The Fraying of the US Global Currency Reserve System
Published December 2, 2020
Since autumn of 2019, I’ve been bearish on the dollar, meaning I have a longish-term outlook towards a weaker dollar.
This view began forming when the Federal Reserve cut interest rates in summer 2019, and then the view solidified with a catalyst after an overnight repo rate spike in September 2019 forced the Fed to begin supplying repo liquidity.
In my October 2, 2019 article, “The Most Crowded Trade“, I said to look for a weaker dollar in 2020, and also stated that the Fed would likely start expanding its balance sheet by buying Treasuries in 2020 or perhaps as early as that quarter in 2019 due to oversupply.