In the current 2021, the price of "green" is moving at a small pace, but gradually approaching its historical minimum relative to the value of currencies of other countries and other global assets. Many believe in the strength of their national units, the growth of the American economy, etc., due to the cheap dollar.
This is mainly due to the insurmountable inflationary component, which is formed due to the work of the printing press of the Fed (Federal Reserve system) to fulfill its debt obligations and high current expenses aimed at localizing the consequences of the COVID-19 pandemic.
According to some US analytical agencies, the annual inflation rate is already about 5%, which for the Fed is a fairly critical level relative to the current discount rate (0.25%). At the same time, Saxo Bank predicted inflation in the United States above 15 percent by 2023, which will be the highest since World War II.
In principle, the Fed is ready for such a scenario, and even a plan of measures has been developed to regulate monetary policy to strengthen the dollar in the current conditions, but its implementation is scheduled only for June 2022.
In this situation, high inflation expectations are already undermining the current rating of the head of the White House, Joe Biden, and the extension of the powers of Fed Chairman Jerome Powell will be largely determined by his tightening of monetary policy not in 2022, but tomorrow.
Powell won't decide, Biden will help!
If we pay attention to the dynamics of changes in the US inflation rate to Biden's rating, then we can see an absolutely opposite trend of these two indicators in 2021.
The key day in the fate of the dollar is December 10 at 16:30 Moscow time, when official inflation data (consumer price index (CPI) and consumer sentiment index from the University of Michigan) will be announced. And if they turn out to be not rosy for the US economy, we think a decision on tightening will be made this year.
One thing is clear that this will be implemented by raising the Fed's discount rate and reducing bond purchases by the US government (avoiding quantitative easing by the Fed), which will largely reduce dollar liquidity and reduce the inflow of money both into the country's economy and in the world as a whole.
In other words, the US government will begin to withdraw all printed dollars from circulation by paying off bonds previously purchased from banks, thereby making "green" a scarce element in settlement relations between entities. That is, in order to maintain financial relations through payments in the US dollar, all market participants will have to "dump" their assets purchased earlier for "green" to a greater extent in order to realize such a need, which will naturally lead to a drop in their value.
So that many people do not talk about the hopelessness and collapse of the dollar, but at the moment, after all, most of the world's mutual settlements are carried out in this currency.
On the eve of this event, there is a high probability that the bubbles caused by the growth of the global economy and the jump in prices for other assets, including cryptocurrency, will begin to burst at the end of this year.
The markets will be cooled, the value of global assets will be revalued taking into account the adjusted dollar price.
Both the Russian (RUB) and the Belarusian (BYN) ruble, which are very closely tied to each other in their pricing system, and have recently grown significantly in price, mainly due to the same dollar, should be ready for such a scenario.
That is, the spiral of global economic development will soon enter its next phase, which is characteristic of it in the current conditions.
Everything is logical – life will become more expensive again or again.
The key day in the fate of the US dollar: the collapse of the markets or growing further - Something like that!
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