Fiat Currency Infrastructure: Why The U.S Dollar Rises During Periods of ECONOMIC deflation – Japan and Korea have dumped billions of dollars defending the Yen and the Won – October 1, 2022,
Rule by “Fiat” money is nothing new, it’s been tried many times throughout human history, and if we’re to be honest, the current fiat monetary system in this digital age is still in its infancy and what most people don’t seem to comprehend about the U.S dollar that makes it so powerful during DEFLATIONARY periods, is what the U.S typically DOESN’T do during periods of economic deflation which is POLICIZE the greenback during periods of deflation.
One of the huge mistakes the United States has been making RECENTLY under the Obama, Trump, and Biden administrations is OPENLY weaponizing the U.S dollar. Russia, as an example, has, for the most part, been BANNED from using greenbacks, which for most people around the world is “Okay” because Russia is currently being perceived as an aggressor against Ukraine.
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Russia declared war on Ukraine, and this declaration of war in the minds of most people is JUSTIFICATION for the U.S government to shun the Russians from the U.S dollar. Although this shunning of the U.S towards the Russians doesn’t seem like a big deal right now, it will likely have MASSIVE repercussions later, especially if different countries feel as though the U.S iS moving towards more CENTRALIZATION of the U.S dollar.
Why Central Bank Digitial Currencies Are a Bad Idea for The U.S Government(Decentralized U.S dollar CASH)
Cash is actually more decentralized than BITCOIN, and U.S dollars are in demand all over the world; some countries use the U.S dollar exclusively, and these countries don’t do this because they necessarily want to; they do it because the people in their country have a huge DEMAND for U.S dollars, which as of the date I’m writing this is imagined as a STABLE currency.
Why don’t people hoard Yen or Won currencies? The answer should be obvious based on the story below, historically, most countries DEBASE their currencies to the U.S dollar, or maybe I could argue that a lot of countries simply buy up a lot of U.S assets, which has the result of debasing their own currencies. A lot of countries like to run trade SURPLUSES with the United States, which can often come across as the WRONG thing to do for a country like Japan.
Why not enrich the Japanese people as an example instead of propping up the U.S economy? The answer to that is simple, in the U.S, there are a lot of wealthy entities that can INFLUENCE people and the direction of the U.S economy simply because there are millions of wealthy people HOARDING U.S dollars. Now, let’s imagine for a moment that wealthy people were hoarding Japanese Yen; well, Japanese power centers might find their POWER and influence over their people minimized as owners of Japanese treasuries might begin to flex their muscles over the Japanese or Korean governments.
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I often write extensively about why I’m NOT a fan of a GOVERNMENT gold standard. Let’s imagine for a moment money was backed by Gold, but a politician could label you a domestic terrorist if you decided to cash out your government money into Gold coins or bars. Would you cash out your foreign government controlled gold? Or suppose a foreign government decided it will no longer honor your gold withdrawal request, citing national security concerns?
Your own government likely wouldn’t want to intervene if your gold withdrawal request wasn’t being honored by a foreign government; I bring this up because MOST countries WILL NOT allow foreign nations to destabilize the CONTROL and INFLUENCE they have over their own people. Once you inherently comprehend this, it will be easier for you to understand the reason why most people HOARD U.S dollars in 2022.
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Now, don’t get me wrong, this PRIVILEGE the U.S has, if abused, will be lost, and other variables could play into the U.S dollar losing its dominance, but in the here and now, most countries have to REACT to what happens to the U.S dollar, because their respective governments don’t allow their people to enjoy the same Liberties and Freedoms enjoyed in the United States.
With that said, you’re noticing more and more U.S Presidents are becoming increasingly tyrannical, Barack Obama bailing out Wall Street and sanctioning countries he doesn’t like, Donald Trump sanctioning countries he doesn’t like and even going as far as to make public attacks against the Federal Reserve for raising interest rates.
And with Joe Biden, doing al of the above while attempting to SPEND his way out of inflation, while overly regulating the U.S economy, which from my point of view is the ROOT cause of consumer price inflation because America is a CONSUMER driven economy, it requires AFFORDABILITY along with competition within its borders, and when a U.S president makes it his MISSION to pick winners and losers in the U.S economy.
Biden is effectively creating an economic environment that FORCES countries to DUMP U.S dollars because U.S consumers, as an example via Bidens Green energy edicts to phase out fossil fuels, are able to buy FEWER Japanese and Korean-made goods. Fossil Fuels obviously being the fuel that POWERS PETRODOLLAR, which DOMESTICALLY benefits U.S consumers because Oil(which influences all aspects of the global economy) is PRICED in US dollars
Where most people blame central banks, I tend to blame GOVERNMENT REGULATIONS on the economy, I’ve stated in SEVERAL posts that whether you like it or not, there’s currently a DEMAND for central banks, and this demand exists because there’s a DEMAND for a Welfare State. Japan and Korea have “WELFARE States” that protect their manufacturers.
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Ofcourse this compromises FUTURE innovation in Japan and even South Korea, but the Chinese model, as an example, has U.S innovation finding its way to CHINA. So you start to see how the governments of Asian countries BENEFIT from a STRONG dollar, as long as a strong U.S dollar continues to CONSUME Asian goods and services.
This U.S dollar infrastructure was built based on the DEMAND of U.S dollars, which stems from the decentralization of the U.S dollar. Jeff Snider has educated many of us on the Euro Dollar market, which in a nutshell, is the demand for U.S dollars OUTSIDE of the control of the United States. No such equivalent market exists for any other currency at the moment, eampel you won’t find too many U.S CONSUMERS demanding Yen, Won, Pounds or even Euros.
Yet on the flip side, you’ll find a huge DEMAND for U.S dollars in almost every part of the world, including in nations hostile to the United States. When Barack Obama gave Iran back the money the U.S stole from them, Iran demanded to be paid in CASH, not digital cash, but actual cash; an actual U.S plane had to be flown to Iran with US physical DOLLARS.
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The Iranians, obviously hostile to the U.S, still understood how LIQUID U.S dollars are international; soon after Barack Obama sent Iran the cash, the terrorist group ISIS was unleashed and was well funded because there’s a HUGE demand for U.S dollars. Now, I bring this up because anyone dumb enough to imagine that the Centralized U.S dollar, which allows the U.S government to cut off your money supply whenever it wants to, will be as popular as U.S decentralized CASH, clearly doesn’t understand what’s going on.
Now, what I’m saying doesn’t mean that the U.S won’t make the mistake of launching a central bank digital currency; politicians are idiots, and if they imagine something is popular with the people, they might do it, but what I am saying is that it’s the AUTONOMY, the decentralization and the popularity of the U.S dollar, that makes it RISE during periods of economic deflation, like it or not the U.S dollar has become a COMMODITY, while most currencies represent a means of CONTROL for most governments.
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Manufacturing powerhouses Japan and Korea both have to DEFEND their currencies from the Ascension of the U.S dollar, which is telling when most of us were taught that to control the means of production is to control another country’s economy. Apparently, humans are more complicated than belts and levers Left Wingers want us to believe. Apparently, people NATURALLY gravitate towards where they imagine they’ll get the most liberty and freedom.
Interesting times ahead!