Currency Crescendo

Code Red


“Every Choice Is Bad”

Hurricanes, Denver, Dallas, Birthdays, and More

Big problems usually begin as small problems. We see that in nature, where small disturbances become hurricanes, and we see it in the economy, too. So, it shouldn’t surprise us if the economic disturbances of the last years compound into something bigger.

Going into 2020, we already had over a decade of global monetary and fiscal foolishness. QE as a monetary policy tool became widespread worldwide. That was compounded by the insanity of zero interest rate policies (ZIRP) and even negative rates, which massively hurt savers, not to mention pension funds, and caused all sorts of malinvestments.

Among the many ill effects of these policies, one of the most pernicious was to widen the distance between upper- and lower-income groups. Wealth disparity was and is one of the main results of a decade of misguided monetary policy. And now we’re having to pay the price for it, not just in the US but all over the world.

Then we had COVID—both its direct effects on health and the labor force, and additional negative effects from the lockdowns and other countermeasures. Then yet more negative effects as the economies of the world struggled to recover from the disruptions. On top of all that, we have the Russia-Ukraine War and the food/energy crisis it sparked.

In music we have a term “crescendo.” Technically, the crescendo is a gradual increase in volume, which can last a long time. It’s a process, not a single moment. Similarly, the economic volume has been getting steadily louder. The crescendo is approaching its peak, but we have no idea whether that peak will be next year or several years down the road.

This dark symphony was never going to end without sparking a currency crisis, one which allows countries to blame other countries as the source of their own internal problems. We will see that it’s not always the case.

Now, with the US dollar strengthening and others crashing, the crisis is drawing closer.