I’ll start by reposting this tweet by Will Schryver:
No reserve currency in history has been able to retain that status indefinitely, for various reasons. That status tends to militate against a healthy economy, and that in turn militates reserve currency status. So King Dollar was never going to remain King indefinitely, although the US—like other countries in a similar position—has been willing to go to great, and probably unwise, lengths to stay on top.
We know that Jay Powell, Fed Chairman, isn’t plugged into that because he has said point blank that he’s OK with multiple reserve currencies. That may not sit well with the US Deep State, but Powell appears to be unfazed. Powell appears to recognize that the US economy is seriously unbalanced, so part of his goal in raising rates is to push the economy in a healthier direction. Key to that is inducing more rational—as opposed to crazily ideological—credit allocation. Within the last month or two one of Powell’s key backers, Jamie Dimon of JPMorgan Chase, said exactly that to the House oversight committee, mincing no words at all. He categorically denounced allocating credit based on woke criteria.
So now we have this:
In case you’ve forgotten, this is what “ESG” is about:
Global sales of environmental, social, and governance (ESG) linked corporate bonds declined for the first time ever as interest rates soared, market turmoil persisted, and economic uncertainty turned borrowers away from debt markets.
Call these “woke” bonds:
What does this mean?
This will all play directly into House politics, since the House controls the USG purse strings. The Zhou regime is already demanding unlimited debt, even as the Fed makes debt more and more expensive. There will be some sort of collision, but Powell must have foreseen this when he started down this road:
Lots going on. Regular order in the House may not mean business as usual. We shall see.
Also, Mark note that Blackrock is losing investments from high profile clients, i.e. red state pension funds, for a couple of reasons:
1) They aren't down with the Commintern for local political reasons
2) They don't want to be sitting on major losses in these going forward, creating a gaping hole in their future liabilities, i.e. defined benefit payouts.
In Florida, FYI, a lot of state employees are not on a defined-benefit system. We were given the option of a private account, owned by us, 20 years ago by the state. So, those people will be dealing with potentially lower payouts in retirement, but it doesn't translate to the State's balance sheet.
Little dynamics to think about in relation to this issue.
Good Post.
Mark, if you haven't read it yet, I recommend a book I finished this past week. It's "The Storm Before the Calm" by George Friedman (formerly of Stratfor). It has a slight similarity to "The Fourth Turning" in that he traces the eighty-year cycle of major events since 1780 in the US. But instead of going into the weeds of "generations" as Strauss and Howe did, he labels the eighty-year cycle as the "insitutional" cycle, and then adds another one--a fifty-year "socio-economic" cycle. He traces both of them over the years since 1780. But what he points out as an oddity is, we are now at a point where both are coming together in the same decade. The Institutional cycles peaked in 1860, 1940, and now; the Socio-economic cycles changed in 1830, 1880, 1930, 1980, and likely by 2030. One of his observations was that the change of each socio-economic cycle was marked by an incompetent president who expected things to go on as they were, and could not deal with change--John Quincy Adams in the 1820s, Grant in the 1870s, Hoover in the 1920s, Carter in the 1970s--and now we have Biden! He thinks we'll be in good shape once we get through both. I am not sure I am as optimistic as Friedman is, but I hope he is right.