Thank You Memphis for sending this to us today:
Memphis- The Rising USD, Look Out Below
Hard times are ahead.
Yes you already knew this but to what degree? More to the point, how confident are you about what is coming to the western world and how soon? And WHY? How sure are you that you are basing your "perspective" on a truly firm foundation with evidence to support your beliefs?
Is your world view a biblical one or is it largely just secular (a moral) with no room for God? Is the information you allow into your head even well sourced and reliable? These things after all really do matter to us and if you've followed my blogs you already know how closely I guard what gets in!
Like the old adage for computer programming: junk in; junk out.
We won't be using dinar goggles for this so please take 'em off! I wish to resume a mental journey with folks and share some insights along the way.
These insights have been fought hard for with daily study for over three (3) years now following just a few very trusted sources that I then compare and contrast; keeping only that which stands up under close scrutiny.
Perfect and 100% spot on? Not likely, but as time goes by, my expectations are proving solid...thus far. Like any human effort, take what you read and BUILD upon it. Make it your own and please construe nothing here as financial or investment advise.
As a preview, I have begun work on a blog that will look at the current global economic landscape and attempt to bring it into a form that will help many see what's coming in the next 4-5 years. It has been heavy on my heart for over a year now and I just recently felt up to the challenge of sharing it.
Many people have written recently asking some hard and direct questions of me about the future for America. I will attempt to address them all in this next email from a decidedly biblical world view.
Although this world view plays very little into the economic forces at work it does figure into how I see things manifesting.
If your world view differs and you choose to discount my conclusions due to your own limitations and/or normalcy bias? That's fine! Let's be sure and compare notes in a few years. :)
This will not be a stroll thru fields of Lillie's with puppies at play in the summer sun but rather a more blunt and hard hitting assessment because the time is nearly past when we can simply pretend that hard times could never come to America.
Change has been hitting our nation in small ripples that can often go unnoticed by many but the amplitude is now increasing and it's time to attempt putting all this on canvas and paint a picture.
What follows here today is then important to share with you as a preparation for my next effort. It was published by Dinar Recaps on their blog this past week (thanks to the Recaps Team) but got little attention as it was buried within other material.
I am not sending this out in email just to be liked by others or made popular. I can easily go for months and say nothing (as I have done!) but am sending out this email in order that you not be handicapped; lacking the perspective needed to see and accept many of the realities of our current global condition; those forces that support my conclusions.
We simply MUST 1st look beyond the US to appreciate what will play out within. Fair enough?
Less than six (6) hours after I posted the following material I was rather surprised to see that Martin Armstrong @ (PrincetonEconomics.com) released a blog that not only fully supported my thoughts illuminating the worldwide destruction being wrought by the strong USD but he touched on the exact same global concerns as well. I will attach a link to go read it at the bottom.
Please consider taking the time to read it and treat it as reinforcement to some difficult concepts. Martin is an economic genius whom you will not see quoted by mainstream media because they could never publish the unblemished truth that he points to! Questions are welcome....
And one more thing!!my next blog will contain two (maybe more) links to recent episodes of TruNews.com where Rick Wiles interviews some leading economic thinkers.
I commend these interviews highly to those of you who thirst for a deeper understanding.
Uncovering the truth no matter where it resides...
note: The following was offered in reply to this:"Any speculation on what’s causing the [turmoil in emerging markets]? Is it the economic pressure felt around the globe or is it just another part in the plan or a combination of the two? I think it is the desire of many nations who have been held underneath the thumb of the USD to be their own man..."
Since the financial crisis of '08 emerging markets have taken advantage of cheap $ (low interest rates) in the USD and have added an UNPRECEDENTED $9+T in USD denominated debt to their balance sheet.
So in that respect they have been loving the party and feeding at the trough of the UST like there is no tomorrow but guess what? Tomorrow is here.
As long as economies (thinking GLOBALLY here) are expanding (growing) then the added weight of this debt burden is not an issue. No cracks appear as long as the music is playing but that is no longer the case. Has the music stopped? No but it has slowed greatly and is still slowing.
The entire globe is encountering a contraction, a deflation, wherein now suddenly all this debt matters and adding GREATLY to the problem? (this cannot be overstated here) is the strong USD.
If a nation is to remain competitive relative to their neighbors this shakes out (after all the complexities of global interactions are settled) in the value of their $. The old adage that a lower relative currency value favors the domestic economy is true but what about the debt? Does this figure into the grand global equation?
So what are they to do, these poor nations who took all that the US debt machine would hand them? Break free from the yoke that is binding them? For nation A's currency to now regain some lost ground, to rise in value relative to the USD (or even just keep pace) is truly money in the bank right? (For the sake of time we will leave out all talk of pegs here)
A rising USD relative to all these emerging currencies does what to their USD debt (thinking domestically now)? It makes it more expensive to repay right?
Their own economic engine (let's pick Sri Lanka for example) produces a certain GDP and from this a certain monetary growth for the nation IN THEIR CURRENCY and then this currency goes to pay off a portion of their USD denominated debt but suddenly (actually this has been growing for over a year right?) their $ does not stretch as far due to the rising USD.
Put directly, if a nations money devalues relative to the USD they are then taking a bath at the FOREX desk when they repay and it is killing them. The Sri Lanka Rupee buys less USD today than when borrowed unless it's value is held high.
Never borrow against an appreciating currency. This was the failure of many businesses and private parties who borrowed cheaply into the Swiss Franc only to be ruined in early 2015.
So we have competing forces at work here. Does nation A maintain a lower relative currency and reap the near term economic benefits; taking their losses effectively on the back end? Or does it compete against the rising USD and service it's debt at the most favorable exchange possible while allowing things internally to wax worse and worse.
This event is far from over and will be something to watch for sure.
This is the stage of the cycle which we are now in and when complete history tells us that these debts will largely be cleared, wiped away, defaulted on.
All this fast and easy money creation thru debt will be erased and equilibrium will be regained in the business cycle.
This is by the way a small glimpse into the big GCR that has been preached from most corners of the dinar world.
It was crap three years ago when I began attempting to point to it and now that it is unfolding we are beginning to see evidence that yes, the debt does matter and it is a much deeper discussion than simply re-pricing the world into higher valuations.
Pulling this together, the rising USD and global deflation (in every possible arena) is slowly destroying [choking] these nations and they are very much so fighting for their life in an every man for himself struggle.
When the problem was proposed as: "economic pressure felt around the globe" it captured fully the forces at work that are driving change.
The globe is facing a deflationary TREND (as in: this is not over) that is yielding ever deflating GDP's yielding less $ to repay the USD denominated debt. And adding injury to pain, a USD that is yet to rise even higher.
How can we be sure the dollar is not about to crash and burn? Capital flows (medium and likely even long term) are going to continue INTO the USD as it is the only what? The only game in town wherein big money can go.
Money cannot go into a hole and as Armstrong might say here, China is not yet ready for prime time. Even the American economy CANNOT hold all of the capital that is headed our way. Enter the SDR?
In closing, one final important point is found in these opening words:
"Any speculation on what’s causing..."
We have the ability to see the world with clarity, the information is right there if we but reach out, grab it, and properly interpret. Speculation should never be our starting point but once we do venture beyond points of clarity (confidence) we have to recognize that speculating certainly has it's place and is by no means a four letter word.
My point here is that we should not sell ourselves short and think that confidence cannot be had because it can! We just need to clearly define where we have it (where we are right) and where we are venturing beyond (into what if's) as I tried to express in yesterday's post [on the Iraqi bond offering].
from Martin Armstrong Sept04, 2015:The Euro and Why the Dollar Will Not Be Dethroned http://www.armstrongeconomics.com/archives/36850