www.armstrongeconomics.com
The Japanese yen has peaked against the dollar. The dollar in fact elected a YEARLY Bullish Reversal at the end of 2014. This is yet another confirmation that we are facing a strong dollar ahead ushering in this age of DEFLATION,
which should start to hit in the USA after October. This is impacting
everything not the least of which has been commodities and interest
rates as hoarding cash rises. While the commodity bulls have kept
touting China from every angle since their consumption reached almost
50% in 2011 of total world output, China’s economy entered a recession
with 2007 and despite the recent reaction stock rally, we are also
witnessing investment outflows from China. Massive borrowing in Hong
Kong and taking the cash back to China masked the trade flows hiding the
real trend because people just look at money and not actual trade. As
the dollar rises, this helps to extend the deflationary trend in
commodities but it also will place pressure on their dollar foreign
loans.
No degree of austerity by the ECB will reverse the economic decline in
Europe. Socialism has reduced Europe from a major economic power to a
shadow of its former self. The bulk of the money supply today is DEBT,
not actual currency. Artificial manipulation to inspire austerity fuels
deflation and will never achieve a reduction in inflation that Germany
is so terrified of these days. The idea of creating money is only the
old-school concept of monetary inflation whereas today the bulk of money
creation is actually debt. This is not something that can even be PAID off, whereas the only outcome is default.
The global deflationary trend is thus alive and well as we can see
reflected in even the Japanese yen. Those who keep touting the
hyperinflation scenarios and the collapse of the dollar only looking at
the United States, are blind to the global trend. The dollar has elected
a YEARLY BULLISH REVERSAL against the Japanese yen and
that confirms the dollar rally and the continued deflation and
additional signals this year will confirm this trend into 2016.
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