How an Illiquid Dollar Ruins the World, by Matthew Piepenburg

There is a lot of dollar denominated debt throughout the world, which poses two problems. Higher interest rates are making it more difficult to service debt, and the dollar has been strong against foreign currencies. From Matthew Piepenburg at goldswitzerland.com:

One can’t emphasize enough how dangerous the current macro setting is in the wake of a deliberately strong and illiquid Dollar.

Biden, of course, says not to worry. We say otherwise.

The Illiquid Dollar: We Showed You So

Over the years, we have written and reported a great deal about the US Dollar and the ironic mix (as well as danger) of its over-creation yet simultaneous lack of liquidity.

This illiquid Dollar, as argued since the first repo crisis of late 2019, combined with a now weaponized US Dollar on the backs of intentionally rising rates by a cornered and Volcker-wannabe Fed, all converge to spell short-term power for the Greenback and longer-term misery for just about every other asset class and economy in a now openly fractured global financial system.

As to the stark reality/risk of this illiquid Dollar, rather than just say “we told you so,” it would be better to “re-show-you so” by making specific reference to a prior report published in December of 2021.

Dollar Illiquidity—The Ironic Yet Ignored Spark of the Next Crisis

Since penning that report just over 10 months ago, it’s worth revisiting the implications of an illiquid Dollar and the financial crisis of which we warned then and now find ourselves today.

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