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The FED may eventually follow the Japan CB : https://tradingeconomics.com/japan/interest-rate

But it needs a re-socialengineering of american society.

The petrodollar is one pillar of the international reserve currency. The other is the total international debt denominated (serviced) in dollar. $305 trillions according to : https://www.iif.com/Research/Capital-Flows-and-Debt/Global-Debt-Monitor . Servicing this debt creates demand for the US dollar.

The BRICs are creating their separate financial system hence the dedollarisation trend. Jay Powell allluded to the possibility of 2/multiple international reserve currencies.

So we are likely entering the events for a pre-Bretton Woods II style meeting until then the FED can still buy time.

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https://tomluongo.me/2022/08/10/from-davos-without-love-true-detective-or-true-conspiracy/

Tom Luongo is a fan of Mark's Substack! He gives it a thumbs up in this article.

I think that's pretty cool :)

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Perfect timing on the Chinese end after the Taiwan fiasco.

My guess is this is a response by the Saudis to the Dollar inflation snafu, trust in the us to protect Saudi Arabia, and diversify / protect from US strings / influence / power / ability to sanction.

The Western sanctions against Russia are partially driving this. Saudis know they could be next…

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In our rebuilding of our Constitutional Republic....this is necessary. Nixon & KISSINGER took the US off the gold-standing (backing of our currency with gold...(so they could overspend) Kissinger made a deal with the Saudi's...called the "Petro-dollar." Saudi agreed to ONLY sell their oil to any country with US currency...Kissinger guaranteed to militarily protect Saudi's. Every drop sold...even to VaChyna..HAD to be purchased with "dollars" .EXPANSION World-Wide of our Nation's money.

It is UNPRECEDENTED. First time since the 1970's that the Saudi's are bailing.... under Byedone-ville.

In the early 1900's...Pres. Woodrow Wilson allowed a private group of Bankers to form the "Federal" Reserve. N0 GOV. NOTHING....Private banks of the time, which btw Taxpayers pay 6% interest on every dollar we allow this bank-cartel ...6% for the Big-bank...for us to use supposedly our own currency. (That means there's Interest debt..that is backing our current currency.

Their ponzi-scheme is coming to an end historically...It really crashed in 2008-2009...Gov/Fed has been artificially keeping it going, using every accting gimmick known to man. "We've" been bankrupt for decades!

Our current economy is gonna go belly-up already.....so the evil-ones plans all along is they were going to "secretly" re-boot the economy.....

but God Bless the internet....Patriots started waking up and were beginning to network with each other....Patriots started pushing back......(they thought they were going to do this secretly and We the People would never know) (Davos crowd) has been preparing to take away and get CONTROL of our Nation...even if they had to start multiple wars or whatever next "big thing" they'd created for DISTRACTION. BTW....I mention Davos cause Klaus-the-nazi mentored under Kissinger....then went power-hungry...but..that's okay....because....

Patriots from every walk-of-life, education, financial status, base of expertise, skill-sets etc....have been awakening..and networking....and slowly but steadily....and THAT's how we got TRUMP.

Patriots know that the current "Fed Reserve Banking System" is out of juice. And we've been planning to take back OUR CONSTITUTION & Bill of Rights...and Rule of Law that BELONGS to We The People.

The evil ones would love to get Patriots out in the streets to "fight" with their paid thugs...DON'T TAKE THE BAIT. WE follow the Rule of Law.....until all possible remedies have been exhausted.....

So the battle at the moment is....who...which side...good or evil...takes control to rebuild (Patriots) or be slaves to the evil ones.......45 was willing to put his Life, Liberty, and his fortune on the line....So is Mike Lindell...and a few other gazillions who shall remain nameless....to boost this Liberty movement....

and even this platform is a sample of a MAGA-economy being built...to replace and crashing "evil-ones-economy" we all grew up in.

Don't get mad....get BUSY. .....We are all here at this point in time for a Reason... At the bare minimum.....read the Constitution and the Declaration of Independence....KNOW YOUR God-given Rights...Know that the Constitution...is a RESTRICTION on what a Federal Gov't can do....and Congress...

pfhht!....Most of what they do up there is NOT one of NINETEEN (19) things they are ALLOWED to do up there....

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So Powell is rearranging deck chairs on the Titanic?

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As Putin shifted to sell Ural Crude, delivered through Odessa, in rubles, at a $30 discount to Brent (Spread is back to near war risks now, not $30), the re-emergence of global competition for commodity delivery + currency risk for the first time since Smoot-Hawley has caught many off guard, particularly those gaming the US$ financing schemes for said commodities in the Contango trade, for instance. It no longer works as the risk from delivery fails gets real. This competiton is extremely healthy for world trade and the liberty spread by freer markets benefits everyone.

(And is beneficially deflationary to boot!)

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There is a counter-argument to the "Fed is trapped" argument. I have seen it made in several places but here is the one I just was able to find:

https://wolfstreet.com/2022/06/27/can-the-government-even-pay-the-rising-interest-expense-on-its-gigantic-debt-as-the-fed-pushes-up-rates-yes-heres-why/

I like Mark am not an economist but in simple terms the argument being made here is that 1) there is a lag between rates raising and the impact of such on servicing government debt, since higher rates only apply to new debt; and 2) In an inflationary environment, nominal rates of GDP growth and tax revenue will be able to compensate for the loss of real GDP growth and real tax revenue inherent in a recession. It sounds sort of like sticking steel needles in your eyeballs to make you forget about that leg you just broke... and then deciding which injury needs to be treated first... but there you go.

Luongo makes a similar argument about the "goodness" of rising rates (https://tomluongo.me/2022/08/08/economic-redution-inflation-expansion-everything-out-stock-nothing-cheaper/):

"The way out of this situation for the US is to raise the cost of capital, which the Fed is doing through raising interest rates and force fiscal discipline on Congress by curbing their ability to run deficits while simultaneously lowering taxes at all levels especially on small businesses and wealth preservation. "

The bad thing as Luongo notes is that Congress can still pass outrageous unneeded spending bills and thereby make the Fed's job of curtailing inflation that much harder. No fiscal discipline is statutorily enforced like it is with many states. Now of course Luongo does not think the Fed raising rates is about taming inflation, anyway. If he is right, the notion of them raising rates high enough to make any real difference to overall inflation on the demand side is moot from their point of view anyway.

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Aug 13, 2022·edited Aug 13, 2022

On a related note, I acquired a copy of Aleksandr Solzhenitsyn’s Gulag Archipelago in January 2021 and have been making my way through it since then. It is tough reading and slow going. While grounded in undoubted fact, Solzhenitsyn’s prose often takes flight and I often have to backtrack to make sure I’m understanding what Solzhenitsyn is saying. And then I put it down for weeks or months at a time. So I still have several hundred pages to go. I may spend the rest of my life reading it.

But I have read enough to begin to appreciate what happens when a government imbued with an ideology and in denial of its opposition’s concerns goes bad.

As Solzhenitsyn would agree, first there is legislative inaction followed by executive decrees justified by political expediency; then the government takes over control of speech and the press. Then, a framework is developed to silence and ostracize, and then charge and convict, political opponents. Show trials are held on dubious legal grounds. To charge is as politically effective as to convict.

We have seen this numerous times in recent years. Witness the politically motivated impeachment proceedings against Trump and the hyper-partisan televised January 6 proceedings.

In the Soviet Union dissent was punished by imprisonment of thousands of political opponents. But what is the practical difference between imprisoning thousands and publicly charging a few handfuls? How does the message sent to the People differ? What do the criminal charges and criminal process brought to bear against Flynn, Manafort, Papadopoulos, Page, Stone, Bannon, Navarro, and others, and now Trump himself, suggest to others, to you and me, who might seriously question the policies or goals of the Democratic party? We better not object. We better not protest.

And how does our ‘cancel culture’ materially differ from the imprisonment of ordinary Soviet citizens which Solzhenitsyn describes? A Soviet citizen who publicly doubted the State was likely to be imprisoned. A 21st century American citizen who uses the wrong pronoun, or who expresses a politically incorrect thought, or who commits a microaggression, or who ‘harasses’ a protected person by speech or action, is liable to be ‘cancelled’, which often entails loss of job and income, loss of status and credentials, and loss of reputation. How is this not tantamount to (and even, perhaps, more efficient than) a criminal conviction?

Solzhenitsyn compares the more or less garden variety of evil as so often seen in the human condition to the evil which can be perpetrated by mass political movements. He looks at literature to the tragedy of Shakespeare's Macbeth and concludes that the imagination and spiritual strength of the evildoers in Macbeth stopped short at only a dozen corpses because they had no ideology. It is ideology, Solzhenitsyn says, that gives systemic evildoing its justification and gives the evildoer the necessary steadfastness and determination to keep going. (I knew there had to be some rationale that explains Pelosi, Schiff, Swalwell, Brennan, Weissmann, and Elias' resolve to keep doubling down...)

That, says Solzhenitsyn, is the social theory which helps to make the ideological evildoer seem good instead of bad in his own and others' eyes. That, he says, was how the agents of the Inquisition fortified their wills: by invoking Christianity; the conquerors of foreign lands: by extolling the grandeur of their Motherland; the colonizers: by ‘civilization’; the Nazis: by race; and the Jacobins (early and late), by: equality, brotherhood, and the happiness of future generations. Without evildoers driven by ideology, Solzhenitsyn concludes, there would have been no Archipelago.

Solzhenitsyn, of course, died in 2008 before he could see and comment on the ideology and political repression growing in the United States. How would he have characterized the ideological fervor of today’s Democrats, who insist on expansions of the individual rights of certain minorities, such as the minority black, gay, trans and other communities, often described as victim communities, and on the righteousness of America’s global ambitions, and who promote ‘social equity’ as a political goal, while at the same time censoring the political speech and limiting the individual rights of their opponents, who may be guilty only of holding competing political views?

Is not the combination of a zealous ideology with political repression a hallmark of historical evildoers? And is not their legacy always one of widespread tragedy? How does our current regime differ from the agents of the Inquisition, the conquerors and colonizers of foreign lands, the Nazis, or the Jacobins identified by Solzenitsyn?

And why will our ultimate outcome be any different?

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