The Moral Implications of the United States’ Financial Sanctions
- Strategeriest
- Mar 27, 2021
- 2 min read
Good afternoon,
Considering the PE on the S&P, that 70 % of the world’s financials are denominated is USD, convexity equations in rising rate environments, and the trajectory of the FED’s Balance sheet, I am becoming less and less concerned about interest rate yield and am looking for investments to combat inflation. I understand that without interest rate yield, the mansion from Dynamite Hack’s “Boyz in the Hood” video may be out of reach, but I am more concerned about protecting my assets given the current investment environment.
Please see my updated projections for the year in which the Federal Government will be insolvent. They include the assumption that as tax revenue increased due to the last round of tax cuts, tax increases will lower the amount of projected tax revenue.
The calculations I used seems to be more conservative than the National Debt Clock’s Website, but more extreme than the CBO or OMB’s Projections.
Please note, it does not look like the National Debt Clock is factoring in interest rate increases on their interest projections.
Also, of Interest on this site, is their analysis of various countries’ debt to GDP ratios.
This is a very impressive site; however, it calculates other countries’ GDPs in USD, and as with all GDP equations, includes government spending.
I propose a more accurate measure of a countries projected future ability to sell government bonds would be, GDP less government spending converted to a universal CPI measure, such as cold rolled steel.
I suggest those of you investing in foreign currencies and securities use a similar measure and method when evaluating risk.
For example, if you look at the Zimbabwe’s GDP to Debt Ratio in their own currency during their 2008 inflation spiral, it did not seem like they were doing that bad, even when you convert their figures to cold rolled steel it looked like they were doing ok, less their food shortage of course. However, when you convert their figures to USD during a worldwide economic meltdown, their situation became unsustainable.
My hypothesis is, that as the United States Zimbabwes itself, the dollar and GDP(any measure including government spending) will become less and less of a reliable way for the rest of the world to gauge economic performance. (Please See YTD Aussie and Looney currency performances verse the dollar.)
As such I believe investing in certain countries that the United State’s has locked out of the financial system may be profitable over the next several years.
As it is our elected official’s fault for leveraging the country up to this point, my question is, do they have the moral authority to tell us how we can and cannot protect our assets from their irresponsibility?
Apologies for not addressing my opinion that the J Curve effect is caused by low liquidity in the FX market, as promised in my last post. I am still working on an example to share.
Warmest Regards,
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