DXY Short: Long term forecast
It takes a long time for the world reserve currency to die, but it is an eventuality. A "When" and not a "IF".
This analysis is based on my own bias reading using Elliott Waves, and also on a few other major issues:
1. The US debt of 34.2 Trillion.
2. The atrocities happening in the US and committed by the US worldwide (if you don't know what I am talking about, read the news).
3. The reduction of US debts by China.
4. The fact that Japan is going to have a currency crisis and the chance that they may finally give up and dump US treasuries to save themselves (a possibility, although still a low probability unless events like civil unrest happens).
Now, most people might use percentage of debt holdings versus the entire debt and say that both China and Japan will not pose major problems. But they are forgetting something: crisis is always an issue of liquidity. Can the markets take in 2 Trillion of treasuries in a single day? Or even a week? Or even a month? The answer is clearly no. And that will hit confidence like nothing else.
Of course, being the printer of USD, Fed can essentially print money to pay back the debts but that will weakened the USD to the point where it will also lose it's reputation as a strong and stable currency and thus lose it's status as the world reserve currency. Some may argue about the petrol dollar. But then, when USD is worth just a half of today's value for example, will USD still continue to be the main currencies for oil? The use of CNH was a bullet punched into the armor.
In any case, I placed a short loss on this analysis. If I am wrong, I won't argue. Let's see how this plays out.
Good luck!
This analysis is based on my own bias reading using Elliott Waves, and also on a few other major issues:
1. The US debt of 34.2 Trillion.
2. The atrocities happening in the US and committed by the US worldwide (if you don't know what I am talking about, read the news).
3. The reduction of US debts by China.
4. The fact that Japan is going to have a currency crisis and the chance that they may finally give up and dump US treasuries to save themselves (a possibility, although still a low probability unless events like civil unrest happens).
Now, most people might use percentage of debt holdings versus the entire debt and say that both China and Japan will not pose major problems. But they are forgetting something: crisis is always an issue of liquidity. Can the markets take in 2 Trillion of treasuries in a single day? Or even a week? Or even a month? The answer is clearly no. And that will hit confidence like nothing else.
Of course, being the printer of USD, Fed can essentially print money to pay back the debts but that will weakened the USD to the point where it will also lose it's reputation as a strong and stable currency and thus lose it's status as the world reserve currency. Some may argue about the petrol dollar. But then, when USD is worth just a half of today's value for example, will USD still continue to be the main currencies for oil? The use of CNH was a bullet punched into the armor.
In any case, I placed a short loss on this analysis. If I am wrong, I won't argue. Let's see how this plays out.
Good luck!
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