The situation in the USA in terms of dynamics will resemble the 1970s, but in a "compressed" form, taking into account the specifics of the 21st century, where the character of historical time flow and the catalytic characteristics of global processes have changed significantly.
Simply put, they have accelerated.
This "similarity" is explained by the fact that in 1971 Nixon eliminated the gold standard and the Bretton Woods monetary system, which was formed after the war and tied to the dollar, which in turn was pegged to gold.
Today, Trump is eliminating the "global dollar reserve standard" and the Jamaican currency system of supposedly market-driven exchange rates of world reserve currencies, all pegged to the fiat dollar, that is, the "symbol of faith" of globalists.
But if globalism is ending and transitioning into a phase of global defragmentation, then the global function of the dollar is ending as well.
This does not mean that the world is expecting a dollar crash, as some like Kiyosaki scream — it will simply become "one of many."
There are enough reserve currencies in the world without the significant global role of their issuing countries.
For example, the Swiss franc or the Japanese yen.
At the moment, the market expects (even craves) a quantitative easing program from the Federal Reserve of at least one trillion dollars: inflation in the USA has slowed almost to the 2% target, but problems in the economy and financial system are growing.
This is the perfect condition for lowering the base interest rate and new issuance.
On top of that, there is Trump's new tax plan to reduce certain taxes, which will deprive the US budget of at least 500-600 billion dollars a year.
Although the budget deficit recorded in April is a seasonal factor related to tax payments, including individual income tax.
For the year, the federal budget deficit could well reach 2-2.5 trillion dollars.
Meanwhile, market leaders who set the wake for "lemming investors" actively encourage them to invest in Bitcoin and "growth stocks."
At the same time, there is a collapse in the US government bond market: the yield on 30-year Treasuries has reached 5.1%.
This is almost a repeat of the historical minimum over the last 20 years.
Interestingly, beta analysis of securities (which shows the level of risk and liquidity indicators for various types of financial instruments and their dynamic changes relative to market trends) predicts in the near future a rise in government bonds and a fall in "growth stocks" in the US market.
A significant portion of hedge funds are opening long positions specifically in government bonds and short positions in stocks.
In other words, they are betting on Treasuries.
The market is approaching an important historical moment of the Federal Reserve’s key decision: whether to save the stock market or the bond market.
The Bolivar can’t hold both...
On one hand, the Fed is the government’s monetary center, and its task is to save the budget.
On the other hand, the Fed is effectively a branch of Wall Street and financial transnational corporations.
In any case, this influence cannot be denied, especially after Powell’s arrival (it was somewhat calmer under Yellen and Bernanke).
But I still tend to think that the Fed will save the bond market, simultaneously expanding the internal market of Treasury buyers.
Primarily by expanding bank investments (revising the SLR indicator, or financial leverage, on bank liquidity investments in government bonds under Basel III).
This will allow attracting additional liquidity from American banks into Treasuries at about 5% per year for 30 years.
That means the US government will have to pay banks in interest 1.5 times more than borrowed, plus the principal.
But at least it will be paying "its own," not foreign central banks.
Nevertheless, the risk of recession in the USA has risen again.
But the real crisis and the death of the carry trade awaits Japan.
In Japan, the debt crisis may unfold according to the most negative scenario.
A severe recession is looming over Germany and Britain.
Economic slowdown threatens France.
As one short-seller enthusiast said: "We are waiting for a crisis, if we’re lucky, a collapse."
But this crisis, if triggered, will to some extent be the last one.
The last before the rise of China.
If the West plunges into a prolonged crisis now, nothing and no one will be able to stop China.
