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The world's central banks are starting to experiment. But what comes next?


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Are we seeing the end of the supremacy of the US dollar? With soaring government spending and gaping deficits are we on the cusp of a great surge of inflation? In light of the extreme financial measures required by the Covid-19 crisis and the alarming polarisation of US politics, the markets can be forgiven for asking such dramatic questions.

But it is worth reminding ourselves that as recently as March, the whole world was crying out for dollars. And far from fearing inflation, the problem actually facing central banks is how to avoid sliding into deflation. Falling prices are a disaster because they squeeze debtors – think negative equity in housing markets – and create a vicious circle of postponed purchases, leading to falling demand and further deflation.

https://amp.theguardian.com/commentisfree/2020/sep/09/central-banks-deflation-covid-19-world-economy

 

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The USD has 2 distinct advantages. In order of importance:

1) It is backed by the largest military in world, greater than the next 24 countries combined. Countries that even mention walking away from the USD suddenly find an aircraft carrier group on their doorstep and 'shock and awe' regime change.

2) The alternatives aren't strong enough (EUR hampered by Br*xit and internal squabbles, RMB and RUB - no chance short of nuclear war, Gold - not enough of it)

 

Not to say this could be the beginning of the end...the Roman Empire took 200 years to decline, but that is a separate thread.

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1 hour ago, msi said:

The USD has 2 distinct advantages. In order of importance:

1) It is backed by the largest military in world, greater than the next 24 countries combined. Countries that even mention walking away from the USD suddenly find an aircraft carrier group on their doorstep and 'shock and awe' regime change.

2) The alternatives aren't strong enough (EUR hampered by Br*xit and internal squabbles, RMB and RUB - no chance short of nuclear war, Gold - not enough of it)

 

Not to say this could be the beginning of the end...the Roman Empire took 200 years to decline, but that is a separate thread.

Is quantity an issue? What about silver?

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11 hours ago, PeanutButter said:

Are we seeing the end of the supremacy of the US dollar? With soaring government spending and gaping deficits are we on the cusp of a great surge of inflation? In light of the extreme financial measures required by the Covid-19 crisis and the alarming polarisation of US politics, the markets can be forgiven for asking such dramatic questions.

But it is worth reminding ourselves that as recently as March, the whole world was crying out for dollars. And far from fearing inflation, the problem actually facing central banks is how to avoid sliding into deflation.

 

 

I think there is a global race to devalue. The US and China do it by printing, because they can, the UK does it by being a bit sh1t and looking like a bad investment.

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  • 415 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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