Global US-Dollar Shortage - Are We Already in a Recession?

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[k1976]

Strap In’—Serious $40,000 Bitcoin Price Crash Warning Issued As The Fed Suddenly Braces For A U.S. Dollar ‘Crisis’ That’s Predicted To Spark ‘Total Collapse’​

Billy Bambrough
Senior Contributor
I write about how bitcoin, crypto and blockchain can change the world.
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Sep 3, 2024,06:17am EDT
Updated Sep 3, 2024, 06:18am EDT
09/03 update below. This post was originally published on September 02

BitcoinBitcoin +0.9% and crypto prices have surged this year as the U.S. dollar index falls to year-to-date lows (with the Coinbase chief executive last week revealing an AI game-changer).

The bitcoin price is trading around $60,000 per bitcoin, up from January lows of under $40,000, as traders bet a fresh injection of liquidity by the Federal Reserve will put the bitcoin and crypto market on the "cusp" of a major move.


Now, as China gears up to drop a bitcoin price bombshell, fears are swirling the U.S. dollar is on "the verge of a total collapse," setting up the bitcoin price for "a critical tipping point."

The U.S. Dollar Index just hit a new 2024 low [and it's] actually still relatively high, but it looks like it's on the verge of a total collapse," economist and gold bull Peter Schiff posted to X.

The index could easily sink below 90 before year-end, challenging the 2020 low," Schiff, the founder of money manager Euro Pacific Asset Management and a bitcoin and crypto skeptic, later added. "I think that low will be breached in 2025, triggering a U.S. dollar crisis, crashing the economy, and sending consumer prices and long-term interest rates soaring."

09/03 update: The bitcoin price has continued on its recent downward trend as September gets underway, which is historically a bad time to be holding bitcoin.

"September has traditionally been a volatile month for bitcoin, with an average return of 4.78% and a typical peak-to-trough decline of 24.6%," analysts with the Bitfinex crypto exchange said in emailed comments.

 

[k1976]

T. Rowe Manager Who Predicted Yen Shock Sees Another One Coming​

• ‘Scapegoating’ of yen carry trade ignores bigger, deeper trend
• BOJ hikes and impact on global capital far from simple: Husain

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Carry Trade Risk in Focus as Ueda Comments Boost Yen
By Ruth Carson
September 3, 2024 at 9:51 AM GMT+8
Updated on
September 3, 2024 at 4:45 PM GMT+8
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Arif Husain says he was early in sounding the alarm on Japan’s rising interest rates last year, which he described as the “San Andreas fault of finance.”
The head of fixed-income at T. Rowe Price is now warning that investors have “just seen the first shift in that fault, and there is more” market volatility ahead after the nation’s rate hike in July helped trigger a sharp reversal of the yen carry trade.

 

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[superpower]

https://www.forexlive.com/centralba...-the-dollar-of-around-us100-billion-20240906/

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Chinese banks used swaps to build short positions in the dollar of around US$100 billion​

• Bloomberg report on China propping up the yuan, and the risks it poses to their state banks

Eamonn Sheridan
Friday, 06/09/2024 | 10:06 GMT+8

• State run Chinese banks have used FX swaps to prop up the yuan
• Bloomberg cites estimates that the banks have built short positions in the USD of over USD100bn
• Which has created "virtually risk-free returns of about 6% as recently as July for traders who took the other side" ... since July, of course, those profits have moderated as the yuan strengthened

Bloomberg add on the shifting of risks:

• It’s the latest side effect of China’s shifting approach to currency management, following a botched devaluation in 2015 that led authorities to burn through $650 billion of foreign-exchange reserves trying to stop the yuan from falling to levels they feared could prompt capital outflow or harm domestic companies who’d borrowed abroad. With banks now bearing the brunt of efforts to support the yuan, China has been able to stabilize the currency without a drop in reserves that might encourage a pile-on by bearish speculators keen to test how much firepower the People’s Bank of China is prepared to deploy.

Update USD/CNH (the offshore yuan - its strengthened since July):

 

[k1976]

https://www.forexlive.com/centralba...-the-dollar-of-around-us100-billion-20240906/

​

Chinese banks used swaps to build short positions in the dollar of around US$100 billion​

• Bloomberg report on China propping up the yuan, and the risks it poses to their state banks

Eamonn Sheridan
Friday, 06/09/2024 | 10:06 GMT+8

• State run Chinese banks have used FX swaps to prop up the yuan
• Bloomberg cites estimates that the banks have built short positions in the USD of over USD100bn
• Which has created "virtually risk-free returns of about 6% as recently as July for traders who took the other side" ... since July, of course, those profits have moderated as the yuan strengthened

Bloomberg add on the shifting of risks:

• It’s the latest side effect of China’s shifting approach to currency management, following a botched devaluation in 2015 that led authorities to burn through $650 billion of foreign-exchange reserves trying to stop the yuan from falling to levels they feared could prompt capital outflow or harm domestic companies who’d borrowed abroad. With banks now bearing the brunt of efforts to support the yuan, China has been able to stabilize the currency without a drop in reserves that might encourage a pile-on by bearish speculators keen to test how much firepower the People’s Bank of China is prepared to deploy.

Update USD/CNH (the offshore yuan - its strengthened since July):
View attachment 205956

After PBOC sell US Treasury, they need to convert the USD holding back to CNY...hence this large amount of USD sell off and buy in of CNY will trigger this "short effect" on USD / CNY currency pair

 

[k1976]

US Bitcoin ETFs Bleed $1.2 Billion in Longest Run of Net Outflows​

• Investors pulled cash from the funds for eight straight days
• Anxiety in global markets is spilling over into digital assets

By Sidhartha Shukla and Suvashree Ghosh
September 9, 2024 at 1:42 PM GMT+8
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US Bitcoin exchange-traded funds have posted their longest run of daily net outflows since listing at the start of the year, part of a wider retreat from riskier assets in a challenging period for global markets.
Investors pulled close to $1.2 billion in total from the group of 12 ETFs over the eight days through Sept. 6, data compiled by Bloomberg show. The drop comes amid a rocky period for shares and commodities on economic growth worries.

 

[k1976]

China’s Deflationary Spiral Is Now Entering Dangerous New Stage​

• Prices seen as falling through 2025 as wages, demand languish
• Long-term deflation could be major setback to China’s economy

“We are definitely in deflation and probably going through the second stage of deflation.”
Photographer: Qilai Shen/Bloomberg
By Bloomberg News
September 9, 2024 at 6:30 PM GMT+8
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Deflation stalking China since last year is now showing signs of spiraling, threatening to worsen the outlook for the world’s second-largest economy and raising calls for immediate policy action.

Data released Monday confirmed that apart from food costs, consumer price growth barely registered in large swathes of the economy at a time when incomes are sagging.