Lately it almost feels as if whoever is making the decisions in the U.S. government is actually trying to crash the markets.
Because as the world continues to decouple from the dollar at a rapidly accelerating rate, the U.S. actions are so economically destructive and bizarre, that it becomes harder to believe that someone would actually think this could in any way help an economy.
In the past few weeks, President Donald Trump has called for 1% interest rate cuts by the Fed, escalated the trade war against China, started new trade wars against Mexico and India, and still had time to fast-track a plan to sell guns to the middle east.
Meanwhile, foreign trading powers (and former U.S. treasury buyers) have given every indication that they have no plans to back down.
A recent ZeroHedge report suggests that China and Russia have been conducting joint military exercises while further “developing bilateral payments in national currencies”.
While the news out of Russia showed further progress towards creating new non-dollar financial infrastructure.
The Kremlin released a draft decree on Wednesday outlining “settlements and payments for goods, service and direct investments between economic entities of the Russian Federation and the People’s Republic of China are made in accordance with the international practice and the legislation of the sides’ states with the use of foreign currency, the Russian currency (rubles) and the Chinese currency (yuan).”
According to the draft, Moscow and Beijing will cooperate to develop a national payments system, along with cross-border payments in national and other currencies.
“The sides deepen the cooperation in the field of national payment card systems and within the framework of the Russian and Chinese legislation provide support to commercial banks in their independent decision-making on joining the payment system in the state of the other side,” reads the document.
Last November, Russian Prime Minister Dmitry Medvedev said that discussions were under way to allow the use of China’s UnionPay credit card in Russia, and Russia’s Mir card in China.
“No one currency should dominate the market, because this makes all of us dependent on the economic situation in the country that issues this reserve currency, even when we are talking about a strong economy such as the United States,” Medvedev said last year.
“I want to say something that may raise a few eyebrows, but I think some of these [US] sanctions are good or useful because they forced us to do what we should have done 10 years ago,” he added.
It seems more and more clear that the world has noticed the reckless actions of the U.S. government and Federal Reserve, and are running out of patience.
The Fed has wildly expanded the money supply in the last decade, and in the face of all that’s happening, what was their latest response?
After introducing an idea called the “maturity extension program” in the Fed’s May meeting minutes (which sounds eerily similar to quantitative easing), numerous Fed officials were out this week talking about the possibility of rate cuts.
While Fed Chairman Jerome Powell unleashed confirmation that the QE that was promised as temporary, is not only here to stay. But that it’s now policy going forward as well.
“Perhaps it is time to retire the term “unconventional” when referring to tools that were used in the crisis. We know that tools like these are likely to be needed in some form in future ELB spells.”
The world is rapidly realizing that the U.S. government and the Fed do not actually have an exit plan. Maybe they never had a plan at all. Or maybe the plan was just to loot as much money from the system as possible before allowing it to crash again.
In either case, whether the mainstream and Wall Street media ever acknowledge the obvious and inevitable, the signs are there for anyone who chooses to look. Similar to how they were there prior to the last market crash.
So while Wall Street continues its pavlovian response to the U.S. dollar and treasury markets as a so-called “safe haven”, you’re not imagining what you’re seeing. And fortunately it is still possible to position yourself in advance of what’s to come.
As always, if you have any questions about this article you are welcome to contact me here. And hopefully this post can be of value in helping you navigate this stunning shift in the world.
June 7, 2019
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