Weak Economy, Weak Hands, and a Weak Dollar … (Death of the Dollar–18) with Link to Full Story
Lower interest rates and more QE would only hasten the coming disaster.
ZeroHedge –
"Trump Urges Fed To Cut Rates, Launch QE To Counter "Strong" Dollar "
(Right-click title to see original story)
(Image source)
– Flash Points –
1 – President Trump believes the US dollar is “strong.”2 – He urged the Fed to lower interests rates, in order to boost exports.
– Synopsis –
In a recent tweet, President Donald Trump proclaimed that the US dollar “is very strong.”
He therefore called on the Federal Reserve to lower interest rates. He also urged the Fed to start another round of quantitative easing (QE, aka money-printing), in the belief that such steps would increase the amount of exports and stimulate the economy.
Playing into Weakness
– Insight from Outside –
While the US dollar may appear strong to some, it has clearly been weakening. Furthermore, it is unlikely to rise anytime soon, if ever.Disastrous Policy
Even if the dollar were strong, that would only be owing to its standing as the lesser of many weak fiat currencies. Were the Fed to heed Trump’s call to lower rates, the result would be a hastening of the coming disaster.Ease, Please, or Squeeze
Since the Great Financial Crisis, the Fed has engaged in 4 rounds of money printing – QE1, QE2, QE3, and the current round, which it refuses to call QE.
Whatever. Call it “quantitative pleasing” or call it “quantitative squeezing,” call it “QE” or call it “BS” … it’s all the same thing. Money-printing.
Creating illusory money out of thin air is not something that is done in a healthy economy. Quite the opposite, it shows that the economy is very sick – that in fact, the economy is on life support, and is surely dying. (Image source)
Posted via Steemleo
Dear @majes.tytyty
Everything WEAK :)
I do understand that printing money sometimes is necessary - simply because lack of liquidity can be more devastating than losing $$$ value / inflation.
However what bothers me is the fact, that those printed FIAT are not ending up in 'real economy' and instead they are directed to 'financial economy'. This is terrible way of re-distributing money.
QE and REPO will bring loads of pain in the nearest future. Stock markets should be fine the the time being, however it seem to be obvious that part of those money will also end up in different assets. Property and land will be one of them.
It's easy to imagine situation, where inflation is increasing, economy is slowing down, factories and companies importing parts from China and retailers selling chinese products will suffer. And yet stock market prices and property prices will continue it's way up.
If properties and rentals would continue getting more expensive (demand would come from that wealth / FIAT printend) then it will affect everyone. Cost of running buiness will increase, cost of living will increase. How to counter it? I have no clue.
Difficult times ahead.
Yours, Piotr
Your point about where the newly printed money ends up is 100% accurate. The money remains in the "financial" realm, where it's given to the elite / oligarchs.
None of that new money ends up in the real economy, the economy of production and retail and so on. The wealth gap continues to grow, and that spells doom for all ... for the economy of the elites and the economy of the middle class.
Posted via Steemleo
Dear @majes.tytyty
In my opinion we're witnessing two important things:
Those without any assets and relying stricly on FIAT may have a hard time in upcoming future.
Cheers
Piotr
Yep, precisely. A massive wealth transfer is underway, and it will lead to a more massive wealth gap. Essentially, the middle class will vanish (as you pointed out).
And a society / economy without a healthy and vibrant middle class is neither healthy nor vibrant. It's doomed.
Let's hope we can survive the coming collapse and help our families, friends, and neighbours as best we can. Maybe we can do so thru "Hopeful Projects" of various types.
Cheers.
Many analysts think the dollar is overvalued. But that means nothing on short or middle term. The exchange rate can differ from fair value for many years, even some decades. If all are buying dollars - because there is some positive real interest rate in USD, for example, or because it is believed to be a safe harbor - the dollar will surge. (Or stay stable, at least.)
I agree. There is too much power behind the dollar, and too many people relying on and using the dollar, for it to collapse overnight. Nobody knows when it will slip into a death spiral, and in fact, many people believe it will not collapse.
However, it's quite clear that it will eventually collapse. It's simply a question of when ... or how long before.
@tipu curate
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We cannot rely on the Fed to govern the economy. I don't know how anyone can agree to that. Maybe much of their support is fear based on some level.
I believe that if an economy is weak and starts printing more money or multiplying it virtually in bank accounts, that can lead to a disaster.
You see, I am from Venezuela, one of the things that has led us to be one of the most miserable economies in the world has been the deranged economic policies and monetary policies, among which was the printing of money without supporting it in production, manufacturing, resources or anything that generated confidence in the currency. That has been a disaster and I don't think it's good for any country.
I agree. Granted, there may be many and various causes of economic collapse, but printing money simple aggravates the situation.