{"id":38980,"date":"2018-10-11T06:27:48","date_gmt":"2018-10-11T11:27:48","guid":{"rendered":"http:\/\/olduvai.ca\/?p=38980"},"modified":"2018-10-11T06:27:48","modified_gmt":"2018-10-11T11:27:48","slug":"ground-zero-will-the-dollar-shortage-kick-off-the-next-financial-crisis","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=38980","title":{"rendered":"\u2018Ground Zero\u2019 \u2013 Will The Dollar Shortage Kick Off The Next Financial Crisis?"},"content":{"rendered":"
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\u2018Ground Zero\u2019 \u2013 Will The Dollar Shortage Kick Off The Next Financial Crisis?<\/a><\/h3>\n

There\u2019s an old saying.<\/p>\n

\u201cYou can\u2019t fight the dollar.\u201d<\/em><\/p>\n

And what this means is: because the world\u2019s chained to the U.S. dollar (thanks to its reserve status) \u2013 everyone\u2019s constantly affected by whichever way the dollar\u2019s value goes.<\/p>\n

If the dollar\u00a0declines<\/em> \u2013 then the foreign economies and currencies get a boost from an inflow of capital.<\/p>\n

But if the dollar\u00a0rises<\/em> \u2013 then the opposite happens. Foreign economies and their currencies sink.<\/p>\n

You can understand why, then, so many countries today are peeved<\/em> with the Federal Reserve\u2019s tightening. They\u2019re all suffering the unintended consequences of a stronger dollar.<\/p>\n

I\u2019ve written about this problem<\/a> before. . .<\/p>\n

Foreign Central Banks from all over the world \u2013 such as Argentina, India, Vietnam, Indonesia, and many more \u2013 are all defending their own local currencies against a stronger dollar.<\/p>\n

Those that borrowed\u00a0trillions<\/em> of dollars are exposed here. A rising dollar against their own falling local currencies creates a mismatch between liabilities (the rising U.S. dollar). And assets (their own weakening currencies).<\/p>\n

Also keep in mind that as rates rise, the dollar-indebted foreign corporations and banks are all feeling the pain of increased borrowing costs.<\/p>\n

For instance \u2013 I wrote last week<\/a>\u00a0that onshore bond defaults in China just hit a record high<\/em> as liquidity gets tighter. . .<\/p>\n

That\u2019s why today \u2013 as U.S. interest rates rise<\/em> (especially as of late hitting a seven-year high<\/a>). And the dollar gets stronger<\/em> \u2013 the global cost of capital keeps getting more expensive<\/em>.<\/p>\n

Thus \u2013 putting it simply \u2013 overseas investors and corporations are finding it increasingly difficult and costlier to get their hands on dollars.<\/em><\/p>\n

And yet \u2013 so far \u2013 the market doesn\u2019t realize just how costly and scarce U.S. dollars are becoming. . .<\/p>\n

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

\u2018Ground Zero\u2019 \u2013 Will The Dollar Shortage Kick Off The Next Financial Crisis? There\u2019s an old saying. \u201cYou can\u2019t fight the dollar.\u201d And what this means is: because the world\u2019s chained to the U.S. dollar (thanks to its reserve status) \u2013 everyone\u2019s constantly affected by whichever way the dollar\u2019s value goes. If the dollar\u00a0declines \u2013 […]<\/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":[19913,21292,312,19915,839,5482],"class_list":["post-38980","post","type-post","status-publish","format-standard","hentry","category-economics","tag-adem-tumerkan","tag-dollar-shortage","tag-financial-crisis","tag-palisade-research","tag-us-dollar","tag-world-reserve-currency"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38980","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=38980"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38980\/revisions"}],"predecessor-version":[{"id":38981,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38980\/revisions\/38981"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=38980"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=38980"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=38980"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}