INFLATION Alert: Prepare For MAYHEM!
The USD is so hated this year that, as a contrarian, I must say that it is probably due for a relief rally.
We could see the dollar index making a bullish run soon, while precious metals and oil prices both take a breather.
But, the tail end of this would be that after the USD exhausts its rally, there would be nothing to keep it from really dropping.
Think about it – people in all nations hold the Dollar. Many countries use it more frequently than they use their national currencies.
Courtesy: U.S. Global Investors
There is not even one good reason for foreign countries to hold so much of it as reserves.
Therefore, the next stage for fiat currencies will be to see China’s Yuan becoming more dominant. It only makes sense, and they know it.
The blowback, though, of this cash glut returning to the U.S. banking system, is alarming.
On the one hand, they may shrink the currency supply, thus avoiding inflation, but making it incredibly difficult for corporations and the Federal Government to pay down their interest and principal obligations, but the flip side is to risk high inflation levels.
Through studying the work of Central Banks, Pure Blockchain Wealth sees inflation hitting us soon. The government is happier with a weaker dollar than with a stronger one.
As you can see, the thing about inflation is that it shocks you.
One year it is calm and controlled; the next year it is raging.
We never know when the eruption will occur, but the signs of it are visible today.
Wages are considerably rising in the U.S. economy at the moment. I just listened to Procter & Gamble’s, Kimberly-Clark’s, and General Mills’ CEO calls for Q1, and they were all notifying shareholders that costs are going up from salaries to raw materials.
It’s no secret that the tax cuts have allowed companies to invest funds elsewhere to jolt the economy.
The increased economic activity could make the crypto economy less attractive, as trust in governments could be on the rise, but the other side of that coin is that if the global economy is thriving, then money will flow faster, so projects that can facilitate transactions at low-costs could be very good.
We’ve never seen cryptocurrencies in an inflationary environment before, so this will be a new test for them to surmount.
Personally, my take is that this summer’s global G20 meeting, which will discuss cryptocurrencies, will set the tone for the year. Right now everyone is just waiting for that, before making big moves.
What is historically proven is that rising inflation is detrimental for stocks, so money could flow out of them and into the crypto economy.
This is a great time to cash-up, then.
There could be many fire-sells, and we want to be ready.