What’s that sound? It’s the sound of economic turmoil, and the re-inflating of the worldwide currency bubble.
1. China Tariffs
Trump keeps touting the tariffs as one-sidedly affecting the Chinese although many US farmers would heartily disagree.
“U.S. farm income is down 50% since 2013, and soybean exports to China have fallen nearly 80% in the past three years as American farmers take on “record levels of debt” to weather the storm.” ~ Huffpost
One strong signal that cracks are also appearing in the Chinese economic foundations are the nationalization of three top Chinese banks. This aggressive action signals a Chinese banking crisis as these companies were seen as incapable of doing what they were purpose built to do.
You know, bank?
In a tit-for-tat, China instituted a ban on purchasing US Agricultural products. The US already suffered a $28 Billion dollar loss from the ban of a single product, Soybeans. Now, the farmers get to look forward to a ban of ALL agricultural product purchases from the Chinese.
It’s not like farmers have had a good time of it: A drought in 2018, along with flooding and heat wave in 2019, closed export markets, no new trade agreements, climate change…and pretty soon they’ll be talking about real problems!
An aside: apparently Trump thinks he can issue decrees via tweet for US companies to leave China.
One bright spot is that the tariffs on China have been delayed till December. Perhaps the US farmers can look forward to a happy Christmas, but I wouldn’t hold your breath. The second “bright” spot is the $16 Billion dollar bribe/bailout for the little over 2 Million US farmers.
Too bad that only works out to around $8k/farm. That will buy you some tire chains for your loader, and a cup of coffee.
2. Interest Rate Cuts
More than 30 central banks around the world have cut interest rates this year, as countries move to shore up their economies amid rising concerns over global growth, trade conflicts and the threat of a messy Brexit.
Everyone wants to be the exporter of last result, a dubious crown that used to belong to China. Interest rate cuts, along with Quantitative Easing is code for inflating the currency, creating a devaluation race to the bottom. The purpose is to make your nations goods cheaper and therefore increasing exports. This commodification competition is making all countries into low cost leaders, but at a certain price points they can no longer outpace the cost of their manufacture.
The only currency that exists that refuses to play this game is Bitcoin. Decentralized so that no nation can command its fragmentation, it remains the only currency that has a mathematically determined scarcity, supply halving every four years, with the punchline already known as its 21 million limit of Bitcoin that will ever and forever be created.
It’s not that Bitcoin is so awesome (which it is), it’s that all other currencies are so fantastically bad.
3. Negative Interest Rates
What’s worse than low interest rates? Well, negative interest rates are now a thing in Denmark, Sweden, and Japan. Low interest rates used to be the tool to urge the taking out of money from savings, and goad businesses to take out low interest loans. Now, we have entered the hail mary territory of negative interest rates. A Danish bank even has the first negative rate mortgage loan —
Get paid to take out a mortgage!
Who wants to keep their cash in a bank that charges clients for the privilege of keeping it in the bank? A mattress, in many peoples eyes, may work better. In that case, only the ephemeral and mysterious hidden tax of inflation will eat away their life savings.
Again, the exception to this devaluation is the hardest of hard money of Bitcoin. It has immunity to these fluffy currency games.
4. Delayed NAFTA Agreement
What’s that? Another White House blunder you say? The White House is reportedly also dragging its feet on the “New” NAFTA agreement with Canada and Mexico (now September 2019). With Trump at war with our so-called allies, it’s less “America First,” rather: “America stands alone.”
At least Melania wants to kiss and make up:
What happens if the US continues dragging its feet the same way it’s dragging its feet with a resolution to the China tariffs? More economic turmoil roiling markets, with investors fleeing to safe havens such as the barbarous relic of gold…and Bitcoin.
The Best of all Possible Worlds?
Whether the current economic turmoil will continue is not certain. In the best of all possible worlds the China tariffs will be resolved, low and negative interest rates combined with global quantitative easing will re-inflate the inflation bubble, NAFTA will be resolved as well, and the economy will chug along.
What is a given is that inflation and devaluation will be implemented worldwide for all nations currencies, the exception being, of course, Bitcoin. Bitcoin shall remain the peg that all other currencies are measured against. Immune to inflation, it will rise in value as all other currencies fall.
Of all things, this is certain: just do the math.