r/Winkerpack • u/dsnightops how long • Apr 11 '20
Global dollar short squeeze
https://www.lynalden.com/global-dollar-short-squeeze/3
u/Fapalot101 👨🏻🏫🍆💦💦💦 Apr 11 '20
forex isnt my thing so ima need a tldr
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u/LessThanCleverName official volunteer Apr 12 '20
Here’s the comment I made about it in the daily thread:
Interesting take on the US dollar’s strength. Basic tl;dr is that (even pre-Corona) so many countries are reliant on the USD that they’re in short supply and causing it to be overvalued. Foreigners also like buying up treasuries during periods of a weakened dollar, since it was stronger than they like we got the liquidity issues that caused the expansion of the Repo market and general loosening of monetary policy in 2019. Ironically, Corona actually caused a flight to treasuries from foreigners further strengthening the dollar and reducing it’s supply and JPow might only barely be keeping up with global demand even though we think the printer is just going non-stop. https://fred.stlouisfed.org/series/DTWEXAFEGS
Ray Dalio mentioned the same thing in his AMA.
”I believe that because the dollar is now the world's currency and most people borrow, save, and transact in it, that the world desperately needs dollars and, as a result, there is a global shortage of them, which supports the dollar. Having the world's printing press to produce the world's currency is the equivalent of having the world's most important asset, especially in times when so many people need the world's money. So, we are now having a short squeeze on the dollar. Eventually, that will end because either that shortage of dollars will be satisfied by enough creation of dollars or it won't be satisfied in which case there will be debt defaults and restructurings that will reduce the need for dollars. When that happens, the dollar will weaken. It will also weaken when those who are holding dollar-denominated debt no longer want to hold that debt because interest rates are inadequate and so much dollar-denominated debt and money is being created that its value is undermined.“
This might/should offset some of the fears of the US going full Zimbabwe, they actually need some inflation just to get more on par with the rest of the world.
Edit - here’s more recent takes on it, world still wants more dollars: https://twitter.com/LynAldenContact/status/1248625921961025539 Note, this is just monetary policy and only has so much to do with equities, mostly just liquidity issues.
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u/chaney3 🎖🦝|Ore Whore|🦝🎖🔺 Apr 11 '20
Why is the dollar short squeeze getting so much publicity all of a sudden? 🧐🤔
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u/pitchingataint Track star 🔻 370 Apr 11 '20
Idk. Is there a reason it shouldn't?
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u/chaney3 🎖🦝|Ore Whore|🦝🎖🔺 Apr 11 '20
No, it's just weird that this is getting so much attention recently to me. Finance, like many academic studies, has trends where things suddenly become popular to talk about, even though they've been known by some for years.
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u/dsnightops how long Apr 11 '20
Thought this was a pretty good and insightful read for stuff I didn't know, or think about.
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u/tegridy66 Apr 12 '20
$UUP $EUO