Sunday, May 23, 2021
👉Financial Reset Looming as The US Exports Asset Bubbles & Inflation. https://youtu.be/NcYjDTVGar0
👉Financial Reset Looming as The US Exports Asset Bubbles & Inflation. https://youtu.be/NcYjDTVGar0
Financial Reset Looming as The US Exports Asset Bubbles & Inflation.
For how long will the US Government continue to PUMP the US Stock Prices artificially? Everyone knows that the US Market is in the MEGA BUBBLE; it is even more overvalued than Tulip Mania Bubble! The US Stocks are INSANELY OVERVALUED and OVERBOUGHT! The Valuations are impossible to justify!
For how long can the US Government run this fraudulent Stock BUBBLE, while Corporate revenues are tanking, Corporate and National Debt is Astronomical, the Valuations are beyond insanity, Political polarization is at maximum, there are ongoing and upcoming wars, the real resources are limited, Economy is Collapsing, Competition is intense, the Stock Dilutions are at record highs, everything is getting worse, China, Russia, and many other countries are set to ditch the US Dollar as an international reserve currency.
The US dollar isn't that much stronger than where we were at the beginning of last year.It has dropped to a Three-Year Low;and it could dip another 10% Lower.The Dollar has been flirting with lows again, as the Dollar Index (DXY) dropped to a low of 89 . This is the third time since April 2018, the DXY has been this weak, and some analysts think it could drop even lower.
When you have a private central bank for over 100 years, it's only a matter of time when the general public completely gets wealth robbed. It happened in 2008, and they will take the rest soon.
Stop printing for a week, and stocks would collapse by 30%. And the fed and the government would declare a state of emergency and martial law!
Pretending everything is "booming" is fine when you can print money and buy and prop up everything.
Stop the money printing, and the tide goes out real quick.
Meanwhile, Talks of de-dollarization looms as the US is seen to further isolate itself from the rest of the world on trade and economic engagement.
Sanctions imposed on Russia and Iran are forcing these two to look to alternative reserve currencies for international trade in commerce. This is where China and the Chinese Renminbi come in, as the currency begins to position itself as an alternative to the almighty US dollar.
Some countries are planning to use the US dollar as a standard no longer.
A financial reset must be coming soon.
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The dollar is backed by oil and the guns that force nations and companies to pay for oil in dollars.
It is backed by guns and threats of lethal violence.
Why else would anyone accept colored paper for real goods.
Let me put some facts on the table first.
The western world met at Bretton Woods in 1944 and decided to put their gold reserve in the USA in terms of US dollars. It was fixed at US$35 per ounce. In 1971, Nixon unilaterally terminated the convertibility of US dollars with Gold.
Also, in 1971, the Middle East oil-producing countries accept only US dollars for payment of the oil. So every country which needs oil will need to get some US dollars to pay for their oil. The US became rich by printing money in exchange for real goods and services. Moreover, the US can use printed paper to buy up assets all around the world.
A lot of US dollars thus flow out of the US and are sitting in the Central banks of governments.
Also, consider the fact that most nations must borrow money in US Dollars, and as these debts come due, it creates demand for greenbacks.
There is no real asset backing up these papers. The demand for US dollars depends on oil. As oil is burnt, the papers used to buy these oil is sitting at the Central banks of the oil selling countries who use these papers to buy what they need. Note, the papers used to purchase the oil are not destroyed, but circulated around. They are sitting in someone’s pocket.
Now virtually the entire system that has provided a de facto commodity backing for the US Dollar in the form of oil is hanging by a thread and is largely dependent on the continued stability of the royal family in Saudi Arabia.
The US Federal Reserve does not provide any information about the amount of US dollars (or its digital equivalent) floating outside of the US.
Nor information about how much flow back and remains in the US.
Will US dollars collapse? It won’t as long as people believe that this paper can still be used to exchange for something of value.
However, we must also remember that this paper is actually IOUs. Will the US Federal Reserve able to provide the values represented by these many years of printing when the paper is presented to them in the future?
The 1971 Nixon declaration may be a hint.
The World Bank estimates that about 65% of all government reserves are either US government bonds or US dollars.
So, when this happens, all government’s money drops about 65% of their value.
But wait, there is something called fractional reserve. If the reserve rate is 10%, a $1 deposit in a bank becomes $10 circulated money. The typical reserve rate is about 3%. That’s the actual impact will be at least 30 times more serious than losing 65% value.
What would happen to the global economy?
The new world order is formed. The USA becomes a third world country. People still go on with their lives. Those engaged in the real economy will go about their daily life much better off. Those involved in the derived economy will have many bad days to come.
Devaluation of the dollar has been happening for the last ~70 years, especially after 1971.
Devaluation of the dollar is a monetary phenomenon and typically driven by lowering interest rates by the federal reserve to increase credit and liquidity. Below is a quick summary of the impacts:
First, in the US.
More credit and liquidity result in more investment in assets in the US, particularly from larger banking institutions; Since they receive the liquidity first (before the dollar is devalued). Since the liquidity and credit are not based on savings, it historically has created incentives for malinvestment driving more giant asset bubbles and retractions. Additionally, it adds more fragility to the economy, given more purchases are made on credit rather than savings — an example of the 2007 housing crisis.
U.S. goods become more expensive for people living in the US. Particularly for goods manufactured in areas outside of the US.
Wage inflation historically lags price and asset inflation, so over time, people are able to purchase less.
US savings rates decline, given there are fewer incentives to save versus expand credit at lower rates.
Exports from the US become cheaper for other countries to purchase. In theory, this should create a higher demand for them. Although it always depends on the country, it is competing with how much lower does it need to go to be competitive.
And around the World.
The world views the U.S. dollar as a reserve currency. As a result, many of the factors noted above (asset bubbles and inflation) are exported to these countries as well. For example, many goods such as oil and other commodities are traded in dollars.
For countries that have larger exports but are also pegged to the US dollar (think China), their currency doesn’t appreciate as it should, so they often go through higher asset bubbles, and retractions given assets remain unrealistically cheap and foreign investment overheats the economies.
Some economies won’t be able to export as much to the U.S., given consumer prices will increase relative to the purchasing power of the US dollar.
The US dollar is the settlement currency for 40–42% of international transactions, as compared to the Yuan Renminbi’s 1% share.
But as China becomes the largest oil customer of OPEC, it is inevitable that oil settlement will be conducted in Yuan Renminbi eventually with Saudi Arabia.
A dollar collapse is when the value of the US dollar plummets. Anyone who holds dollar-denominated assets will sell them at any cost. That includes foreign governments that own US Treasurys. It also affects foreign exchange futures traders. Last but not least are individual investors.
When the crash occurs, these parties will demand assets denominated in anything other than dollars. The collapse of the dollar means that everyone is trying to sell their dollar-denominated assets, and no one wants to buy them. This will drive the value of the dollar down to near zero. It makes hyperinflation look like a day in the park.
Altogether, foreign countries own more than $5 trillion in U.S. debt. If China, Japan, or other major holders started dumping these holdings of Treasury notes on the secondary market, this could cause a panic leading to collapse. China owns $1 trillion in U.S. Treasurys. That's because China pegs the yuan to the dollar. This keeps the prices of its exports to the United States relatively cheap. Japan also owns more than $1 trillion in Treasurys. It also wants to keep the yen low to stimulate exports to the United States.
Japan is trying to move out of a 15-year deflationary cycle. The 2011 earthquake and nuclear disaster didn't help.
Would China and Japan ever dump their dollars? Only if they saw their holdings declining in value too fast, and they had another export market to replace the United States. The economies of Japan and China are dependent on U.S. consumers. They know that if they sell their dollars, that would further depress the value of the dollar. That means their products, still priced in yuan and yen, will cost relatively more in the United States. Their economies would suffer. Right now, it's still in their best interest to hold onto their dollar reserves.
China and Japan are aware of their vulnerability. They are selling more to other Asian countries that are gradually becoming wealthier. But the United States is still the best market in the world.
There are no safe havens in this environment.
Imagine a clean slate where every inhabitant on this planet was moved over to another planet.
A system based on trust most likely barter towards a rebuilding of necessary institutions to govern, inform, and educate.
The problem is not currency. It is one of control.
Those who have want to hang on to it. Those who don't will attempt to abuse the system gain access. With 250 trillion global debt, the only solution is a clean slate. Even if you did manage to get something going with digital currencies, its value would always be subject to control by the authorities, so I don't see a difference from what we currently have.
Governments using central banks to fund operations will never allow competition. We lost that fight in 71.
Meanwhile, after the Russians and the Chinese, the Germans too are rushing to Buy Gold as a Draft Bill Threatens to Restrict Purchases.
December 2019 Reports have emerged depicting long lines in front of a physical gold sales location in Germany, in view of pending legislation, which would once again lower the anonymous purchase limit, this time from €10,000 to €2,000. The last drop happened in 2017 when the limit was set at €15,000.
China is also reportedly buying enormous quantities of Gold, while the price is still low, using the US Dollar and thus unburdening itself of what they foresee as a very much weakened fiat currency and transitioning towards a currency backed by hard assets. This at a time when the US appears to be giving away a lot of its physical Gold. There appears to be a movement of Gold from West to East.
The Chinese yuan is grossly underrepresented in global trade. It could quadruple in use, and it would only put a marginal dent in the use of the US dollar.
The Yuan Renminbi is poised to become a major global reserve currency in the next five to ten years.
By then, Shanghai and Shenzhen will become global Financial hub trading in yuan and US dollar-denominated assets.
This is probably why Saudi Arabia, Qatar, Iran, Russia, Angola, Venezuela, and other major oil and gas producers are amenable to settle oil and gas trade in yuan, and so many cities vying to become offshore yuan trading hub to get ready for the lucrative yuan trade.
That is horrible news for the US petrodollar. It is just one step closer to ending the US dollar as the world reserve currency.
But it is going to be great news for Gold, so make sure you are diversified in your holdings. Once the US went off the gold standard in 1971, and the dollar was no longer backed by Gold, it became a fiat currency, and it is a very risky thing to have much of your wealth in fiat currency.
The entire world should tear up the magical monopoly money, and all use Gold and silver. This will Fix all of the self-inflicted problems and will make stealing from workers much harder.
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