Currency markets are breaking

Currency markets are breaking:

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Currency markets are breaking.

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The Bank of Japan has kept yield curve control at 0.25%.

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This means that the BoJ has unlimited buying power in buying Japanese bonds.

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This increases inflation in the country and makes everything in the local currency more expensive.

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It imports inflation from the US into the country.

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The BoJ is one thing, but now the Chinese RMB is breaking.

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Look at this.

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The Chinese RMB breaking the 7 mark is disastrous.

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China has been known to keep it’s currency artificially low to prop up its exports so it makes it cheaper for other countries to buy the goods they produce.

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With the Chinese RMB going higher, it causes massive local inflation.

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Add that to the popping of the biggest mortgage bubble in history, their zero Covid policy and a falling market and you have a powder keg on your hand.

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When currency markets blow, all hell breaks loose.

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The Fed seems set on breaking inflation domestically, no matter how much pain they have to handle.

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Let’s see.

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Let’s see how quickly other currencies break before the Fed resorts to QE and massive stimulus again to save the existing systems.

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Long Term Capital Management in ‘98 broke up because of the Asian currency crisis that started in Thailand as many countries were forced into devaluing their currency bringing on a massive financial crisis.

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That could be coming along with the bursting of the everything bubble.

China could devalue its currency once again, only this time they’re dealing with many other issues.

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And we haven’t even talked about Europe.

The Euro is finished.

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There are too many countries with different cultures, ways of spending and debts that can’t all be financed by Germany and France.

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It’s trading less than par with the US dollar, something that hasn’t happened in decades.

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It imports inflation into Europe while making American travelers happy to visit.