Samseau is right about the world being dragged around by the Fed over the last number of years. When the Fed lowered rates to 0 and printed a ton of money buying bonds, it not only starved average people of income on their savings, it created a situation in which foreign investments became extremely attractive due to much higher rates elsewhere. So those with access were able to borrow dollars for basically nothing and speculate/invest abroad, mostly in the emerging world and China, getting a much higher return, with basically no risk, at least in the short term.
Once the dollars stopped flowing from the Fed, relatively speaking, the impetus to buying EM investments dried up. All the companies/governments where those dollars ended up are now in the situation where they have promised to pay back dollars at a high interest rate, yet are dealing in weaker local currencies. This is the basic anatomy behind the crisis in China, and why the dollar has risen, as there is currently a scramble for dollars to service debts taken on in recent years.
None of this could have happened if the Fed hadn't flooded the globe with dollars in the first place. The problem is that in their twisted thinking, they'll see the current slowdown as a matter of a lack of money, rather than prior money explosions pushing prices far beyond what the respective economies could support.
So they're going to print even more money, and they'll keep going until there is hyperinflation. This is because the dominant economic dogma is that the price level can never, ever fall, for any reason. And the economic fundamentals suggests that prices will fall if the economy is left to its own devices.
In other words the Fed has two choices, defend asset prices, or defend the value of the dollar. They can't do both at the same time. Right now they're defending the dollar, and have been for at least 18 months, during which asset prices have suffered. I don't know where their Uncle point is, but at some point they will have to step in to 'save' asset prices which means trashing the dollar again.
I've mentioned before that the profligacy of economic marxism is what funds the cultural marxism, and that funding starts with the Fed. Their ability to print money arbitrarily in unlimited amounts creates the illusion that there are unlimited resources. This in turn undermines the need for real savings, investment, long term planning. It promotes conspicuous consumption and the accumulation of debt. This all enables the replacement of men in favor of the government, destruction of families, and all the cultural decay that follows. It is no surprise that the cultural marxist revolution really took hold in the 1960s, the same time when the Federal Reserve and the other major central banks really started to dismantle the gold standard, finally getting rid of it officially in 1971.
This issue, more than any other is a quick fix if there ever is one. Trump clearly knows the score here, but the question is how much can he do? As I've said before, the entire economic establishment worships the Fed and thinks they can do no wrong, regardless of the political bent of the economist in question. If he goes out and picks a Volcker-esque Fed chair he'll never get confirmed. Having said that, at the rate Trump has gone in moving the Overton Window, we'll be back on the gold standard by his second term.
Once the dollars stopped flowing from the Fed, relatively speaking, the impetus to buying EM investments dried up. All the companies/governments where those dollars ended up are now in the situation where they have promised to pay back dollars at a high interest rate, yet are dealing in weaker local currencies. This is the basic anatomy behind the crisis in China, and why the dollar has risen, as there is currently a scramble for dollars to service debts taken on in recent years.
None of this could have happened if the Fed hadn't flooded the globe with dollars in the first place. The problem is that in their twisted thinking, they'll see the current slowdown as a matter of a lack of money, rather than prior money explosions pushing prices far beyond what the respective economies could support.
So they're going to print even more money, and they'll keep going until there is hyperinflation. This is because the dominant economic dogma is that the price level can never, ever fall, for any reason. And the economic fundamentals suggests that prices will fall if the economy is left to its own devices.
In other words the Fed has two choices, defend asset prices, or defend the value of the dollar. They can't do both at the same time. Right now they're defending the dollar, and have been for at least 18 months, during which asset prices have suffered. I don't know where their Uncle point is, but at some point they will have to step in to 'save' asset prices which means trashing the dollar again.
I've mentioned before that the profligacy of economic marxism is what funds the cultural marxism, and that funding starts with the Fed. Their ability to print money arbitrarily in unlimited amounts creates the illusion that there are unlimited resources. This in turn undermines the need for real savings, investment, long term planning. It promotes conspicuous consumption and the accumulation of debt. This all enables the replacement of men in favor of the government, destruction of families, and all the cultural decay that follows. It is no surprise that the cultural marxist revolution really took hold in the 1960s, the same time when the Federal Reserve and the other major central banks really started to dismantle the gold standard, finally getting rid of it officially in 1971.
This issue, more than any other is a quick fix if there ever is one. Trump clearly knows the score here, but the question is how much can he do? As I've said before, the entire economic establishment worships the Fed and thinks they can do no wrong, regardless of the political bent of the economist in question. If he goes out and picks a Volcker-esque Fed chair he'll never get confirmed. Having said that, at the rate Trump has gone in moving the Overton Window, we'll be back on the gold standard by his second term.