Armstrong Gives Us a Reason for Dollar Going to 160…
America is great “again”. When was it great last time by “their” definition? 1980-1988 right? The Reagan years. What happened to gold? Crash down… dollar to all time highs…
Now? Repeat is coming… Gold fell out of favor then. It’s falling out of favor again. It will be in favor towards the end of “America being great again” but give that some time… Where do I believe you should be now? Looking for a buying opportunity for the stockmarket… it’s in a bull…
I’ve envisioned it going this way: the United States, at the expense of the rest of the world and blamed on Trump, does FANTASTIC for a while. Money comes flooding into the United States like never before. (Trump Prophecy says this too). They allow the United States to blow bubbles like never before. 100,000 Dow!? Yep. Then right at the end of Trump’s second term boom, pull out the rug, crash her down…. Blame Trump, Nationalism, Captialism. They’ll say that a new economic system is needed because the rest of the world faltered while just America prospered. With commodities at really reduced levels, they’ll then create their asset backed global currency… (right before this is the time to buy gold if it doesn’t become confiscated). Then we can have the “global leader” of biblical proportions come on the scene and a couple good wars to boot.
Here is Armstrong and his discussion of U.S. companies repatriating their money back home and its impact on the world. The vision I’ve been given is coming into focus. We won’t see US Dollar 80. We’ll see above 160 says the Trump Prophecy(says new dollar highs)… I believe it…
Will US Companies Repatriating Cash Home Create Banking Crisis Outside USA?
QUESTION: Mr. Armstrong; Do you believe that if American companies do repatriate dollars to get the low tax rate in the USA, will this impact foreign banks as capital withdraws? I figured you are the best qualified to answer that question nobody seems to be discussing.
Thank you for sharing your expertise.
SY
ANSWER: That is a very interesting question and it is indeed unique. I cannot think of anyone who has asked that one yet. Let us assume that U.S. corporations will repatriate at least 25% of their estimated US$2.6 trillion of offshore funds to take advantage of a one-off 14% tax holiday. It will not matter if they are selling euros, yen, pounds, or yuan. Switching their funds from the offshore dollar funding markets to domestic dollars will have a similar impact on the same trend that took place between 1980 and 1985 that drove the dollar to all-time record highs.
American corporations moving capital sends a powerful impulse through global finance system. Despite the rise of China and the creation of the euro, the world has never been so “dollarized” as it is today. The euro is a complete failure for there is no single market with a centralize debt to compete with the dollar as an alternative. China is rising, but it is not ready for prime time. There is no alternative to the dollar. That is the real crisis in the world economy.
U.S. lending rates are critical to the world economy. The Bank for International Settlements (BIS) says offshore dollar funding has risen fivefold to US$10.7 trillion since the early 2000s, with a further US$14 trillion of global dollar debt hidden in derivatives. BIS research also confirms that the rise and fall of the dollar is the major cycle of dollar liquidity which is driving the world’s investment appetite and global asset prices. This liquidity spigot is clearly being turned off. The Fed is not only raising rates, it is also reversing bond purchases exactly OPPOSITE of the ECB which openly admits it will repurchase government debt as it expires because they know there are no buyers at these rates. The Fed is shrinking its balance sheet while the ECB is trapped and cannot dare take the same steps.
The BIS is warning that China, Canada, and Hong Kong all have the risk of banking failures that are greater than that of Europe. Apple Inc. said it will bring hundreds of billions of overseas dollars back to the U.S., pay about $38 billion in taxes on the money and spend tens of billions on domestic jobs, manufacturing and data centers in the coming years. That is more than a quarter-trillion. The answer is YES – ABSOLUTELY. US companies will bring back a substantial amount of that money and this will reduce deposits overseas and that will increase the risks of bank failures outside the USA, but probably more so in Asia than Europe. The ECB will most likely prop-up banks no matter what it says.
Mario Draghi will NOT stop Quantitative Easing and he WILL NOT raise rates until he can get out the door. His term at the ECB is for 8 years and sources say he cannot wait to leave. Draghi will extend his signature landmark bond-buying stimulus programme that is just life-support for the member governments at least until September 2018 officially but indefinitely until he leaves. He does not want to be blamed for the economic disaster he has created for the world and as such he is trapped in the ECB until October 2019. The question will be can he really keep up this insane losing position that much longer or will the entire house of cards come crashing down.
So look first to bank failures on the rise in Asia with respect to capital withdraws. Nonetheless, there is deep concern about Italian banks can take down the entire euro-system and that may be the spark which ignites the next catastrophe. No institution will buy 10 year bonds of Europe locking in significant losses. Indeed, as Yellen said – rates must be normalized.
I’m not going to say USD 160 is impossible, but if it happens it will cause the dollar cycle to fail for the first time since it came off the gold standard in the 1970’s.
Ok.
Lotsa good reasons for Canada banks to get into trouble with the high dollar, independent brokerage or one of the big banks comes to question as ‘bail-in’ the new law which means accounts and bank stock holders get the axe.
Thanks for sharing. Going to be interesting to see this unfold if it does happen. The U.S. could be the one that benefits as others fall to the way side….
Didnt realize gold was in favor.
Uhhh. Good point. Gonna really be our of favor… lol.
When Reagan took over he started the stock market runs and the dollar bull and the gold drop.
Then the stock markets kept going up over another decade after him and gold down.
This time we’re already 1/2 way into it. This is the halfway point for gold down in my opinion and the stock markets have been going up for a decade already with another 6 years to go in my opinion.
Certainly can’t argue the trend is exactly that so far.