Whenever the U.S. Treasury is out of cash in the Treasury General Account (TGA), additional cash will need to be borrowed by raising the debt limit and monetized by the Federal Reserve. This puts pressure on the U.S. dollar currency.
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Dollar Shorts to be Flushed Out
Shorting the dollar is overcrowded.
Overnight Reverse Repurchase Agreements Vs. Effective Fed Funds Rates
Whenever the effective Fed funds rate drops too much, the Federal Reserve will conduct overnight reverse repurchase agreements where it will sell treasury securities to the market in exchange for cash. This will push up the Fed funds rate temporarily.
A rise in overnight reverse repurchase agreements (RRP) indicates that there is too much liquidity and tells us that the U.S. dollar is about to get weaker on lower Fed funds rate pressure.
For example, In May 2021, there was an excess amount of reserves at the banks, pressuring the Fed funds rate lower. The RRP purchases skyrocketed.
U.S. dollar currency held abroad
70% of U.S. dollars is held abroad.
Bitcoin Vs. USD
There is an inverse relationship between Bitcoin and the U.S. dollar.
Dollar Shortage Vs. FX Swaps
Dollar shortages can be monitored by looking at FX swaps.
U.S. Dollar Denominated Debt
This graph shows who is the most vulnerable to a rising USD.
China can easily service its dollar debt, while Chile, Argentina and Mexico will have more difficulties.
According to Lyn Alden, the U.S. has a $11 trillion dollar hole in their net assets (amount of assets owned – amount of assets owed to other countries).
Peter Schiff Vs. Brent Johnson: 1 gold coin
Peter Schiff bets against Brent Johnson that the USD will be lower in one year. The reward is 1 gold coin.
I actually think Peter will win when I look at the U.S. deficits:
The U.S. dollar will crash, the question is when
The U.S. dollar has been strong, because everyone else was worse. But there is a limit to this. The U.S. trade deficit is ballooning and should weaken the U.S. dollar.
Where is the U.S. Dollar headed?
In one simple chart. If you believe U.S. bond yields will go up, the U.S. dollar will go down. I just watched Gundlach’s live presentation and the most interesting part was that inflation expectations are going up, so you can be absolutely sure that bond yields will be going up, which will put pressure on the U.S. dollar.
Correlation Economics (Backup) 