For years, big-money investors have borrowed money where it is cheap and invested it where higher returns are available. This has helped provide liquidity around the world in the fiat currency system. When the cost of foreign money (interest rates) goes up, these trades must be eliminated.
Many countries have devalued their fiat currency to enhance their foreign trade positions. By having a low currency value, their export products remain ‘cheap’. In the global economy, it has been a ‘race’ to the bottom.
For the USA this has provided inexpensive products for the consumer. It has also given th USA very large trade deficits.
Currently the Trump administration is negotiating import tariffs to balance the system. If the system changes, the currently profitable trade agreements fail. For the USA this means higher prices. For foreign exporters this means lower profits.
The world economy is tightly entangled. Currently this has shifted value from West to East. The USA buys cheap products from Japan, China, and dozens of other countries. Jobs exist to support US lifestyles.
This system is failing as fiat currencies become valueless.
The practical value of crypto currencies and precious metals remain poised to increase as the fiat system collapses.
Here is today’s beauty.
