The dynamics driving the dollar down, by Alasdair Macleod

There’s a huge global overhang of fiat dollars and many of their owners will be looking to exchange them for less debasement-prone assets as U.S. debasement continues. From Alasdair Macleod at

This article examines the currency imbalances between US dollars and the other currencies and concludes that should foreign holders decide to reduce their dollar exposure, the consequences for its value would be dramatic.

The dollar’s problems should be laid at the door of the wishful thinkers who think the state knows better than free markets. It is that which has led to currency imbalances. Central banks attempting to manage economic outcomes by manipulating interest rates and “stimulating” economic activity have acted in defiance of Say’s law, which defines the relationship between production and consumption, and the true role of a medium of exchange. 

By dismissing this fundamental truth, the US authorities have made a rod for their own backs. Their determination to replace gold as the highest form of money with the fiat dollar has led to extraordinary levels of dollar accumulation about to be unleashed onto unsuspecting markets. A break below 100.50 on the dollar’s trade weighted index will probably be the signal. It currently stands at 101.50.

Say’s law says it simplest

John Maynard Keynes did the world a disservice with his offhand dismissal of Say’s law. Consequently, economists have lost the true relationship between production and consumption. And we have lost our understanding of the true role of currencies as a medium of exchange. Nearly all our economic errors have flowed from this dismissal. 

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One response to “The dynamics driving the dollar down, by Alasdair Macleod

  1. Egalitarian Slit Trench Latrine

    They found our Achilles Heel and internal quisling traitors said…your terms are acceptable.


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