A Take on #USD as reserve currency
#USFED #dollarindex #Dollar #dollarglobal #EURUSD #EURO
The Fed has printed more money out of thin air in just the last couple of months in 2020 than it has for its entire 107-year existence.
#USFED #dollarindex #Dollar #dollarglobal #EURUSD #EURO
The Fed has printed more money out of thin air in just the last couple of months in 2020 than it has for its entire 107-year existence.
Before February 2020 , the Western governments were in debt to an extent where it would have been impossible to repay.
What’s a bigger issue, is the debts that were accumulated before the virus and those debts now have been blown to sky-high proportions
What’s a bigger issue, is the debts that were accumulated before the virus and those debts now have been blown to sky-high proportions
The only way to solve that problem is to default on it outright or to default on it by virtue of an inflationary outcome.
post-2008 financial crisis, the "solution" to the problem was an extension of credit by the banking system.
post-2008 financial crisis, the "solution" to the problem was an extension of credit by the banking system.
What these allowed banks to do was to repair their balance sheets. The capital largely flowed into real estate, bonds, and stocks , various asset classes and sector by sector. What you’ll notice is that we’ve had extraordinary inflation. It’s just been in financial assets.
My view in short-to-medium term will be actually bullish on the US dollar. The reason to be bullish on the US dollar is quite simple.
The US dollar is a disaster, but at this point in time, it’s still the reserve currency of the world.
The US dollar is a disaster, but at this point in time, it’s still the reserve currency of the world.
It makes up 87% of global transactions within the foreign exchange markets. In fact, it makes up more today than it did in 2008.
So, the dependence on the US dollar has increased while they’ve been destroying their balance sheet.
So, the dependence on the US dollar has increased while they’ve been destroying their balance sheet.
the ECB (European Central Bank) and the Bank of Japan are worse than the US.
You have this situation where the ECB doesn’t have a federal system as the US does.
The only place that the US dollar is down—is against the euro.
You have this situation where the ECB doesn’t have a federal system as the US does.
The only place that the US dollar is down—is against the euro.
in the shorter term, bullish on the US dollar, is also due because that emerging markets are in a world of hurt.
As governments have locked down, they’re not in a liquidity issue. They’re in a solvency issue.
As governments have locked down, they’re not in a liquidity issue. They’re in a solvency issue.
Ultimately, the US dollar will go away, and it’s going to be a very difficult and chaotic process. And the reason for that is there is no alternative at this point in time.
Credits #ChrisMacIntosh
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Credits #ChrisMacIntosh
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