A crash in the dollar is likely and it could fall by as much as 35 percent by the end of 2021.”

So writes Stephen Roach of Yale University and the former Morgan Stanley Asia chair, in the Financial Times. What is going on?

To Mr. Roach, the past is catching up with the United States, the present is observing the potential for a financial collapse, and the future will be left with the job of reconstructing a new world. Where is Mr. Roach coming from?

Where Is The Federal Reserve?

The Federal Reserve seems to have taken itself out of the picture with its new approach to inflation and its interest rate policy.

As Mr. Roach writes,

The Federal Reserve has recently shifted to a strategy that takes into account an average of inflation rather than a specific target, and promised to keep policy rates near zero for several more years. That means the interest rate channel has effectively been closed.”

Furthermore, as I have written many times over the past twelve months or so, the world seems to have lost confidence in the U. S. federal government and this has added to an already substantial movement out of the “risk averse” foreign money that had flocked to the dollar before.

This lost of confidence has been accelerated at the government’s budget seems to be “out-of-control” with no end is sight to the build up

And, as I have recently written

Debt is accelerating everywhere… this is happening both inside and outside the federal government. And, slower (economic) growth makes it harder for the government to reduce the debt burden.

It also makes it harder for corporations and other business enterprises to cover cash outflows, thereby threatening their ability to cover debt payments.”

Furthermore, whoever wins the election on