Lyn Alden - The Dangers Ahead Are Real!

3 years ago
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Lyn Alden - The Dangers Ahead Are Real!

In this video, Lyn Alden explains how money printing reduces the value of the US dollar. She also discusses the future purchasing power of fiat currencies and the overvalued equity markets. Here are some of the key points in the interview:

With global central banks' printing trillions of dollars these days, those voices claiming that cash is trash appear to have a valid point. Banks give us no returns of savings, and inflation is swiftly eating away its purchasing power. The US dollar has been in a prolonged decline since the trillions issued in response to the coronavirus pandemic. We should expect further dollar weakness.

In the last 50 years, we've had 15-year gyrations in terms of multi-year bull markets and bear markets in the dollar. So, this seems to be the third major leg of the long-term cycle. In late 2019, the US dollar started to decline but the coronavirus outbreak later pushed it up. Overall, the dollar has a negative outlook in the long run. But it is possible to see a retracement that mostly occurs during consensus.

Even before the outbreak of the coronavirus, the bearish dollar outlook had been obvious due to the combination of loose fiscal and monetary policies. When you have a loose fiscal policy with a tight monetary policy, this tends to be dollar bullish. The US is running larger fiscal deficits in the United States compared to most of the developed countries as a percentage of GDP.

The US runs structural deficits and the dollar tends to weaken over time, but it gets held up by big offshore debt cycles that create a huge demand for it.

Currently, fiat currencies are not very attractive, and this buttresses Ray Dalio's statement that cash is trash. The reason is that you're getting little to no interest rates for holding cash and the inflation rate is positive in most countries. You can invest in some equities and commodities. Bitcoin is also an excellent diversifier.
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