How the Inflationary Pressure Will Contribute to the "Perfect Currency Storm."

The inflationary effects of a strong dollar on the rest of the world may be underestimated by the markets.

Some economic factors relate to every investor. Strong dollar, bond yields that will eventually break into negative yield territory, horrendous demographics in the developed world (of 180 million retirees), massive asset liquidations (due to excess Debt and labor retirement), and the deflationary pressure will contribute to the "perfect storm."

Having lost confidence in the US Dollar, a better alternative to fiat currency is demanded. This is referred to as the  possible cause of the coming  of a Currency Crisis. 

Monday, October 3, the Federal Reserve will hold an emergency meeting at 3.30 PM GMT ,people are worried as the timing to calling this meeting seems rather awkward . 

The meeting's purpose is unknown, however I assume it may involve the following: First, the British central bank was compelled to resume quantitative easing. Faced with a precipitous decline in bond prices, the Bank of England was compelled to resume buying government bonds. 

The Chicago Purchasing Managers Index decreased by 12% from August to September, falling from 50 to 45.7. This is a clear indication of economic contraction, a warning that the economy is collapsing.

This is a clear indication of economic contraction, a warning that the economy is collapsing. May of 2020 marked the last time the PMI fell below 50. Clearly, a bond market crisis combined with economic recession would suffice.  A bond market crisis coupled with economic contraction, would clearly be sufficient for the Federal Reserve to go from quantitative tightening to quantitative easing

De-dollarization is a goal that has been voiced by the many banks in around the world including Europe ,China, and even various members OPEC. The fact that the United States has increasingly used the dominance of the dollar as a tool for political and military policy in international trade and international relations is one of the most troubling aspects of the situation.

In total disregard for both international law and the other countries' inherent right to sovereignty, we impose a variety of economic embargoes on other countries. That has never been a good plan, and it never will be!

The use of the United States Dollar as a tool for warfare, leverage, or conflict resolution will only serve to enrage other trading partners.

Trust is the bedrock of the business world!

There can be no commerce if there is no trust between the parties. This is even more pertinent when considering the fact that foreigners finance our consumers by providing their capital infusions through treasury purchases and have been re-importing our inflation to themselves for decades.

Now, their demand for dollars is pushing deflation in the United States, which baffles the Federal Reserve, and no matter how much money it prints, it is never enough to get the "magic" inflation number that it seeks! Be wary of what you ask for, however, because once the "Inflation Devil " is released , there is no way to put it back!

It's possible that when asset prices drop to rock bottom, we'll witness a repeat of the late 1980s, when a real estate bubble in Japan led to an outflow of capital from Japan that then flowed into the United States and bought up downtown real estate in the United States.

This scenario could play out again. I think this would be an ideal solution for long-term prosperity, but we need to accept the fact that we are now taking a very similar trajectory as Japan, which many have called a 'lost' country.

Whatever the outcome, we should expect the United States to not fully recover for decades.

An illustration of the potential outcomes of a money-printing experiment, as presented by Murray Rothbard, is presented here.

If the financial situation had become more favorable, a real estate developer would have made more money in his partnership. With newer capital, banks are eager to make loans.

Construction projects will be competitive. Newcomers are expected to disadvantage current growers of resources (such as lumber, labor, and so on). The available sources of timber becomes limited. The end of the line is a person whose ability to provide those resources within reasonable price points becomes limited due to new competition.

When the cost become unreasonable to those at the end of the line, they are relieved. The unfortunate part of this scene is if the lack of money coming in becomes for more time, prices will continue to rise. The poor soul at the end of the line is the only one who will wish for recent circumstances 

Housing constitutes a good example of prices going down and the cost of living lifting which will ultimately result with the rise of prices. The distraction caused by the easy availability of the product in question is what leads to the continued rise in demand.

As more people get on the bandwagon and converts spots in the marketplace, an increase in demand occurs, which inevitably drives up prices. The same principle applies to any category that creates its wealth upon mass demand, such as our daily technology consumption. When there is a constant flow of new money in circulation, all of the prices for goods and services in the marketplace will likely rise 

Economists agree that we will experience cycles of boom and bust if there is enough money to be invested.*

The federal reserve injection of trillions in new money into the economy between 2001 and 2004, benefited companies and consumers. However it has caused asset bubbles in economics. Because banking deregulation in the 1990s enabled huge amounts of lending and borrowing by banks, causing the financial crisis.

Banks that relied on loan contracts to sell the products they were to lend generated huge gains. Banks also engaged in fictitious activity. High capacity of three-month commercial paper was the backbone of the mortgage lending, which caused sub-prime lending, the bubble of 2007–2008. With the financial crisis, people turned insane 

One of the likely consequences of the deceleration in the money-creation process was the price increases of 2006. Following that, houses remained stable for several years. Then, after the Federal Reserve removed its foot from the accelerator, the house prices began a freefall. What ended up happening was that the banks had little to no choice but to dump these houses

Central banks, including those in the United States and most member states of the European Union, continue to print money inappropriately. Some economists believe "inflation" refers to the act of printing money, rather than just an increase in the general level of prices.

Markets are distorted, and the economy is distorted, by the printing of too much money.

Print more money to stimulate the economy, or the market will pay for it by distorting prices even further, with rising rates of inflation.

It is not breaking news that the printing of too much money feeds the boom-bust cycle. The lessons of history have shown that new money will always flow somewhere, which will inevitably cause a frenzy in a specific market . Real estate and stocks account for the majority of it.

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