“The 2024 deficit will represent 7% of US gross domestic product while the 2034 deficit will be 6.9% of GDP,” the nonpartisan Congressional Budget Office (CBO) wrote in its latest report. This makes it easy: 7% over a decade roughly doubles the US debt. The CBO now projects this year’s deficit at $2 trillion, a …
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The Big Mistake of Markets for Central Banks
Six months ago, the world’s major central banks were preparing for a move that would reward anyone with a credit card or hoping to buy a home or run a business: A global shift to lower interest rates that would make borrowing cheaper and loans more available. Interest rate cuts are “a topic of discussion …
Currency War – The Implicit Replacement of the Petro-Dollar
The dollar as the currency of valuation for oil silently died last week, ushering in a new era in the global monetary status quo. On June 9, the US agreement with Saudi Arabia expired – What will be the consequences. Although it did not grab the headlines of the economic press, for obvious reasons the …
The nightmare of ECB policy and the mistake of cutting interest rates
The ECB decided to cut interest rates by 25 basis points on the same day it raised its own inflation estimates for 2024 and 2025. If anyone wants irrefutable proof of the lack of independence of central banks, this is it. The ECB has only one mandate, price stability, and it has violated it for …
Gold Overtakes Euro as Reserve – Next Currency is the Dollar
There has been a large increase in the share of gold in central bank purchases since 2009 at the expense of fiat currencies. In fact, by the end of 2023, gold has overtaken the euro, while the next currency to challenge is the US dollar. The dollar’s share of total reserves appears to be slowly …
De-dollarization is constantly being strengthened
The dollar is still a primary currency for spending, liquidity and foreign exchange. But it’s no longer the top savings asset. Gold (now a Tier-1 asset…) will continue to be a high-value reserve (ie, it holds its wealth) better than any amount of money. In any case, the dollar and US Treasuries are now quantitatively …
China: The Strategic Moves, Trade and Sanctions It Prepares for Currency War Against the Dollar
Financial security has become an integral part of China’s national security strategy since the Asian financial crisis of 1997 – when the so-called Asian Tigers collapsed. Rising geopolitical tensions with the US and the West in general since 2018 and Western economic sanctions against Russia have further prompted Chinese policymakers to strengthen the economy’s financial …
Central banks are creating poverty with real estate, stock and over-indebtedness ‘bubbles’
Due to loose monetary policy (quantitative easing), financial assets appreciate without being supported by proper fundamentals while real estate becomes investment vehicles and the lower income strata are excluded from ownership. Despite what the conventional narrative about the economy holds, central bank monetary policies are a form of distortive government intervention in the economy. Their …
At extreme levels of market valuations (bubbles), everything portends a crash
Lately there has been growing concern over the valuation of the US stock market, warning that it is currently overvalued. This analysis delves into the reasons behind this rating and explores the various factors that contribute to the perceived overvaluation. By trying to understand the basics of what “overvalued” means, we shed light on the …
“Mesoeconomics” or the study of the “middle” space between micro- and macroeconomics
Understanding the network helps to understand the economy. Supply chains have always been seamless and therefore “boring”. Now, however, geopolitical, environmental, social and political upheavals are bringing supply chains to the fore. A consequence of this is the emergence of what is called “mesoeconomics”, or the study of the “middle” space between micro- and macro-economics, …