Not MMT but relevant historically. How the world got here ((to dollar hegemony), as well as to monetarism, the accounting identity that is, as the basis of macro.
Adam Tooze is a historian rather than an economist, so he is able to shine a different light on the subject.
ChartbookChartbook 310 The shock of the new: Dollar dominance and modern monetary macro in the 1920s.
Adam Tooze | Shelby Cullom Davis chair of History at Columbia University and serves as Director of the European Institute
22 comments:
Just as the incorrect beliefs about coins caused the shortage of currency crisis in England in the 17th century, the First world war and beliefs about gold collapsed the Sterling currency area. Coins were made of precious metal because precious metals were rare. It was an anti-counterfeiting measure to start with, became a belief because of the writings of Locke, and became embedded because of the British industrial revolution which made a Pound more valuable than the 125 grains of gold in a £1 gold sovereign.
If Barbon had lived, Locke been ignored and the Bank of England failed rather than the National Land Bank, the path of history may have been very different.
$ index following crude oil.
1 month chart, 6 month chart, 1 year chart. All the real data is there.
I dunno how much more proof you need that oil is now on a $ standard.
$ Index Won't go back up until crude goes back up. Divergence is how you scalp it.
How much more proof do you need ?
Before you believe your own eyes ?
Step 1: Open up trading economics website.
Step 2 : Open up crude oil
Step 3 : Compare US $ index against it.
Step 4 : Believe what your eyes are telling you
Step 5 : Spread bet the divergence
If you know what crude is going to do via MMT Trader. Then you can clean up trading the $. Hell you could do both at the same time.
Rate cuts - the $ index will diverge like crazy but looking at the charts it will move back to track crude. That's when you clean up.
With crude and the $ now in sink
Compare USD/ JPY and USD/ CAD and AUS/ USD and GBP/ USD
With the crude oil price.
The divergence there is an absolute gold mine.
NZD/USD using the crude price is like predicting the future.
Crude price falls after a few weeks lag the NZD goes up against the $. Crude price rallies NZD goes down against the $.
This recent rally in the NZD/ USD was easily predicted as the crude price fell. The divergence was simply too big for the whole month of July.
The other currency pairs are the same just look at them the crude price moves the $. After a few weeks lag they all follow.
Using the crude price you could have predicted the fall in the USD/JPY a month before it happened.
Just look at the major forex pairs against the $. Compare them against The crude price. The crude price dictates all. If the divergence gets big you can clean up.
When the crude oil price dropped from $87 to $73 between the start of April to the start of June but USD/ JPY continued to rally the divergence got too big. That was the time to short USD/ JPY.
Crude went from $90 to $68 that was the time to go long NZD/ USD the divergence was too big. NZD/ USD rose 300 pips.
July 4th crude went from $83 to $73
NZD went from 61 to 58 it fell the whole month of July with the crude price. The divergence was too big it should have been rising as the crude price fell.
That was the time to go long NZD. It rose 300 pips back to 61 today.
It is a licence to print money on forex.
GBP/USD is the exact same thing.
Crude went from $90 to $68 that was the time to go long GBP/ USD the divergence was too big. GBP/ USD rose 600 pips. Between start of November and Christmas day.
Crude went back up from $69 to $86 between 12th December and April 8th. That was the time to short the £. It dropped 300 pips by April 21st.
USD/CAD
This recent drop in the crude price what did the USD/CAD do?
It rallied between July 10th and Aug 1st. Divergence got too big it should have fell along with the crude price.
What happened ?
Fell 260 pips between Aug 2nd and today.
I'm telling you guys believe your own eyes
When either crude rallies or drops by over $10 a barrel. The bigger the rally or the bigger the drop the better $20 is even better.
Some major currency pairs against the $.
Are either too slow to react or do the complete wrong move. They always correct and track the crude price again.
This divergence is when you can make a killing.
I bet anybody on here the next crude rally by over $10 - $20. I will be able to identify a major FX pair against the $ that has either.
a) Been too slow to react
Or
b) Went in the complete wrong direction like the CAD and NZD just did On the drop of this crude price.
Be able to identify a correction that will make at least 200 pips profit. As it moves back to correctly track the rise in the crude price.
Step 1: Open trading economics
Step 2 : Open AUD/USD
What do you see ?
Nothing apart from the belief that it moves due to what it exports.
Step 3: Now Compare the AUD/USD with the crude price.
Now what do you see ?
A very clear picture. Crude drops by $ 20 Aussie $ moves up 600 pips.
Crude rises by $15 and Aussie $ drops by 400 pips.
All consistent with Oil now being On a $ standard as the oil against $ index now shows.
It is Crystal clear if you use Brent oil price.
The beauty is the oil price leads the currency move.
So what happened with this latest downward move in crude prices as it dropped $10 in June and July.
Did the Aussie $ rise like it was supposed to over those 2 months. Nope it fell along with the crude price and dropped 300 pips.
That period was when to go long AUS $. The divergence simply far too big.
What happened ?
AUS $ rose over 250 pips between Aug 2nd to today.
The Aussie $ along with USD/CAD and NZD/USD and GBP/USD went the wrong way in this recent crude price drop.
Using the crude price as the guide and accepting it is now on a $ standard. Predicted these moves ahead of time.
Column 11 elements corrosion resistant too Neil…. full D bands…
Comparing the $ pairs with the crude price you can see what is driving them.
You can see that right ?
The yearly charts are a Eureka moment.
The,Swiss Franc is a licence to print money. Anybody who says it doesn't track the crude price belongs in a lunatic asylum.
The proof is everywhere that The dollar is now on a oil standard. and that Chris Cooke theory that Rex Tillerson and Gary Cohen did under Trumps first term is correct.
https://www.macrovoices.com/podcast-transcripts/419-chris-cook-energy-markets-are-manipulated-in-multiple-timeframes
My guess is you could probably day trade it as well now the dollar is on a oil standard.
USD/CAD right now at 11:15 hasn't moved and yet the crude price has moved up nearly a whole $ lol, a whole $ is nothing in macro terms. Day traders probably look for stuff like that lol.
Not that I would ever day trade but it looks like USD/CAD will move up from here and track the rise in the crude price.
USD/CAD is currently 1.3608 will we get 1.3614 ?
1.3617 9 pips - nothing in Mike's macro world but to a day trader @ £50 a pip.
Switch the computer off and play a round of golf.
One way to stop guessing is to risk your savings.
If you were day trading today.
GBP/ USD is the outlier
Crude ↑ 0.48%
GBP/USD ↑ 0.17%
All the other pairs are tracking the rise in today's crude price.
GBP/USD should be ↓
If crude continued to rise and the GBP/ USD doesn't start to react you sell GBP/USD.
Tonight just check all the major $ FX pair daily charts against the crude price. The true picture is as clear as day on all of them.
Peter I have been spread betting it. That's why I know for sure Chris theory is right.
Now that I know 100% the crude price is driving the major $ currency pairs. I'm going to take a risk on seasonality of the oil price combined with the leading flows. Trade FX instead over a longer timeframe.
If you can catch an upswing in the oil price using the leading flows and oil's seasonality. Then you will clean up on all major $ FX pairs.
Reuters:
https://www.reuters.com/business/energy/oil-slips-sixth-consecutive-day-big-builds-us-oil-fuel-stocks-2024-06-05/
Read what Reuters says about rate cuts and oil demand. That is the equivalent of Mike's zombie trading strategy.
Reuters are letting everybody know how the crowd will react to oil prices regarding rate cuts.
The FX $ pairs will be so out of whack when they start cutting rates. You will be able to fill your own bushel basket and take their money hundreds of pips at a time.
They'll cut rates - the crowd will drive the oil price upwards- Some FX pairs will go in the wrong direction. Just take their money as the FX pairs move back to tracking the oil price.
Anyhoo that's the last on the matter. Daily, weekly, monthly, yearly, 5 yearly charts all show the $ tracks the crude price.
I've tried to help and point the obvious out that Chris Cook was 100% right. That the dollar is now on a oil standard.
You can choose to deny all of the charts and your own eyes or fill your bushel baskets.
It is now up to you.
If you look now at GBP/USD against crude the daily chart. Now that the day is over.
Played out exactly like I said it would earlier.
Both rose together earlier part of the day. That made the GBP/USD the outlier. It should have been falling as the $ got stronger tracking the oil price.
Until the GBP/USD eventually dropped as the oil price continued to move higher. As the $ got stronger.
Never mind the rate cuts all you need is a combination to come together for them to get out of whack.
All you need is some headline news release like a trade balance to come out that the zombies think make the £ move higher. They dive in push the £ up.
While this happens oil moves higher.
That's a perfect combination to push it out of whack. While the zombies are pushing the £ higher. You would be selling as they are buying because you see the oil price is rising.
Then fill your bushel basket as the £ moved back into whack and reflects the oil price.
There's a dozen ways to skin this cat. All you have to do is sit on your hands until something pushes the correlation out of whack.
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