The Crunch, or Farewell My Eurodollar

Jeffrey Snider is putting out a steady stream of great articles describing the retreat of the eurodollar and the deflationary wave currently unfolding.

Alhambra: The Monetary Root
Alhambra: No Surprise To Find Dealers Hoarding For A Third Time

The petrodollar is drying up too. Here's FTAlphaville: Foreign cbank drawdowns, int’l drawbridges and a Fed moat
Remember, decades worth of dollar claims have by now been built up against the US system. Most of this time, such dollars were reinvested right back into the US economy creating a virtuous circle of ongoing demand for value added goods produced abroad, albeit funded by the US system’s underlying and growing petrodollar debt.

At some point, however, these dollars also began to be reinvested abroad, funding the continued consumption of dollar-denominated goods (such as commodities) but this time in countries which had no control over the underlying dollar availability or the size of the petrodollar debt, and who certainly couldn’t afford to be gouged at the same rate that the developed US system could.

Inevitably, the commodity correction will encourage defaults in that regard. And inevitably this will see dollar surplus countries confronted with a mismatch between dollar inflows and their their dollar liabilities. Dollar stocks will have to be drawn.
Snider gives some monetary history, explaining the central bankers still haven't figured out the eurodollar 50 years on:
Real Clear Markets: There Was Never a 'Greenspan Put'
Unlike August 1971 when Nixon "closed the gold window" for good, there is no parallel monetary system in place to take up the function of global financial and really exchange payment system. Then, the eurodollar had already been ceded most of the exchange function; all that was left was official acknowledgement. It was a terrible prospect in that economists really had no idea how to control an "offshore" dollar; and indeed, they never have.

This is different in that there is nothing but a yawning void at its end. As I write persistently, the end of the eurodollar would be cause for great and deserved celebration all over the world, bringing up the actual prospects for true prosperity and sustainable growth (debt nowhere near the center) if it were being done with a replacement not just in mind but likely already in place and with parallel function already begun. Instead, I am writing constantly about fifty-year old history that still hasn't been recognized for what it was; policymakers still have no idea about the eurodollar in its full agency, and economists in general still think money is something the Fed does.

Investopedia: What percentage of the global economy is comprised of the oil & gas drilling sector?
According to market research by IBISWorld, a leading business intelligence firm, the total revenues for the oil and gas drilling sector came to $5 trillion in 2014. This sector is composed of companies that explore for, develop and operate oil and gas fields. It is also sometimes referred to as the oil and gas exploration and production industry, or simply as E&P. Since the 2014 estimates for global gross domestic product range between $77 trillion and $107 trillion, the oil and gas drilling sector makes up between 4.6% and 6.5% of the global economy.
On one side is deflation, destruction of leveraged eurodollars. On the other side is a large and continuous demand for foreign currency from mainland China.

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