"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 56 mins Who Will Pay For Trump's $60 Billion China Tariffs?
  • 16 hours Vladimir Putin’s Mysterious Fortune
  • 17 hours Cryptos Resist Social Media Crackdown
  • 18 hours The Death Of Dodd-Frank
  • 19 hours Bitcoin Bounces Back Ahead Of G20 Meeting
  • 20 hours Trump's Trade War Nears Boiling Point
  • 22 hours Will April Be A Turning Point For Precious Metals?
  • 23 hours Economic Pressures Weigh On Banks And Borrowers
  • 1 day U.S. Political Uncertainty Keeps Stock Markets On Edge
  • 2 days Gold: The Religion Of Currency
  • 3 days Economists Polarized On Trump’s Tariff Plan
  • 4 days Why Are Investors Overlooking Gold Stocks?
  • 4 days The App That Democratized Trading Is Now Worth $5B
  • 4 days Super-Cycles: Why Gold Is Set For A Breakout
  • 4 days U.S. Sanctions Russia For Election Meddling And Cyberattacks
  • 4 days Snap Shares Tank Over ‘Slap Rihanna’ Campaign
  • 4 days How Low Can Bitcoin Go?
  • 4 days Amazon’s Japan HQ Raided In Anti-Monopoly Push
  • 4 days Is Barrick Gold Close To Finding A Bottom?
  • 5 days Morgan Stanley’s Top 10 Short-Term Stock Picks
What Killed Toys ‘R’ Us?

What Killed Toys ‘R’ Us?

In another blow for America’s…

Why Aren’t Millennials Investing?

Why Aren’t Millennials Investing?

After watching previous generations take…

John Rubino

John Rubino

John Rubino edits DollarCollapse.com and has authored or co-authored five books, including The Money Bubble: What To Do Before It Pops, Clean Money: Picking Winners…

More Info

Well That Didn't Work

The Bank of Japan and European Central Bank eased recently, which is to say they stepped up their bond buying and/or pushed interest rates further into negative territory. These kinds of things are proxies for currency devaluation in the sense that money printing and lower interest rates generally cause the offending country's currency to be seen as less valuable by traders and savers, sending its exchange rate down versus those of its trading partners.

This was what the BoJ and ECB were hoping for -- weaker currencies to boost their export industries and make their insanely-large debt burdens more manageable. Instead, they got this:

JPY/USD 1 Week Chart

EUR/USD 1-Week Chart

Both the yen and the euro have popped versus the dollar, which means European and Japanese exports have gotten more rather than less expensive on world markets and both systems' debt loads are now harder rather than easier to manage. And it gets worse: Japan's yield curve has inverted, meaning that long-term interest rates are now lower than short-term rates, which is typically a harbinger of recession. Here's a chart from today's Bloomberg:

Japan 10-Year Yields below overnight rates

This sudden failure of easy money to produce the usual result is potentially huge, because the only thing standing in the way of a debt-driven implosion of the global economy (global because this time around emerging countries are as over-indebted as rich ones) is a belief that what worked in the past will keep working. If it doesn't -- that is, if negative interest rates start strengthening rather than weakening currencies -- then this game is over. And a new one, with rules no one understands, has begun.


Back to homepage

Leave a comment

Leave a comment

Sign Up For The Safehaven Newsletter