Aloha from the South China Sea (FREEPOM)

Cultural, Economics, FREEPOM, Geopolitical, Multilateral Investment Strategies9 Comments

Chinese Capital Outflows and the Buying of American Business Interests

By JC Collins

Early last year the Chinese government threatened the United States with funding and arming Hawaiian independence activists who want to restore the islands’ constitutional monarchy. The story passed with little fanfare until just days ago when the Chinese made a comparison between setting up defensive arms on the man-made islands in the South China Sea, to the US establishing military facilities on the Hawaiian Islands.

Are the G20 Nations about to Depreciate the US Dollar?

Economics, Premium POM

By JC Collins

There are increased discussions taking place between the G20 finance ministers and central bank governors that a decision should be made at this weekend’s meetings in Shanghai to depreciate the US dollar against select currencies. The meetings, which are being held on February 26th and 27th could very well signal the beginning of the exchange rate transition which we have been reviewing here on POM for the last two years.

As we have thoroughly covered, the increasing global deflation and slowing growth would act as the monetary and financial catalyst to spur the economic reforms and promote the required monetary policy changes to support the multilateral framework. This is exactly what is now taking place.

Persia and the Petro-euro

Economics, Geopolitical, Premium POM

Iranian Crude and the Multilateral Middle East

By JC Collins

Iran has recently announced that they will be accepting crude debt payments from foreign buyers in euros as opposed to dollars. New crude sales will also be denominated in euros instead of dollars. Many will remember that Iraq began selling crude in euros in the lead up to the American invasion. This fact has been presented as the main reason for that war.

The thought process is that the US most stop other countries from selling crude in anything but the dollar so that it can continue running up budget deficits back home. Though there is some supportive evidence for such a claim, the complexity of the second Iraq war, and any future war, would suggest a more diverse set of circumstances and casus belli for the ensuing death toll and humanitarian crisis.

Has the “Made in America” Dollar Depreciation Begun?

Economics, Premium POM

Just as American Exports Are Set to Explode

By JC Collins

When we hear that the Chinese renminbi has depreciated against the US dollar we automatically think that the RMB is weakening everywhere. After all, the USD is the global benchmark on currency valuation. But we need to consider that the renminbi’s valuation is also based on a basket of trade weighted currencies. (See post China Just Ended the Dollar Peg…for the most part) Under this exchange regime the RMB has remained stable, even though Chinese monetary authorities have lowered the daily fixed rate against the dollar.

Over the last few days the dollar has been depreciating, which has caught many by surprise. Most POM readers will understand that this depreciation of the dollar has been expected, and in fact, has been a strategy of the both the Federal Reserve and the US Treasury for many years now.