After the United States cut the global economy into de-globalization, its fundamental purpose is to change the flow of global capital, labor and technology exchanges. In this regard, the "Currency War" The author of the book, Jim Rickards, recently analyzed that the world is approaching a major turning point in the currency cold war.
Christian Gattiker, director of research at Julius Baer Group, told CNBC last week (July 2) that the Fed has been succumbing to pressure from the White House and its policies may affect the future of the dollar. Once the United States enters the cage of substantial economic growth, it may trigger a currency war within "two to three years."
We know that the United States has always treated the US dollar as an economy Power, especially after the U.S. dollar has continuously collected seigniorage after its departure from the gold standard, and has injected a huge amount of liquidity into the world through money printing, it has made some economies become its currency "colonies" (such as Zimbabwe)...
Because the U.S. dollar is the world’s hard currency, the Federal Reserve is in fact the central bank of the world. There are two indispensable foundations for supporting the U.S. economy, namely economic strength (not discussed in this article) And the dominant position of the dollar currency.
The term currency war comes from a country deliberately depreciating the value of its currency in order to stimulate its own economy. Currency war refers to raising or lowering the dollar based on the current economic situation of the country. The exchange rate has forced economies that peg the US dollar (or US dollar savings rate) to intervene soon afterwards, such as Newton’s establishment of the gold standard, the replacement of the British pound by the US dollar, the Invisible Plaza Agreement in Japan, the European currency crisis, and the recent engulfing The global financial tsunami is a currency war.
Although there are still people who doubt the possibility of a currency war, Bank of America Merrill Lynch (BofA Merrill Lynch) Head of currency research David Woo believes that the changing global currency war is evolving into an "invisible blocker". Because of the building of trade barriers, many companies that are unwilling to give up the US market will return.Flow to the United States, thereby increasing the value of the U.S. dollar and its share of use, allowing foreign countries to continue to buy U.S. debt. This is the business of the U.S. dollar as the top currency.
But readers and friends who often read the BWC Chinese website know that the current US economy has actually reached the ceiling of growth. The deepening of U.S. bond yield trend has been emphasized, and for a long time, the monetary authorities of most economies in the world have also realized that the US dollar as the world’s most important reserve currency has a "shelf life", and they have been To increase gold reserves, they buy gold not for investment, but to hedge against the currency exposure and diversified investment needs of the concentration of US dollar assets. In 2017, Germany even shipped some of the gold in the United States back to China three years in advance. And in 2019 it even set off including Italy,The process of transporting overseas gold home to many European countries including Romania.
On the other hand, the market share of petro-dollars supporting the U.S. dollar is also declining. We have repeatedly emphasized on different occasions that today’s economic growth in the United States falls into a lack of momentum. The roots of the situation in which central bank investors with national backgrounds continue to reduce holdings of U.S. debt areThe main reason is that since the mid-1970s, crude oil production in the continental United States has continued to decline and the dependence on external energy has continued to increase.
The United States has been hit hard by the oil crisis twice in history. The first time was the interruption of oil supply in the Middle East, which caused huge losses to the US-dominated Western economy; the second time was in 2008 In the first half of the year, due to the surge in international oil prices, the U.S. oil price index hit a record high of $147.94 per barrel, which pushed up. After U.S. inflation, the Fed had to raise interest rates to 5.25%, which triggered the "Lehman Moment" in the United States. "And the subprime mortgage crisis, which broke out the most serious global financial crisis since 1929.
But now the U.S. energy strategy has undergone a fundamental change. What is completely different from the historical story is that this time the U.S. is likely to be truly prepared, and its biggest shortcoming in history is becoming one of its strongest competitive advantages. 1. The United States has surpassed Russia and Saudi Arabia to become the world's largest crude oil producer (data in the figure below), which has allowed the United States to transform from a victim of an oil war to a beneficiary, thus enabling the United States to use oil as the basis for initiating a currency war. Potential.
At the same time, as some emerging market economies continue to increase their dependence on foreign oil, the anti-risk ability of the imported oil structure is also relatively weak. For example, The high degree of foreign oil dependence is still the European Union, Japan, India and other countries.
As we all know, the U.S. dollar uses U.S. bonds and oil (petro-dollars) as the carrier to exercise the U.S. dollar privilege. Now, it may officially enter the currency game. The Chinese version of the RMB crude oil futures contractOil traders will be allowed to trade around the U.S. dollar, which is gradually evolving into a crude oil pricing benchmark based on the Asian and European markets.
At the same time, China, Russia, Iran and Turkey are the four key carriers of Eurasian economic integration. They are also adopting any necessary investment and settlement mechanisms to bypass petrodollars. The Eurasian Economic Union A common system for a dollar-free payment system is being developed. In addition, the European Union has also announced its new plan to challenge the dominance of the dollar in the global market, and plans to establish a euro-denominated crude oil futures contract this year.
in these contexts. Next, the world may launch a gold reserve war. This is actually a war of global currency reserve status. This is also a process in which the value of commodities that can represent credit is re-evaluated. Therefore, as a gold with strategic economic value It will play a greater role in dealing with the continuous depreciation of the U.S. dollar. Therefore, a new global de-dollarization movement may come. Once many countries abandon U.S. dollar settlement in the field of oil trading, the good days of the U.S. dollar may really be gone. It's back.
In this regard, the BWC Chinese network financial team recommends that investors should exchange for gold and other hard currency assets before then. For example, Russian Finance Minister Anton Siluolov had several months back BeforeIt has been stated that if Russia’s gold reserves are confiscated by the United States, even if there is such an idea, it will be regarded as financial terrorism and financial "declaration of war." (End)
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