Another amazing day in America. The DOW is sinking faster than a sub on a crash dive.
The bond market is in freefall, the dollar is dropping fast and investors are fleeing America entirely.
According to Bernie Condon of the AP,
“Economists worry that the recent drop in the dollar is so dramatic that it reflects something more ominous as President Donald Trump tries to reshape global trade: a loss of confidence in America.”
At the time of writing this, again today, the DOW is down 3.14%, and the dollar has lost 10% of its value.
What Americans have not felt yet is how the loss of faith in the U.S. dollar will impact consumers and businesses to borrow at unnaturally low rates, which has sped America’s growth and standard of living.
But, no more.
According to Deutsche Bank, there is now a confidence crisis in relation to the American dollar.
“It is no longer hyperbole to say that the dollar’s reserve status and broader dominant role is at least somewhat in question.”
Federal Debt and the Looming Problem
Debt ratio for the U.S. is now 120% of America’s annual economic output.
Benn Steil, an economist at the Council on Foreign Relations states:
“At some point people are going to look seriously at alternatives to the dollar.”
In fact, they already have.
China has been striking deals with Brazil for agriculatural products, Russia for oil and South Korea for other goods.
At the same time China has been been making loans in Yuan to central banks in Argentina, Pakistan and other countries, replacing the dollar as the emiergency funder of last resort.
At the moment there is no other currency to rival the dollar, but that could change rapidly.
The Euro seems to be where people, businesses and investments are fleeing.
Similar to what happened in 1956 to the British Pound over the Suez Crisis, Trump’s tariffs may do the same to America.
Berkeley’s Eichengreen states that Liberation Day, as Trump called April 12th could be remembered as a similar turning point if the president continues on his current course.
“This is the first step down a slippery slope where international confidence in the U.S. dollar is lost.”
However, due to Trump’s combination of narcissism, arrogance, ignorance and stupidity, it looks likely that a mulitpolar geopolitical world will be joined by an economic one.
But the worst is that Trump can’t shut his mouth. He’s such an insatiable dullard that he has to hear himself constantly, and every time he does, the DOW sinks, the dollar weakens and money flees America.
Hold onto your T-Bills in Terror.
This is going to get Fugly.
Leave a Reply