The Dollar Is CRASHING Right Now!! (What You Need To Know)
Summary
Dollar Dynamics: The DXY drop is driven by relative moves versus the euro and yen, not a loss of reserve status.
Yen Weakness: BOJ/MOF interventions near 160 spark short-term yen strength, but the market likely pushes USD/JPY back toward 160 and ultimately higher.
Dollar Strength: Apparent USD weakness masks underlying strength versus JPY, with expectations for a snapback as intervention effects fade.
Euro Flows: European managers selling U.S. assets amid tariff rhetoric temporarily lift the euro by increasing USD velocity.
Velocity Matters: Dollars are bank deposits lent into existence; global loan creation and circulation, not Fed QE/QT, drive broad USD supply and FX moves.
Historical Context: Past DXY declines coincided with strong dollar demand and EM/commodity booms, illustrating counterintuitive currency mechanics.
Precious Metals: Gold and silver spikes reflect sentiment but are not the primary drivers of recent DXY weakness.
FX Opportunities: Currency volatility and intervention cycles create opportunities in USD/JPY positioning, with whipsaw risk from policy actions.
Transcript
Hello fellow Rebel Capitals. Hope you're well. So we got to talk about the dollar. It is tanking right now. That is for sure. So is this the sell America trade or is the dollar losing reserve currency status? No one wants to touch the hot potato as my good friend Doug Casey always says. Or is there a little more nuance to this rapid decline in the dollar as measured by the DXY? Let's dive into the details and try to connect some dots. First and foremost, let me do the screen share. Whoa. Okay, there we go. That's a little bit better. And we'll go over to the DXY. Now, you see we're down. I mean, we're rapidly approaching a 95 handle, 96.19. But look at this. Just today, it's gone down by 88%. Which I know a lot of you are saying, "Oh, George, that's not a crash." Actually, it is. if for the dollar that that's a huge move down in just one day. So let's zoom out and look at a chart of let's just say the last six months and now you get the gist of what I'm saying. When you look at this visually you see how dramatic this move is just in the last call it week or so. I mean at on the 19th we were at 99.39 that's is the close. I don't know where we were or you know intraday uh I'm not sure where we were. So this is just I mean this is right off a cliff right here. So when you look at a chart like this and you listen to the narrative, especially when you see silver going straight up, didn't do that today, but going straight up. At one point in day it was up 14% just on the day. You see gold going higher and higher and higher, going past that psychological market, $5,000 an ounce. So it's very easy to see this rapid decline in the dollars measured by the DXY and come to the conclusion that oh my gosh, this is it. We're seeing it play out. This is everyone around the world finally realizing that the debt and the deficits in the United States are unsustainable and the Fed is going to have to start doing QE again. They're going to have to start money printing and everyone is dumping the dollar. They're buying gold and they're buying silver. Very easy to buy into that narrative. In fact, it makes sense until you look into the details, right? Right. The devil's always in the details. Always in the details. So now let's go over to a CNBC article where I want to point out now before we do actually let's remember the DXY is really two main currencies. It's it's the euro and the yen. So that's like 75% of it. And so we have to focus on what's happening with these currencies if we're trying to figure out why the dollar is crashing. And again, when everyone says the dollar is crashing, they're not really talking about in terms of goods and services in the United States because from that aspect, it's always declining. They're more so talking about against other fiat currencies. Okay. So now right here, headline from Reuters, dollar weakens across the board as yen climbs. Remember, you can't have the dollar go down and the other currencies stay the same because it's just a relative game. So, if the dollar is going down, then by definition, the euro and the yen are most likely going up. But look at what it says next. Yen climbs on intervention risk. You see, here is where you start looking beneath the hood and you're like, "Wait a minute. Is this a result of the marketplace just getting to the point where they no longer want to deal with these hot potatoes, these the these currency units that we call dollars? Is this the market refusing? It's them just turning their back on the dollar. Actually, when you look at the yen, it's the opposite. It's the opposite of that. And this is why you got to watch videos like this. This is why you can't just buy into the narratives. Let me show you what I'm referring to. We're going to go down here. And first, let's bounce over to a chart of dollar yen and then we're going to come back to this article that explains exactly what's going on. So, we look at FX. You see right here we're 152. But look at this dramatic drop. Now keep in mind when this is dropping this means the yen is appreciating. When this line is going up this means the dollar is appreciating. So right here we let's call it the 13th. We were almost at 160 again. Now, let's zoom out because this is kind of the line in the sand where the BOG, the BOJ and the Ministry of Finance likes to step in and do something. They like to intervene in the currency markets because the yen is just getting too weak. So, we see this usually happens right around 160. That's where they wave the white flag. That's when they tap out. I'm talking about the central planners in Japan. So what they can do there is they just take a bunch of uh their dollar reserves and they sell that into the market. They buy yen and shortterm you see what happens that strengthens the yen. That's mission accomplished short term and then what happens is market forces always take over and it goes right back to where it would have been. And then usually what happens in these cycles, the central planners try to intervene, try to intervene. They always blame it on speculators. Always, always, always. It's always the speculators fault. It's never ever ever due to the central planners or their dog crap economy or whatever. It's always the speculators. But then what ends up happening is you bump up against this 160 and pretty soon the market takes over and it goes straight to 200. In fact, Steve, the guy I always talk about from St. Barts, the according to Hugh Henry, the best trader he has ever seen. Um, when we got to this point, I was actually in St. Barts or right around, you know, here. And I asked him his opinion and this is when the BOJ or the Ministry of Finance came in and intervened that one point when it got up to 160. And he just looked at me straight in the face. He said, "The yen's going to 200." He goes, "I don't know when, but it's going to 200." He goes, "I've seen this over and over and over and over again." And sure, short term it makes a difference, but the market's going to take it where the market's going to take it. And I don't know if it happens in a year. I don't know if it happens to two year two years, but it's going to 200, meaning the yen is going to weaken against the dollar. So, you see what I'm saying here is we got close to that 160 mark and that's when the central planners in Japan had to start talking tough and say, "Oh, we're going to intervene. we've those darn speculators, we've got to come in and sell dollars, buy yen, and we're going to intervene in markets. So then what the market does is they try to frontr run that, and the yen appreciates rapidly against the dollar, which is what you see right here. Okay. Now, is this a result of foreigners dumping dollars because they're just sick and tired of dealing with Trump or the US debt and deficits or whatever narrative you want to plug in here? You know, it's the sell America trade. No, it's actually because it's not be the dollar isn't weak because the dollar is weak. The dollar is actually weak against the yen because it's too strong. it was too strong to begin with. That that was the catalyst. So, it it wasn't weakness that you're seeing here in this move. It's actually dollar strength, ironically, when you look at the details. And that's why I've said numerous times throughout this video, devils in the details, especially when you're talking about currencies when there's like 5,000 different variables. Uh very, very complex currencies. Now, let's move on to the euro because that's a big part of the DXY decline that we have seen. So, we're going to go back. Let me just make sure we got the screen share working here. Yes, we do. Okay. Now, we're going to go back to CNBC and we're going to come on now and look at FX. Look at dollar euro. Now, when this chart goes up, that means the euro is strengthening against the dollar. kind of the opposite of what we just saw. And you see that goes back to about the 16th. This was right around when Trump comes out with the whole 4,000% tariffs on French wine because you're not giving me Greenland or whatever he was saying. It was the whole like tariff tantrum type thing that we saw in April. And during these taper tantrums, or not taper tantrums, these um tariff tantrums like we saw earlier, you do see this knee-jerk reaction when the dollar loses value relative to the euro. So why is this happening? Because you have all these European asset managers that are like, you know what, the US is uninvestable, at least for them, based on Trump's rhetoric. So they have to sell their dollar positions and take those dollars. They sell the dollars to buy euros to buy European assets that are hopefully the equivalent. And so what I want you to focus on throughout the rest of this video is think about currencies, especially the dollar versus other currencies in terms of velocity. Velocity. So velocity can increase for a multitude of reasons. Number one, it's European asset managers giving the finger to Trump and saying, "Okay, we've had enough blowh hard. We're going to go ahead and sell some of these dollar assets." Now, what does that do? That means they take the dollars, they sell the dollars, they got to buy euros. So, temporarily that increases the flow, the circulation of dollars, right? The velocity. So, effectively that's like creating more dollars over the short run. So, then what does that do? Exactly what you're seeing here in the chart. See, that's dollar euro. So it the dollar euro decline is literally the complete opposite of the dollar yen decline. Although the net result is still the same right here, they're selling dollars and because they want to. In Japan, they're selling dollars because they have to or they're they're um they're threatening to sell dollars because they have to and then the market fronts that. So, this is why you really got to pay attention to these moves in currencies. Now, for a lot of EM, I was focusing on Colombia because, as most of you know, that's where I live. The dollar is actually up over the last week or so. So it's it's always about the cross rate between the two individual currencies. And when we focus on the DXY often, and I do this myself, we use this as a proxy for the dollar going up or down when really it's all about the dollar going up or down against the yen and the euro. And as we see in this example, often the dollar can move against those currencies for completely different reasons. Okay, now let's go into why you've got to focus on velocity so much. Let's zoom out and go look at a chart here. DXY. Let's look at all time. Now, what I want you to focus on is when the dollar was way up here close to 120, right around 2000. Okay? So then we go from 120 all the way down to like a bottom in 2008 of call it 70 low7s. So why did we see this? Was this a result of just foreigners dumping dollars and the market turning their back on the dollar? They just refused to buy it anymore because of debt and deficits. No, actually it's the opposite. It was because there was more demand for dollars. Why was there more demand for dollars? And why would that make the dollar go down? Here's where it gets very counterintuitive. And this is why I say on the channel over and over and over and over and over again that especially in terms of the dollar, we have to remember that the majority of dollars that exist are just simply commercial bank deposit liabilities. They're not green pieces of paper. Why is that important? Because that means that they were lent into existence. They were lent into existence. So if you have more loans being created than are being paid off due to dollar demand, then you're going to see more currency units on net, right? More dollar denominated currency units. And likely you're going to see a higher velocity because what happened during this time frame, you had China explode. You had emerging markets really growing quickly. And that means a lot of commodities. Remember we had a huge commodity boom from the late 90s to call it 2011 2012 and again that was mostly uh a result of China growing at break neck speeds and taking a lot of these emerging markets along with them. Okay. Well, what do they need? They need commodities. They need energy. What are those commodities denominated in? They're denominated in dollars. So what you have happen here is actually when the dollar declines from 120 down to 70 roughly. This is because there's massive demand for dollars. Massive demand for dollars. And what happens is the banks are creating these dollars by lending them into existence because there's productive loans to be done because there's so much growth in the emerging markets. And these are dollar-based loans. See? And then because the uh countries are doing business with one another, what's happening to the velocity of the dollar at the exact same time? It's increasing. You see? And so then you get this decline. So then what happens is we fast forward to today and we see that is the move in the dollar, you know, going down, let's say from 99 to 96 as a result of massive demand for dollars like we saw back here? Probably not. Probably not. And it but it is a result of increased velocity you see because of what we were talking about with the euro. So you can have increased velocity due to dollar demand increasing right like we saw here and the net effect is still the exact same even though the reason for that velocity is different. Now, you could be saying to yourself, "Okay, George, well, let's fast forward to today." And in terms of the euro, you just said it's because a lot of these, you know, the taco trade, they're fed up with Trump or whatever it is, Greenland, they're selling dollar assets, taking the dollars, then buying the euros to buy the the euro assets. And that's they're making a choice to send more dollars out there, increase that circulation, increase that velocity. Okay, that's fine. But remember the key component here is that dollars are lent into existence. So if that continues and demand for dollars goes down what's going to happen to loan generation in terms of dollar denominated loans that's going to go down as well. And then what happens over six months, a year, what, what have you, is you because of this aggregate decline in the dollar, if we see this continue, then you have fewer loans being created than are being paid off. Then what does that do to the supply of dollars globally? It decreases it. You see, and then you have this equilibrium type component. And so you say, George, well, what if the Fed is doing QT? What if the Fed is doing QE? What if uh the money and to money supply growth in the United States is increasing at whatever 10% per year although it's not but what if it is okay fine what you're talking about here is you're talking about the United States you're talking about the Fed's balance sheet which you know I think the bank reserves are what three trillion roughly 3.5 so let's assume they do QE again and they add another trillion dollars to their balance sheet Okay, we're talking about a global economy of 125 trillion and growing where the vast majority of that is dollars. So, say that you've got $90 trillion out there in these commercial bank deposit liabilities, right? Dollars that were lent into existence. You're going to you're going to honestly tell me that the Fed doing a trillion dollars of QE is going to move the needle on that? Of course not. Of course not. And that's why it's so important that when we look at these dynamics, when we look at quote unquote money printing that we just completely ignore the Fed because at the end of the day they don't really matter. What we have to focus on almost entirely are the commercial banks. The commercial banks especially outside of the United States. And so when we're looking at this, I think the main takeaway here is number one, remember that dollars are lent into existence. So, let me give you a quick another make sure the screen share is working. Okay, let me give you another quick example here, guys. And I think this will really put things into perspective because this is how most people see currencies and how most people see the dollar. And my good friend Lyn Alden uh tweeted this out. I saw it just briefly today and she's making a great point here, right? She says Hasbro is being sued by its own shareholders for printing so many uh Magic cards, destroying the long-term value of the brand. and she she said something like uh there's a lot to learn here and she's absolutely right for governments who actually print the majority of their currency literally currency units like uh Argentina as an example but when you have a pie chart of the dollar the amount of currency units that exist and 1% of that or maybe 2% is actually green pieces of paper then and 98% are in this case magic cards that if no one wants them, what happens to them? They disappear. They disappear because they were lent into existence. And if no one wants them, they just don't sit in the corner. Those currency units are taken to pay off existing debt, which is how they were created to begin with. See? So when you're thinking what most people do is they look at the dollar in these terms and it's correct when you look at the dollars that were literally printed. And what I'm talking about is currency um or um paper currency. That's what I'm talking about. This is true when you're looking at paper currency, but it's not true when you're looking at the vast majority of dollars that were lent into existence. Therefore, if you pay off that loan because of no demand, those dollars disappear. They disappear just like that. So, I think those are the key takeaways here. And then going back to what's driving this rapid decline in the dollar, which is definitely alarming, but I I would expect a shift here because the dollar yen, which is the I think the big reason why this is happening, is likely going to snap back over time. Why? Because the central planners just aren't as powerful as the market. And as my good buddy Steve says, eventually the yen's going to 200. So let's just look at that chart one more time here. And you can see when we zoom out, same pattern goes to 160, they intervene or they talk about intervening, intervening, goes down to 140, then starts going back up, then oh, we got to get back in those darn speculators. And it's doing the exact same thing here. So, I would not be surprised if within, I don't know, a month or two, it's right back to 160 and the Ministry of Finance or the Bank of Japan is having to talk about intervening once again and uh we just go through this cycle until it just rips through and they totally lose control, which inevitably will happen. Interesting, isn't it? how the decline in the dollar can be due to it being too strong and not too weak. All right, guys. For more insider intel just like this, you got to check out Rebel Capitalist Live. That's right. We open up ticket sales. You can go to Rebel Capitalist Live. Well, Josh will put the URL in the description, but you can see all of the speaker. Well, not all of them. Most of them who we've got coming. Darius Dale is going to be there for the first time. That's going to be cool. Rick Rule, I just heard him on Adam Teert's podcast talking about the gas the opportunity in the gas producers and he says it's a once in a-lifetime opportunity. So you can hear him talk about that live at Rebel Capitalists live face to face and the faster you get your tickets the cheaper they are. You can see past speakers and whatnot. Kiasaki obviously going to be there. my good buddy Kenny Mroy, Brent Johnson himself, will be talking about the dollar. So, this is an event you definitely don't want to miss. You check out the link in the chat or we'll put a link in the description below. All right, guys. Enjoy the rest of your afternoon. As always, make sure you're standing up for freedom, liberty, free market, capitalism, and we'll see you in the next video.
The Dollar Is CRASHING Right Now!! (What You Need To Know)
Summary
Transcript
Hello fellow Rebel Capitals. Hope you're well. So we got to talk about the dollar. It is tanking right now. That is for sure. So is this the sell America trade or is the dollar losing reserve currency status? No one wants to touch the hot potato as my good friend Doug Casey always says. Or is there a little more nuance to this rapid decline in the dollar as measured by the DXY? Let's dive into the details and try to connect some dots. First and foremost, let me do the screen share. Whoa. Okay, there we go. That's a little bit better. And we'll go over to the DXY. Now, you see we're down. I mean, we're rapidly approaching a 95 handle, 96.19. But look at this. Just today, it's gone down by 88%. Which I know a lot of you are saying, "Oh, George, that's not a crash." Actually, it is. if for the dollar that that's a huge move down in just one day. So let's zoom out and look at a chart of let's just say the last six months and now you get the gist of what I'm saying. When you look at this visually you see how dramatic this move is just in the last call it week or so. I mean at on the 19th we were at 99.39 that's is the close. I don't know where we were or you know intraday uh I'm not sure where we were. So this is just I mean this is right off a cliff right here. So when you look at a chart like this and you listen to the narrative, especially when you see silver going straight up, didn't do that today, but going straight up. At one point in day it was up 14% just on the day. You see gold going higher and higher and higher, going past that psychological market, $5,000 an ounce. So it's very easy to see this rapid decline in the dollars measured by the DXY and come to the conclusion that oh my gosh, this is it. We're seeing it play out. This is everyone around the world finally realizing that the debt and the deficits in the United States are unsustainable and the Fed is going to have to start doing QE again. They're going to have to start money printing and everyone is dumping the dollar. They're buying gold and they're buying silver. Very easy to buy into that narrative. In fact, it makes sense until you look into the details, right? Right. The devil's always in the details. Always in the details. So now let's go over to a CNBC article where I want to point out now before we do actually let's remember the DXY is really two main currencies. It's it's the euro and the yen. So that's like 75% of it. And so we have to focus on what's happening with these currencies if we're trying to figure out why the dollar is crashing. And again, when everyone says the dollar is crashing, they're not really talking about in terms of goods and services in the United States because from that aspect, it's always declining. They're more so talking about against other fiat currencies. Okay. So now right here, headline from Reuters, dollar weakens across the board as yen climbs. Remember, you can't have the dollar go down and the other currencies stay the same because it's just a relative game. So, if the dollar is going down, then by definition, the euro and the yen are most likely going up. But look at what it says next. Yen climbs on intervention risk. You see, here is where you start looking beneath the hood and you're like, "Wait a minute. Is this a result of the marketplace just getting to the point where they no longer want to deal with these hot potatoes, these the these currency units that we call dollars? Is this the market refusing? It's them just turning their back on the dollar. Actually, when you look at the yen, it's the opposite. It's the opposite of that. And this is why you got to watch videos like this. This is why you can't just buy into the narratives. Let me show you what I'm referring to. We're going to go down here. And first, let's bounce over to a chart of dollar yen and then we're going to come back to this article that explains exactly what's going on. So, we look at FX. You see right here we're 152. But look at this dramatic drop. Now keep in mind when this is dropping this means the yen is appreciating. When this line is going up this means the dollar is appreciating. So right here we let's call it the 13th. We were almost at 160 again. Now, let's zoom out because this is kind of the line in the sand where the BOG, the BOJ and the Ministry of Finance likes to step in and do something. They like to intervene in the currency markets because the yen is just getting too weak. So, we see this usually happens right around 160. That's where they wave the white flag. That's when they tap out. I'm talking about the central planners in Japan. So what they can do there is they just take a bunch of uh their dollar reserves and they sell that into the market. They buy yen and shortterm you see what happens that strengthens the yen. That's mission accomplished short term and then what happens is market forces always take over and it goes right back to where it would have been. And then usually what happens in these cycles, the central planners try to intervene, try to intervene. They always blame it on speculators. Always, always, always. It's always the speculators fault. It's never ever ever due to the central planners or their dog crap economy or whatever. It's always the speculators. But then what ends up happening is you bump up against this 160 and pretty soon the market takes over and it goes straight to 200. In fact, Steve, the guy I always talk about from St. Barts, the according to Hugh Henry, the best trader he has ever seen. Um, when we got to this point, I was actually in St. Barts or right around, you know, here. And I asked him his opinion and this is when the BOJ or the Ministry of Finance came in and intervened that one point when it got up to 160. And he just looked at me straight in the face. He said, "The yen's going to 200." He goes, "I don't know when, but it's going to 200." He goes, "I've seen this over and over and over and over again." And sure, short term it makes a difference, but the market's going to take it where the market's going to take it. And I don't know if it happens in a year. I don't know if it happens to two year two years, but it's going to 200, meaning the yen is going to weaken against the dollar. So, you see what I'm saying here is we got close to that 160 mark and that's when the central planners in Japan had to start talking tough and say, "Oh, we're going to intervene. we've those darn speculators, we've got to come in and sell dollars, buy yen, and we're going to intervene in markets. So then what the market does is they try to frontr run that, and the yen appreciates rapidly against the dollar, which is what you see right here. Okay. Now, is this a result of foreigners dumping dollars because they're just sick and tired of dealing with Trump or the US debt and deficits or whatever narrative you want to plug in here? You know, it's the sell America trade. No, it's actually because it's not be the dollar isn't weak because the dollar is weak. The dollar is actually weak against the yen because it's too strong. it was too strong to begin with. That that was the catalyst. So, it it wasn't weakness that you're seeing here in this move. It's actually dollar strength, ironically, when you look at the details. And that's why I've said numerous times throughout this video, devils in the details, especially when you're talking about currencies when there's like 5,000 different variables. Uh very, very complex currencies. Now, let's move on to the euro because that's a big part of the DXY decline that we have seen. So, we're going to go back. Let me just make sure we got the screen share working here. Yes, we do. Okay. Now, we're going to go back to CNBC and we're going to come on now and look at FX. Look at dollar euro. Now, when this chart goes up, that means the euro is strengthening against the dollar. kind of the opposite of what we just saw. And you see that goes back to about the 16th. This was right around when Trump comes out with the whole 4,000% tariffs on French wine because you're not giving me Greenland or whatever he was saying. It was the whole like tariff tantrum type thing that we saw in April. And during these taper tantrums, or not taper tantrums, these um tariff tantrums like we saw earlier, you do see this knee-jerk reaction when the dollar loses value relative to the euro. So why is this happening? Because you have all these European asset managers that are like, you know what, the US is uninvestable, at least for them, based on Trump's rhetoric. So they have to sell their dollar positions and take those dollars. They sell the dollars to buy euros to buy European assets that are hopefully the equivalent. And so what I want you to focus on throughout the rest of this video is think about currencies, especially the dollar versus other currencies in terms of velocity. Velocity. So velocity can increase for a multitude of reasons. Number one, it's European asset managers giving the finger to Trump and saying, "Okay, we've had enough blowh hard. We're going to go ahead and sell some of these dollar assets." Now, what does that do? That means they take the dollars, they sell the dollars, they got to buy euros. So, temporarily that increases the flow, the circulation of dollars, right? The velocity. So, effectively that's like creating more dollars over the short run. So, then what does that do? Exactly what you're seeing here in the chart. See, that's dollar euro. So it the dollar euro decline is literally the complete opposite of the dollar yen decline. Although the net result is still the same right here, they're selling dollars and because they want to. In Japan, they're selling dollars because they have to or they're they're um they're threatening to sell dollars because they have to and then the market fronts that. So, this is why you really got to pay attention to these moves in currencies. Now, for a lot of EM, I was focusing on Colombia because, as most of you know, that's where I live. The dollar is actually up over the last week or so. So it's it's always about the cross rate between the two individual currencies. And when we focus on the DXY often, and I do this myself, we use this as a proxy for the dollar going up or down when really it's all about the dollar going up or down against the yen and the euro. And as we see in this example, often the dollar can move against those currencies for completely different reasons. Okay, now let's go into why you've got to focus on velocity so much. Let's zoom out and go look at a chart here. DXY. Let's look at all time. Now, what I want you to focus on is when the dollar was way up here close to 120, right around 2000. Okay? So then we go from 120 all the way down to like a bottom in 2008 of call it 70 low7s. So why did we see this? Was this a result of just foreigners dumping dollars and the market turning their back on the dollar? They just refused to buy it anymore because of debt and deficits. No, actually it's the opposite. It was because there was more demand for dollars. Why was there more demand for dollars? And why would that make the dollar go down? Here's where it gets very counterintuitive. And this is why I say on the channel over and over and over and over and over again that especially in terms of the dollar, we have to remember that the majority of dollars that exist are just simply commercial bank deposit liabilities. They're not green pieces of paper. Why is that important? Because that means that they were lent into existence. They were lent into existence. So if you have more loans being created than are being paid off due to dollar demand, then you're going to see more currency units on net, right? More dollar denominated currency units. And likely you're going to see a higher velocity because what happened during this time frame, you had China explode. You had emerging markets really growing quickly. And that means a lot of commodities. Remember we had a huge commodity boom from the late 90s to call it 2011 2012 and again that was mostly uh a result of China growing at break neck speeds and taking a lot of these emerging markets along with them. Okay. Well, what do they need? They need commodities. They need energy. What are those commodities denominated in? They're denominated in dollars. So what you have happen here is actually when the dollar declines from 120 down to 70 roughly. This is because there's massive demand for dollars. Massive demand for dollars. And what happens is the banks are creating these dollars by lending them into existence because there's productive loans to be done because there's so much growth in the emerging markets. And these are dollar-based loans. See? And then because the uh countries are doing business with one another, what's happening to the velocity of the dollar at the exact same time? It's increasing. You see? And so then you get this decline. So then what happens is we fast forward to today and we see that is the move in the dollar, you know, going down, let's say from 99 to 96 as a result of massive demand for dollars like we saw back here? Probably not. Probably not. And it but it is a result of increased velocity you see because of what we were talking about with the euro. So you can have increased velocity due to dollar demand increasing right like we saw here and the net effect is still the exact same even though the reason for that velocity is different. Now, you could be saying to yourself, "Okay, George, well, let's fast forward to today." And in terms of the euro, you just said it's because a lot of these, you know, the taco trade, they're fed up with Trump or whatever it is, Greenland, they're selling dollar assets, taking the dollars, then buying the euros to buy the the euro assets. And that's they're making a choice to send more dollars out there, increase that circulation, increase that velocity. Okay, that's fine. But remember the key component here is that dollars are lent into existence. So if that continues and demand for dollars goes down what's going to happen to loan generation in terms of dollar denominated loans that's going to go down as well. And then what happens over six months, a year, what, what have you, is you because of this aggregate decline in the dollar, if we see this continue, then you have fewer loans being created than are being paid off. Then what does that do to the supply of dollars globally? It decreases it. You see, and then you have this equilibrium type component. And so you say, George, well, what if the Fed is doing QT? What if the Fed is doing QE? What if uh the money and to money supply growth in the United States is increasing at whatever 10% per year although it's not but what if it is okay fine what you're talking about here is you're talking about the United States you're talking about the Fed's balance sheet which you know I think the bank reserves are what three trillion roughly 3.5 so let's assume they do QE again and they add another trillion dollars to their balance sheet Okay, we're talking about a global economy of 125 trillion and growing where the vast majority of that is dollars. So, say that you've got $90 trillion out there in these commercial bank deposit liabilities, right? Dollars that were lent into existence. You're going to you're going to honestly tell me that the Fed doing a trillion dollars of QE is going to move the needle on that? Of course not. Of course not. And that's why it's so important that when we look at these dynamics, when we look at quote unquote money printing that we just completely ignore the Fed because at the end of the day they don't really matter. What we have to focus on almost entirely are the commercial banks. The commercial banks especially outside of the United States. And so when we're looking at this, I think the main takeaway here is number one, remember that dollars are lent into existence. So, let me give you a quick another make sure the screen share is working. Okay, let me give you another quick example here, guys. And I think this will really put things into perspective because this is how most people see currencies and how most people see the dollar. And my good friend Lyn Alden uh tweeted this out. I saw it just briefly today and she's making a great point here, right? She says Hasbro is being sued by its own shareholders for printing so many uh Magic cards, destroying the long-term value of the brand. and she she said something like uh there's a lot to learn here and she's absolutely right for governments who actually print the majority of their currency literally currency units like uh Argentina as an example but when you have a pie chart of the dollar the amount of currency units that exist and 1% of that or maybe 2% is actually green pieces of paper then and 98% are in this case magic cards that if no one wants them, what happens to them? They disappear. They disappear because they were lent into existence. And if no one wants them, they just don't sit in the corner. Those currency units are taken to pay off existing debt, which is how they were created to begin with. See? So when you're thinking what most people do is they look at the dollar in these terms and it's correct when you look at the dollars that were literally printed. And what I'm talking about is currency um or um paper currency. That's what I'm talking about. This is true when you're looking at paper currency, but it's not true when you're looking at the vast majority of dollars that were lent into existence. Therefore, if you pay off that loan because of no demand, those dollars disappear. They disappear just like that. So, I think those are the key takeaways here. And then going back to what's driving this rapid decline in the dollar, which is definitely alarming, but I I would expect a shift here because the dollar yen, which is the I think the big reason why this is happening, is likely going to snap back over time. Why? Because the central planners just aren't as powerful as the market. And as my good buddy Steve says, eventually the yen's going to 200. So let's just look at that chart one more time here. And you can see when we zoom out, same pattern goes to 160, they intervene or they talk about intervening, intervening, goes down to 140, then starts going back up, then oh, we got to get back in those darn speculators. And it's doing the exact same thing here. So, I would not be surprised if within, I don't know, a month or two, it's right back to 160 and the Ministry of Finance or the Bank of Japan is having to talk about intervening once again and uh we just go through this cycle until it just rips through and they totally lose control, which inevitably will happen. Interesting, isn't it? how the decline in the dollar can be due to it being too strong and not too weak. All right, guys. For more insider intel just like this, you got to check out Rebel Capitalist Live. That's right. We open up ticket sales. You can go to Rebel Capitalist Live. Well, Josh will put the URL in the description, but you can see all of the speaker. Well, not all of them. Most of them who we've got coming. Darius Dale is going to be there for the first time. That's going to be cool. Rick Rule, I just heard him on Adam Teert's podcast talking about the gas the opportunity in the gas producers and he says it's a once in a-lifetime opportunity. So you can hear him talk about that live at Rebel Capitalists live face to face and the faster you get your tickets the cheaper they are. You can see past speakers and whatnot. Kiasaki obviously going to be there. my good buddy Kenny Mroy, Brent Johnson himself, will be talking about the dollar. So, this is an event you definitely don't want to miss. You check out the link in the chat or we'll put a link in the description below. All right, guys. Enjoy the rest of your afternoon. As always, make sure you're standing up for freedom, liberty, free market, capitalism, and we'll see you in the next video.