The Dollar – King Rat of Failing Currencies
The comments below are an edited and abridged synopsis of an article by Alasdair Macleod
“The explanation for the sudden halt in global economic growth is found in the coincidence of peak credit combining with trade protectionism. The history of economic downturns points to a rerun of the 1929-32 period, but with fiat currencies substituted for a gold standard. Government finances are in far worse shape today, and markets have yet to appreciate the consequences of just a moderate contraction in global trade. Between new issues and liquidation by foreigners, domestic buyers will need to absorb $2 trillion of US Treasuries in the coming year, so QE is bound to return with a vengeance, the last hurrah for fiat currencies. However, China and Russia have the means to escape this fate, assuming they have the gumption to do so.”
Macleod proceeds with an introduction, and then discusses: peak credit is coinciding with trade protection; the impact on government debt funding will be immense; the demise of unbacked currencies; and escaping the fiat collapse.