I suspect our Allies feel much the same way about America. They’re not coming back when we post a Democrat in the White House. America is burnt. Trump is our Suez Moment.
Before Trump, you just bought US weapons for a few billion $ and got some good partnership with the US.
Now Trump decided in the Ukraine to just pull the plug by disabling them (all above a hand gun are software depended now) – and now everyone here in Europe knows now that their expensive F35 won’t fly when the US president throws a tantrum about nothing.
Arms companies here already begin to advertise “Developed with no US components”. I hope there are no China components, too.
That’s why I think Trump must be parroting Putin. Who in their right mind would announce to potential customers that the next generation of a product will be nerfed because customers can’t be trusted? It’s nuts.
That’s just empty talk Hickory. Trump is actively pushing cryptocurrency not least because Russia is using it to avoid banking sanctions.
He has lots of empty talk, however money as an exchange medium works if you trust it.
All of his talk and maneuvers severely undermines trust.
People (countries) will do what it takes to find a way to get out from underneath bullying and uncertainty.
And yes, I think he sees cryptocurrency as a way to avoid oversight, regulation, laws. More fun for the warlords, oligarchs, human traffickers, smugglers, and weapons salesmen.
He is bent on creating a sovereign wealth fund that will be in reality a funding mechanism for the militant right wing political action committee. And with a crypto foundation they can funnel money to whatever militia they want to.
A reserve currency is based on math and stability, nothing else.
The USA dollar is considered the “reserve currency” because USA dollars are building up in countries foreign account reserves due to trade deficits.
It is stable so people like to use it as the unit of comparison.
The only way the BRICS nations or anybody else becomes “The Reserve Currency” is if their currencies start building up in other countries foreign reserves and the currency isn’t volatile.
If it is volatile, it won’t be building up in other countries foreign reserves.
China has lots of USA dollar reserves, because the USA buys lots of shit from them with USA dollars and they get lots of interest on USA treasuries.
Do you buy your Chinese trinkets with Yuan? Dollars or Euros most likely (if you are from those countries)
There is no secret plot to become “The World’s Reserve Currency”
Andre,
Not all dollars are a result from US trade deficits. Or the US exporting dollars in exchange for goods and services.
The vast majority of “dollars “ are created outside the borders of the USA on the balance sheets of banks that reside outside the USA.
So who prints the actual reserve currency. That would be the commercial banks that are making the loans. Not central banks, not governments.
The commercial banks decide what money is and what it is not. What will be used and how trade will be settled. Not the government.
The whole talk of what the global reserve currency is comes from a wide range misunderstanding of what the global reserve currency is and who actually controls it.
And it’s no coincidence that people don’t understand it. We are told time and time again that the USA and its privileged come from having the global reserve currency.
If that was the case then why do most of the “dollars “ originate outside of US borders and are outside of any US control?
The global monetary system is a global network of banks that create loans at will. It’s just a matter of what is used as collateral. What is accepted as collateral amongst the banks in order to make loans.
Global monetary system is starting to breakdown. Not because of Trump or any other stupid policy makers. It’s energy. And the fact debt requires expanding energy to pay back the principal plus interest payments.
Side note: A lot of the dollars you see here in the USA were created by banks outside the USA and lent into the USA. Think about that for a moment.
Most of the global debt is denominated in dollars. Because the banks lent dollars instead of Yen, Yuan, Euros, or whatever other currency. So in order for all that dollar denominated debt to be serviced, what has to happen? Energy and loans have to expand.
But the problem is worse than that. All the other loans made in all the other currencies. They also have to have expanding energy and loans in order to service the loans or debt.
If global banks stopped issuing debt denominated in dollars. What would happen to the debt denominated in dollars that they have already issued?
If you don’t already know the answer I’ll tell you. The supply of dollars would shrink drastically while the debts remain. So everything under the sun would get sold at fire sell prices in order to get dollars to service debts. Value of the dollar goes through the roof while everything else crashes, including all other currencies.
Canada actually just issued a Canadian sovereign bond that is denominated in US dollars. Think about that for a minute.
All the crap you read and hear in the news an on the internet about the demise of the dollar is in fact BS. And unfortunately a lot of professional investors repeat the same crap on podcast and in interviews.
When something goes wrong in the Eurodollar market there is no entity that can step in and recapitalize the market.
Which is another thing you’ll hear out of professional investors is that the Fed’s dollar swap lines can fill the void when dollar funding is in short supply.
It’s suppose to work like this. The FED creates say $60 billion in bank reserves out of thin air which it swaps for an equal amount of bank reserves denominated in Euros or whatever. Now the ECB or whatever central bank now has dollars that they can loan out to individual commercial banks within their area. There for providing dollar liquidity when it’s needed the most. There for entities within any given country won’t have to sell US dollar denominated assets to get actual dollars during a dollar shortage.
Here the thing, it is all smoke and mirrors to make you feel like the authorities are on it and are doing something. They have your back and are all powerful. Bank reserves aren’t used in the Eurodollar system. Bank reserves don’t increase the money supply. All they increase is the Fed’s and other central banks balance sheets.
But you’ll hear the swap line touted as the solution in a dollar shortage crisis. But commercial banks don’t use bank reserves when creating loans. Commercial banks don’t loan out bank reserves.
Commercial banks create money by loaning into existence against collateral. The collateral commercial banks use isn’t bank reserves.
The US debt ceiling battle. There is a lot of incorrect information that swirls around it.
The biggest myth is that the US government won’t be able to fund itself. Not true at all. The US treasury can continue issuing bonds to roll over all existing debts. What they can’t do is increase the debt without a lifting of the ceiling.
Without an expanding amount of US treasuries. Namely the one that are considered on the run treasuries. Or treasuries that were recently issued. Off the run treasuries would be the kind that are locked away in portfolios.
But without an ever increasing amount of new treasuries being issued. The collateral underpinning the entire global monetary system would be in short supply. Which means dollars would be in short supply. Because commercial banks wouldn’t have the collateral needed to make loans.
Countries outside the US would see their currencies collapse if the US doesn’t go deeper into debt. That is reality. That’s a fact. It’s how the monetary system is.
It’s in everyone’s best interests for the US government debt to expand.
The reason why monetary stimulus and now government fiscal stimulus is failing is energy related. China over there doing their version of cash for clunkers. Trying to stimulate internal demand. Might make their numbers look better for a few months but then what?
HHH,
The US treasury can continue issuing bonds to roll over all existing debts.
Definitely agree. Unless no one buys the bonds.
HHH,
You may well be right. I don’t understand the Eurodollar stuff completely.
2 questions on this
1) Woudn’t this amount to counterfitting the US dollar which would have to raise eyebrows in the FBI?
2) Why would banks accept or want bank reserves that aren’t spendable in the economy?
Why would a bank take spendable cash and convert it to a reserve that it can’t use accept in the intrabank exchange system??
Andre,
Easy answer to both questions. Moving the collateral to the Fed’s balance sheet moves the commercial banks liabilities off their balance sheets onto the Fed’s.
It’s a collateral swap. Unfortunately for the commercial banks they are receiving collateral they can’t do anything with in the real economy. Those bank reserves just sit in an account at the Fed and Banks earn a little amount of interest income on them. But on the plus side the commercial banks balance sheets are cleaned up. No money is injected into the economy or markets via QE.
Commercial banks with cleaned up balance sheets have been loaning money to the biggest and best corporations to do stock buybacks to the tune of over $15 trillion since 2009. Yes this will eventually end badly for the banks making these loans. But until then the corporates will continue buying hundreds of billions of their own stock shares back every year and the banks will continue making these loans.
I might be wrong but I think stocks are likely to make new all time highs later on this year. You have the corporates doing their buybacks, the passive flows from retirement funds and the CTA’s chasing the momentum higher. This will continue until it can’t. And this will likely happen right in the face of all the tariffs and chaos going on. Stocks don’t represent the economy.
One of the biggest reasons yields on government debt have risen over the past couple of years is something called the hedge funds basis trade.
Hedge funds are selling government bonds in the futures market then leveraging up in REPO and going long in the cash bonds market. The largest hedge funds in the US have been stepping in and buying the US debt via the basis trade. The amount of leverage they are using is insane. They are 100x leveraged. What could possibly go wrong? This also will continue on until it can’t.
HHH,
Thanks for the response. I am curious and open.
“Easy answer to both questions”
You didn’t answer how this isn’t counterfitting of the USA dollar.
So North Korean commercial banks can just start loaning money to people in USA dollars, creating new USA dollars?
next
“It’s a collateral swap. Unfortunately for the commercial banks they are receiving collateral they can’t do anything with in the real economy”
This is why I don’t understand why they would agree to this,
Again, u may be correct.
This is going against everything that has been taught in Economics and Finance for decades / centuries.
As Carl Sagan said, “Extraordinary claims require Extraordinary evidence.
Andre,
The commercial banks get a clean balance sheet and they don’t have to mark to market any losses that they would have taken.
The Fed has the power to bailout banks . It just isn’t what you think it is. It’s not money printing. The Fed can absolutely create an infinite amount of bank reserves. The Fed can expand its balance sheet to whatever amount it chooses.
It just doesn’t increase the money supply that is in the economy chasing goods and services nor does it increase the money supply going into asset prices not directly anyway. It just allows commercial banks to do what they do. Which is make loans because their balance sheets have been cleaned up.There is no direct injection of central bank money printing. That is a myth that all central banks want you to believe.
But if there no expanding of the energy supply. Banks could have a clean balance sheet and they still won’t be making loans. This is the territory we are starting to enter. Chinese banks would rather lend to the government for a less than 2% yield instead of chasing larger returns lending into the economy for instance.
If you look at the Fed’s balance sheet. QE isn’t loans being made to commercial banks. Commercial banks aren’t paying the money back. But if it was money printing with no debt attached or not a loan. Then the funds should leave the Fed’s balance sheet.
The bank reserves don’t ever leave the Fed’s balance sheet. That is not money printing. It’s a collateral swap. The bank reserves go into an account at the Fed under the name of the bank they swapped collateral with.
When the Fed does quantitative tightening or QT or allows its balance sheet to shrink via letting maturing assets roll off without replacing them it does absolutely nothing to tighten monetary policy. It’s smoke and mirrors. There was never any added liquidity to drawdown on. Which is exactly why stocks didn’t bat an eye when the Fed did QT.
END OF AN ERA FOR CANADA-US TIES, SAYS CARNEY
Canada’s prime minister has said the era of deep ties with the US “is over”, as governments from Tokyo to Berlin to Paris sharply criticized Donald Trump’s sweeping tariffs on car imports, with some threatening retaliatory action. Mark Carney warned Canadians that Trump had permanently altered relations and that, regardless of any future trade deals, there would be “no turning back”. He told reporters: “The old relationship we had with the United States based on deepening integration of our economies and tight security and military cooperation is over.”
Since Canada provides excellent snowmobiles, and also watercrafts of different kinds it would be a shame if Donald reduces our ability in Europe to buy them, at a reasonable price and with an accepted currency of course. For example, I would surely be in the market to buy the newest Volvo S60 if it was not assembled in NC, for dollars or some other currency. (for quality reasons mainly, with 737 max, 777x and kc46 in mind.
“A federal judge had also ordered Mr. Watson and Ozy to pay $96 million in restitution and forfeiture. As part of Mr. Trump’s commutation, Mr. Watson and Ozy no longer have to pay those financial penalties, the people said.”
This feels as significant as the Berlin Wall coming down, except in the wrong direction. Donald’s gaslighting bs about taking Greenland and annexing Canada has to be condemned in Congress.
US international relations are becoming Donald’s except no paid off sex partners.
ARCTIC SEA ICE HITS RECORD LOW FOR ITS USUAL PEAK GROWTH PERIOD
“The Arctic reaches its maximum sea ice in March each year and then starts a six-month melt season. The National Snow and Ice Data Center said the peak measurement taken Saturday was 5.53 million square miles (14.33 million square kilometers)—about 30,000 square miles (80,000 square kilometers) smaller than the lowest previous peak in 2017. That’s a difference about the size of California.”
Roughly 70% of the GDP of the US came from counties that voted for Democratic presidential candidate Harris.
And we don’t mind that that they are milking our productivity as they form an angry and destructive oligarchy.
Hickory, you’re last two comments are spot on, and others. But we can do our little part anyway. I don’t mind at all buying products from Canada and other counties, and Blue states. It is my preferred mode of operation. To head off the moron Maga crowd at the pass if they claim I am not a patriot, well, I am not among the ones who started this shite of a theocratic autocracy. In addition, as a scientist I deplore the Republican war on science that has been ongoing for decades…and I can say, with the exception of one or two, I would not vote for any Republican, and boot out Musk! All this is my opinion, and I understand this is STILL allowed in this country.
Top tip, don´t move to France or Romania, or the EU for that matter, you might end up in jail for heresy against “Democracy” tm. Not personal at all, just an observation of what might happen in a less well oiled or lithiumed world if you don´t follow the party line.
IT IS ‘VIRTUALLY CERTAIN’ THAT EARTH HAS BREACHED THE 1.5°C CLIMATE CHANGE THRESHOLD
One of the papers, a study from research scientist Alex Cannon at Environment and Climate Change Canada, used climate model simulations to conclude that there was a 60 to 80 percent chance that the Earth already crossed the threshold back in June 2024. If the world experiences 18 consecutive months at or above that 1.5-degree limit, he warns, it will be “virtually certain” that the Paris agreement has been breached.
The second paper, led by Emanuele Bevacqua, a climate scientist at the Helmholtz Centre in Germany, used real-world climate data and climate modelling to address the same question. It found that if trends continue, it’s almost certain 2024 marked the breaching of the Paris climate goal.
…with very little effort emissions will be kept under 1500 billion tonnes…
Please clarify what your intent is here, because:
1. We’re already past 1500 billion t CO2 cumulative emissions.
2. Other fossil fuel GHG emissions impacts add on top of CO2, as do other drivers of climate change.
3. 1500 billion t CO2e emissions isn’t any particularly meaningful threshold.
The 1500 billion tonnes is anthropogenic Carbon Emissions only. For CO2 this would be about 5500 billion metric tonnes of anthropogenic CO2 emissions (land use change, fossil fuel burning, and cement production primarily).
See comments starting at link below from a conversation in 2019.
My best guess is that anthropogenic carbon emissions will be in the 1200 to 1250 billion tonne range due to fossil fuel constraints, rising prices and more economically favorable prices for non-fossil fuel energy resources as fossil fuel resources deplete.
Note that this is not enough, we need to aim for 1000 billion tonnes of anthropogenic carbon emissions and this will require a lot of effort and may not be attainable, probably 1100 billion tonnes is an optimistic estimate with a huge effort that seems very unlikely.
Thanks DC, that makes mores sense now. Whenever I think about emissions, I always think about CO2e in tons. However, I suppose carbon itself makes more sense given the context of this site. Either way we’re in trouble.
Also, thank you for drawing our attention to the latest from Mike Shellman. Excellent insights on the Permian and AB. I would suggest that his analysis also provides support for your approach to considering average, network level behavior in a given geologic unit. It also pokes some holes in some of the more optimistic opinions supported by anecdotal data.
There are many different opinions in the climate science field. They all know more than me. Note also that the comment you pointed to was from 2019, I am neither omniscient nor clairvoyant.
A paper from many years ago pointed to one trillion tonnes of carbon emissions as being a nice round number to aim for. My guess is that it will be impossible to achieve that aim today. The paper was from 2009, newer research likely gives different results.
Dennis said the first two lines. I should have put quotation marks.
Dennis has such misplaced faith in governments and government agencies, which is mind blowing considering the utter mess they have brought us to.
As you say, the amount of industrial CO2 is just one factor driving the increase in droughts, floods and fires. The amount of methane and carbon which was already being released from the permafrost is another major contributor.
The IPCC for years neglected to factor that in and factor in the loss of tropical forests cool the world mainly through evaporation but also CO2 capture.
The 1500 billion is meaningless as places like the Tundra have started to melt, every billion tonnes of CO2 and every million acres of destroyed rainforest makes the melting faster.
If you haven’t seen it, one of Hansen’s latest pieces has some excellent figures illustrating the contributions of GHGs over time. In particular, it has a figure (15) that shows the best infographic format I’ve seen linking to the various IPCC emissions pathways.
Don’t worry man. I’ve been told many of times that the Chinese are long term thinkers and have a plan. 😂
Yeah their plan is to continue throwing everything they have into continue business as usual until their coal reserves are gone in 20-25 years and oil imports are no longer a thing. And their population drops below 100 million. That is the long term plan.
Meanwhile there is growing evidence that AI models are 20 times too big. A neural network is a bunch of nodes connected by weighted connections — in extreme examples trillions of connections. Training sets the weights.
One paper took a trained neural network and discarded the connections that were near zero weights, on the theory that they weren’t important for the result. Then they retained the new reduced network. They found connections with near zero weights again, so they removed them and retained. The repeated about 30 times. In the end they had a network that was less than 10% of the size of the original network that performed nearly as well.
Modern software is insanely bloated. It is cheaper to upgrade the hardware than it is to employ programmers to optimize the code. As we used to say, Intel giveth and Microsoft taketh away. But AI isn’t even programmed. It is created algorithmically. We know how the training algorithm works, but nobody knows what the networks learn, or how efficiently they use resources. Trying to figure out how they work is a hot research topic.
What DeepSeek and a bunch of very recent Chinese imitators are showing is that it may make more sense to find ways to optimize the networks instead of just throwing money at hardware, which is what OpenAI plans to do with that $40 billion. That and buy politicians I guess.
But the race is just starting, nobody has won yet. It will really get exciting when the networks get smart enough to design the networks themselves, without human intervention. That will start a feedback loop with each generation of AI spawning a newer better generation.
473 / 5,000
Marie Le Pen est désormais une criminelle condamnée. Elle doit porter un bracelet électronique à la cheville pendant deux ans après avoir été condamnée à deux ans de prison avec sursis. Plus important encore, elle ne peut se présenter à la présidence de la République française lors des prochaines élections. Les Français semblent prendre plus au sérieux la menace que représentent les extrémistes de droite pour la Constitution et la démocratie que les Américains, qui ont permis Trump, à un criminel condamné, de s’emparer du pouvoir suprême dans leur pays.
Translation of comment above from Google translate for non-French speakers like me
Marie Le Pen is now a convicted felon. She must wear an electronic ankle monitor for two years after receiving a two-year suspended prison sentence. Most importantly, she cannot run for president of the French Republic in the next election. The French seem to take the threat posed by right-wing extremists to the Constitution and democracy more seriously than the Americans, who allowed Trump, a convicted felon, to seize supreme power in their country.
Not only that…his appointed supreme court granted him immunity for any and all actions as long as he perceives them to be in his best interest. He can now direct his minions to do what ever the hell he wants, with pardons held over their heads as the guarantor of absolute loyalty.
What Putin or Kim Jong Un can do in private Trump can now do openly, without any fear of repercussion.
Laplander. I’d like to know what I’m ignorant about…I do like to hear other perspectives, even more so from those who live outside of the American media universe.
How can tariffs and sanctions raise property insurance?
Insurers will find payouts for damages much higher when construction items like copper and lumber escalate in price. In fact it seems that anticipated higher costs are already starting to show up in property insurance premiums.
The higher costs of labor have a similar dynamic.
Can your state afford to backstop the insurance industry or all of the individual business and residential real estate at risk? Make no mistake- the municipalities and states and Fed will come to you to help plug the shortfall even if your region or property has not been damaged.
U.S. housing market, economy at serious risk due to $3 trillion in uninsured homes-
“A 2023 Insurance Information Institute study found that 12% of U.S. homeowners haven’t purchased homeowners insurance. Similarly, a recent CFA report found that 7.4% of American homeowners were uninsured in 2021. That represented 6.1 million homeowners, meaning the number could be over 10 million in 2024, based on the Institute’s growth figure from 2023. That’s an increase of over 60% – an alarming rise in uninsured American homeowners. If premiums continue to rise, this number could also increase.”
And that does not include the degree of under-insurance, or commercial/government/infrastructure real estate at risk.
There is ‘no free lunch’. The abundant cheap energy was such a bargain, when viewed in the very short term.
FOSSIL FUELS DRIVE CLIMATE, HEALTH AND BIODIVERSITY CRISES
In a review published in the journal Oxford Open Climate Change, top scientists issued an urgent warning that fossil fuels and the fossil fuel industry are driving interlinked crises that threaten people, wildlife, and a livable future. The review synthesizes the extensive scientific evidence showing that fossil fuels and the fossil fuel industry are fueling not only the climate crisis but also public health harms, environmental injustice, biodiversity loss, and the plastics and agrochemical pollution crises. “The science can’t be any clearer that fossil fuels are killing us,” said Shaye Wolf, Ph.D., climate science director at the Center for Biological Diversity and lead author of the report.
CHEAP THERMAL COAL PRICES EMERGE AS ATTRACTIVE INPUT FOR POWER GENERATION IN INDIA
And — CHINA’S NET-ZERO GOAL AT RISK AS COAL POWER SURGES
“China is expanding its coal power capacity at an unprecedented scale, raising concerns over its climate commitments. In 2024, the country began construction on 94. 5 gigawatts of coal power projects, accounting for 93% of the global total.”
“Dear GOP: You’ll Never Wash the Stench of Trump Off You or Your Party. Never.”
probably true?
I suspect our Allies feel much the same way about America. They’re not coming back when we post a Democrat in the White House. America is burnt. Trump is our Suez Moment.
“They’re not coming back ”
I wouldn’t.
And I’d be looking for a new trade currency so that I couldn’t be so easily at the whim of Aholes.
One big damage done is military unreliability.
Before Trump, you just bought US weapons for a few billion $ and got some good partnership with the US.
Now Trump decided in the Ukraine to just pull the plug by disabling them (all above a hand gun are software depended now) – and now everyone here in Europe knows now that their expensive F35 won’t fly when the US president throws a tantrum about nothing.
Arms companies here already begin to advertise “Developed with no US components”. I hope there are no China components, too.
That’s why I think Trump must be parroting Putin. Who in their right mind would announce to potential customers that the next generation of a product will be nerfed because customers can’t be trusted? It’s nuts.
“Trump threatened BRICS nations with a 100 percent tariff if they moved away from the U.S. dollar as a reserve currency. “
I think that is really, really the key issue.
That’s just empty talk Hickory. Trump is actively pushing cryptocurrency not least because Russia is using it to avoid banking sanctions.
He has lots of empty talk, however money as an exchange medium works if you trust it.
All of his talk and maneuvers severely undermines trust.
People (countries) will do what it takes to find a way to get out from underneath bullying and uncertainty.
And yes, I think he sees cryptocurrency as a way to avoid oversight, regulation, laws. More fun for the warlords, oligarchs, human traffickers, smugglers, and weapons salesmen.
He is bent on creating a sovereign wealth fund that will be in reality a funding mechanism for the militant right wing political action committee. And with a crypto foundation they can funnel money to whatever militia they want to.
A reserve currency is based on math and stability, nothing else.
The USA dollar is considered the “reserve currency” because USA dollars are building up in countries foreign account reserves due to trade deficits.
It is stable so people like to use it as the unit of comparison.
The only way the BRICS nations or anybody else becomes “The Reserve Currency” is if their currencies start building up in other countries foreign reserves and the currency isn’t volatile.
If it is volatile, it won’t be building up in other countries foreign reserves.
China has lots of USA dollar reserves, because the USA buys lots of shit from them with USA dollars and they get lots of interest on USA treasuries.
Do you buy your Chinese trinkets with Yuan? Dollars or Euros most likely (if you are from those countries)
There is no secret plot to become “The World’s Reserve Currency”
Andre,
Not all dollars are a result from US trade deficits. Or the US exporting dollars in exchange for goods and services.
The vast majority of “dollars “ are created outside the borders of the USA on the balance sheets of banks that reside outside the USA.
So who prints the actual reserve currency. That would be the commercial banks that are making the loans. Not central banks, not governments.
The commercial banks decide what money is and what it is not. What will be used and how trade will be settled. Not the government.
The whole talk of what the global reserve currency is comes from a wide range misunderstanding of what the global reserve currency is and who actually controls it.
And it’s no coincidence that people don’t understand it. We are told time and time again that the USA and its privileged come from having the global reserve currency.
If that was the case then why do most of the “dollars “ originate outside of US borders and are outside of any US control?
The global monetary system is a global network of banks that create loans at will. It’s just a matter of what is used as collateral. What is accepted as collateral amongst the banks in order to make loans.
Global monetary system is starting to breakdown. Not because of Trump or any other stupid policy makers. It’s energy. And the fact debt requires expanding energy to pay back the principal plus interest payments.
Side note: A lot of the dollars you see here in the USA were created by banks outside the USA and lent into the USA. Think about that for a moment.
Most of the global debt is denominated in dollars. Because the banks lent dollars instead of Yen, Yuan, Euros, or whatever other currency. So in order for all that dollar denominated debt to be serviced, what has to happen? Energy and loans have to expand.
But the problem is worse than that. All the other loans made in all the other currencies. They also have to have expanding energy and loans in order to service the loans or debt.
If global banks stopped issuing debt denominated in dollars. What would happen to the debt denominated in dollars that they have already issued?
If you don’t already know the answer I’ll tell you. The supply of dollars would shrink drastically while the debts remain. So everything under the sun would get sold at fire sell prices in order to get dollars to service debts. Value of the dollar goes through the roof while everything else crashes, including all other currencies.
Canada actually just issued a Canadian sovereign bond that is denominated in US dollars. Think about that for a minute.
All the crap you read and hear in the news an on the internet about the demise of the dollar is in fact BS. And unfortunately a lot of professional investors repeat the same crap on podcast and in interviews.
When something goes wrong in the Eurodollar market there is no entity that can step in and recapitalize the market.
Which is another thing you’ll hear out of professional investors is that the Fed’s dollar swap lines can fill the void when dollar funding is in short supply.
It’s suppose to work like this. The FED creates say $60 billion in bank reserves out of thin air which it swaps for an equal amount of bank reserves denominated in Euros or whatever. Now the ECB or whatever central bank now has dollars that they can loan out to individual commercial banks within their area. There for providing dollar liquidity when it’s needed the most. There for entities within any given country won’t have to sell US dollar denominated assets to get actual dollars during a dollar shortage.
Here the thing, it is all smoke and mirrors to make you feel like the authorities are on it and are doing something. They have your back and are all powerful. Bank reserves aren’t used in the Eurodollar system. Bank reserves don’t increase the money supply. All they increase is the Fed’s and other central banks balance sheets.
But you’ll hear the swap line touted as the solution in a dollar shortage crisis. But commercial banks don’t use bank reserves when creating loans. Commercial banks don’t loan out bank reserves.
Commercial banks create money by loaning into existence against collateral. The collateral commercial banks use isn’t bank reserves.
The US debt ceiling battle. There is a lot of incorrect information that swirls around it.
The biggest myth is that the US government won’t be able to fund itself. Not true at all. The US treasury can continue issuing bonds to roll over all existing debts. What they can’t do is increase the debt without a lifting of the ceiling.
Without an expanding amount of US treasuries. Namely the one that are considered on the run treasuries. Or treasuries that were recently issued. Off the run treasuries would be the kind that are locked away in portfolios.
But without an ever increasing amount of new treasuries being issued. The collateral underpinning the entire global monetary system would be in short supply. Which means dollars would be in short supply. Because commercial banks wouldn’t have the collateral needed to make loans.
Countries outside the US would see their currencies collapse if the US doesn’t go deeper into debt. That is reality. That’s a fact. It’s how the monetary system is.
It’s in everyone’s best interests for the US government debt to expand.
The reason why monetary stimulus and now government fiscal stimulus is failing is energy related. China over there doing their version of cash for clunkers. Trying to stimulate internal demand. Might make their numbers look better for a few months but then what?
HHH,
The US treasury can continue issuing bonds to roll over all existing debts.
Definitely agree. Unless no one buys the bonds.
HHH,
You may well be right. I don’t understand the Eurodollar stuff completely.
2 questions on this
1) Woudn’t this amount to counterfitting the US dollar which would have to raise eyebrows in the FBI?
2) Why would banks accept or want bank reserves that aren’t spendable in the economy?
Why would a bank take spendable cash and convert it to a reserve that it can’t use accept in the intrabank exchange system??
Andre,
Easy answer to both questions. Moving the collateral to the Fed’s balance sheet moves the commercial banks liabilities off their balance sheets onto the Fed’s.
It’s a collateral swap. Unfortunately for the commercial banks they are receiving collateral they can’t do anything with in the real economy. Those bank reserves just sit in an account at the Fed and Banks earn a little amount of interest income on them. But on the plus side the commercial banks balance sheets are cleaned up. No money is injected into the economy or markets via QE.
Commercial banks with cleaned up balance sheets have been loaning money to the biggest and best corporations to do stock buybacks to the tune of over $15 trillion since 2009. Yes this will eventually end badly for the banks making these loans. But until then the corporates will continue buying hundreds of billions of their own stock shares back every year and the banks will continue making these loans.
I might be wrong but I think stocks are likely to make new all time highs later on this year. You have the corporates doing their buybacks, the passive flows from retirement funds and the CTA’s chasing the momentum higher. This will continue until it can’t. And this will likely happen right in the face of all the tariffs and chaos going on. Stocks don’t represent the economy.
One of the biggest reasons yields on government debt have risen over the past couple of years is something called the hedge funds basis trade.
Hedge funds are selling government bonds in the futures market then leveraging up in REPO and going long in the cash bonds market. The largest hedge funds in the US have been stepping in and buying the US debt via the basis trade. The amount of leverage they are using is insane. They are 100x leveraged. What could possibly go wrong? This also will continue on until it can’t.
HHH,
Thanks for the response. I am curious and open.
“Easy answer to both questions”
You didn’t answer how this isn’t counterfitting of the USA dollar.
So North Korean commercial banks can just start loaning money to people in USA dollars, creating new USA dollars?
next
“It’s a collateral swap. Unfortunately for the commercial banks they are receiving collateral they can’t do anything with in the real economy”
This is why I don’t understand why they would agree to this,
Again, u may be correct.
This is going against everything that has been taught in Economics and Finance for decades / centuries.
As Carl Sagan said, “Extraordinary claims require Extraordinary evidence.
Andre,
The commercial banks get a clean balance sheet and they don’t have to mark to market any losses that they would have taken.
The Fed has the power to bailout banks . It just isn’t what you think it is. It’s not money printing. The Fed can absolutely create an infinite amount of bank reserves. The Fed can expand its balance sheet to whatever amount it chooses.
It just doesn’t increase the money supply that is in the economy chasing goods and services nor does it increase the money supply going into asset prices not directly anyway. It just allows commercial banks to do what they do. Which is make loans because their balance sheets have been cleaned up.There is no direct injection of central bank money printing. That is a myth that all central banks want you to believe.
But if there no expanding of the energy supply. Banks could have a clean balance sheet and they still won’t be making loans. This is the territory we are starting to enter. Chinese banks would rather lend to the government for a less than 2% yield instead of chasing larger returns lending into the economy for instance.
If you look at the Fed’s balance sheet. QE isn’t loans being made to commercial banks. Commercial banks aren’t paying the money back. But if it was money printing with no debt attached or not a loan. Then the funds should leave the Fed’s balance sheet.
The bank reserves don’t ever leave the Fed’s balance sheet. That is not money printing. It’s a collateral swap. The bank reserves go into an account at the Fed under the name of the bank they swapped collateral with.
When the Fed does quantitative tightening or QT or allows its balance sheet to shrink via letting maturing assets roll off without replacing them it does absolutely nothing to tighten monetary policy. It’s smoke and mirrors. There was never any added liquidity to drawdown on. Which is exactly why stocks didn’t bat an eye when the Fed did QT.
END OF AN ERA FOR CANADA-US TIES, SAYS CARNEY
Canada’s prime minister has said the era of deep ties with the US “is over”, as governments from Tokyo to Berlin to Paris sharply criticized Donald Trump’s sweeping tariffs on car imports, with some threatening retaliatory action. Mark Carney warned Canadians that Trump had permanently altered relations and that, regardless of any future trade deals, there would be “no turning back”. He told reporters: “The old relationship we had with the United States based on deepening integration of our economies and tight security and military cooperation is over.”
https://www.theguardian.com/us-news/2025/mar/27/us-allies-worldwide-decry-trump-car-tariffs-and-threaten-retaliation
I smell toast burning . . .
Since Canada provides excellent snowmobiles, and also watercrafts of different kinds it would be a shame if Donald reduces our ability in Europe to buy them, at a reasonable price and with an accepted currency of course. For example, I would surely be in the market to buy the newest Volvo S60 if it was not assembled in NC, for dollars or some other currency. (for quality reasons mainly, with 737 max, 777x and kc46 in mind.
“A federal judge had also ordered Mr. Watson and Ozy to pay $96 million in restitution and forfeiture. As part of Mr. Trump’s commutation, Mr. Watson and Ozy no longer have to pay those financial penalties, the people said.”
“The fundamental weakness of Western civilizaton is empathy for conservatives.”
Oh good gravy! And you think conservatives have empathy for liberals?
Just some Dark Gothic humor Ron. It’s a riff on Musk’s anti-empathy statement.
This feels as significant as the Berlin Wall coming down, except in the wrong direction. Donald’s gaslighting bs about taking Greenland and annexing Canada has to be condemned in Congress.
US international relations are becoming Donald’s except no paid off sex partners.
ARCTIC SEA ICE HITS RECORD LOW FOR ITS USUAL PEAK GROWTH PERIOD
“The Arctic reaches its maximum sea ice in March each year and then starts a six-month melt season. The National Snow and Ice Data Center said the peak measurement taken Saturday was 5.53 million square miles (14.33 million square kilometers)—about 30,000 square miles (80,000 square kilometers) smaller than the lowest previous peak in 2017. That’s a difference about the size of California.”
https://phys.org/news/2025-03-arctic-sea-ice-usual-peak.html
1979: Three Mile Island nuclear plant accident
Roughly 70% of the GDP of the US came from counties that voted for Democratic presidential candidate Harris.
And we don’t mind that that they are milking our productivity as they form an angry and destructive oligarchy.
Hickory, you’re last two comments are spot on, and others. But we can do our little part anyway. I don’t mind at all buying products from Canada and other counties, and Blue states. It is my preferred mode of operation. To head off the moron Maga crowd at the pass if they claim I am not a patriot, well, I am not among the ones who started this shite of a theocratic autocracy. In addition, as a scientist I deplore the Republican war on science that has been ongoing for decades…and I can say, with the exception of one or two, I would not vote for any Republican, and boot out Musk! All this is my opinion, and I understand this is STILL allowed in this country.
Top tip, don´t move to France or Romania, or the EU for that matter, you might end up in jail for heresy against “Democracy” tm. Not personal at all, just an observation of what might happen in a less well oiled or lithiumed world if you don´t follow the party line.
Not good news lads!
IT IS ‘VIRTUALLY CERTAIN’ THAT EARTH HAS BREACHED THE 1.5°C CLIMATE CHANGE THRESHOLD
One of the papers, a study from research scientist Alex Cannon at Environment and Climate Change Canada, used climate model simulations to conclude that there was a 60 to 80 percent chance that the Earth already crossed the threshold back in June 2024. If the world experiences 18 consecutive months at or above that 1.5-degree limit, he warns, it will be “virtually certain” that the Paris agreement has been breached.
The second paper, led by Emanuele Bevacqua, a climate scientist at the Helmholtz Centre in Germany, used real-world climate data and climate modelling to address the same question. It found that if trends continue, it’s almost certain 2024 marked the breaching of the Paris climate goal.
https://macaonews.org/news/around-the-world/earth-climate-change-global-warming-paris-threshold/#:~:text=One%20of%20the%20papers%2C%20a,threshold%20back%20in%20June%202024.
I’m stocking up on so much food that I’m starting to feel a little off. After a few waves of famine I’ll emerge to checkout the second hand shops.
Don’t worry
Dennis says gas production will peak by 2035.
With very little effort emissions will be kept under 1500 billion tonnes.
https://peakoilbarrel.com/eias-electric-power-monthly-august-2019-edition-with-data-for-june-and-h1-2019/
Trouble is too many people in business and government think the same way
LOADSOFOIL
You note that
…with very little effort emissions will be kept under 1500 billion tonnes…
Please clarify what your intent is here, because:
1. We’re already past 1500 billion t CO2 cumulative emissions.
2. Other fossil fuel GHG emissions impacts add on top of CO2, as do other drivers of climate change.
3. 1500 billion t CO2e emissions isn’t any particularly meaningful threshold.
T Hill,
The 1500 billion tonnes is anthropogenic Carbon Emissions only. For CO2 this would be about 5500 billion metric tonnes of anthropogenic CO2 emissions (land use change, fossil fuel burning, and cement production primarily).
See comments starting at link below from a conversation in 2019.
https://peakoilbarrel.com/eias-electric-power-monthly-august-2019-edition-with-data-for-june-and-h1-2019/#comment-688580
My best guess is that anthropogenic carbon emissions will be in the 1200 to 1250 billion tonne range due to fossil fuel constraints, rising prices and more economically favorable prices for non-fossil fuel energy resources as fossil fuel resources deplete.
Note that this is not enough, we need to aim for 1000 billion tonnes of anthropogenic carbon emissions and this will require a lot of effort and may not be attainable, probably 1100 billion tonnes is an optimistic estimate with a huge effort that seems very unlikely.
Thanks DC, that makes mores sense now. Whenever I think about emissions, I always think about CO2e in tons. However, I suppose carbon itself makes more sense given the context of this site. Either way we’re in trouble.
Also, thank you for drawing our attention to the latest from Mike Shellman. Excellent insights on the Permian and AB. I would suggest that his analysis also provides support for your approach to considering average, network level behavior in a given geologic unit. It also pokes some holes in some of the more optimistic opinions supported by anecdotal data.
D C
and these are presentations from scientists who know just a little bit more than you
https://www.youtube.com/watch?v=uS0V31i_BhY
https://www.youtube.com/watch?v=wt-8XPpP1WY
Loadsofoil,
There are many different opinions in the climate science field. They all know more than me. Note also that the comment you pointed to was from 2019, I am neither omniscient nor clairvoyant.
A paper from many years ago pointed to one trillion tonnes of carbon emissions as being a nice round number to aim for. My guess is that it will be impossible to achieve that aim today. The paper was from 2009, newer research likely gives different results.
https://www.nature.com/articles/nature08019
The thread may have the last comment we heard from Gone fishing (see link below). I miss his perspective. Hope he is doing well.
https://peakoilbarrel.com/eias-electric-power-monthly-august-2019-edition-with-data-for-june-and-h1-2019/#comment-688910
T Hill
Dennis said the first two lines. I should have put quotation marks.
Dennis has such misplaced faith in governments and government agencies, which is mind blowing considering the utter mess they have brought us to.
As you say, the amount of industrial CO2 is just one factor driving the increase in droughts, floods and fires. The amount of methane and carbon which was already being released from the permafrost is another major contributor.
https://www.arcticwwf.org/the-circle/stories/thawing-permafrost/
The IPCC for years neglected to factor that in and factor in the loss of tropical forests cool the world mainly through evaporation but also CO2 capture.
https://www.rainforestcoalition.org/deforestation-and-degradation/
The 1500 billion is meaningless as places like the Tundra have started to melt, every billion tonnes of CO2 and every million acres of destroyed rainforest makes the melting faster.
Thanks LOADSOFOIL, I see the thread now.
Yes, we are certainly in trouble.
If you haven’t seen it, one of Hansen’s latest pieces has some excellent figures illustrating the contributions of GHGs over time. In particular, it has a figure (15) that shows the best infographic format I’ve seen linking to the various IPCC emissions pathways.
https://www.tandfonline.com/doi/full/10.1080/00139157.2025.2434494
For those interested in the scale of the disaster, see these videos:
Oceanographer Jim Massa on ocean heat content and ocean stratification:
https://youtu.be/wt-8XPpP1WY?si=-wLcAQ9Y373849H9
Money quote (at the end): “The oceans are dying.”
Polar Peril and the Methane Time Bomb:
https://youtu.be/uS0V31i_BhY?si=e5qBKMAp3XeykHYh
Money quote: The whole thing!
Looks like China won the AI race already and beat the US in an AI bubble collapse. Too much capacity no profitability.
https://www.technologyreview.com/2025/03/26/1113802/china-ai-data-centers-unused/amp/
JT,
Don’t worry man. I’ve been told many of times that the Chinese are long term thinkers and have a plan. 😂
Yeah their plan is to continue throwing everything they have into continue business as usual until their coal reserves are gone in 20-25 years and oil imports are no longer a thing. And their population drops below 100 million. That is the long term plan.
HHH
Great posts today. The markets rule us and central banks fool us.
Tim Watkins wrote a post that if you haven’t read it you’ll love.
https://consciousnessofsheep.co.uk/2023/07/19/our-predicament-re-stated/
He explains bank lending on confidence in collateral that requires energy growth.
OpenAI just raised $40 billion in anew round of funding.
https://www.cnbc.com/2025/03/31/openai-closes-40-billion-in-funding-the-largest-private-fundraise-in-history-softbank-chatgpt.html
Meanwhile there is growing evidence that AI models are 20 times too big. A neural network is a bunch of nodes connected by weighted connections — in extreme examples trillions of connections. Training sets the weights.
One paper took a trained neural network and discarded the connections that were near zero weights, on the theory that they weren’t important for the result. Then they retained the new reduced network. They found connections with near zero weights again, so they removed them and retained. The repeated about 30 times. In the end they had a network that was less than 10% of the size of the original network that performed nearly as well.
Modern software is insanely bloated. It is cheaper to upgrade the hardware than it is to employ programmers to optimize the code. As we used to say, Intel giveth and Microsoft taketh away. But AI isn’t even programmed. It is created algorithmically. We know how the training algorithm works, but nobody knows what the networks learn, or how efficiently they use resources. Trying to figure out how they work is a hot research topic.
What DeepSeek and a bunch of very recent Chinese imitators are showing is that it may make more sense to find ways to optimize the networks instead of just throwing money at hardware, which is what OpenAI plans to do with that $40 billion. That and buy politicians I guess.
But the race is just starting, nobody has won yet. It will really get exciting when the networks get smart enough to design the networks themselves, without human intervention. That will start a feedback loop with each generation of AI spawning a newer better generation.
473 / 5,000
Marie Le Pen est désormais une criminelle condamnée. Elle doit porter un bracelet électronique à la cheville pendant deux ans après avoir été condamnée à deux ans de prison avec sursis. Plus important encore, elle ne peut se présenter à la présidence de la République française lors des prochaines élections. Les Français semblent prendre plus au sérieux la menace que représentent les extrémistes de droite pour la Constitution et la démocratie que les Américains, qui ont permis Trump, à un criminel condamné, de s’emparer du pouvoir suprême dans leur pays.
Translation of comment above from Google translate for non-French speakers like me
Marie Le Pen is now a convicted felon. She must wear an electronic ankle monitor for two years after receiving a two-year suspended prison sentence. Most importantly, she cannot run for president of the French Republic in the next election. The French seem to take the threat posed by right-wing extremists to the Constitution and democracy more seriously than the Americans, who allowed Trump, a convicted felon, to seize supreme power in their country.
Not only that…his appointed supreme court granted him immunity for any and all actions as long as he perceives them to be in his best interest. He can now direct his minions to do what ever the hell he wants, with pardons held over their heads as the guarantor of absolute loyalty.
What Putin or Kim Jong Un can do in private Trump can now do openly, without any fear of repercussion.
I must say, regretfully, that I´m really impressed by the level of your ignorance.
No need to ban me, I will not say anything here anymore.
Laplander. I’d like to know what I’m ignorant about…I do like to hear other perspectives, even more so from those who live outside of the American media universe.
How can tariffs and sanctions raise property insurance?
Insurers will find payouts for damages much higher when construction items like copper and lumber escalate in price. In fact it seems that anticipated higher costs are already starting to show up in property insurance premiums.
The higher costs of labor have a similar dynamic.
Can your state afford to backstop the insurance industry or all of the individual business and residential real estate at risk? Make no mistake- the municipalities and states and Fed will come to you to help plug the shortfall even if your region or property has not been damaged.
U.S. housing market, economy at serious risk due to $3 trillion in uninsured homes-
“A 2023 Insurance Information Institute study found that 12% of U.S. homeowners haven’t purchased homeowners insurance. Similarly, a recent CFA report found that 7.4% of American homeowners were uninsured in 2021. That represented 6.1 million homeowners, meaning the number could be over 10 million in 2024, based on the Institute’s growth figure from 2023. That’s an increase of over 60% – an alarming rise in uninsured American homeowners. If premiums continue to rise, this number could also increase.”
And that does not include the degree of under-insurance, or commercial/government/infrastructure real estate at risk.
There is ‘no free lunch’. The abundant cheap energy was such a bargain, when viewed in the very short term.
Nothing new here.
FOSSIL FUELS DRIVE CLIMATE, HEALTH AND BIODIVERSITY CRISES
In a review published in the journal Oxford Open Climate Change, top scientists issued an urgent warning that fossil fuels and the fossil fuel industry are driving interlinked crises that threaten people, wildlife, and a livable future. The review synthesizes the extensive scientific evidence showing that fossil fuels and the fossil fuel industry are fueling not only the climate crisis but also public health harms, environmental injustice, biodiversity loss, and the plastics and agrochemical pollution crises. “The science can’t be any clearer that fossil fuels are killing us,” said Shaye Wolf, Ph.D., climate science director at the Center for Biological Diversity and lead author of the report.
https://phys.org/news/2025-03-fossil-fuels-climate-health-biodiversity.html
Meanwhile,
CHEAP THERMAL COAL PRICES EMERGE AS ATTRACTIVE INPUT FOR POWER GENERATION IN INDIA
And — CHINA’S NET-ZERO GOAL AT RISK AS COAL POWER SURGES
“China is expanding its coal power capacity at an unprecedented scale, raising concerns over its climate commitments. In 2024, the country began construction on 94. 5 gigawatts of coal power projects, accounting for 93% of the global total.”
https://energy.economictimes.indiatimes.com/news/coal/cheap-thermal-coal-prices-emerge-as-attractive-input-for-power-generation-in-india-bofa-securities/119798692
https://www.youtube.com/watch?v=3je-3VXNa4Y
More sad and disturbing news on conservation front.
‘IS IT “WOKE” TO CARE ABOUT THE ENVIRONMENT?’: HOW TRUMP’S CUTS ARE DISMANTLING GLOBAL CONSERVATION WORK
“Hundreds of projects supported by USAID have been thrown into doubt, as fears grow of an increase in crimes such as poaching and trafficking.”
https://www.theguardian.com/environment/2025/apr/01/trump-cuts-wildlife-conservation-usaid-aoe