme
I don't understand why the DXY is conflated with "the dollar". Several disparate currencies, all in different proportions seems like an odd benchmark. For example, "the dollar" (DXY) is strong but it takes more FRNs to buy gasoline than ever before. PPI is through the roof. So "the dollar" is "strong"? And weak? Help a brother out.
Dollar is reserve currency, so when USD dilutes & becomes weaker, dollars pile up at foreign Central banks & they issue their own currency with USD as the reserve. So they automatically make their own currency weaker which offsets the dollar weakening and makes the dollar look stronger vs other currencies
Dollar is strong relative to other currencies because other countries are debasing their currencies relatively more than the United States. And the purchasing power of the Dollar is eroding, but other currencies are eroding more.
@@Rainy_Day12234 exactly! And they're doing it because their "reserves" (US IOUs) are more numerous
@@Rainy_Day12234 Yeah yeah, cleanest dirty shirt, etc. I still think the DXY is a flawed metric and shouldn't be referred to as "the dollar". Record inflation, record trade deficits, businesses struggling...
Now take the Ruble. THAT'S showing strength.
Is "the dollar" an index comparing USD to Euro, Yen, GBP, etc? Because I don't get it.
The index is the DXY.
@@Zummbot I know about the DXY. What I don't know is how valuable is a comparison of FRNs to Euros, Yen, etc.
@@geedoubleu641 from wikipedia:
The U.S. Dollar Index is calculated with this formula: USDX = 50.14348112 x EURUSD^-0.576 x USDJPY^0.136 x GBPUSD^-0.119 x USDCAD^0.091 x USDSEK^0.042 x USDCHF^0.036
where number1^number2 is number1 to the power number2, so EURUSD dominates
@@edubmf Yeah, I know all about what "Dixie". What I don't know is why I should care that the Euro, Yen, etc. are down against "the dollar". I'm saying that the DXY is not "the dollar".
@@geedoubleu641 okay I'm out!
Oh man, if dollar tops today this would be fkin EPIC!
It won't.
"Fed is overseen by congress" - ha, ha , ha ,lol, lol, lol
Growing inequality? Define please.
I love Brent but I wish he would get better words instead of always lacking better words.
Probably at the top, better Brent hurry up with his winners final lap
So Brent, from a financial point, why dont they want Trump or Republicans back in office?
I think the milk in the milkshake is off (early stage of rotting) so who cares who has the straw. A Rotten milkshake needs to be flushed.
Brent is speaking from both corners of his mounth. He is missing some vital knowledge that can bridge the disparities and discrepancies between both corners of his speak.. He is very vague for me.. So his probablities are not quite rational.
I think Brent has wishful thinking all while disguising it with neutrality.