CRASH2 ANALYSIS: WHY YELLEN & THE FED WILL BE FORCED INTO MORE QE & DOLLAR DEVALUATION

Saturday, January 10, 2015
By Paul Martin

BY JOHN WARD
Hat4uk.wordpress.com
JANUARY 10, 2015

Interest rate contagion, a new currency bloc, the dive into deflation, and chaos in Europe all make the cheaper Buck a Must

There are two possibilities that terrify the debt-ridden West: rapid deflationary moves, and rising interest rates. Deflation is already a fact, and is set to worsen. I have been posting for three years now to say interest rates must rise in the end – because even in a so-called ‘global’ world economy, different blocs have different problems and priorities. Two new events have hugely increased the likelihood of that latter change.
1. China’s vow to intervene as and when necessary to support the Rouble.The continuing pressure – produced by the US – on the Russian economy has seen the Russian currency slump 20% since Christmas.
2. The Russian central bank decided to up its interest rates again yesterday. In short order, interest rates there have shot up from 10% to 17%.
Nobody is as yet clear about how or when the much-vaunted ‘alternative Sino-Russian currency bloc’ will materialise. But if it does, most of those keen to join it will have a vested interest in upping their rates – to protect valuations slaughtered by the QE tailoff – at least in the short term. Cheaper exports are all very well, but not much good if all market confidence in the Sovereign is lost.
Based on Sion-Russian deals already completed, a large chunk of hydrocarbons are no longer traded in US (petro) dollars, but in rubles and yuans and their partners respective local currencies. This will reduce worldwide demand for the petro dollar….and interfere with American maintenance of pressure on Sovereign doubters and opponents (like Venezuela and Iran) via so-called ‘Dollar Diplomacy’.

The Rest…HERE

Leave a Reply

Join the revolution in 2018. Revolution Radio is 100% volunteer ran. Any contributions are greatly appreciated. God bless!

Follow us on Twitter