Comment: persona....thanks for pointing out my weak writing skills

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persona....thanks for pointing out my weak writing skills

I know this is my weakness in life but it's always nice to be humbled by someone…… I even qualified it by saying that “this is out of kindness”.

First of all……I was not attacking your premise…..just an attempt to enlighten you that the situation was worse than you thought. Also to bring your attention to the fact that the “petro-dollar scheme” had metastasized to include not only the countries we import oil from, but also from countries we import the things we once manufactured in this country that are now made overseas…..which provided a nice little ancillary effect of gutting the manufacturing base. Which now even exacerbates the “Balance of Payment” problem. By the way this is how countries go broke.

As far as the research quotes…. you misunderstood the context of your own research.

Scroll down to page 10 and look at the chart called "Foreign Currency Reserve Accumulation: Major Holders". Add up the first column under "Feb 2013". The total is $7,957,863 billion, or $7.96 trillion US dollars held as foreign reserves as of February 2013, NOT $150 billion as you claim.

1. The header on the chart say…..Major Holders….so obliviously this is only the top 11 holders.
2. But what are they holding…….these countries are the holding the accumulated dollars reserves of the negative balance of trade since the petro dollar scheme started. Those countries have accumulated the 8 trillion dollars you added up. ( I said 11 trillion net position held by foreigners... explained later)
3. The 150 billion I mentioned are the foreign reserves that the United States holds of other counties currencies.
4. On the very next page of your own research you have the Balance of Payments and Trade. This is where a little accounting knowledge is helpful. The BOP is analogous to a cash flow statement for corporations. Cash flows statement must balance. So does BOP statement. The components are Current account, Capital account and an off set in your currency or IMF account. We will exclude IMF account for this discussion because that is used as a lender of last resort when a country is in trouble.
5. Capital account/ Current account must balance….So a Current Account deficit/surplus must be offset with a Capital Account surplus/deficit.
6. So let’s look at your research on page 11. Let’s look at the bottom half of the report first. The last line on the report states that the US for 2012 ran a balance of trade deficit of -735 billion. You move that line to the top….add or subtract the details of the current account and you see we ended up with a
current account balance of -475 billion.
7. The capital account shows that the US was able to convince foreigners to loan us 406 billion by buying mostly treasuries and agency paper. The foreign central banks accumulated 406 billion more dollars in reserves for the year 2012……people this is where the dollars becomes reserve currency of the world…..right here……here is how it happens.
8. Now let go to my research, attached in a link to the Federal Reserves Flow of Funds report called the Z.1. This reports attempts to track the flows of fund for the whole economy. We will concentrate on the “Rest of the World” account. Like I said in my post the F series tracks the current quarter….. The L series tracks the accumulated account.
10. On page 70 you will find L.106 “Rest of the World” which is the accumulated position of dollar reserves around the world that all foreigners hold, It’s pretty straight forward……top line shows the dollar reserves held by foreign to be about 20 trillion……the foreign liabilities are about 10 trillion, this is what we hold of their assets for a “NET NEGATIVE POSITION OF 10 TRILLION. I called it 11 because I went in and dissected the accounts.

I hope I have clarified.

You made your point correctly in the OP… lost your way when you thought I was offending you…..then you blasted me as if I am some fucking idiot:

I always assume every poster has valid points, even if I don't agree with everything, but with your post, there's no way to know what your points are! And since you have launched a direct on me personally I must protest in the most strenuous terms. Your comment here is not helpful to the conversation.

I do apologize for my poor writing skills and I certainly did not mean to offend you…..I was attempting to support you.