The dollar: Calm before the storm?

Markets expecting falls in interest rates are blind to reality. Lower rates won’t prevent an imploding debt/credit bubble undermining the dollar and its purchasing power.

The chart below shows what will blow apart the credit bubble, putting in chain a series of events which could rapidly undermine the dollar, potentially fatally, and all US investment media. The carnage is bound collapse the other major G7 currencies and their financial markets as well.

In May 2022, the long bond yield smashed through the 40-year downtrend at 3%. The equity bubble continued, with the S&P 500 rising from 4130 to an all-time high of 6550 currently. Admittedly, the headlong rush in the long bond’s yield paused at 5.1% in October, since when it has moved sideways. But as the pecked lines covering from that period illustrate, this is a consolidation and not an end to the uptrend in yields. And very soon, they will start rising again. And technical analysis tells us to expect another rapid rise in the yield, covering a similar distance to the preceding move. That takes it into national bankruptcy territory.