저자: Global economy · 외국인
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Peter Schiff how to profit on next recession at money show San Francisco Peter Schiff the problems I saw leading up to the financial crisis of 2008 to nine are dwarfed by the problems that I see now under burnick and Yellen the bubble that they created is far bigger this thing is probably going to blow up on Donald Trump I wish he having claimed ownership when he put his brand on this stock market bubble on this phony economy they're going to have the renamed the Great Recession because this one is going to be worse we are going to have a dollar crisis this time the average American is going to suffer much more this time that's why I'm here in the money show to tell people how to profit on the events that are about to unfold the basic reason for believing that the dollar is overvalued is of course that the United States is running very large current account deficits and that the possessors of other major currencies especially the yen are correspondingly running large current surpluses now current account imbalances are not necessarily a warning sign indeed they are the necessary counterpart of any transfer of funds from places with excess saving Japan to places with high returns on investment the u.s.
still massive current account imbalances mean that the surplus countries are holding an ever-growing share of their wealth in the deficit countries a process that cannot go on forever and herbert Stein's law reminds us that things that cannot go on forever don't eventually the u.s. deficit and the rest of world surplus must be sharply reduced perhaps even reversed and while this adjustment could take place in other ways it is likely that much of it will occur via decline in the value of the dollar Visa Visa yen the euro and so on the sustainability question which as far as I know I first posed back in 1985 in a paper title is the strong dollar sustainable is whether the market seems to be properly allowing for that required future currency decline if not the dollar is doing a wily coyote and is destined to plunge as soon as investors take a hard look at the numbers for those without a proper cultural education mr.
coyote was the hapless pursuer in the Roadrunner cartoons he had the habit of running five or six steps on telly off the edge of a cliff before looking down realizing there was nothing but air beneath and only then plunging suddenly to the ground and the numbers do have a definitely coyote I feel true interest rates in the United States are higher than those in Japan or Europe which means that the market is an effect predicting gradual dollar decline but inflation is also a bit higher in the United States the real interest differential on long term bonds is probably only about two percent Lisa V Japan less Lisa V Europe thus investors are implicitly expecting only a 2% per annum real depreciation of the dollar against the yen over the long term given the size of the current account imbalance that just isn't enough to understand why bear in mind that a currency depreciation or more strictly a revision of expectations leading to a currency depreciation the exchange rate is of course and endogenous variable constitutes a positive demand shock and a negative supply shock to the depreciated country it is a positive demand shock because the country's goods become more competitive on world markets it is a negative supply shock because import prices increase and conversely of course a currency appreciation is a negative demand shock and a positive supply shock the reason to be concerned about a settling dollar decline then is that it so happens that the United States is currently a supply constrained economy what much of the rest of the world is demand constrained so the net effect is negative almost everywhere in the United States where wages are finally beginning to reflect more than full employment labor market a settling dollar decline would at least threaten to produce a wait price spiral and the mere threat would mean that the Fed would likely be forced to raise rates whether this would lead to a substantial contraction is unclear who the heck understands aggregate supplier behavior these days but a dollar decline is certainly not positive for the US right now as for the rest of the world demand shocks from a currency appreciation are normally easy to deal with just cut interest rates which among other things limits the appreciation but of course Japan is firmly in a liquidity trap and cannot cut rates the eurozone is not in a liquidity trap but a sufficiently sharp dollar declined could put it into one the only places that clearly benefit from a weaker dollar our demand constrained economies pegged to the dollar in Argentina and Hong Kong are just not big enough to change the general picture simple textbook open economy macroeconomics then tells us that starting from where we are right now a US economy at or beyond capacity a large part of the rest of the world well below capacity and in or near a liquidity trap a drop in the dollar will be a global contractionary force how strong a force well it depends on the drop if markets were to force the u.s.
to move rapidly to current account balance or beyond the numbers would be very troubling this is unlikely I think but then serious crises usually are exam T three events that could trigger a collapse these two situations make a collapse possible but it won't occur without a third condition that's a huge economic triggering event that destroys confidence in the dollar altogether foreign countries owned more than five trillion dollars in the u.s.
debt if China Japan and other major holders started dumping these holdings of Treasury notes on the secondary market this could cause a panic leading to collapse China owns one trillion dollars in the US Treasuries that's because China pegs that you want to the dollar this keeps the prices of its exports to the United States relatively cheap Japan also owns more than one trillion dollars in Treasuries it also wants to keep the yen low to stimulate exports to the United States what China and Japan never dump their dollars only if they saw their holdings declining in value too fast and they had another export market to replace the United States the economies of Japan and China are dependent on US consumers they know that if they sell their dollars that would further depress the value of the dollar that means their products still priced in yuan and yen will cost relatively more in the United States their economies would suffer right now it's still in their best interest to hold on to their dollar reserves China and Japan are aware of their vulnerability they are selling more to other Asian countries that are gradually becoming wealthier but the United States is still the best market in the world what would happen after a collapse of selling dollar collapse would create global economic turmoil investors with rush to other currencies such as the Euro or other assets such as golden commodities demand for Treasuries would plummet and interest rates would rise US import prices would skyrocket causing inflation US exports would be dirt-cheap given the economy or brief boost in the long run inflation high interest rates and volatility would strangle possible business growth unemployment would worsen sending the United States back into recession or even a depression how to protect yourself protect yourself from the dollar collapse by first defending yourself from a gradual dollar decline keep your assets well diversified by holding foreign mutual funds gold and other commodities $1.00 collapse would create global economic turmoil to respond to this kind of uncertainty you must be mobile keep your assets liquid so you can shift them as needed make sure your job skills are transferable update your passport in case things get so bad for so long that you'll need to move quickly to another country these are just a few ways to protect yourself and survive a dollar collapse
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