As another week rolls off the calendar, the move away from the dollar continues to grow.
While Bitcoin and the cryptos have remained the focus of the markets, China has recently begun testing its PetroYuan platform. And given how the Petrodollar has been such an integral part of the U.S. dollar reserve currency status, the news is a startling indicator that foreign trading partners are continuing to walk away.
Why would this be happening at this particular time? Certainly the fact that one Fed official after another comes out with commentary similar to Chicago Fed President Charles Evans (who believes inflation is too low and rate hikes should be put on hold) is a big reason.
As a result, as the years go by following the sub-prime crisis and the Fed’s unprecedented monetary easing programs, more and more are beginning to realize that there might not actually be an exit plan. After all, if Fed officials still think more artificial credit is going to be necessary 8 years later, doesn’t taking assets out of the dollar system make a lot of sense?
This is also a big part of the reason why the pricing of the cryptos has accelerated like it has. While traditional inflation hedges like gold and silver remain depressed due to continuous paper contract selling, people are seeing what’s going on and investing in assets that give them protection from the failing system.
Because while the Fed can continue to talk about how they plan to continue raising rates and normalizing their balance sheet, one would think they have to realize that there’s going to be incredible amount of pressure on the stock, bond, real estate markets should they do so. Which is likely why many of the officials are already talking about lowering rates again in the future. One way or another, more printed money is coming. This is why China and other nations are making arrangements to trade outside of the dollar, while investors are taking their money out of the old system and putting it into the replacement.
An honest look at U.S. fiscal and monetary policy over the past few decades left a clear picture of how things would eventually end up. Now it’s interesting how the signs that we are either at or close to that point continue to emerge.
Certainly this leaves investors and savers with some challenging decisions. Which is why keeping an eye on news events like the PetroYuan and further Bitcoin and crypto adoption can be so valuable. Because whether we are on the verge of a more significant move, or if there is still a little more time to go, the handwriting is on the wall.
So while we have yet to hit the breakpoint that so many of the Austrian Economics community are expecting, the news continues to support that at this point it’s only a matter of time.
-Chris Marcus
December 18, 2017