Wait, what?I am not buying it.
What would best serve the Deep State is a dollar that increases in purchasing power and extends the Deep State's power. It is widely assumed that the Fed creating a few trillion dollars has created a massive surplus of dollars that will guarantee a slide in the dollar's purchasing power and its demise as the reserve currency.
Those who believe the Fed's expansion of its balance sheet will weaken the dollar are forgetting that from the point of view of the outside world, the Fed's actions are not so much expanding the supply of dollars as offsetting the contraction caused by deleveraging.
I would argue that the dollar will soon be scarce, and the simple but profound laws of supply and demand will push the dollar's value not just higher but much higher. The problem going forward for exporting nations will be the scarcity of dollars.
"off-setting the contraction caused by de-leveraging" is a bogus statement. There are two possible types of de-leveraging .. there is the type that is supposed to happen.. where creditors take a bath because they are not going to get paid.. and there is the type where the currency itself is debased and the losses are socialized across everyone who holds that currency - by Money printing to pay off the creditors and make them look solvent...as if didn't take a bath. They did - along with everyone else. Making everyone who holds dollars accept the loses incurred by some will not make the "Dollar stronger" - by definition this is a tactic you use only when your economy and currency are in such trouble you have no other choice and its the only way to kick the can.
They are printing billions, and he thinks the dollar will soon be scarce? Because there is so much wonderful international trade going on where everyone needs and trusts it? If I am an exporting nation, aren't I accepting dollars in return for real goods? If I am exporting doesn't that mean I need someone to BUY what I am trying to export? How does demand or dollars go up in a world of falling demand? The economics in the US ( the worlds main consumer market) aren't going well. Europe is the second largest consumer market, and yeah. they aren't looking too good either. Money is being pumped into stocks and the bond market propped up by the Fed because international demand for dollars ( and dollar denominated debt) is LOW. So everyone worldwide needs more dollars so we can export in a really low growth environment while the govt is printing new ones by the billions and that will suddenly make the dollar strong. Yeah. Everything is awesome dude. Meanwhile back in real life, these emerging economies and exporting nations are making deals to NOT use the dollar in their trade. I assume they are doing that because the dollar is become scarce-right? They simply can't get enough even when we are literally printing them and GIVING THEM AWAY in dollar swaps with Europe. And all because the "DEEP STATE" is in charge. The Deep state wants us dependent upon them, because , as the article suggests, the country doesn't need the deep state.. Obviously any imperial hopes of America leading the world that Deep State held are being lost. Otherwise the dollar would be strong now.. and would BUY MORE STUFF for little pieces of paper.
How do people like this get their shoes tied?
UPDATE: an even better way of stating it
El Vaquero
El Vaquero's picture
I think this article attributes too much power to the deep state. No, we are not going to intentionally kill the dollar, but scarce dollars lead to unpayable debts, and that alone will kill the dollar by shaking confidence in the US's ability to pay its debts, freezing up the financial system, etc... Printing to make up for that is flirting with hyperinflation, which will kill the dollar. We have long since passed the point of no return. To add to that, we are bumping up against real resource limits. This cannot be sustained, and thus will not be sustained.
As the dollar grows stronger, GDP ( and therefore tax collection) would fall - that is why Deflation is often seen as worse than inflation. Because you must pay of debts with dollars that are worth more than the ones that came original principle. The US government can just continue to print more Dollars, but it has a devastating effect on everyone else that would destroy economies faster than the inflation will.
