Modern Monetary Theory

Discussion in 'Markets & Economies' started by mmm....shiney!, Sep 14, 2019.

  1. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    When the usd sinks no one will want it. And it's not different this time so dont try to say Drumph is fixing it because hes not. Hes following in the grape apes foot steps perfectly. And the big government leftists win again.
     
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  2. alor

    alor Well-Known Member Silver Stacker

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    the rates must only goes down, so that bonds could go up, or else the bonds are over
    there are no other place for USD
     
  3. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    How will the USD sink? I ask this because every country is engaging in currency devaluation so something has to drive the market away from USD and it won’t be currency devaluation.
     
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  4. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    So what will you buy? RMB or HKD? RMB term deposits were hot a couple years ago in Singapore. At that time, 1 SGD exchanges for 4.5RMB. Now you can get more, 5.15RMB.

    Or perhaps the AUD maybe a good bet now if commodity inflation takes off? I’ve been thinking about this since I joined this forum.
     
    Last edited: Nov 16, 2019
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  5. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    I’m buying USD.

    I’m cold on RMB, but if I was better off financially I may be tempted to have a play. Roubles is interesting and if Nth Korea sorts its shit out then maybe their won.

    Trouble is that I’m a very small player and the spreads are against me. My allocation of USD is in TUSD which is cheap to buy and sell.

    I’ve got some AUD in cash but I don’t consider it an investment or a hedge, it's emergency money. I exchange my AUD for other assets regularly, when I can.
     
    Last edited: Nov 16, 2019
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  6. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Great Britain Pounds might be interesting and it can be bought as a stablecoin too. But I just want to explain that my first and most important currency hedge is gold, these other currencies are AUD hedges in the event that both the gold price and the price of AUD collapse. Who knows, I may be on the wrong path completely.

    Edit to add: there’s SGD planned too as a stablecoin.
     
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  7. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    I don’t know if I will I say if it is a good idea as looking at the 20 year chart, the AUD is reaching a history low against the SGD. Before 2012, the AUD averages between 1.2 to 1.3 SGD. Of course the AUD has also weakened against the USD since 2012. Is there a specific reason why the AUD has weakened in the last 7 years?
     
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  8. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Firstly, the AUD historically averages about USD0.80, so today’s exchange rate needs to be viewed through the lens of history. I’m not sure about the SGD.

    There’s probably 2 reasons for the decline, the AUD is a commodity currency so when commodities are in demand prices are high and this reflects in the exchange rate. The boom in commodities post-great recession was fuelled by Chinese reserves built up Hu Jintao I think, basically the Chinese went on a spending spree after 2008. The second reason was that during the high period our cash rate was something like 6%, which for a Western country was quite high at the time, more than the US for example so foreign currencies were rushing in.

    There’s a thought going around at the moment that the RBA has already injected huge sums of money into the banking sector as M1 supplies seemed to have surged mid-year. So the RBA may have already begun QE. I’m thinking this could drive the AUD down further, amongst other side effects eg stock market boom, property boom.

    What characterises the SGD?
     
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  9. madaw1

    madaw1 Well-Known Member

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    We know this nearly 2000 years-nothing has changed-maybe Bread and Footy in Australia!
     
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  10. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    I'm not really into currencies but from what I've read, the SGD is under a managed float that tracks a basket of currencies, USD, EUR, YEN, GBP, etc. The central bank of Singapore (MAS) doesn't set interest rates so the rates in Singapore follows the US.

    The Singapore government has been saying a strong SGD is preferred because it reduces imported inflation and Singapore imports a lot of stuff especially food. The government is infatuated with controlling food prices. There doesn't appear to be any concern that a strong SGD will affect exports.

    Here's an interesting article - https://www.todayonline.com/singapo...-it-mean-singdollar-appreciation-rate-reduced

    The interest rates in Singapore tracks the US. Since 2015, rates have risen significantly. They have started to fall when the Fed started cutting rates. Incidentally, the price of gold started going up while interest rates rose.

    [​IMG]
     
    Last edited: Nov 16, 2019
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  11. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    I think there's danger for goldbugs with this mindset. Things are vastly different now than they used to be at any previous time in history. The upshot of that is that history might be completely irrelevant now. As gold owners we need to tread carefully and not get carried away.
     
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  12. madaw1

    madaw1 Well-Known Member

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    This is not mindset there are the facts these days how they people/most of them/ behave in our society. Even that history might be irrelevant now-history can help us understand our greed as human being and teach us how to use it /if we can/ to our advantage.
     
  13. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    The Roman's already tried this. They added copper to the gold coins and it had the same effect as what we have now. This is nothing new and its all been tried before many times.
    The banker puppets will tweet you that this time is different but is it? Trumpbamas economic system is crumbling beneath their feet like a foundation of sand. Good job.
     
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  14. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    The usd is in its final death stages now. Comparing weaker currencies dont show strength, only that they are even worse.
     
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  15. madaw1

    madaw1 Well-Known Member

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    Buy CHF-they are backed by Swiss Vaults /whatever are in there/-you can't go wrong.
     
  16. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    @leo25 , I watched "Princes of Yen" last night and came away with two questions.

    1. How did the post-War Japanese planners manage to create such wealth when the majority of economic theories observe that the best form of wealth creation happens within a free-market? This challenges my beliefs so I scratched frantically through my grey matter for some answers. The only things I could come up with were that the population was largely compliant and likely fearful of authority, individual liberties and especially dissent were crushed by the fascists in power, opposition ideologies were not tolerated and the population was brainwashed somewhat in the education system.

    Because the central planners didn't have to deal with much dissent they could concentrate on creating wealth. The first thing they did was steal the property of the Zaibatsu and forbid them to ever engage in capitalist activity again and then through the window-allocation policy they dictated where new money should be directed and how much, essentially nationalising industries - although it came at a huge cost through wasted resources as companies competed with each other until they were bankrupt. The compliant Japanese were rewarded with a surge in living standards. One criticism I have is that Werner makes the point that it resulted in a society of great economic equality, I'd dispute this as those closest to the funding tap and those making those decisions would actually be more advantaged than the ordinary Japanese. That's the problem with MMT.

    Their goal was to enhance their own wealth and power and they did it by showering gifts on the population whilst also at the same forcing the people to sacrifice their individuality and liberty. These national-socialist did a better job than than their Marxist cousins I'll admit but I really can't answer my question. Any thoughts? Apart from the fact that it's not sustainable?

    2. Are we in for another property and stock market boom if the RBA indeed has already begun QE? I think so.
     
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  17. Silver260

    Silver260 Well-Known Member Silver Stacker

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    Yep, I actually came away with the exact same thoughts, regarding free-market economics . Interested to see what Leo thinks.

    The more I've read the more I'm questioning the whole concept of economic modelling.

    Has there ever really been a true free-market economy, in history?, and what does it really mean? . All I see is the same old pattern regardless of the economic/political framework.

    In order....
    - Growth/Wealth creation -
    - Consolidation of wealth/power at the top
    - Exploitation of the middle classes
    - Revolution ( Bloody or Political )
    Rinse and repeat, for the entire recorded human history.

    I suppose what I'm saying, is that maybe they just got the balance right. The Soviets got it right, for a while. A bit like, we got it right for a while???... Only the future will tell.
     
    Last edited: Nov 19, 2019
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  18. Silver260

    Silver260 Well-Known Member Silver Stacker

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    Actually, thinking of Japan and Economic theories, I only just finished listening to this podcast interview featuring Richard Koo. A fascinating perspective ( Balance Sheet Recessions ) . Have already ordered his book.

    Why Governments Haven't Learned The Lessons Of Japan by Odd Lots
    https://player.fm/1yBcAb #nowplaying
     
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  19. JulieW

    JulieW Well-Known Member Silver Stacker

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    I hope you're wrong there Shiney.

    Putting the AUD to 60 cents could be a consequence of QE and that wouldn't, generally, be a bad thing but my instincts have me thinking that politicians delaying corrections just mean bigger and badder corrections.

    Unfortunately another "recession we have to have" looks a certainty.

    As to Japan, I remember in the 60s a lot of political action in the news from Japan directed at the continuing role of the reconfigured Zaibatsu and their crushing of Japanese freedom. Much in the way of German war industries being reconfigured for the West Germany economic rebirth.
     
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  20. 66rounds

    66rounds Well-Known Member Silver Stacker

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    Can someone please explain the benefit of a falling AUD? To me as a layman it seems counter intuitive. Does it have to do with allowing increased exports as international dollars go further in the Aussie market, thus boosting foreign investment and trade?
     

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