A Global Debt Deleveraging It At Our Doorstep

Phoenix Capital Research's picture

The blogosphere is rife with talk of the “death of the US Dollar.”


The US Dollar will eventually die, as all fiat currencies do. But the fact remains that it is the reserve currency of the world. And everyone on the planet has been borrowing in US Dollars for decades, or leveraging up using Dollars.


When you borrow in US Dollars you are effectively shorting the US Dollar. So when leverage decreases through defaults or restructuring, the number of US Dollars outstanding diminishes.


And this strengthens the US Dollar.


With that in mind, it looks as though we are in the early stages of a massive, multi-year Dollar deleveraging cycle. Indeed, the greenback is now breaking out against EVERY major world currency.


Here’s the US Dollar/ Japanese Yen:



Here’s the US Dollar/ Euro:



Even the Swiss’s decision to break the peg to the Euro hasn’t stopped the US Dollar from breaking out of a long-term downtrend relative to the Franc:



The fact that we are getting major breakouts of multi-year if not multi-decade patterns against every major world currency indicates that this US Dollar bull market is the REAL DEAL, not just an anomaly.


With that in mind, I continue to believe the US Dollar is in the beginning of a multi-year bull market. And this will result in various crises along the way.


Globally there is over $9 trillion borrowed in US Dollars and invested in other assets/ projects. This global carry trade is now blowing up and will continue to do so as Central Banks turn on one another.


This will bring about a wave of deleveraging that will see the amount of US Dollars in the system shrink. This in turn will drive the US Dollar higher.


Indeed, consider that the US Dollar actually MATCHED the performance of stocks for the year of 2014.



Any entity or investor who is using aggressive leverage in US Dollars will be at risk of imploding. Globally that $9 trillion in US Dollar carry trades is equal in size to the economies of Germany and Japan combined.


Smart investors are preparing now.


If you've yet to take action to prepare for this, we offer a FREE investment report called the Financial Crisis "Round Two" Survival Guide that outlines simple, easy to follow strategies you can use to not only protect your portfolio from it, but actually produce profits.


We are making 1,000 copies available for FREE the general public.


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Best Regards

Phoenix Capital Research



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FPearl602's picture

Graham has been dancing "The Sky is About to Fall" jig forever...

BoPeople's picture
BoPeople (not verified) May 27, 2015 10:51 AM

Any reason why ZH cannot hire an editor or proof reader? In most cases just turning on spellcheck would help.

OR is the NSA intercepting all ZH posts and adding typos to make ZH look stupid?

holgerdanske's picture

If you can't get the headline right, how can we believe the rest is much better?

Mayer Amschel Rothschild's picture

Dear Author, you might as well bang your head against a wall.  Technical analysis is for a more refined crowd than one will fine among a bunch of ZH mouthbreathers.

holgerdanske's picture

What is technical analysis in a world of free money? How can you expect any semblance of predictability when they can just print what they like.?

It can only end in a loss of confidence in fiat money.

Whenever that will happen, however,  is anybody's guess.

Yen Cross's picture

  You couldn't be more wrong. Why do you think the $usd tanked when the BUND market sold off? Traders were hedged in F/X short eur long usd. When they covered their BUND trades they also covered their hedges, and sold usd back for eur, causing the usdx to tank.

  Why do you think the yen strengthens against the $usd when the carry trade unwinds? It's becuse $ usd long f/x hedged positions are unwinding and buying yen back at the same time that $usd shorts are being covered in other yen denominated investments.

autofixer's picture

I have fat fingers too, but I am not writing headlines.  ;)

schrock's picture

Phoenix Crap-ital peddling their crap.