Who’s Got the Most Ammo in a Currency War?

You would think logically that the nation and its central bank that have had the strongest currency and firmest policy (I know… but work with me here) over the last few years might have the most bullets in its gun. The monthly chart below shows that USD bottomed vs. other major currencies in 2008 and in some cases a few years later. The Good Ship USS Lollypop sailed forward with Goldilocks in tow as the Fed finally began a rate hike regime after the BBB (the Ben Bernanke Blight) known as ZIRP.

Japan has been tramping out the Yen for years. Europe is flogging the Euro with rollover-and-die ECB policy and the others have been practicing some form of currency debasement as asset stimulant for years longer than the good ole’ US of A, which is now by the way, getting great again.

In this war its greatness may only go as far as its currency debasement abilities allow for. This did not start out as a post having anything to do with Trump, but at the risk of antagonizing or alienating you once again, this MAGA jingoism has a simple macro parlor trick known as currency debasement as one of its pillars. And do you know what? The US can win this battle if it continues to try really hard (cue again this morning’s Jerome Powell shit show).

The (world’s reserve) US dollar is the currency that needs to crack if we are going to go full frontal inflation trade/crack up boom. But what do I know? It’s the opinion of a blogger, as opposed to a market manager who writes actual data and fact based reports on the weekends.

currencies

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