Another Loss for the US: Japan Breaks with Western Allies, Buys Russian Oil at Prices Above Cap

I continue to be amazed about how little the MAGA crowd knows about how markets work yet speak about it so confidently. I for example know zip about astrophysics and quantum whatever. I’ll read the thread but I’m unqualified to pipe up so I don’t.

 

About 21-22% of that $30T is effectively IOU’s shoved into the Social Security kitty. You might be joking about inflation, but the reality is that the Fed has infinite ability to print money and make those entitlements worthless. 32% or so is held by banking and public. 19-20% by Fed’s balance sheet. The rest is a “come and take it” cannon pointed at countries using dollars in reserves.

I didn’t clickbait on the article, but my assumption is no mention of USD strength against the Yen and denominating in USD would have resulted in a higher price in currency exchanges from yen to USD to settle. Yen is -22% to the USD pre-pandemic to now. It’s trended stronger after a -40%; however, Japan central banks may have concerns.

 

I continue to be amazed at how anti-American and anti-democracy the MAGA crowd has become.

 

But tell me how it causes inflation. If Saudi Arabia sells its oil to China in Yuan vs dollars, how does that cause inflation?

if China buys oil in dollars, they exchange yuan for dollars, give dollars to Saudi Arabia, and Saudi Arabia exchanges the dollars for its currency. I don’t know the mechanics but in theory that could all be computer automated and dollars may be involved for only minutes, or even seconds. How is that different than it dollars were never used in the first place?

What about all the other industrialized countries in the world where oil is not sold in their currency. Why don’t they have way way way more inflation?

 

And with OPEC cutting production and the price rising again US producers likely will see a bigger reason to try to produce more while they can get top dollar.

Seems like OPEC really doesn’t care what Biden wants. Wasn’t it last year when he asked them to raise production and they scoffed ?

 

What may cause inflation to rise is the price of crude going up due to the recent OPeC production cuts.

Fed maybe in more of a pickle now.

 

You could argue that being the reserve currency boosts the dollar, but if that is true at all, it is long term and very uneven.

Pound Dollar Exchange Rate (GBP USD) - Historical Chart

Id argue that long term dollar strength has been mainly due to its comparatively strong economy and generally stable (until recently ) geopolitical status.

Putting that aside, if the dollar falls, exports increase, which gives a boost to US economy, and US corporations bring in higher foreign earnings, as almost half of US S&P earnings come from outside of US.

The percentage of US dollar transactions is slowly going down, but the dollar keeps increasing. It’s seems like it would be the opposite if the doom sayers were correct.

 

Oil price going up cuts both ways. It also increases earnings of US energy companies. We export as much as we import. Ultimately if prices stay higher US will produce more. But yes it could cause modest and temporary US inflation.

 

They would look like they cared if he asked them to cut production like the traitorous Trump did.

 

Doesn’t most almost all of our Alaskan oil go to japan. I remember it used to be illegal to export American oil and maybe in the 80s or 90s our Congress got out of the way. It was cheaper to send Alaskan oil to Japan then to the Gulf of Mexico to be refined.

 

The Saudis have never been our friends. The Sunni are no better than the Shia. Now that we aren’t a net oil importer we aren’t even a good market for them.

 

OPEC has never cared what any president wants and have only acquiesced to pressure for short periods of time when it suits their purposes. They have remarkable discipline and can turn on and off the spigot when they please. They’re a cartel but they are completely dialed in to macroeconomics. Their target for oil is around $100 from what I’ve seen

As for the US we are not a cartel we can’t turn on and off the. Spigot. Private companies make those decisions and are limited by capacity constraints including refining. The needle won’t move very much in the US. It would be advantageous if we can build relations with Venezuela and Iran and Iraq to boost their moribund oil infrastructure. They have lots of oil guess who doesn’t want that. The GOP and Saudi.

 

How do you break with your allies while doing exactly what your allies allowed you to do?

 

Here's a tip: anytime you guys bring Soros into the argument you go from being wrong to being batshit crazy wrong.

 

It's a long read but this research and analysis paper published Feb 2022 by Cambridge University Press tells the story of de-dollarization. While published over a year ago the research paper goes into a deep analysis of the progression and implications to the dollar hegemony. To that end much has transpired in the world of financial markets since Feb 22 up to now. This is the beginning of the multi-polar world and CBDC (Central Bank Digital Currency) as well as the challenges to the IMF and SWIFT.

Can BRICS De-dollarize the Global Financial System?

4.2 The Yuan Oil Futures and De-dollarizing Global Oil Trade

While the NDB represents a BRICS’ coalitional challenge to the US dollar’s dominance by establishing a new multilateral institution governed by its members, there are also important de-dollarization trends in the global oil market that can be augmented by expanding BRICS energy cooperation. The US dollar’s hegemonic position in the global financial system has been critically grounded in its exclusive position as the funding vehicle and pricing currency of the global oil trade. The world’s leading crude oil pricing benchmarks, namely the West Texas Intermediate (WTI) and Brent, are priced in US dollars. Scholars have argued that “the main front where the future of the dollar will be decided is the global commodity market, especially the USD1.7 trillion oil market” (Reference LuftLuft, 2018). The use of nondollar currencies in global oil markets “is a serious challenge to the petrodollar system” (Reference FosterFoster, 2018). BRICS as a group is certainly strong enough to mount that challenge: in terms of consumption power and forms a bigger oil-importing bloc than the entire European Union. China, the world’s largest energy importer, and Russia, the world’s largest energy exporter, are mobilizing within BRICS to promote “yuan oil futures,” thereby challenging the US dollar’s hegemonic position in the global oil market.​

 

You can’t do any better than a 68 year old article? I mean fine if that’s all you got, but come on, times change.

 

Don't forget how pro-Big Gov.