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  US federal government debt is projected to surpass  its World War II-era peak. Welcome back to The Forecast David Wessel, a senior fellow at Brookings  The chance of a debt crisis was low, the authors wrote, “so long as the US retains its strong institutions  and a fiscal trajectory that isn’t vastly worse than the one currently projected.” Walter Frick Bloomberg 16 February 2025 https://www.bloomberg.com/news/newsletters/2025-02-16/could-the-us-have-a-sovereign-debt-crisis Tillbaka till Rolfs länktips 15-16 Februari 2025 https://englundmacro.blogspot.com/2025/02/rolfs-lanktips-15-16-februari-2025.html

  Their currency, our problem If you spend enough time on certain corners of certain social media sites, chances are that you’ll see someone point out that Mississippi, the poorest US state, is now richer per capita than the UK or Japan. This is another proof that the dollar is grossly over-valued, inflated in part due to the super-sized fiscal program. Stephen Jen of Eurizon SLJ’s more specific arguments on why fiscal largesse is at the heart of the phenomenon,  and why he estimates that the dollar is about 22 per cent overvalued against other G10 currencies — the most since 2002 If this is true, what might trigger a reversal? Who knows. Robin Wigglesworth FT 16 January 2025 https://www.ft.com/content/b66b4de0-44c8-441d-ac2f-9d94170c5c40 Robin Wigglesworth on my blogg https://englundmacro.blogspot.com/search?q=Robin+Wigglesworth+ Det är dollarn bakom allt - Monetary Creation and Destruction del 5 https://englundmacro.blogspot.com/2025/02/det-ar-dollarn-bakom-allt-monetary.htm...

Förra året hade den federala staten knappt 7 000 miljarder dollar i utgifter men bara 5 000 miljarder i inkomster.  Under högkonjunktur, alltså. Det är klart att tillväxten blir hög. Inflödet av kapital och lån blåser samtidigt upp dollarns värde.  På tio år har den stärkts med nästan 40 procent mot andra valutor. Att dollarn är övervärderad är en ganska vanlig uppfattning bland bedömare.  Frågan är hur mycket – och när – den kan tappa i värde. Carl Johan von Seth Text Stefan Rothmaier Grafik Dagens Nyheter 13 februari 2025 https://www.dn.se/ekonomi/carl-johan-von-seth-sa-overskattad-ar-usas-ekonomi/ US Budget Deficit Hits Record $840 Billion  the first third of the fiscal year Interest on the debt continued to be a key driver, as the Treasury refinances low-yielding maturing debt with securities paying out much higher rates.  Bloomberg 12 February 2025 https://www.bloomberg.com/news/articles/2025-02-12/us-budget-deficit-hits-record-840-billion-over-past-fo...

 ... borrowing costs for Uncle Sam and everyone else have stayed elevated.  Cynics have warned for decades that the US could lose the backing of reserve managers, and for decades they have been largely wrong. It takes only a small reduction in the dollar slice of global reserves to hit prices and keep borrowing costs unusually high, the researchers said.   Katie Martin Financial Times 8 February 2025 https://www.ft.com/content/5d697901-af9e-43da-909c-6f9e0f963bcf A ‘reverse conundrum’ and foreign official demand for US Treasuries Rashad Ahmed  Alessandro Rebucci / 15 Jan 2025 This may, they wrote, “reflect waning foreign official demand for dollar-denominated safe assets, possibly driven by geopolitical concerns including fear of sanctions and asset freezes”. https://cepr.org/voxeu/columns/reverse-conundrum-and-foreign-official-demand-us-treasuries The end of the dollar’s exorbitant privilege https://englundmacro.blogspot.com/2020/10/the-end-of-dollars-exorbitan...

Treasury Secretary Scott Bessent said the US continues to have a “strong dollar” policy  For decades, top US officials have stressed the value of a strong dollar, touting it as evidence of the economy’s dynamism.  https://www.bloomberg.com/opinion/quicktake/almighty-dollar During Trump’s first term many saw the so-called strong-dollar policy being shoved aside, given views that it crimped US exports and diminished the overseas earnings of America’s multinational companies . Bloomberg 6 February 2025 https://www.bloomberg.com/news/articles/2025-02-06/bessent-says-strong-dollar-policy-remains-intact-under-trump Solid growth, big deficits and a strong dollar stir memories of past crises Greg Ip https://englundmacro.blogspot.com/2024/04/solid-growth-big-deficits-and-strong.html Tillbaka till Rolfs länktips 7 Februari 2025 https://englundmacro.blogspot.com/2025/02/rolfs-lanktips-7-februari-2025.html

A near 60% premium over Europe. Bloomberg 6 February 2025 https://www.bloomberg.com/news/features/2025-02-06/europe-s-markets-can-t-keep-up-with-us-ftse-stoxx-s-p RE; Nu är frågan:  Är USA-aktierna för höga,  eller är de europeiska aktierna för låga? Tillbaka till Rolfs länktips 7 Februari 2025 https://englundmacro.blogspot.com/2025/02/rolfs-lanktips-7-februari-2025.html

  Bloomberg 5 February 2025 https://www.bloomberg.com/news/articles/2025-02-05/us-trade-gap-ballooned-ahead-of-trump-term-tariff-promises Det är dollarn bakom allt - Monetary Creation and Destruction del 5 https://englundmacro.blogspot.com/2025/02/det-ar-dollarn-bakom-allt-monetary.html Tillbaka till Rolfs länktips 6 Februari 2025 https://englundmacro.blogspot.com/2025/02/rolfs-lanktips-6-februari-2025.html

  The U.S. trade deficit grew again at the end of last year That took the deficit for December to $98.4 billion, up 25% from $78.2 billion in November, Commerce Department data showed. For the year as a whole, the deficit in trade with the rest of the world increased to $918 billion, from $785 billion a year earlier. Wall Street Journal 5 February 2025 https://www.wsj.com/livecoverage/stock-market-today-dow-sp500-nasdaq-live-02-05-2025/card/u-s-trade-deficit-widens-again-amid-burgeoning-tariff-spats-with-trade-partners-BpFWVUqWjjRVy6O4Uyws   Det är dollarn bakom allt - Monetary Creation and Destruction del 5 https://englundmacro.blogspot.com/2025/02/det-ar-dollarn-bakom-allt-monetary.html Tillbaka till Rolfs länktips 5 Februari 2025 https://englundmacro.blogspot.com/2025/02/rolfs-lanktips-5-februari-2025.html

  US President Donald Trump has threatened BRICS nations with 100% tariffs if they replace the US dollar as reserve currency. The BRICS group consists primarily of Brazil, Russia, India, China and South Africa.  In the last few years, Egypt, United Arab Emirates, Ethiopia, Iran and Indonesia have also joined the group, bringing the number of members to eleven.  Deutsche Welle 31 January 2025 https://www.dw.com/en/trump-threatens-brics-with-tariffs-if-they-replace-us-dollar/a-71464802

Förra gången, typ 2008, trodde alla att fastigheter bara kunde gå upp.  Nu tror alla att dollarn, upptrissad av alla som vill investera i USA , bara kan gå upp. Frågan om det blir en sjunkande dollar som utlöser nästa stora grej, eller om det blir sjunkande kurser på Wall Street som utlöser dollarfallet. Det blir i vart fall en intressant tid när både dollarn och Wall Street sjunker samtidigt. Om denna spådom infrias kommer jag att påminna om detta inlägg. Annars får det försjunka i mediabrusets brunn. 31 januari 2025 Rolfs länktips 31 januari 2025

 When you are at Davos — and I was there last week, no apologies, I was just doing my job — it is tempting to read small shifts as profound trends that will upset the world order as we know it.  You have to work to resist this temptation. More likely, you’re just hungry and tired. This year, however, I feel confident in saying that major change is upon us.  The world is entering a new regime in which economic relationships are secondary to political considerations. That will bring more financial risk and less economic growth. Allison Schrager Bloomberg 29 januari 2025 https://www.bloomberg.com/opinion/articles/2025-01-29/more-risk-less-reward-welcome-to-the-new-world-order Allison Schrager https://englundmacro.blogspot.com/search?q=Allison+Schrager+ En ny världsordning är här, och den ser mycket ut som merkantilism Franklin D. Roosevelt anlände 1933 fast besluten att balansera budgeten. Det finansiella systemet kom till ordning och reglerades noggrant, mest känt av Glass-...

  “We’ll be announcing the tariffs on Canada and Mexico for a number of reasons,”  MarketWatch 30 January 2025 https://www.marketwatch.com/story/trump-says-canada-mexico-tariffs-are-coming-saturday-stocks-dived-then-rallied-c16b6e14 Trump to Hit Canada, Mexico With 25% Tariffs on Saturday Canada, Mexico tariffs threaten to upend auto, energy sectors “Number one is the people that have poured into our country so horribly and so much.  Number two are the drugs, fentanyl and everything else that have come into the country.  N umber three are the massive subsidies that we’re giving to Canada and to Mexico in the form of deficits,” he said. “With China, I’m also thinking about something because they’re sending fentanyl into our country, and because of that, they’re causing us hundreds of thousands of deaths,” Trump said Thursday.  “So China is going to end up paying a tariff also for that, and we’re in the process of doing that.” Bloomberg 30 January 2025 https://www...

Kronan är rekordsvag mot dollarn, fast det borde vara tvärtom enligt skolboken i nationalekonomi. Svaret verkar ha mer att göra med finansiella flöden än med klassiska reala faktorer.  Egentligen kokar det ner till frågan: Var vill företag, banker, pensionsfonder och privatpersoner parkera sina pengar och sitt sparande?  De senaste åren har svaret varit givet: USA. Detta då dollartillgångar är de mest likvida och stabila Sverige fick ordning på sin ekonomi och har sedan länge ett bytesbalansöverskott i klass med länder som Holland och Tyskland. De senaste åren har det legat runt 6 procent av BNP. Det är därmed uppenbart att stora och regelbundna bytesbalansöverskott inte är något som automatiskt stärker en valuta.  Den stackars kronan är inte ensam om detta orättvisa öde utan delar det med andra länder med stora bytesbalansöverskott, som Japan, Sydkorea Sveriges låga statsskuld har inte heller hjälpt, kanske snarare tvärtom.  Den är nämligen så låg i förhållande till...

  Adam Tooze 26 January 2025 https://adamtooze.substack.com/p/flexible-exchange-rates-fear-of-floating Crashed: How a Decade of Financial Crisis Changed the World, Book by Adam Tooze What really went wrong in 2008? "Even people who have followed this story closely will learn a great deal." Martin Wolf FT’s chief economics commentator 17 July 2018 https://englundmacro.blogspot.com/2018/07/crashed-how-decade-of-financial-crisis.html Tillbaka till Rolfs länktips 25-26 januari 2025 https://englundmacro.blogspot.com/2025/01/rolfs-lanktips-25-26-januari-2025.html

Oil demand to remain at current levels until at least 2040, Vitol says Financial Times 2 February 2025 https://www.ft.com/content/17a0149a-542a-4e6d-8e40-e1b2b798e301 Donald Trump is late to the shale party. The fracking boom of the last 15 years has largely run its course as the best seams are exploited and productivity declines.  “We will drill, baby, drill. We will be a rich nation again, and it is that liquid gold under our feet that will help to do it,” said the president at his Orwellian inaugural. The US Energy Information Agency (EIA) said shale output peaked in November 2023 and fell last year for the first time since the fracking revolution began. “The great drama of American shale may now be nearing its final act. The Permian shale oil basin is very close to peaking out. When it does, everything changes for the US and the world,”  said Adam Rozencwajg, from commodity specialists Goehring & Rozencwajg. He said AI and new techniques can perform marvels but “enthus...

Maybe you are in the habit of applying a hefty discount to claims by Donald Trump; no one could blame you.  But he really does have the chance to lead America into the golden age he proclaimed in his second inaugural address. America’s economy is the envy of the world.  America is already exporting record amounts of gas and oil, and its biggest obstacle to pumping more is global demand.  In Mr Trump’s first term some of his aides saw the potential of linking enhanced border security to broader reform of America’s immigration system.  For all his harsh oratory about immigrants, Mr Trump has sometimes sounded sympathetic, particularly about people brought as children.  Last October, he told the editorial board of the Wall Street Journal he had a practical reason for his tough talk about illegal immigration:  “The nicer I become, the more people that come over illegally.” (The Biden administration learned that lesson to its sorrow.)  But, Mr Trump said, “...

  Victor Hultgren DI  17 januari 2025, 13:49 https://www.di.se/live/borsfesten-fortsatter-har-ar-dagens-vinnare-och-forlorare/ Dollarkursen ger USA sämsta konskurrenskraften på 40 år https://englundmacro.blogspot.com/2025/01/dollarkursen-ger-usa-samsta.html Tillbaka till Rolfs länktips 17 januari 2025 https://englundmacro.blogspot.com/2025/01/rolfs-lanktips-17-januari-2025.html

  Fed’s measure of the real, broad dollar, taking into account different rates of inflation, puts it at its strongest (and for the purposes of exporters least competitive) level in 40 years Traders working today, in bonds and forex, have no experience of a dollar this strong, or of rates that are steadily rising: John Authers Bloomberg 17 January 2025 https://www.bloomberg.com/opinion/articles/2025-01-17/dollar-s-smile-for-trump-can-change-the-world Weakening the dollar is a good idea https://englundmacro.blogspot.com/2024/10/weakening-dollar-is-good-idea.html Tillbaka till Rolfs länktips 17 januari 2025 https://englundmacro.blogspot.com/2025/01/rolfs-lanktips-17-januari-2025.html

History of Eurodollars Part 1: Cold War Origins https://englundmacro.blogspot.com/2025/01/history-of-eurodollars-shadow-banking.html History of Eurodollars, Part 2: Defending the Dollar System https://www.bloomberg.com/news/articles/2025-01-15/the-hidden-history-of-eurodollars-part-2-defending-the-dollar-system History of Eurodollars, Part 3: Spinning Out of Control https://www.bloomberg.com/news/articles/2025-01-16/the-hidden-history-of-eurodollars-part-3-spinning-out-of-control

  MarketWatch 15 January 2025 https://www.marketwatch.com/story/the-u-s-dollar-has-never-been-stronger-by-one-measure-that-could-create-problems-for-investors-429d5465 Tillbaka till Rolfs länktips 16 januari 2025 https://englundmacro.blogspot.com/2025/01/rolfs-lanktips-16-januari-2025.html