Currency Convulsions

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by Turd Ferguson, TF Metals Report:

It’s just another day in the barrel for Comex precious metals so let’s a couple of other items that have crossed my screen this morning.

First of all, welcome to Wednesday…in all its glory. The POSX is up while bonds catch a safe haven bid as the S&P is down 70 points. Yeehaw. And the PMs?….

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Let’s start with this. As you know, that whole Terra/Luna shitcoin “ecosystem” collapsed last week…as all ponzis eventually do. Many have wondered if this would/will extend to other so-called “stablecoins”, most notably Tether. But you’re probably like me…too old and cynical to have taken time to grasp and understand this stuff. And that’s fine.

But now, these schemes are threatening to become a systemic risk. Already, more than $1T in combined crypto market cap has been vaporized and what happens if this is just the start?

To that end, I urge you to read this column by Ben Hunt today. It’s less than a ten minute read and it may seem a bit thick from time to time. However, it will help you to understand why I used the word “ponzi” a few paragraphs earlier. Again, this does not mean that all crypto is useless or doomed but if the pyramids described in this article begin to implode, the impacts will not be limited to just each individual “ecosystem”.

OK. Now let’s talk about currencies. As you know, the POSX is soaring and this creates a massive problem for everyone else, particularly emerging market countries which have issued primarily dollar-denominated sovereign debt. The spiral of demand for dollars at a time when The Fed is trying to reduce the supply of dollars is at the root of all this. It’s what my friend Brent Johnson has described for years as his “Dollar Milkshake” theory.

And it’s not just emerging markets that are feeling the pain. Check the charts below of the euro, the yen, the Swiss franc and the pound versus $US.

So I think you can see where this is all getting pretty messy, with no end in sight…or is there?

To my surprise, check these two items that ended up in my Twitter stream this morning. In order to connect the dots, I combined them into one.

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