RE: SP20 Jul 2021 15:58
Perma - I agree in parts. But no, I don't think this is the beginning of a USD fightback. The US has spent more on covid already, inflation adjusted, than it spent on both world wars. There will be consequences to this. At the moment that money is mostly sat in accounts as dry powder, but once it starts to actually be spent, and to impact on the velocity of money, America will have some phenomenally complicated problems to solve - more complicated than the problems of say, Spain or Italy. Velocity of money has dropped to historic lows in the US given the deluge of money supply (same amount of transactions - or less! - with more money sloshing around to make them). Given that the velocity is expected to return to normal levels over time, something has to give, either in GDP, inflation or contracting the money supply, but most likely some combination of all of them. The tools you need to solve that riddle are the same tools that will ultimately weaken the dollar further.