Currencies are held together only by the agreement that they are of value. It could well be that they are about to take a tumble. Too many negatives are coincident:
– Sabres are rattling in China, Russia and Japan*
– Stock markets are overvalued
– The major economies are in dire straits
– Unemployment and poverty are widespread and growing
– Banks are insolvent, almost without exception
– The EU is politically sick to its core
– The Euro is a zombie currency
– Muslim immigration has been a cultural disaster in the West
– Some nation states are on the verge of complete collapse, i.e. – Venezuela, North Korea and Greece. Don’t even look at a map of MENA
– Debt – never forget the debt that towers over all other factors
A major fall in the value of currencies will have a compounding effect. The agreement that they are ‘of value’ will falter causing confidence and hence value to fall even further. And on and on it will go until it stops; if it does.
Are we closing in on the permanent backwardation of Gold?
As someone said many years ago when the crisis first began to manifest: “Just because something is inevitable doesn’t mean it’s imminent.”
But it sure does feel close.
* With their overt aggression in the South China Seas, the Chinese have managed to achieve what would have been considered impossible only two years ago. They have managed to unite South Korea and the Philippines (and others) with Japan. Fascinating how quickly past grievances can be overlooked when confronted with a common enemy (the enemy of my enemy is my friend). The Chinese are not silly; their economy must be in terrible shape for them to gamble so much on focusing their citizen’s gaze externally.