{"id":36807,"date":"2018-08-19T07:18:17","date_gmt":"2018-08-19T12:18:17","guid":{"rendered":"http:\/\/olduvai.ca\/?p=36807"},"modified":"2018-08-19T07:18:17","modified_gmt":"2018-08-19T12:18:17","slug":"the-anatomy-of-a-crisis-a-strong-dollar-and-disappearing-liquidity","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=36807","title":{"rendered":"The Anatomy of a Crisis: A Strong Dollar and Disappearing Liquidity"},"content":{"rendered":"
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The Anatomy of a Crisis: A Strong Dollar and Disappearing Liquidity<\/a><\/h3>\n

Since March \u2013 the dollar\u2019s rallied over 7%. And it\u2019s caused the Emerging Markets to implode.<\/p>\n

But the bigger problem is what lies ahead<\/em>.<\/p>\n

And that\u2019s a global dollar shortage<\/em> \u2013 which the mainstream continues to ignore. . .<\/p>\n

I\u2019ve touched on this a couple months back<\/a>. Wondering when the mainstream would start to realize that the stronger the dollar gets \u2013 the more pressure global economies will feel.<\/p>\n

I wrote<\/a>. . . \u201cThis is going to cause an evaporation of dollar liquidity \u2013 making the markets extremely fragile<\/em>. Putting it simply \u2013 the\u00a0soaring<\/em>\u00a0U.S. deficit requires an even\u00a0greater<\/em>\u00a0amount dollars from foreigners to fund the U.S. Treasury<\/strong>. But if the Fed is\u00a0shrinking<\/em>\u00a0their balance sheet<\/strong>, that means the bonds they\u2019re selling to banks are sucking dollars\u00a0out<\/em>\u00a0of the economy<\/strong> (the reverse of Quantitative Easing which was injecting dollars\u00a0into<\/em>\u00a0the economy). This is creating a shortage of U.S. dollars<\/strong> \u2013\u00a0the world\u2019s reserve currency\u00a0<\/em>\u2013 therefore affecting\u00a0every<\/a><\/em>\u00a0global economy.\u201d<\/p>\n

Since then, things have only gotten worse<\/a>. . .<\/p>\n

First: Jerome Powell \u2013 the Fed Chairman \u2013 issued a statement at the end of June that they would actually increase<\/em> the amount of rate hikes over the next two years. This means they\u2019re tightening even faster.<\/p>\n

Second: the U.S. Treasury increased<\/em> their debt-borrowing needs to the highest since the financial crisis<\/a> \u2013 which was over a decade ago<\/em>. Therefore, they will need even more dollars to fund their spending.<\/p>\n

\u201c<\/em>The department expects to issue $329 billion in net marketable debt<\/strong> from July through September<\/strong>, the fourth-largest total for that quarter on record and higher than the $273 billion estimated in April [a 17% increase], <\/strong>the Treasury said in a report Monday. The department\u2019s forecast for the October-December quarter is $440 billion, bringing the second-half borrowing estimate to $769 billion, the highest since $1.1 trillion in July-December 2008\u2026\u201d<\/em><\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

The Anatomy of a Crisis: A Strong Dollar and Disappearing Liquidity Since March \u2013 the dollar\u2019s rallied over 7%. And it\u2019s caused the Emerging Markets to implode. But the bigger problem is what lies ahead. And that\u2019s a global dollar shortage \u2013 which the mainstream continues to ignore. . . I\u2019ve touched on this a […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[19913,21292,1732,303,431,21291,19915,661,8701,662,8625,839,3650],"class_list":["post-36807","post","type-post","status-publish","format-standard","hentry","category-economics","tag-adem-tumerkan","tag-dollar-shortage","tag-emerging-markets","tag-fed","tag-interest-rates","tag-liquidiity","tag-palisade-research","tag-qe","tag-qt","tag-quantitative-easing","tag-quantitative-tightening","tag-us-dollar","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/36807","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=36807"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/36807\/revisions"}],"predecessor-version":[{"id":36808,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/36807\/revisions\/36808"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=36807"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=36807"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=36807"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}