These simple early warning signs in US Dollar markets will help you know before it’s too late.
In This Article
- Bond Market Instability as a Warning Sign
- Central Bank Interventions: A Prelude to Collapse
- The US Dollar’s Surge: A Harbinger of Crisis
- Recognizing the Final Indicators of Systemic Failure
We all know that the global fiat financial system is approaching the edge of collapse.
Of course, it is simply not possible to predict the actual date.
Yet, there are some fundamental warning signs to look for ahead of the inevitable crash.
Understanding a few simple indicators like the bond market instability, central bank’s taking desperate measures, and a record-breaking surge of the US dollar’s value against other major currencies will help you predict that the system is about to fail sooner rather than later.
I explain each of these basic warning signs below.
Sovereign Bond Market Instability: The First Warning Sign
The bond market is a barometer of economic health, and its instability signals impending disaster.
During periods of growing financial system stress, the bond market can experience a very weak demand (bids) as investors scramble for safety.
The high probability of weak bond sales during an accelerating crises will trigger central bank intervention.
However, massive central bank intervention will present a double-edged sword.
When risk can’t be contained within the sovereign debt market, it spills over into corporate bonds or credit spreads, indicating the credit markets are heading into a global dollar credit freeze.
Dramatic Central Bank Interventions: A Prelude to Collapse
Central banks are often seen by mainstream news outlets as saviors in times of crisis, but their interventions.
When central banks rush to stabilize the bond market, they expose the system’s inherent weaknesses.
As risk migrates from the sovereign debt market to other areas, such as corporate bonds or the currency market, the fragility of the entire system becomes publicly apparent and creates a self-fulfilling panic prophecy.
A Record-breaking Surge of the US Dollar: The Final Sign
In times of global financial stress, the US dollar emerges as the ultimate safe haven. It literally is the cleanest dirty shirt in the currency laundry basket.
However, the dollar’s final earth-shattering surge won’t be a sign of dollar strength, but actually the last phase of the global fiat system collapse.
Non-US countries hold massive amounts of dollar-denominated debt, and when crises hit, they struggle to refinance these obligations. This causes huge demand for dollars globally resulting in a worldwide dollar shortage.
Especially in the global EuroDollar shadow banking market.
The resulting dollar scarcity drives up its value, particularly in the offshore Eurodollar market. There will be no dollars to be had and a parabolic surge in the US dollar’s value will result (supply and demand basics).
As capital flees emerging markets and returns to the US, the dependency on the US dollar becomes a glaring weakness.
The global financial system, tightly wound around the dollar, will be pushed to its breaking point.
This final dollar surge is not a sign of confidence but a desperate grasp for stability as the global financial system completely unravels.
Recognizing the Final Indicators of Systemic Failure
To predict the impending collapse of the global fiat financial system, watch for these ominous signs:
- Desperate Central Bank Interventions: Large-scale, frequent efforts by central banks to prop up the bond market signal deep-seated instability.
- US Dollar Scarcity: A sharp increase in demand for US dollars, especially in offshore markets, indicates severe stress.
- Volatile Currency Movements: Wild fluctuations in exchange rates, with the US dollar soaring against other currencies, reflect panic and instability.
- Emerging Market Crises: Early liquidity crises in emerging markets can quickly escalate, engulfing major economies and signaling a global meltdown.
As the crisis reaches its zenith, the US dollar will experience a euphoric surge, reaching record-breaking highs.
This final rally is the ultimate warning sign of the fiat financial system’s imminent collapse. When the world fixates on the US dollar as the last bastion of value, the system is on the brink of failure.
The Bottom Line
The collapse of the global fiat financial system is not a question of if, but when. By recognizing the bond market’s instability, central bank interventions, and the US dollar’s historic surge, one can foresee the impending disaster.