Let’s Talk About India and the Growing Demand for U.S dollars destroying their economy: Credit to Jeff Snider and Emil Kalinowski, The Federal Reserves’ job is to prevent DEFLATION – August 31, 2022,
As a Canadian, one of the things I DON’T do, is hoard Canadian dollars without INTEREST; why? Because most of the exports in Canada go to the United States, the U.S is our largest trading partner, and as a Canadian, I’m fully aware that the Canadian WELFARE State will go bankrupt if the Canadian dollar ever dares to reach parity with the greenback.
The weakness of the Canadian dollar to the U.S greenback is to the BENEFIT of the productive classes in the Canadian economy who export items to the United States, because if let’s imagine for a moment that the Canadian dollar reaches parity with the greenback or even becomes stronger than the U.S dollar, all of a sudden production costs in Canadian dollars just got a whole lot more expensive. Profit margins in a U.S-Canadian dollar parity scenario would not only get squeezed but become UNPROFITABLE for Canadian producers reliant on U.S Consumers.
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Although Jeff Snider and Emil Kalinowski take a different approach than I do when it comes to the Eurodollar, I’m very appreciative of their research because as an example, I would have never known about this problem in India without them, or maybe I would have learned about months later when it was too late. So kudos to Jeff Snider and Emil Kalinowski for Episode 282, and consider supporting their work when you get the chance.
The real question to ask is why hasn’t the world abandoned the U.S dollar. The answer is simple; if you live OUTSIDE of the United States, you don’t have to concern yourself with DOMESTIC U.S regulations or taxes. Currently, Canada has a far-left Prime Minister who would likely win a 2022 election, even though the economy has been on a steep decline since he took office. Ask yourself why.
Big business in Canada, if they’re smart enough to take advantage of BENEFIT from a weakened Canadian dollar, as most businesses in Canada HOARD U.S dollars and usually sell or spend Canadian dollars as soon as they can in fear, the Canadian dollar will buy LESS domestically. A very similar situation is playing itself out in India, the difference between India and Canada is that the Indian economy on paper is a lot stronger.
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If you’re living in India and you’re working for U.S dollars, maybe in the IT field, for example, the rupee hitting an all-time low may actually BENEFIT you, especially if your government, unlike the Canadian government, hasn’t been dumb enough to declare war on fossil fuels. Canadians’ cost of living has been going up because the Left WIng Canadian government has declared war on fossil fuels, meaning that if you’re amongst the productive class in India, your only concern should be the Russian-Ukraine war, and your government NOT adding more silly regulations to the Indian economy.
Why the Russian war with Ukraine should concern India is because of the potential for shortages of things, money is all about what money buys, so if lets say this grain shortage worsens, that’s a cause for concern for developing nations, but if let’s imagine for a moment Putin says, mission accomplished in Ukraine, war ends, and things start getting back to normal, and by normal I mean the Western nations continue these stupid climate change initiatives, the BRICS nations (Brazil, Russia, India, China, and South Africa.) might find themselves in a much stronger position than anyone could have imagined.
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Now, this can all happen as the U.S dollar strengthens and remains strong; it wouldn’t surprise me in the least if Europe or the European Union isn’t on the verge of collapsing because I am definitely a believer in the PETRODOLLAR being a real thing. Wind, solar, and Biomass will NEVER replace fossil fuels; as I like to point out they can work alongside them, they could even compete with them in some respects, but they can’t phase them out because fossil fuels are far to efficient.
Not only are fossil fuels more efficient, innovations to make fossil fuels do more with LESS are happening at a rampant pace, and if we want to be serious about fossil fuels, the primary concern is CLEANING up our waste, something Western leaders appear disinterested in doing. Western leaders, in the modern era, are all about virtue signaling and what’s that old saying? Let sleeping dogs lie!
Now, this doesn’t mean everyone in Western nations is asleep at the wheel, but the flaw of democracy is that the MOB RULES; if the majority in any Western nation wants to keep their welfare states alive and strong, well, obviously, as BRICS nations gain more power, they may for a period of time allow the U.S dollar to strengthen for the benefit of the development of their countries because I remind the reader that the PRIVATE sector is responsible for building the middle class.
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In most third-world nations, the people are more pragmatic, in that as long as the standard of living improves, they’ll support whatever people are in power. Something people may not understand is that Putin allowed Russians to travel again; Indians are also doing a lot of traveling, as are the Chinese, Brazilians, and productive South Africans.
If you’re amongst the upper middle class or rich in one of the BRICS nations, you will have an entirely different outlook on the world than a productive person in a Developed nation straddled by government regulations and virtue signaling. A lot of American businesses prefer to manufacture things in China because the Chinese COMMUNIST Party has FEWER regulations on productive people than the United States.
When allow the aforementioned paragraph to sink into your brain, you start to see what our future world might look like. There is no reason to fight the Federal Reserve, and there is no reason to abandon the U.S dollar; I’m not saying it can’t happen or won’t happen eventually, but why would India make it a priority investment may very well find their way to India?
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Yes, India has its challenges, and yes, the stronger U.S dollar is destroying segments of the Indian economy, but this destruction could, in actuality, be CONSTRUCTIVE if the Indian government doesn’t overreact to it. Yes, intervention by the Indian government will make their currency devaluation worsen, as long as the Indian government doesn’t straddle their private sector with more government regulations; in my opinion, the tide will eventually shift to India’s benefit.
One of the major benefits India has over China is that they speak ENGLISH, and their government isn’t as overbearing as the Chinese Communist Party. I’m not saying India has a perfect economy, but I am arguing that BILLIONS of Indians speak the language of business, and if that is ever properly organized, India could very well, supplant China as the next great power in the world.
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It could even happen faster than anyone thinks because, as pointed out by Jeff Snider and Emil Kalinowskithe, Indians are NOT manipulating their currency; this sell-off appears to be happening organically. In the past, I argued that countries were manipulating their currency; maybe I was wrong. Maybe the Market is doing this intentionally to increase its profit margins.
If Jeff Snider and Emil Kalinowski are correct about what is potentially happening in the global economy, it means what some assumed was a secret really isn’t a secret, and, therefore, we can get a better glimpse into the new emerging world. There are more U.S dollars in circulation outside of the U.S than there are in the U.S, but and this is the kicker, the cost of living in U.S dollars for U.S consumers living in the U.S is going up, while the cost of living in U.S dollars outside of the U.S is going down🤭.
So anyone trying to convince you that the U.S dollar is going to collapse will have to give us a realistic scenario as to why. I agree that the U.S dollar will eventually collapse or be replaced, but with what? Certainly not Gold, because gold is NOT this liquid, as we’re all observing in real-time, the Federal Reserve is more concerned with DOMESTIC consumer price inflation, which under the Joe Biden administration is running rampant.
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Now, yes, to avoid getting political, Jerome Powell has to put on a dog and pony show to avoid telling Joe Biden that his idiotic war on fossil fuels is fueling consumer price inflation, but where Jerome Powell is benefitting is that the Democrats keep finding ways to lie about that’s causing inflation and Democratsaregoing so far as to manipulate statistics and redefine recession 🤣, which in actuality gives Jerome Powell an excuse to raise interest rates.
The Federal Reserve’s job is to prevent DEFLATION; consumer price inflation is DEFLATIONARY activity, and asset price inflation is NOT deflationary activity; I hate saying this but truth is truth, the malinvestment in the global economy has led to a lot of people becoming rich, who would have thought Bitcoin would have created millions? Well, it did because cheap fiat dollars were allocated to areas of the economy investors imagined were better suited, based on market conditions.
Well, the Joe Biden administration changed all of that, Joe Biden wants to kill the golden goose(fossil fuels), and I have to assume that Jerome Powell knows this, will Powell, attempt to stop it? That’s anyone’s guess, but the Biden administration gave Powell every excuse to continue raising interest rates, and this could benefit nations like India greatly, as long as the Indian government doesn’t overreact to the falling Rupee.
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With that said, the Indian government, I assume, will want this Ukraine war to end; at this point, Putin owns Ukraine; if Putin stops the war today, I think it unlikely that Ukraine will do anything with NATO for the next 30 years, in fact, Ukraine very well might become more subservient to Russia. Once a war is over, and you’re left with the clean-up, trust me when I say that you will NOT want to get into another war for a few generations.
What the Ukrainian people are going through right now, I wouldn’t wish on anyone, but it’s a win for Russia in that Ukrainians will likely think twice before considering a NATO alliance again. India is an economy I’m going to be paying close attention to moving forward, because the world just got a whole lot more interesting.
The Indian rupee touched record lows, but not everyone is worried | aljazeera.com
Interesting times ahead