(Chinese Professor crying (like a woman) over U.S. Dollar carry-trade)
China is complaining about the U.S. dollar carry trade.
It’s sort of ironic that the King of all currency manipulators is bemoaning our rightful place in the world as leader of the carry trade, master and commander of all things fiat.
Many of you worry about the carry trade, when, in fact, you should be embracing it, as if it was a winning lottery ticket— because it is!!! The dollar can weaken to Bernanke’s delight, providing the good folks from Wal-Mart Stores, Inc. [[WMT]] keep the pantries of the proletariat stacked with cheap goods. After all, we have our trading partners by the short hairs. All they need to do is shut up, manufacture “stuff” and finance our debt—indeud! Due to artificially low rates, coupled with an exceedingly weak currency, money shifters are borrowing dollars, in order to buy “things” (stocks, junk bonds, art, collectibles) and “stuff” (oil, wheat, sugar, corn, copper, gold) with it. Unlike the infamous “yen carry trade,” the dollar is supremely liquid and makes for a better weapon to combat any suggestion or hint of deflation. We are spend thrifts and we will not have it any other way.
Providing the dollar does not rally, commodity and equity markets will enjoy the splendor of speculative capital in search of a new home. As we all know by now, leaving it in cash is simply the wrong thing to do. If this relationship continues and the Fed is successful at keeping the game going, domestic and foreign real estate markets will be flooded with capital, causing rapid price appreciation, a boom of sorts—effectively bailing out underwater mortgage players and CDO lovers.
Now if things go awry and the dollar carry trade is unwound, well then, we’re just screwed. However, until that happens, let’s party like it’s 1927 or 2006, shall we? Pop champagne bottles and start eating colossal servings of carpaccio (trust me, you’ll like it). Let us remember, if the Fed didn’t inflate like a mother-you-know-what, by now, we’d be killing each other in streets for small overcooked pieces of bison meat.
Enjoy it while you can. God willing, by the time it unwinds, I will be residing in my permanent resting place: inside an egregious pineapple coffin.
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