The Dollar is SKYROCKETING, Here’s What You Must Know

The dollar is popping and that's not what most people were anticipating to the point that it's rattled the entire cryptocurrency space. It's why Bitcoin is sold off really hard this week, especially yesterday, as its dollar debasement theory predictably comes up empty. But more important than that, the dollar is accelerating higher, which is a dependable signal all its own. But a signal about what? We've got the Japanese government starting to make the same preliminary noises it always makes just prior to intervening, trying to prop up the yen against the dollar. Canadian and New Zealand dollar exchange values have sunk to nearly their April lows all over again. Even the SELL AMERICA euro is being sold to its weakest level in months with an unfavorable trend now firmly established. And because of that last one, the euro, DXY, which is the dollar index that most people watch and sadly the only one most people watch, it broke back above 100, which appears to have triggered the crypto bloodbath yesterday, sending Bitcoin down by more than 5% and Ether crashing 10%. With dollar debasement predictably falling apart, is the latest short-run crypto bear market a useful signal for more meaningful activities in the real monetary world? That's the question that we're asking here. If the euro dollar is going that far, it may be a useful indicator for just how much this latest deflationary, not inflation or debasement, this latest deflationary wave is truly getting to be. So we've got some critical updates on the dollar not being debased, just as the governments in Japan and India. Plus we've got to talk about this dollar debasement theory and where it actually came from and what it really means. And if we're being honest about it, it's nothing more than circular reason. It's a tautology and a false one, which is why these theories always end up getting everything backward. It's why we're seeing the dollar scream higher again when everybody was convinced it was crashing. The dollar, after all, has been declared dead repeatedly for the last 20 years and really longer, yet it keeps going higher and they never really talk about it. Dollar doom is always a next year thing. Okay, but why hasn't the dollar died? Or at any point since 2008 and 2009 when Bitcoin was introduced and QE's alleged money printing got started, right when the federal government spending and borrowing went off the rails. Notice how it's always the wrong correlation. Everyone keeps saying that the Federal Reserve money printing or the insane spending from the government are going to lead to dollar destruction, yet ever since those began, the dollar has gone only higher against every other currency. Not in a straight line, of course. Nothing ever does go in a straight line. But with every prediction that money printing and drunken borrowing is about to kill the currency, only the opposite takes place. And they never give you an answer why that's the case. They simply say, well, it'll be next year or the year after when it all suddenly matters. No explanation why it hasn't to this point, just moving the goalposts further into the future. And I'll give you the answer right now. It's depression economics. It really is that simple. But hardly anyone knows what that means, nor do all these people talking about the dollar know what they're talking about when they try to talk about these things. There is no dollar standard and it hasn't been in a very long time. The world hasn't really used fiat currency in basically a century. Anyone who brings up that term fiat, you can immediately dismiss everything that they're saying. They have no idea what they're talking about. We have a Eurodollar standard, not dollar. Eurodollar means bank money, not government money. It's an entirely different animal, which is why all the predictions that are made about the dollar only ever come out backwards. The level of monetary ignorance is absolutely staggering if you couldn't already tell that. They say the dollar is being debased and then right on cue, what happens? The dollar starts screaming higher. And that is actually the problem. The dollar going higher is the problem. You see what I mean about getting everything backwards? It really is depression economics. So the dollar, that's what it's doing. We've got big moves in all the key currencies, including the euro. That one is sitting at just under $1.15. It's lowest since early August and threatening to make a multi-month low even lower than that one. Like cryptocurrency prices, the euro has been rolling over the past four months. It's not something that just happened this past week. It basically began to flatten out right in early July, the very same inflection that I've been telling you about in all the rest of the currencies. The euro hasn't escaped the reasserting Eurodollar, which has grabbed a hold of most of the world's opposite currency values. Just to quickly review, there was no sell America, just like there was never any treasure rejection. Remember that one? That one faded away too. Those were first raised by partisan political forces, like we see in every administration and from both parties. The guy in office is always wrecking the dollar, but yet just like the debasement fantasy, the dollar never gets wrecked. Instead, the Eurodollar is the one doing the wrecking. So what did happen was a pretty solid and disrupted deflationary outbreak late last year, which we talked about at the time, on early into this year, which sent the dollar exchange value soaring. That's the signal. That's the problem. The rising dollar is a signal of deflationary monetary conditions down deep inside the bank ledger money Eurodollar black hole, and it all reached a crescendo in April with max trade war fears. What followed from that, however, was not sell America. There was no ditching treasuries. It was the extreme deflation of March and April that simply relaxed. There wasn't nearly as much acute pressure and urgent monetary tightening. The dollar's exchange value reflected that relaxation. It came back down off its major highs. It retraced. That's all it was. That's all it ever was. However, as we always see in these cases, in these short run periods, the debasement theorists seized upon what was little more than a two-month reprieve and declared it the absolute proof positive the dollar was finally finished. And they circled the euro as the key pillar in their Swiss cheese of an argument, especially since the euro makes up the majority of DXY, which, as I said before, the only dollar index that most people look at, even as quite often it is the most misleading dollar index. But setting all that aside, even if you accept the dollar was crashing this summer because of the euro and what it did for DXY, the euro is now the one moving lower. And it has been since July, which also means it's being swept up in the latest dollar deflationary wave, which is more visible and has progressed much farther against almost everyone else's currencies. So focus on the euro as missing the meat of the euro dollar's latest jump. And it is indeed jumping now. Start with the yen in Japan. Now, the mainstream media will make us about some government policy or really central bank and interest rate differentials, when we can see very clearly over the last several months that the yen has been weakening like all these other currencies. Perceptions of policies and changes in policies and changes in governments have gone back and forth, yet the trend remains anyway. JPY, like all the rest, is clearly euro-dollar synchronized, which means as central bank whims blow back and forth and governments do change the direction of the euro dollar against the yen or whatever other currency remains steady regardless. With the yen specifically weakening once again more than interest rate differentials would suggest, the Japanese government has dusted off its currency playbook, which says step one before intervening is to declare the exchange value is out of step with the government's view of fundamentals that just so happen to be derived from those policy differences. As Bloomberg reported today, recent yen moves are deviating from what might be expected given the difference between interest rates in Japan and the U.S., according to Japan's top currency official. Basically, we always say you should look at interest rate differentials between yen and U.S. dollars or U.S. treasury bonds and JGBs, and the currency pair should move in line with that gap, at least according to Vice Finance Minister for International Affairs, Atsushi Mimura. If you look at the actual movement in foreign exchange and the movements of differentials between U.S. and Japan interest rates on public bonds, you do see some sort of deviation recently, I would say. And all that is true. There is deviation on interest rates, which, by the way, there's always deviation on interest rates, which should tell you that it isn't interest rates that are driving the yen exchange value. It's not rate fundamentals. It's euro-dollar fundamentals, globally synchronized euro-dollar fundamentals. And one of our canaries that we watch closely for a measure of those globally synchronized euro-dollar fundamentals is one that you may not think of, India's rupee. India's rupee has been a dependable canary from the very beginning, go all the way back to 2007. October of 2007. India's rupee has been weakening the entire time as the global economy has fallen deeper and deeper into depression economics. What is a euro-dollar university membership? It's where understanding the monetary world isn't a mystery, it's a method. If you're serious about your financial education and you want clarity in a world of volatility and misunderstanding, this is for you. Mainstream education has left so many gaps on the most foundational concepts, making sense of everything is practically impossible otherwise. With our memberships, we'll fill in everything that you've been missing. 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The dollar goes up against INR as dollar strain and heightened risk aversion combine to force everyone else's value down. Not because the dollar is stronger or it's somehow winning. Again, depression economics, tighter money conditions overall that both reflect worsening economic potential as well as contribute to that worsening economic potential. Not so much a double-edged sword as it is, as Urjit Patel of the Reserve Bank of India once said, a double whammy, though he got the whammy part wrong. It was a double whammy. The rupee had actually turned around before the rest of the currencies more recently, sliding lower again, all the way back in early May. And it did, as you can see, accelerate dramatically right from the start of July, globally synchronizing with the euro, Canada, New Zealand, Japan, everywhere else after performing its canary service a couple of months before that. Now, more recently, the Reserve Bank of India has been trying desperately to hold the rupee at 88.80 to keep it from plunging to even more new record lows. RBI has been constantly in the FX and onshore markets over the past couple of weeks. So while INR is trading sideways during this time, sideways to lower, the heavy sustained official intervention is the other side of this eurodollar deflation. Instead of the rupee dropping like all the other currencies are, at least temporarily, it's being held up by RBI until eventually the Reserve Bank of India gives up and INR falls sharply to catch up on the downside with everyone else. Right now, the intervention is India's confirmation of this rising dollar syndrome. And I could go on and on with a number of further examples from Canada's dollar, New Zealand's, I mentioned, Korea's won. All of them that are quite surprising to most people, almost all the way back to where they were at their lows in April. Again, that's completely contrary to the idea that, you know, sell America, dollar debasement, the US dollar is crashing towards zero. It's these other currencies that are heading back toward their all time lows, or at least, you know, multi-year lows consistent with where they had been in April for the very same reasons as April. Again, you can see what I mean about getting everything backward. And it starts with this debasement theory itself. Now we've heard dollar doom for longer than I care to remember. And one reason why it won't go away is what I talked about earlier in the video. There does seem to be something to it, or at least there should be. Yeah, government debt is definitely out of control. That is not the argument. So the thinking goes that shouldn't that eventually threaten the status of the currency? And proponents of this argument cite a few historical cases to make it sound plausible. They actually don't make it sound plausible. They make it sound like this is the only possible outcome, when that just is not true. This is why they throw around the term fiat currency, then make the further claim that all fiat currencies end up being destroyed in an inflationary, if not in hyperinflationary inferno. They bring up Weimar Germany. But like I said, dollar debasement stems mostly from just gross ignorance of monetary history. First of all, the United States itself put that notion to rest with its own fiat currency experience. The Civil War greenback not only didn't lead to hyperinflation, it was retired at great effort and expense. More important than that, we don't use fiat currency and haven't pretty much since that time. We've been on a ledger money standard for all practical purposes going back that far. Not fractional reserve lending, ledger money. Huge difference, and it's not semantical. And if you want to know what those are, that's what Eurodollar University memberships are for, to actually examine the facts, to uncover useful truth when it comes to money, and then everything else that's related to it, which is basically everything in the world that we have here, the interconnected, globally synchronized world. But like I said, dollar doomism starts with some truth. The idea that governments are out of control, which they are, that is absolutely the case. But it does not necessarily follow that out of control governments lead to currency debasement or currency destruction. That is not true. Another historical example is the 1930s, where we really see depression economics at work. The government first under Hoover, who was far from a do-nothing, but mostly under FDR, they broke all historical precedents and racking up unfathomable debts previously seen only during wartime. And many people at the time said the US dollar was going on its way to Weimar Germany status, that the treasury market was going to blow up from all that consistent massive supply. Every argument that you hear today was made throughout the entire 1930s. And none of it happened because of depression economics. Banks in particular bought every last bill and note that FDR issued because they only wanted what was perceived to be safe and what was treated as the most liquid. Treasury yields fell throughout the 1930s, even as the government's debts soared. Does this sound familiar? The dollar itself was never threatened. It isn't exactly comparable since the world back then was on a fixed exchange standard, but there was no hyperinflation. In fact, there wasn't even enough price inflation, price reflation to come out of the steep deflationary hole from the early 1930s. And that was despite a massive influx of gold, which just got turned into useless bank reserves that banks held onto as a liquid store of value. Does this sound familiar? Depression economics. So the government back then had gone crazy, but that doesn't necessarily lead to the monetary and economic consequences that you've been led to believe that are the only possible options. The only ones that you hear on social media, especially in any discussion related to cryptocurrency. So the current version of debasement theory really comes from that idea. As usual, its supporters start from the end and try to reverse engineer an explanation. This is how it always ends up being backward. They're looking at everything that way, so how else could their ideas ever end up? Bitcoiners, especially the maximalists, are huge into debasement because they have to be. They absolutely have to be. They believe in very cult-like fashion, despite the overwhelming and constant evidence that they've got everything wrong and backward from history to monetary mechanics to what is the even trying to replace? They don't even know it's the euro dollar, not dollar, and that's not semantics. They believe that every rise in Bitcoin's price has to be coming at the expense of the dollar. It has to, according to this worldview. Bitcoin, they believe, is taking over the world, so why else would its price be soaring? They see Bitcoin's gain as the dollar's loss. But where is that loss coming from? Now, before recently, that was the Fed, right? I mean, that was QE, that was money printing. 2021 inflation and the monster QE that went along with it. The Fed had finally unleashed dollar destruction. But instead in 2022, the dollar soared and deflation returned, not more inflation. Again, they get everything backwards. And since then, as we know only too well recently, the Fed has been in QT rather than QE. So what else is there that might be causing this debasement that Bitcoiners are so sure is taking place? It ain't Jay Powell any longer. So again, working backward from the one bad assumption after another, it has to be government debt. US Feds are out of control, and that somehow is debasing the currency because after all, if the government is borrowing through treasuries, that would have to be the same thing as money printing, wouldn't it? And there has been a cottage industry, a brand new cottage industry that sprung up, which claims that this is actually the case. And they even have a name for it. They call it fiscal dominance, just like FDR. So for dollar debasement, at least the theory, it really is that simple. Government is now the money printer, meaning government borrowing is destroying the dollar, which is why Bitcoin and other cryptos have been soaring up until recently. Easy to understand, simple, straightforward package for social media. And as always, utterly wrong and totally backward, which is why more recently, as the dollar is not being debased, it is crypto that is taking it very hard. The entire theory unraveling once again in predictable fashion. Depression economics, not dollar debasement. The truth is Bitcoin is not even in the same arena as the Eurodollar. They don't compete whatsoever. So the idea that any rise in Bitcoin's price is at the expense of the Eurodollar is just plain nonsense. See, that's the thing. It has to be the dollar's loss. Otherwise, Bitcoiners will have to accept there must be some other explanation for why Bitcoin and crypto prices had been surging. They're all just risk assets. They're NASDAQ stocks. There's nothing fundamental about them. So you can see why dollar debasement is so heavily ingrained in crypto today and is totally sad and unfortunate. So much potential is being squandered by ignorance and refusal to accept reality and the mountains of historical and empirical proof that shows this, including the past few months when, complete surprise, to sell American dollar debasement, pretty much everyone in crypto, the dollar is not being debased. And that is the actual problem we have. And that is the one that crypto should be trying to solve. Well, at least some crypto actually is. It really is that irrational. That's the simple point of it. Yes, governments are out of control, but it doesn't necessarily follow that means the currency is going to be destroyed. Certainly not in a period where depression economics dominates. It's like saying every jump in Nvidia's price is proof of the dollar being debased. That's what Bitcoin competes with, not the Eurodollar. Bitcoin is a NASDAQ stock and it trades a lot like one if you haven't noticed. It's not even in the monetary realm and has made no tangible progress to change that almost 20 years after Satoshi's white paper urged the thing to become a payment system. Everything about dollar debasement is backward. History, mechanics, reality. Our bigger problem is that the dollar is now jumping again, which, like last year, has far greater implications. Deflationary, not debasement implications. It confirms growing risk aversion, not interest rate differentials. However, those might work out given the Fed is cutting rates again, despite Powell's claim recently, they're only going to do so at their own pace. However, there is some signal in this latest short-run struggle for Bitcoin and cryptocurrencies. It is the same risk aversion that is pushing the dollar higher, not into debasement. And as we see the dollar continue to go higher and maybe cryptocurrencies continue to struggle with the idea and the fact that it's not happening the way you're supposed to, that also gives us another powerful confirmation and signal for the re-emerging next stage of deflationary depression economics. And we've got quite a lot of those signals that are proliferating all over the place, including potentially more confirmation of the flat beverage curve, which is behind a whole lot of this stuff. And I went over the details in the video link below. As always, thank you very much for joining me. Huge thank you, Eurodollar University members and subscribers. And until next time, take care.