The Dollar Crash Is On Its Way

Be mindful whatever you want.

I'm talking about the estimated $2 trillion in U.S. corporate cash being placed in foreign banks - as well as the Trump-backed proposal for your special 10% repatriation tax on those profits.

The hope and belief is an enormous chunk of those funds should come home, giving the GOP-dominated Congress a great deal of cash to pay on pet projects similar to a giant-sized boost on infrastructure spending. There's no doubt which the tax goes through in certain form, or that Congress and also the new Trump administration will find a good amount of uses of it.

But in relation to what that repatriation will work on the United states dollar, well... read the sentence at the start of this short article.

Let's look into the influence over the United states dollar the last time Congress pulled off a primary repatriation "tax holiday" back 2005. The enabling legislation was named the U.S. Homeland Investment Act, a 1-year tax break for big American multinational firms.


During the time, Goldman Sachs estimated the legislation triggered the repatriation of some $300 billion over the course of the entire year. And what actually transpired for the dolar?

First, an unsustainable surge that lasted the complete 2005 calendar year...

But when the repatriation period ended, and corporations stopped converting their foreign-held currencies into dollars, so did the rally - leading the dollar to a inevitable cliff dive in the following two years.

You can certainly argue concerning the Federal Reserve's efforts to enhance rates (making the dollar more appealing to investors and raising its value relative to other currencies) and rein within the surging United states real-estate boom and overinflated economy.

Though the Fed began raising rates in earnest in mid-2004 (from 1% to 1.25%), and didn't stop for 2 straight years up until the fed fund rates hit 5.25% in mid-2006. At that time, the dollar was already six months time in a major decline. And the major stock exchange indexes wouldn't finally roll over until October 2007.

The idea is the repatriation of even a tiny amount of corporate America's current $2 billion in offshore cash could have a profound impact, having a tremendous surge in the cost of the dollar as companies sell yen, euros and yuan to buy dollars instead.

A parabolic dollar surge is something that we've warned about for some time as a prelude to the brutal economic collapse.

In simple terms, it may be the ultimate climactic dollar-buying frenzy after nearly two decades of lots of Fed-induced digital dollars chasing the "same exact, same exact" overpriced stocks, overpriced bonds and overpriced real estate.

Wouldn't it be ironic (and tragic) if the very thing that signaled a hoped-for resurgence with the United states economy (the billions in presumed infrastructure spending) was the really thing that wrecked it instead?
Sign In or Register to comment.