When the dollar suddenly goes up by 25%, a number of crucial things are implied, the first being that people are dumping all other currencies, indeed all other assets, to get the dollar. Remember the gold and oil prices of this era? They blew past the Case-Shiller decline (of 20%) and collapsed by 30% and 80% respectively. All that money wasn’t heading to enterprises, either, as would be healthy, but to cash and the ersatz cash that are U.S. treasuries.
If cash appreciates at 25% all of a sudden, cash becomes king. “Aggregate demand,” investment, and all the rest goes in the bin.
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