How An Illiquid Dollar Ruins The World
The comments below are an edited and abridged synopsis of an article by Matthew Piepenberg
It can’t be emphasized enough how dangerous the current macro setting is in the wake of a deliberately strong and illiquid US dollar. President Biden, of course, says not to worry. Piepenberg says otherwise.
Over the years, there has been much written and reported about the dollar and the ironic mix (as well as danger) of its over-creation yet simultaneous lack of liquidity.
This illiquid dollar, as argued since the first repo crisis of late 2019, combined with a now weaponized dollar on the backs of intentionally rising rates by a cornered and Volcker-wannabe Fed, all converge to spell short-term power for the greenback and longer-term misery for just about every other asset class and economy in a now openly fractured global financial system.
As to the stark reality/risk of this illiquid dollar, rather than just say we told you so, it would be better to re-show-you-so by making specific reference to a report published in December, 2021: “Dollar Illiquidity—The Ironic Yet Ignored Spark of The Next Crisis.”
Since it was written just over 10 months ago, it’s worth revisiting the implications of an illiquid dollar and the financial crisis of which Piepenberg warned at the time and in which we find ourselves today.
Up for discussion: Why strong is weak; how we got here; the euro dollar—all tangled up in blues; tangled dollars = unusable, unavailable and illiquid dollars; other domino effects of the illiquid dollar; how to fix the poison; pick your poison; the pivot point; a prize for the guilty; and as for gold…