This is the last of our articles featuring the recently released July 5th Board Meeting Minutes put out by Incrementum. We have noted that this report is really full of interesting and relevant information in terms of what we follow here.
Below are some excerpts from the report on discussion about the idea that there may be poltical pressure in the US to get a weaker US dollar along with some reasons why that may well indeed happen.
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Ronald Stöferle:"Luke (Gromen), you have mentioned the economists’ petition aimed at Yellen to increase the inflation targets, which hasn’t been mentioned very often in the media. I think this fits in with your views that Donald Trump wants and needs a weaker dollar. And with the disinflationary developments that are currently taking place I believe the Fed will have a hard time continuing to raise rates, and I believe they will have to make a u-turn. I would appreciate if you could talk about this economist petition, and then give us your market outlook for the second half of 2017 and some of your best trade ideas."
Luke Gromen:
"Sure. A few weeks ago, there was a letter sent to Janet Yellen that was signed by around 20 senior level neo-liberal academic economists, many of which had served in the prior administration or in past administrations. All of these economists effectively said that we are not achieving our inflation targets and not only do we need to focus on achieving it; we should also increase the target. This went underreported in the media.
Moreover, Trump is talking about exporting oil all over the world, but with the dollar where it is, US shale resources are one of the world’s highest marginal cost sources of oil. And recently two former IMF officials released a book, which was featured prominently in the Wall Street Journal, and they explicitly said that the dollar is too strong and that it needs to be devalued. So we are seeing tension between the strong dollar “mechanics” numerous analysts and economists are talking about (heavily driven by Eurodollar market USD shortages and US rate differentials) and the internal US political pressure to weaken the dollar."
Mark Valek:
"When do you think the US dollar will weaken, and when do you believe this knee-jerk reaction of a stronger dollar during market sell-offs will change? Would a change in this type of behavior confirm your view?"
Luke Gromen:
"During recent risk-off periods the dollar has not been acting well, i.e. there has not been a knee jerk reaction where investors automatically buy the dollar. Historically, the dollar has appreciated during risk-off periods. But in the last few weeks we have seen the dollar depreciate significantly on risk-off days. That’s the type of behavior you would expect to see if the dollar is falling out of favor, but it’s too early to say if there has been a paradigm shift. It was mentioned earlier in the call that bonds and equities have been selling off at the same time in recent weeks, which is also something you might expect to see in such a paradigm shift. But this is also too early to tell, so we are watching the markets and seeing how they develop going forward. "
Please Click Here to read the full Incrementum Report
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Added news note: I added the paragraph below to the page of information on SDR's found in the upper hand of this blog (or click here). A new currency Token called the ACChain (Asset Collection Coin) based in China has created quite of bit of discussion and uproar on alternative media platforms. The promo video for this new token seems to imply it is some kind of new digital version of the SDR. I do not believe that is the case as explained below. I added the information below because it is the best information I have on this at this time. If that changes, I will update it over time. I am working on more research on this for now.
August 2017 - Alternative Media View of the SDR - this video appears describing a new currency token (ACC - Asset Collection Coin) as being tied to a new digital form of the SDR that the IMF would propose as a replacement for the US dollar. It's an interesting idea, but I cannot find any connection between this new token and the IMF. An expert I talk to on these kinds of issues does not believe this would be any kind of SDR from the IMF, but rather what he calls an example of a private SDR like the SDR bonds China has issued. At this point, this appears to just be a private venture token (based in China) that is using the SDR instead of the US dollar or the Yuan as the unit of account. An account holder of these tokens would see them valued in SDR's instead of dollars for example, but would not actually own official SDR's. This does however show how it is possible to some day create a digital version of the SDR which is something we have talked about as being possible in the future. The best information I have right now is that nothing like that is on the near term horizon. I would expect to see some national central banks issue a central bank digital currency long before any kind of digital SDR might be looked at based on information I get from experts I talk to on this. I am keeping an eye on Singapore.
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BullionCoin Update 8-14-17: BullionCoin has sent out the email below to anyone who signed up to request information on how it will work:
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BullionCoin Update 8-14-17: BullionCoin has sent out the email below to anyone who signed up to request information on how it will work:
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