Notes From Underground Mar. 22, 2020:
My Fantasy News — China Swaps U.S. Treasuries For Fort Knox – by Yra Harris
This headline would have seemed ridiculous eight weeks ago but today it has great relevance. If I ran the PBOC (or rather had the totalitarian impulses of President Xi), the command from above would be trade in the overvalued U.S. debt instruments for a 3,000-year vehicle that’s a reliable store of VALUE. The world’s central banks have confirmed a central theme of NOTES FROM UNDERGROUND: It is not inflation they fear but the onset of a DEFLATIONARY SPIRAL.
The guardians of value will render savers worthless in an effort to bail out debtors. Yes, if the global financial system collapses into a horrid feedback loop of liquidation the results will be calamitous. Therefore, those who have HOARDED fiat currencies are deemed to be expendable,t he ultimate and financial act of FINANCIAL REPRESSION. The issue for global finance has been and will be DEBT, DEBT, DEBT, aided by the policies of lower for longer interest rates by the Bernanke, Yellen, Kuroda, and for eight horrendous years, Mario Draghi. The tide is going out and it seems that everyone has been floating naked on a tsunami of cheap funds.
Think back to January 2015 when the Swiss National Bank was forced to remove its peg of the Swiss franc to the EURO of 1.20. As a result, the Swiss franc soared as those who borrowed massive amounts of currency at CHEAP INTEREST RATES had to repay those loans with a much higher Swiss currency, turning cheap loans into a major financial debacle. Many Eastern European mortgage holders were forced into foreclosure. Lawsuits are still being settled against the banks that underwrote so many of those loans. This is a major issue today as the FED flooded the world with cheap money, creating a global system balancing on a stable dollar with very low interest rates.
As the fear of a global downturn increases there is a RUSH to…
Read the rest of this article at Yra Harris’s website.
Follow Yra on Twitter.
Plan Your Trade, Trade Your Plan
NONE of the content produced by TraderStef, staff members, or any services associated with this website should be construed as financial or investment advice. Financial investment is a risky endeavor and may lead to substantial loss. Always perform due diligence before undertaking any financial decision. Not a Financial Advisor.
Copyrighted Material – A “by TraderStef” credit linked back to this website is required when using any quotes, written material, technical analysis charts, or publishing a full version of an article.