Liberal Forum

Cannonpointer » 28 Jan 2025, 9:58 pm » wrote: ↑

28 Jan 2025, 9:58 pm

The dollar was in excellent standing against the brazilian currency last summer. As my stay progressed, the exchange rates became even more favorable.

There is a trick that the Tiny Hats can use, and I don't even think this is far fetched.

The US issues trillions in Treasury bills and bonds every year. The interest rates are inversely related to their price.

If there is "persistent inflation" then the Federal Reserve will be forced to raise / keep interest rates high. What this does is devalue existing bonds purchased by foreign countries from previous years. If interest rates rise from 1% (back in 2020) to 4.5% (today), that's a major loss in bond value.

If those countries need to raise cash, and at some point this WILL happen due to some black swan event, they will dump their holdings of US governmenr debt.

The Tiny Hats in America can buy back these bonds, have the Fed lower interest rates, and issue new bonds (now at lower interest rates) and retire those higher interest bonds. 

Basically offloading America's debt for a fraction of its cost. 

I don't believe that the inflation was unintentional or unforseen. It was deliberate (and had nothing to do with Biden).