WHAT IS MONEY POLLUTION & ITS EFFECT ON GLOBAL MARKETS?
The US dollar is the only financial trade reserve currency for nations. The size of dollars in circulation and the SYSTEM underlying the WORLD RESERVE Status of the dollar makes it the ONE INSTRUMENT with liquidity depth to settle even one day of food and energy trades let alone the rest of world goods globally.
Said another way the WORLD rely’s on the FED and the USA policy makers to keep the global system stable and safe – protected.
Now we have President Trump policies. One is to move Frank Dodd Regulations as a yolk off investment banks which own commercial banking today – too big to jail.
Next, we have policies related to say China just taking one nation.
So now let us look at the ECONOMICS of suggested policies. Frank Dodd has a rule that reserves for banks must be increased for bad loans and recession period to make bank’s safe. Commercial banks have under the rule acquire 2.7 trillion of USA Debtor Treasuries to make up their capital reserve accounts. I believe and many other economists believe THAT if the Frank-Dodd policy is relaxed the commercial banks may sell off this huge pile of Treasuries to secure CASH they can use for higher return STOCK BUYBACKS vastly impacting their share price in a market manipulation within casino capitalism.
China holds 1.2 Trillion dollars of US Treasuries. If Policies in a trade with other nations begins with China they would I believe and many economists believe be quick to retaliate by dumping their TREASURY holdings as they did 48 billion last October following some Trump policy statements in the media.
If the banks and China both dump the Treasury market will move into volatility such as have never seen before. The entire system will shudder. IF the entire system becomes affected all hell in the markets can break loose and no one knows the outcomes.
The risk of POLICIES coming down remains something that must be considered. For the reasons, I’m putting into the mix while everything looks so happy time.
Think about it.
Berny Dohrmann – Information IS Power
PS: ETF market core liquidity could grind to a halt in such conditions as a by-product and is one reason I suggested the next SUPER SHORT will be in ETF market space.