The challenge to the USD: The future of finance in a multipolar world | Zoltan Pozsar, Adam Tooze
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- Опубліковано 23 сер 2024
- May 2022 | For the past decades the USD dollar has been the dominant currency and the centerpiece of financial globalization. Recent events have put the future of the globalized economy into question.
Of particular interest is the rise of China, the conflict in Ukraine and the subsequent sanctions, and the rise of cryptocurrency. From a geopolitical perspective we may be observing the first shifts towards a multipolar world and deglobalization. How do these developments challenge the preeminance of the US dollar now and in the future?
Panelists:
Zoltan Pozsar (Credit Suisse)
Adam Tooze (Columbia University)
Introduction by Rob Johnson (INET)
Moderation by Jay Pocklington (INET)
Footage by Derek Van Gorder (www.dvgvideo.com)
This talk was hosted by the Financial Stability Working Group of the Young Scholars Initiative. Thought this was interesting? Become a member of YSI via ysi.ineteconom...
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This demonstrates the importance of diversification and having a concrete understanding of a certain asset for investors considering this recent global economic crisis. Likewise, how important it is to seek professional counsel.
Takes courage and persistence to wander out into the wilderness and build a new civilization but that is the summary of innovation.
@Bianca Rantzsch | Your Way of Life: I do agree, Markets are oceans not lakes. The prominence of basic or institutional financial managers cannot be overstated. Take myself, having faced my share of bad trades, Fortunately with the help of my Pm, I came to understand the essence of timing, capital, entry, exit, goal and how they each affect every asset. Currently hold a $415k portfolio averaging a 14% monthly roi in less than 7 quarters. so I do know the importance of basic knowledge and delegation.
@@mvanwie Yvonne Annette Lively the Inv. advisorr with Morgan Stanley? From a JustFin podcast Tate was on?
@@mvanwie Just looked her up. Records and wbpge are detailed but wouldn’t she be sorta pricy for 15% m-roi? Left a message though.
@@mvanwie I'm sorry to ask but do i get a call back after i missed her scheduled call twice? Her details tally. I wasn't exactly sure at first.
We need Zoltan on a proper podcast
The status quo always has a certain inertia which is why it took major wars or other events to upend previous monetary regimes. Adam is right to be skeptical, but I suspect Zoltan is on to something.
Russian commodities are far more important than many think. In a world of profligate currency printing, that which cannot be printed becomes more important than ever. The West needs Russian commodities to be in the market, otherwise prices will rise all the moeso. So Russia is going to get paid one way or the other. By freezing their fx reserves, the West is forcing Russia to find an alternative. To the extent they succeed, others may join them so as not to be vulnerable to similar actions.
Adam is the same as Michael Pettis they keep arguing that because the USD is superior to commodities Russia and China will keep saving in dollars or the costs of using commodities are high. However, If you are saving in USD and even Eurodollars then that money will be seized you have no custody over it, that's the point. Inconvenience, costs will be trumped by national security implications. Most commodity producers are outside the G7 including OPEC they now know one false step and all their savings can be seized.
@@pt17171 very recently China and Russia, plus several other nations have sold their USD HOLDINGS. Why do you think that the USD has been significantly dropping? Of course this sell off had not begun at the original release of this video.
And Russia is armed to the teeth so no Iraq WMD style intervention will save the day this time.
Z begins @ 13:10.
So great. Thank you for uploading.
Zoltan is a genius in the industry as extreme as some of his work is. I strongly suggest folks read some of his papers from the years 2010s regarding the shadow banking industry.
I think having the originator of most of Zoltan's ideas - Luke Gromen - would be far more interesting. And would allow a proper discussion that treads new ground not just a rehashing of the papers.
Economist Michael Hudson has already been talking about this issue for many years.
Unfortunately I think Michael Hudson is just paid attention on certain circles only. The mass media, internet media I mean, like Facebook, is censoring even URLs from MH's site. A clear proof that they don't want people to know about Hudson's ideas and views of Russia or China's situation. That's because he is an US prestigious academic who can't be denied. Now, after Zoltan's article about the multipolar world, which dropped like a bomb that can't be ignored or censored anymore from American citizens. What is the new reality the US is about to face and how will it affect the US citizens? This is the real WWIII and it will be economic, not military, and this time the results will be out for everyone to see. The episodes with China and the USA during Trump's presidency will be nothing compared to this new world order multipolarity will bring, with very little the US will be able to do.
💯 However, he is not from the “right” school of political economy so he is ignored by the mainstream. In fact, his analysis is much sharper and better informed than Zoltan’s.
As has Luke Gromen, who Zoltan rebrands almost shamelessly.
He certainly has. This people should read his articles or his books.
you guys should use lavalier microphones or pass around a hand mic, it was difficult to hear the speakers
It is ironic that a move to commodity-based reserves seems the logical choice because of their inherent value and limited availability, seemingly necessary because of the inability of the actors involved to cooperate and trust. Yet commodities, in their raw form are resources from nature. Despite that seemingly obvious truth, the expansion of the debt-based dollar system has been unable to recognize ecological value on its own terms, and has been relentlessly destroying the biosphere at an accelerating rate. Attempts to prevent or halt these effects have run into the dilemma of failed trust and cooperation. So will we value commodified nature as the reserves backing our monetary units? If this is the case, why not do do directly, based on global average temperature, biodiversity, atmospheric GHG, ocean acidity and forest cover? Which raises the awkward question about why extracting resources and consuming nature has been incentivized and measured as an increase in wealth, when supply depletion is a net loss in wealth. If commodities are the new gold, why have we been giving them away as quickly as possible for the last century and calling it progress? It could also be called theft.
Zoltan has very important knowledge to impart.
But the whole setup is very shoddy and unprofessional.
Otherwise Zoltan as usual on point 👌👍💯
Yeah, it's really set up for a salon type of engagement; audio is horrible since there were no individual mics.
Adam Tooze is very British! 😂
indeed...
What are Bretton Woods 2 & 3?
Good stuff in here. BTC is not what will be the driver in Crypto going forward. All the crypto issues now are based on corrupt centralized finance side not defi.
Please explain how any of those corrupt centralized forces have damaged the integrity of the Ethereum and Bitcoin blockchains.
US will need to pay Bond yields in Gold to attract purchasers.
Can USD remain the reserve currency while the US 10-yr. is no longer the benchmark (in)security?
Quite a big effort from too many to discredit Zoltan. Quite certainly he's telling the truth. In any case he seems to be late in following the ascent of the multipolar world and the coming rules for world trade, without dollar, without US control. Continue not taking it seriously so it can grow and grow.
Unimaginable for the Chinese to side with the USA/West, knowing what the eventual outcome would be, read Japan. The Americans firmly believe in the winner take all kind of gambit. It is exactly what the Chinese Russians aren't able to come to terms with the US$ hegemony, which IMHO, trumps over everything else and would in effect perpetuate American global dominance.
How about crypto?
Topaze needs to asks questions in a more concise manner. He comes off as someone who simply likes the sound of his voice.
I think you might call it articulate
@@ilovejimrogers waffling, droning.. Etc.
@@ilovejimrogers No! He's british
@@ilovejimrogers I call him annoying - seems to fit quite accurately. Ask a question - we don't care what he thinks.
Thought - all of the issues are trust issues at their root. So why is Bitcoin so roundly dismissed? Especially when the 'bitcoin' criticisms are actually reasons why 'crypto' blew up...?
What do you think about the head of the Dutch central bank speculating about revaluing gold?
...BRICS....
If the FED fought inflation, they would increase the reserve requirements.
No. Energy Storage. In the ground or through IP is the new “gold”. Bc is represents, in the abstract, future consumption. Now bitcoin, bc the energy overhead is too high, so it’s NOT the answer (currently). The answer is…
The world has a natural currency- in a physical sense. It’s measured in Joules. Gold has value, but you can’t eat it, build a shelter with it, etc.
The answer is banking future productivity through automation and energy storage
And that Is Money
Crypto + energy + tech = power
Exactly. “Stuff” + “other Stuff” + “other Stuff” = Money is malleable.
Dude finally realized he was underemployed at Credit Suisse.
Tooze is just incomparably more informed, articulate, and analytically sophisticated than his conversation partners. This is a room filled with very smart people, but Tooze is in a class of his own.
I remember Tooze tweeting it March that Russia would collapse in a few weeks.
😄@@pt17171 He's British! enough said
Though the most his conclusions based on falls premises they sound eloquent for unsophisticated brains.
Is Zoltan an Open Society guy?
Wearing a mask and complying are the first step in the "new order"
The absence of Luke Gromen here is painful. Zoltan hasn't had an original thought at all - he's merely reiterating ideas from others, and his lack of depth when explaining anything here testifies to that.
Luke Gromen originated this changing order idea (Zoltan's PR labeled "Bretton Woods 3") and he would have pushed back at the comments on crypto. He would have vocally separated Bitcoin - proof that creating a world without the need for trust is entirely valid and worthwhile - versus the "fiat criminals finding a new place to rob retail investors" that is the crypto industry.
Don't throw the baby out with the bathwater around bitcoin and the altcoins.
Get Luke in for a proper discussion with Perry.
Luke is very knowledgeable. However, he predicted that by Sept 2022 the Fed was going to pivot, because of unsustainable interest payments by the US Treasury. Don't know why he predicted that, because he knows quite well there are +3 Tns in Reserves and +2 Tns in Overnight Reverse Repos with Fed. That's a huge wall of liquidity that will be buying Treasuries and IG credit each time the 10-year yield crosses 4%. By the way, that moment came in Oct 2022 and is almost back again (10 yr closed at 3.94 % last Friday).
@@jorgeponce5512 What happens to RRP?
BTC is a bunch of numbers on screen, not essentially different than the FED digits on screen. I buy Dash.
@@jorgeponce5512 What are those reserves? & how would the Treasury benefit from RRP?
@@issenvan1050
RESERVES:
They have been created by a monetary policy instrument called Quantitative Easing (QE). Primary Dealers (PDs) buy Treasuries (bills-notes-bonds) at US Treasury auctions and then the Fed buy those instruments from PDs and deposit Reserves (aka Fed Funds, actual dollars created out of thin air via keystrokes) in the accounts of those PDs at the Fed.
These Reserves peaked a 4.2 Trillions in Sept 2021 and are now roughly 3 Trillions.
These Reserves are lent by banks in the repo markets to portfolio managers (e.g. to big behemoths like Blackrock, State Street, Vanguard, as well as hedge funds, pension funds, insurers, sovereign wealth funds from countries like Saudi Arabia, Singapore, Norway) who now can buy Treasuries at much higher rates than they have been in 16 years (e.g. right now the 6-month Treasury bill is yielding 4.93%, the 10-yr note is at 4.05%). So, by buying Treasuries, they can put sort of a ceiling on the rates the US Treasury will have to pay to all those institutional investors.
RRP:
The Overnight Reverse Repo is another instrument of monetary policy implemented by the Fed. In this case, the Fed "borrows" liquidity from 3 types of financial institutions:
1--Money Market Funds of 30 large investment managers of firms like Goldman Sachs, JP Morgan Chase, Northern Trust (and another 27)
2--Government-Sponsored Enterprises: This includes Fannie Mae, Freddie Mac and the 11 Federal Home Loan Banks of 11 cities in the US.
3--Large US, European, Japanese, and Canadian Banks.
This is what happens:
Those institutions lend money to the Fed at an Overnight Reverse Repo rate currently at 4.55% and the Fed gives then Treasury bills as collateral.
For instance, the total overnight lending today at closing (1 pm) was 2,192 355 000 000 (roughly 2.19 Trillions). That is a lot of liquidity that all those financial institutions prefer to lend securely (against solid collateral like Treasury bills), instead of buying then at Treasury auctions.
However, at some point, if rates keep rising, those 2.1 Trillions can be used to buy longer duration Treasury instruments (like bonds and notes at Treasury auctions) instead of short-term bills, as well as to buy corporate debt, both investment grade and perhaps some high yield (aka junk bonds) like BB-rated, thus helping to put a ceiling on the rates that corporations will have to pay investors for the corporate bonds they issue.
Hahaha. .."recovering from Kohvidd...hahaha. BS!
A bunch of people sitting around smelling their own farts.
How about crypto?