“Yet, the US Dollar, and the Grand Central Bank are stuck in a bear market. The Grand Central Bank has been experimenting with zero-interest rates to help stimulate the global economy. A risky strategy, which is working well in Europe but is a disaster for the US dollar. The currency that trades lowest right now is the US dollar. The currency of countries that trade with the US has surged to a high because they are taking advantage of the low-interest rate policy.”
A pandemic is an exciting new book by Jim Rickards (a former CIA officer). It discusses the financial crisis and the possibilities of a new financial and economic era.
Pandemic is a sequel to his 2020 book, Currency Wars. His new book, though, is about how central banks and governments play each other against each other. Here’s a quick synopsis:
In Pandemic, Jim Rickards describes the insider trading schemes that occur in the aftermath of a financial crisis. The book takes a look at what happens when countries look to the future rather than the present to boost their economies. What’s worse, the printing of dollars out of thin air to keep the global credit markets afloat isn’t enough to cover the interest payments that are now due.
A discussion begins with an example from Pandemic. A major corporation made a decision to purchase an amount of stock to increase their share price. This is a classic type of insider trading.
In the case of the corporation mentioned in the first chapter of Pandemic, the decision came after the market had already fallen dramatically. The company had a lot of debt that it was unable to pay back. People speculate that this caused the decline in the stock price. But what happens next?
After the company purchases the stock and it begins to rise in value, it is then “sold” to government entities. The government is seeking ways to increase revenue so they would be able to invest in infrastructure projects. This may have increased the value of the stock, but now the government is stuck holding the “damaged” stock.
After Pandemic describes this problem, there is some good news for the US Dollar. In the case of Japan, because of their huge debt load, the central bank did not buy a great deal of stock during the crisis, but it does in fact buy a lot of dollar assets.
When it comes to the US Dollar, we are also in trouble. Because of our ballooning deficit, our financial institutions are forced to print more money to balance their books. Now we have not only a problem with debt, but we have an increasing currency devaluation as well.
This means that the point in time where it was possible to purchase an increasing number of stock shares, it is no longer an option. Instead, there are fewer options for investors, which increases the USD value. This is great news for the Yen.
In Pandemic, Jim Rickards talks about the effects of large financial institutions who have large position sizes in the stock market and how they will respond. They cannot use their stock holdings to boost their current income or revenues. This is a great problem for all of us inthe US because if we follow this same trend, our economy could be negatively affected.
In Pandemic, Jim Rickards’ takes a look at the possible consequences if the stock market and interest rates continue to fall. . He warns of the long-term ramifications of having too much debt and also of the potential for more wild swings in the economic sector.