On Friday, October 21st, 2022, Terry Sawchuk made an appearance on The Steve Gruber Show. Listen as they discuss what a “Strong U.S. Dollar” means.
The strong dollar is happening primarily because the Federal Reserve has taken such aggressive actions to get inflation under control- aggressively raising interest rates and pulling dollar liquidity out of the system. This is a problem. When you look at global trading, the US dollar is involved in about 90% of all global trade. The fact that the dollar has gotten so strong is wreaking havoc on other countries.
There’s been an interesting development in European Central Banking that we should be talking about, which is that the swap lines through the Swiss National Bank have started to be used again. Meaning, banks are going to the Swiss National Bank to get US dollars in lieu of trading amongst themselves. Normally, they have auctions, and nobody shows up because all the business is being done between the banks. But, in the last few weeks, as many as 15 banks have shown up at these auctions, and that means they don’t trust the lending amongst each other. They’re afraid if they trade with another commercial bank, they might not get paid back. This sounds odd, and it is, but these are signs of global stress. The last time we experienced anything like this, was the 2007-2008 global financial crisis, and then again in Covid in 2020. We are not to the point where it’s going to collapse again, but we are seeing some signs of stress.
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Any information discussed in this article is for educational purposes only. It is not meant to be any kind of recommendation or financial advice. The information contained in this video is intended for informational purposes only. Any opinions are those of Terry Sawchuk and not necessarily those of JW Cole Financial, Inc. or JW Cole Advisors, Inc.
Securities offered through J.W. Cole Financial, Inc. (JWC) Member FINRA/SIPC. Advisory services offered through J.W. Cole Advisors, Inc. (JWCA). Sawchuk Wealth and JWC/JWCA are unaffiliated entities.