
ReFeR
21.8K posts












Goodbye, dollar milkshake theory. In the movie Minority Report, Tom Cruise is part of a team which prevents crime before it can happen. Fed swap lines being expanded to cover all US allies (non-allied countries have already de-dollarized their economies) prevents funding stresses before they become funding stresses. Ergo, there will never be any "sucking" of liquidity from the global financial system into the US dollar even in a severe crisis, which means the dollar will lose its safe haven bid in times of stress. If the world is short dollars, and the Fed supplies them, there is no consequence to being short dollars. You are actually encouraged to use dollars for carry trades, much like Abenomics did to the Japanese Yen. The eventual outcome is the dollar becoming more of a transactional currency and less of a store of value. This is great news for Asians. It means the end of permanent currency depreciation, making local equities more attractive relative to US assets. Pair high growth rates and favorable demographics with currency stability, and you have the perfect setup for an EM resurgence. The Treasury Secretary does not understand the long-term implications of this Empire ending move.































