Monday, January 9, 2012

Wall Street Shuffle (is the Game Rigged) does the Market really know what going on!

Put it together and see. Iran gets around 70% of their income from oil related products. Trade blocks by the West basically takes food off their tables. Imagine if 70% of your income was GONE. Wouldn't you be pissed???
Look at the move. Anyone who trades Iranian oil in currency other than U.S. Dollars is on the list of renegade nations? WTF? That is insane. It's like saying you have to pay for your food with sea shells and if you don't you cannot get food again!

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Huh? When the Fed expands its balance sheet these days it’s actually bullish for the dollar!?


The Balance of Assets & Liabilities for Irredeemable Fiat Currencies:

The more technical reason for this dynamic is that irredeemable fiat currencies trade at perennial discounts from imagined would-be ‘pars’. Before the early 1970s there was at least some vague attempt at maintaining redemption at some specific ‘par value’. This meant that if the market were to doubt the integrity of a currency issuer then that currency would fall to a ‘discount from par’. This would invite either a correcting drain on reserves (due to redemptions at par value), an outright debasement (more snidely referred to as a ‘revaluation’) or some kind of intervention to forestall the inevitable. But since there is no clearly identifiable promised ‘par’ at present we have a scenario where currencies trade at perennial discounts to the value that would be par if redemption were to resume with immediate effect.
The above characterizes the fact that fiat currencies are promises for maybe something (but probably nothing) at perhaps some time in the future (but probably never). In this way, the dollar-backed fiat currency represents a doubly precarious asset – for it’s a promise for maybe something maybe later (but probably nothing, never) for maybe something different at perhaps some later date (but probably nothing, never)!

shared article with Forex Insight Team  link to full origin  

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