/biz/ - Business & Finance

>>52741140
So does this mean the US is back to 75bps hikes or are they still gonna do 50 while everyone else does 75bps?

>>52741140
heh, nothing personnel kid

>>52742138
it means you should pick up a Bible

>>52741140
pension funds are managed just like FTX? AWW SCHWEET

>>52741140
doesn't this mean the dollar is going to rocket up once this shit gets margin called

>>52741140
They'll get bailed out at the expense of the rest of us, can't have boomers losing their ill-gotten gains

>>52742424
So are we or are we not all gonna die? Is shit just gonna get more expensive or will they just ignore the debt?

>>52742581
>Are we or are we not all gonna die
You're much more useful to the elites alive than you're dead. You'll be alive. Just barely.
Just enough to work for them.

>>52741140
Explain like I browse 4channel please
I'm guessing pension funds have too much exposure to USD, and they probably opened these positions when the pound was much stronger against the dollar? And now that the pound isn't as strong, they are going to lose a lot of money somehow?

>>52742632
hopefully bitcorn will save us

>>52741140
This is what happens when you don't use Chainlink Proof Of Liabilities technology

>>52742668
80 trillion in debt sounds like a lot

>>52742668
Could be any currency. These funds have traded into other currencies through loans, expecting stability, but now owe more because of the volatility. Some are probably better off, others are part of this $80T black hole.

>>52742138
>75 BASIS POINTS

>>52741140
This is why fed swaps won't work. They can give liquidity to credit suisse and other banks but how do they bail out private debt? Even if they knew of all the foreign USD based debt, it would be logistically impossible to send liquidity to everyone.

Once the recessionary dominoes start falling USD is gonna moon hard.

>>52742138
It means other countries have to raise rates to match the US, throwing their economies into deeper recession and putting status quo at risk of losing power. If they do not raise rates, their currency will tumble as it has been all year and the dollar will strengthen in relation. As dollar strengthens, the dollar debt will become more expensive and they'll have to trade more foreign currency for the same amount of dollars. It could trigger a vicious cycle of debt collapse and remaining debtors willing to pay anything to get dollars that they owe. Kind of like a dollar short squeeze, europoors need to cover on their dollar debt but can't get their hands on any.

>>52741140
>Swaps
Were the GME baggies right?

>>52741140
i dont get it

>>52742632
Nah dog, they think we're all useless eaters. The climate cult has taken a hold of them. Poor people are fucked.

>>52743031
neat

>>52743031
What happens if they just don’t pay the debt or come to an agreement with the US to not pay anywhere near as much?

>>52741140
>we should have seen this coming haha but we didn't D:

>>52741140
Don't worry, it's to fight Putin

>>52741140
The dollar is going to the Moon, where it'll die.
The Fed is going to rug the entire world (in the technical sense of "rug", i.e. removing liquidity).
Third World currencies will hyperinflate.
The euro and pound will go to <0.5USD
International trave will break down.
Pension funds will collapse.
Bitcoin will be adopted as a reserve asset.
Simple as.

>>52743857
Reasoning: the FX swaps are USD-X pairs, where X is the local fiat currency, and they are used to get Eurodollars. If interest rates climb, the cashflow of the swap becomes hugely negative for the holder of the fixed leg. A standard swap has a fixed cashflow, received by one party, and a variable cashflow, held by another. E.g. I receive monthly payday loan payments from my clients, but I don't want to deal with the defaults and decrease interest in borrowing, so I sell the right to those loan payments to a bank. The bank, in exchange, gives me a fixed amount each month so that I can sleep easily. The two risks are
>the risk of a decrease in the variable cashflow
>the risk of increased funding costs (the price I pay to the bank to maintain the arrangement).
If interest rates are, say, 1%, then my swap my cost 2%, good for one year (risk-free rate + cost of capital + default-risk). If interest rates go up to 5%, then my funding cost goes up x5 ceteris paribus. Swaps also let you get leverage:
the easiest way to pay my variable cashflow is to have real-life payday borrowers who pay to me. But let's say that cashflow is 10%, so for $1,000,000 of capital I get 10% interest. Now, I could invest $1,000,000, or I could buy the swap for $3,000, and just pay $1,000,000*0.1 / 12 = $8,333 monthly and hopefully get maybe $9,000 fixed from the bank. If funding costs for swaps go up, my capital (which might not even exist beyond the first 8.3K) goes to 0.
Depending on what is swapped, some of those swaps will wipe out one party, at which point USD-liquidity will start spiraling downward, and then the other consequences can relatively easily be inferred.

>>52743995
So if I am reading this right the fed is putting the crunch on USD liquidity to try and tamp down inflation, which may work, with the byproduct of completely JUSTing thousands of FX swap traders?
If the downward spiral of liquidity does happen, what does that mean for me, standard US Wagie?
Something like
>paper value of dollar moons
>price of foreign trade goods outpace it
>I can basically only afford to buy those things not shipped very far
How am I doing?

>>52744481
>If the downward spiral of liquidity does happen, what does that mean for me, standard US Wagie?
You're probably among the best-situated people on Earth in such a scenario, but just imagine that imports and exports into and out of the US go down by 75%.
>So if I am reading this right the fed is putting the crunch on USD liquidity to try and tamp down inflation, which may work, with the byproduct of completely JUSTing thousands of FX swap traders?
Interest rates don't have a monotonous relationship (one always goes up/down when the other goes up/down) with inflation. In a "standard" scenario without a not very constrained supply of goods, lower interest rates do increase the amount of money in the economy, which, if it gets into the hands of consumers, results in increased demand and prices, but if the suppliers of goods need capital to build out their production (e.g. because everything's been destroyed by a war), then their cost of capital goes up too and they can't increase supply, thus increasing prices. There is a lot of reckless spending, but at the same time, supply chains are breaking apart and production sites shut down, e.g. China's lockdowns or the Ukraine war. Increasing interest rates now prevents new capacity from being built out. Jerome's not tightening into a slowdown, he's tightening into a liquidity crisis.
>paper value of dollar moons
>price of foreign trade goods outpace it
That's a quantitative point, I cannot say whether the effect of the dollar appreciating or the price of goods increasing will go up faster, though I suspect it'll be the dollar that outpaces most things, and every other good that can't be supplied will go up faster in price, or won't be able to be supplied at all. Or it might get rationed (rationing is just the allocation of goods by a criterion other than price).

>>52743031
So as an American living in the US and paid in US dollars, am I fucked?

>>52744481
The one-sentence summary is that the US is like the world's central bank and it's taking away everyone's money. The US is the country that's least likely to adopt Bitcoin out of immediate economic necessity, because it does have the base money of the world (the USD). Russia has already legalized Bitcoin as legal tender for cross-border payments, since being shut out from the dollar-system, and other countries will likely follow as the situation becomes dire.
If not just your imports and exports are denominated in dollars, as some poorer country,, but the loans in your economy as well, as is the case for less creditworthy countries who only get dollar-funding, the either the rate of the dollar's change in FX markets or the increased interest rates (above which your Honduras-bonds pay a premium) kills you and you default. Which currency are people going to lend in, at that point, if the dollar has become out of reach? The euro? They could lend in gold, but gold is a physical object that's hard to transport, which is why historically, people relied on gold receipts (the origin of paper money in modern times).

>>52742138
>everyone else does 75bps

>>52744637
short term not as much as europoors
long term yeah people will eventually stop using USD because the trade is so lopsided.

oh nooo, we're gonna need a bailout to save the economy bros
how tragic that it has come to this
those fragile bankers deserve a nice bonus at least for all the hard work they put in trying to avoid this

>>52743618
historically, the bankers will spew propaganda against the debtor countries and fund their enemies in order to enforce the loan agreements, like an international loan shark. if the debtor still refuses to pay, then they go to war.

>>52743618
Barring war, they default and their future funding costs go stratospheric, since even the adventurous lenders want to be paid for lending to someone with a history of not paying.
This is why William Anders Cecil Gordon IV borrows at 0.5% and Sha'uniqe from the South Side of Chicago borrows at 28%.

>>52745614
> Sha'uniqe from the South Side of Chicago
Hey I know her, she sucked my dick once

>>52744728
to add to that, depending on each debtor's trust of the IMF, those nations may not want to deal in gold deposit receipts seeing how Iran and Russia's (among others) foreign gold reserves have been confiscated. quite literally the gold version of "not your keys."

So any nation that values soveriegnty (and has intelligent leadership) will eventually have to move off the dollar. But desu, not many people value soveriegnty.

>>52745655
Well interest rates for debt are
>[risk-free rate] + [default risk premium] - [dick sucking discount]
Actually, getting your dick sucked costs ~$50, so buying $1000 of debt while getting your dick sucked is like buying $950 of debt, resulting in in 950*(1+[interest rate]) debt. If Y = [risk-free rate] + [default risk premium] and D=[dick sucking discount] then
>1000*(1 + [Y] - [D])= 950*(1+[Y])
>0.05 + 0.05Y = D
and
>Y = 20D - 1
So sucking dick on a $1000 loan has a 5% lower interest rate (95% of the original yield), or you could get an interest-free loan by sucking dick 20 times.

>>52745808
Meant to say that loan is free upon sucking dick 20 times. Forgot the "1".

>>52744598
>dollar appreciating
can we use a different terminology for this? It's still inflating (more slowly), but not deflating. the dollar is only appreciating relative to other currencies, but still depreciating against real purchasing power.

>>52741140

say goodbye to the fucking US$, biggest fucking scam in known history

they will just print some jewish 1 gorillion dollar coin biden will probably film it being shit out his sons asshole

>>52745851
bullish for the dollar retard

>>52742800
the boomer's aave (if aave took loans on their positions without asking)

>>52744728
>The one-sentence summary is that the US is like the world's central bank and it's taking away everyone's money
You have it backward. It's precisely because the eurodollar system has gotten out of control of the Fed that the US cannot act as the world central bank and plug all those usd holes offshore.

>>52745880

that's what they want you to believe

look at the fucking US$ index chart

>>52745839
The Dollar Milkshake theory on which this is based also states that US equities will go up of all things, because as people will be trying to rescue their capital from other parts of the world, they'll park it in US equities, somewhat similar to the 1920s, which began with the US receiving huge amounts of gold (on which it then defaulted by 1/3 in 1934, lol).

>>52741140
It's going to be like a game of musical chairs for USD. There will be mass panic. And wouldn't it be funny if there was a small bankrun on stablecoins, exposing how little liquidity they have in these conditions, leading to a full bankrun
>USDC is the safest stablecoin, it's a future cbdc! It would be impossible to depeg. N-no it's not federally issued or managed. It's issued by a private company with a goatse logo, and it's managed by Blackrock. Oh, they're limiting withdrawals from their real estate fund? I'm sure it's temporary

>>52745924
It's can't act as a good central bank, but it can still fuck things up. The Euro"dollars" are mostly debt-based. Yield from US bonds does increase the base money supply over time vis-a-vis bank"dollars" with a default risk. By increasing interest rates, the Fed is diverting cashflows from profit, and at some point, the dollar-borrowers start becoming insolvent en masse.

>>52743618
War and/or bretton woods 3 depending on the situation.

>>52742581
Survival of the fit anon. Hope you've been working out. You didn't reslly think nerds would inherit this glorious earth did you?

>>52745986
Correct. It can exarcebate the dollar shortage abroad by soaking it up at home. But I was specifically referring to your characterization of world central bank, which would imply that its primary purpose, which is to act as a lender of last resort, can accomplished offshore.

>>52741140
It's just the third financial crisis i see in my life haha

>>52746126
>But I was specifically referring to your characterization of world central bank, which would imply that its primary purpose, which is to act as a lender of last resort, can accomplished offshore.
Yeah, I see what you mean. I agree, I described the situation incorrectly there.

>>52745808
>>52745830
Sha'uniqe only sucks enough dick to cover interest payments, but never bothers to suck down the principle. She will take much more than 20 throat punches.

>>52746247
We really need to improve financial dick sucking literacy in disadvantaged communities.

>>52745952
oh fuck, the great reset is gonna be that soon? I thought it would be at least 25-30 years out. i don't think igmi

>>52745986
Thank you for the quality posts Anon

>>52743031
The funny thing is its the dollar becoming strong that is the largest threat to its status as the world reserve currency
>>52743618
Much of this debt is business to business. Outside of Europe the dollar is extremely popular for countries and business trading between each other or loaning money. So the US could help in some way but it can't forgive debt that it had no part in other than the currency used

>>52742632
>>52742581
If this can be called "alive" then yes you will "survive".

>>52743618
If it appears they can't or won't pay their debt their credit rating gets dropped. If they have a low credit rating, other countries won't want to trade with them because they are unreliable. Remember that almost 90% of world trading is done in US dollars. Nearly all countries demand their goods be paid in dollars because it's stable, in high demand, and easy to convert. They don't have a choice, they need dollars if they want to trade on the global market. And since there are only like $2 trillion real paper dollars in circulation, they end up leveraging the same dollars on top of each other over and over to meet liquidity needs. That's how you have $80 trillion in (known) dollar debt but only $2 trillion actual physical dollars in circulation.
>but how can they just leverage the dollar infinity amount of times
Because financial systems outside of the US are not regulated by the US, there are no laws preventing this crazy leveraging.
>what happens when they need to pay all that debt but there aren't enough dollars to pay it
When demand far exceeds supply, the price shoots up.

>>52743618
The dollar debt isn't owed to the US necessarily. Most of it is debt traded in global trade outside of US jurisdiction and was loaned into existence to meet liquidity needs.

>>52741140
El-Arian talked a lot about a liquidity event as a potential problem the fed is going to face. Imagine high inflation + a historically high debt/gdp ratio + a liquidity event that will force them to stop QT and maintaining higher rates. Also seems to be without precedent

>>52741140
https://www.bis.org/publ/qtrpdf/r_qt2212h.pdf

>>52745968
While im sure blackrock and blackstone are incestuously related in some way and completely jewish thru and thru,

It still needs to be said that Blackstone =/= Blackrock.

God cant these fucking saturn worshipping faggots come up with any other names...

>>52748817
reminder that if blackjew doesn't buy it, then the ccp will instead. pick your master, debt slave

>>52741140
>>52742857
>>52743031
>>52743857
>>52743995
>>52744481
>>52745968
>>52748817
>>52746431

So which is better to buy between Gold and USD to preserve net worth as much as possible?

>>52743185
>we're all useless eaters
And they're right.

So I should empty the 401k?

>>52746133
lol, lmao even

>>52751235
I’m going with the millennia-old hedge since even if the USD is King Shit of Shithole City, it’s still shit. On the other hand my decision-making skills are Kramer-tier, so your mileage may vary

>>52745266
Tfw yank in yuroland
Comfy

>>52748470
Everything going forward is completely unprecedented in "modern" (defined as "since 1600") economics. Population growth? Flat. Age structure? Aged out in most places. Skillset? Declining rapidly because the old people never taught the young people and there aren't enough young people to maintain the structures/institutions/infrastructure built to maintain a working population 6x the size.

There will be a de-everythingization from 2030-2070, and even that assumes people start having kids sometime in 2040, which is hardly a guarantee either.

>>52753151
>even that assumes people start having kids sometime in 2040, which is hardly a guarantee either.
don't worry
I'll make up the slack ;)

>>52753151
>people start having kids sometime in 2040
In the middle of the biggest recession of all times? No chance

>>52753151
It'll be like a BTC bubble. 80-95% reduction in population before slow crab (about a millennium) and that is without a black swan.

>>52748293
>>but how can they just leverage the dollar infinity amount of times
>Because financial systems outside of the US are not regulated by the US, there are no laws preventing this crazy leveraging.
>>what happens when they need to pay all that debt but there aren't enough dollars to pay it
>When demand far exceeds supply, the price shoots up.
fucking hell

>>52742792
Yeah, it sounds like a lot, but i wouldn't worry about it

>>52741140
The tranny fatty fappy rabbi crappy jabby groomy farty glowy banny niggy faggy trappy lefty shitty janny on biz must go