As I identified on Could 16 — https://www.paulcraigroberts.org/2024/05/16/the-west-has-an-illiterate-financial-press/ — when international central banks redeem their US greenback denominated reserves equivalent to US Treasuries, they’re paid in {dollars}. They promote the Treasuries as a result of they’re getting out of greenback reserves. As they don’t need the Treasuries, they don’t need the {dollars} in money or every other kind, in order that they promote the {dollars} for different currencies or use them to purchase gold.
China has about 800 billion {dollars} of US Treasuries left to promote. As China sells and as international locations use different technique of settling commerce balances than the US greenback, the demand for US Treasuries and dollar-denominated monetary devices will decline. The Federal Reserve can stabilize the value of Treasuries by creating cash with which to purchase the bonds, however the Fed can’t create foreign currency echange with which to buy the {dollars}. The issue turns into a greenback downside.
Because the world demand for {dollars} diminishes, so does the greenback’s worth. As US manufactured items are produced offshore and because the US imports meals, US inflation might be a consequence of greenback decline. Tariffs additionally limit provide, increase costs, and additional scale back the greenback’s buying energy. The tariffs being imposed on items imported from China are thus counterproductive.
Inflation and greenback decline imply no reducing of rates of interest. As an alternative, US rates of interest will rise. The morons ruling us are destroying their very own energy base and the residing requirements of the US inhabitants. There’s not a single individual in “our” authorities with sufficient sense to be there.
The pending US monetary disaster described in The Nice Taking is certainly pending. We’re completely arrange for it.
The globalism the US championed as an instrument for Washington’s hegemony is now destroying its instigator.
