What happens to the US dollar after this crash?

What happens to the US dollar after this crash?

What happens to the US dollar after this crash?

Is this the transition away from a US dominated world reserve currency?

I think so.

It’s going to be a few years but it’s coming. America’s reign at the top of the economic world is losing its traction to China.

I still think Western central bankers don’t trust the Chinese currency that much, but the US dollar may not be able to be trusted soon as well.

Inflation is here. The value of the currency is getting eroded every day.

Most of the money the federal reserve created went into financial assets, but not the real economy.

People who own assets, who are mostly the rich, became richer on paper.

Never confuse money printing for genius.

A lot of people think they’re so smart right now buying on leverage and taking on extra debt to finance things.

These times in history have happened before and they always end badly.

Think about this.

If someone took out a 800k mortgage on a million dollar house, his mortgage payments are x.

As long as he has a job, he’s able to pay the mortgage payments.

If the economy starts to tank because of the market crash, a lot of people won’t be able to pay their debts.

That same person may not have a job and can’t pay the mortgage.

The outlook for America in the 2020s may not be good.

Climate change is here and causing massive floods, droughts, fire storms, and damage to many parts of the country.

Their infrastructure is failing.

As Marc Andreesen beautifully wrote, they need to start building.

They need to invest heavily around infrastructure of the future.

They need to better educate their population. They have to invest in the healthcare of their population. But to do all of this, they need money.

So going back to the US dollar, what are they supposed to do?

Interest rates are effectively at 0% so people have been taking on tons of leverage. Leverage = risk. It’s great when everything is going up, but it wipes people out on the way down.

Unfortunately a lot of people will be wiped out when this falls.

So the US government can continue to let the market run hot? Then you run the risk of hyperinflation.

Can you really have a hyperinflated currency as the global reserve currency?

I don’t think so.

Then they have to raise interest rates. But that can’t work because the interest on their debt is effectively their GDP.

So they're stuck.

One solution is to default on its debt and devalue the currency, something which China did in 2015.

Do I think that will happen? Not when politicians are in charge.

They can’t have the charade blow up, because they will be blamed.

But they’re in a death trap.

Enter AMC and Gamestop.

The match for the greatest transfer of wealth in the history of the market.

The thing that brings it all down.

To be fair, the market crashing is not only AMC/GME’s fault, but it will be a trigger.

Hedge funds blow up = banks blow up = bailouts = America into a recession that could rival the Great Depression.

I almost hate writing these words because of how many people suffer at the hands of so few.

The bankers control the system.

They ‘regulate’ themselves.

But they’re the ones who take insane risks.

Why do taxpayers have to bail these guys out?

Why can’t we let them fail?

Why can’t we let them go bankrupt and have bigger players buy them up?

That’s likely what’s going to happen where BlackRock and Fidelity can buy banks around America for pennies on the dollar.

It’ll be a tough few years for the country and there will be a lot of conflict.

Now throw in an economic crisis and all the ingredients exist for something bad.

It’s been so long since we’ve had conflict on this side of the world.

Usually we’re the ones looking at other countries wondering what civil war they’re having, but now it could be in a lot more places.

The long-term debt cycle is ending. Every 80-100 years we transition away from a global reserve currency. We’re at year 79.

America won’t be the global reserve currency to infinity.

They’re time is coming up.

Who knows what happens to the US dollar, but it doesn’t look great.