$70 dollar-plus crude, Bretton Woods II and Comrade Faber

Noland:

“I view $70-plus crude as the most prominent price manifestation to emerge from global Credit inflation dynamics. This price surge should be recognized as a major escalation from inflationary effects that were until recently isolated largely to asset markets (“Asset Price Inflation”) and Asian manufacturing capacity (“Investment Inflation”).

…The breaking away this past year of major financial flows from the recycling of dollar balances by Asian central banks has unleashed inflationary forces in all directions. No longer are price pressures largely contained by the methodical flow of finance between the U.S. financial sector, Asia and then U.S. asset markets.

…I fear we may soon have reason to put to rest the notion of a painless (“Bretton Woods II”) dollar recycling mechanism. Middle Eastern banks, oil companies, investors, and policymakers have altogether different priorities than Asian central bankers, and we already have evidence that oil producing economies are keen to diversify away from dollars.”

See also:
“The US Economy and the Sustainability of Bretton Woods II” - Heribert Dieter

“China’s Role in the Revived Bretton Woods System: A Case of Mistaken Identity” - Morris Goldstein and Nicholas R. Lardy

“Oil and Currency Distortions in the World Economy and their Long-Term Investment Implications” – George Hoguet

For a different view consider the ‘speech’ of ‘Comrade Faber’.