2016 – US dollar warning : the beautiful isolation of the « global reference currency »

Note for our readers — Following our monetary research work under the form of a surveillance of several months, our team is worried again about the US dollar. After a calming two year time, the dollar is heckled again within today’s new multi monetary world. Surprised by the conclusions of its own analyses, presented here below exclusively to you, our team of experts wishes to warn you, the GEAB readers, about the possible danger threatening the dollar. 2016 could very well be the year when the dollar wall will fall…

To explain the current financial turmoil, all official accusing fingers are pointing to a single guilty party: China, the ideal guilty player, the same way Greece and the euro currency were at their time. It is true that evidence seems to be on the side of those accusing fingers, due to the recently unstable Shanghai stock market and its low values.

Yet, there is something these mercenary detractors seem to forget: unlike in the United States, for example, the stock market is far from being vital in China, a country where this is more like “fun” than actual financing of the economy: in 2015, only 7% of the businesses were financed by equity[1]… This expansion of Macau casinos is therefore not at all representative of the Chinese real economy[2]. Of course, in the West the stock market has also been completely disconnected from the real economy, since the beginning of the accommodating policies of the central banks, but the importance of the financial markets is infinitely greater. As was mentioned particularly in the GEAB Edition 100, the finance system is truly at the heart of the American system (we have in mind mostly the enormous amounts of pensions that are being recycled within the stock market), and wants to be seen as the remedy for the industrial and economic decline of the country – but none of this is true in China. This means that the slightest cooling of the Shanghai stock is not the real reason for the pneumonia of the world’s finances (or of the world full stop). As a proof, note that the Shanghai index lost 32% in less than a month (!) during June-July 2015, without causing the emotion aroused by the two 7% drops (partially offset, now) registered earlier this year.

Yuan’s Way

The real reason was whispered, in fact, by some mainstream media, in place of a good analysis: in August 2015, what caused panic, much more than the market decline was the decision taken by the PBoC (Chinese Central Bank) to slightly devalue the yuan[3]. This would demonstrate, according to certain specialists, the weakness of the Chinese economy…

Full article: 2016 – US dollar warning : the beautiful isolation of the « global reference currency » (GEAB)

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