Dollar index (spot). (select 5-year)
We're in a sort of brink. We're on the verge of the Age of Trumpiarius (you know, "harmony and understanding; sympathy and trust abounding; no more falsehoods or derisions: golden living dreams of visions...") and, in part because of that, the US dollar is maybe stronger than ever.
We may be in a situation that compares with those times when US told gold how much it was worth in the eve of the Nixon Shock. By then, US' economy was worth 30% of the overall global output, more if you left out non-monetary economies. Now it's down to 15-16% and losing a 0.2% share each year.
Yet, by the momentum given by Trumpian dreams, in just two months Mexican goods have become +10% cheaper for the US consumer, what guarantees no job is coming back to the States, but now Mexicans are not going to make money out of it.
The question is, are we facing a change of paradigm in terms of currency-related finances? The old "the US creates a crisis that sucks all the money into the US; the crisis is solved by making more US money" is bound to come to an end, isn't it? I mean, the fact that the US dollar is sort of a "Giffen" currency. How much time have these mechanics left if they rely on an exclusive market and the Federal Reserve's rates? Isn't the bluff soon to be called and the seigniorage bills redeemed in weakness and inflation?
(Don't take me wrong, the rusty belt will shine again, not unworthy cause at all)
We're in a sort of brink. We're on the verge of the Age of Trumpiarius (you know, "harmony and understanding; sympathy and trust abounding; no more falsehoods or derisions: golden living dreams of visions...") and, in part because of that, the US dollar is maybe stronger than ever.
We may be in a situation that compares with those times when US told gold how much it was worth in the eve of the Nixon Shock. By then, US' economy was worth 30% of the overall global output, more if you left out non-monetary economies. Now it's down to 15-16% and losing a 0.2% share each year.
Yet, by the momentum given by Trumpian dreams, in just two months Mexican goods have become +10% cheaper for the US consumer, what guarantees no job is coming back to the States, but now Mexicans are not going to make money out of it.
The question is, are we facing a change of paradigm in terms of currency-related finances? The old "the US creates a crisis that sucks all the money into the US; the crisis is solved by making more US money" is bound to come to an end, isn't it? I mean, the fact that the US dollar is sort of a "Giffen" currency. How much time have these mechanics left if they rely on an exclusive market and the Federal Reserve's rates? Isn't the bluff soon to be called and the seigniorage bills redeemed in weakness and inflation?
(Don't take me wrong, the rusty belt will shine again, not unworthy cause at all)
via International Skeptics Forum http://ift.tt/2i8uoW2
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