Are Russia and China Moving Against the Dollar

In response to sanctions Russia has struck a deal with Iran for oil. China and Russia have been stockpiling gold. Are both moving away from the dollar?

Podcast Summary:

0:00-6:10 Introduction

Why Did the Fed Taper?

6:10-7:35 Discussion of why the Fed tapered its quantitative easing program (QE) and has been insisting that it will continue to do so until they shut down the program completely. They did so to gain credibility that they would not print money for ever. They also tapered QE to provide the narrative that QE worked and that the economy had achieved “escape velocity” to allow them to taper and take credit for economic progress.

Interpretation of Initial Jobless Claims Data
7:35-9:00 The most recent initial jobless claims data came in at a seven year low. The media likes to insist that lower jobless claims means a better job market and a pick up in new jobs. It does not. While initial jobless claims may be at a seven year low, non farm payroll which measures job gains is not. The Fed and the media have been touting a “recovery” since 2009 with “green shoots” and recovery summer in 2010 and each year with an insistence that the economy will improve in the second half of the year. It never does, hence, QE’s 1, 2, 3, etc. The Fed is now talking about keeping interest rates low even after they stop this round of QE (beyond the six months that Ms. Yellen originally suggested). This begs the question- If the economy is in this roaring recovery for the past five year, why are low interest rates still needed?

Jamie Dimon, CEO of JP Morgan Chase

9:00-11:50 Discussion of Jamie Dimon’s recent comments regarding the economy and interest rates. Mr. Dimon thinks that the Fed can end QE and interest rates can double without a problem! Won’t be a problem for J.P. Morgan, perhaps.

Washington D.C. Metro Area Housing Market Set for Weather Related Bounce?

11:50-13:05 The D.C. metro area housing market is discussed. The media is expecting a weather related boost, blaming the first few months of the year’s slow sales on the cold and snow, not on interest rates that have risen significantly year over year.

How Does J.P. Morgan Make Money?

13:05-17:12 Discussion of how J.P. Morgan makes money through its relationship with the Fed and how the media and regulators fawn over him.

J.P. Morgan's Dimon Describes Year of Pain http://t.co/3nFGkeD9JS That's what I call a "mensch"

— Arthur Levitt (@ArthurLevitt) April 10, 2014

Discussion of how the media builds up the Fed Presidents as having super powers and how the banks will always win a rigged game. Continued discussion of Jamie Dimon’s comments.

Discussion of the Proper Role of Banks in an Economy

17:12-24:04 discussion of the traditional role of banks to provide capital to companies and to hold deposits for customers vs. today’s banks that do little retail lending, provide no interest on savings account and spend most of their resources trading and bringing unprofitable companies public.

How is the Housing “Recovery” Defined?

24:04-28:10 Discussion of the real objectives of QE- to raise asset prices even though there has not been widespread participation in the gains. The housing recovery has been in price only. Household formation, homeownership are down. New home and existing home sales are way down from their peaks in the mid 2000’s.

China and Russia Moving Against the Dollar?

28:10-33:00 Discussion of what can throw off the Fed’s plans. Russia and China have been buying enormous amounts of gold in the past few years. Both countries are making plans to reduce their reliance on the US dollar. This would have the effect of reducing demand for the dollar and causing price inflation in the United States. Reduced dollar demand would impact the value of Russia’s and China’s dollar reserves, but the increase in value of their own currencies and gold reserves could more than offset those declines. Discussion of Russia’s oil deal with Iran. Russia doesn’t need oil! They are probably doing the deal to test non dollar deals. Unlike smaller countries like Iraq and Libya, the U.S. can’t force Russia or China to accept the US dollar with out a major war. The Fed is probably tapering to appease its foreign bond holders.

Could Russia and China Push The U.S. Towards Mandatory Retirement Accounts?

33:00-38:17 Discussion how the President can through executive orders force citizens to purchase treasuries for their retirement plans to cover and shortfall in Treasury bond sales.

Fractional Reserve Banking

38:17-46:15 Fractional reserve banking discussed. Banking is a guaranteed way to make money. Small banks, however, can’t compete. Small “illegal” banks are loan sharks. Discussion how large corporations and banks control the political system. Raw milk is discussed. Discussion how regulation cripples innovation and entrenches large companies. One mandated light bulb made in China by GE that requires Hazmat to clean it up if its dropped. Facebook ads are discussed.

Making Money by Losing it

46:15-The companies that make the most money are the companies that lose money. Non profitable companies do very well on Wall Street these days. Discussion of the ask J.P. Morgan event on Twitter.JP Morgan can exist and profit irrespective of the public’s negative view of them. How banks get away with making it difficult to return the money that depositors lend to them.

Are Russia and China Moving Against the Dollar?