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Imagine if all three – oil, general goods and services, and capital equipment – accelerate their de-dollarization in response to Trump’s abusive and coercive economic policies. Quite literally, the world could lose five, even ten percentage points of dollarization over the next few years. Then what will happen to America?
Some real sh$@ can fly here. America is already struggling with a deficit of more than 6 percent of the GDP, or about $ 2 trillion. Trump’s sweeping tax cuts could increase the deficit by $5-8 trillion over 10 years. Very innocently, they believe they could get about $4 trillion through a 20 percent universal and 60 percent Chinese tariff increase.
Even otherwise, about 22 percent of US debt is financed by the savings of other countries, notably Japan, China, the UK, the Cayman Islands, and Luxembourg. India is also a big contributor.
What would happen if ROW quietly forms an alliance as described above? What if 10 or 20 percent of global savings moved out of the US? Bonds would crash, 10-year Treasury rates could rise above 6 percent, inflation (increased by already high tariffs) would rise, and the dollar would become extremely volatile. Frankly, it would be a financial tsunami that could wreck Trump’s ship.
