I was thinking: if the Federal Reserve is putting hundreds of billions of dollars of loans out into the market to ensure liquidity (wise move), but they are running short, so have asked the US Treasury for help, what sort of help would this be?
Simply, wouldn’t the Treasury ensure supply by growing money supply?
Surely, with massive growth in money supply, wouldn’t we also see massive growth in US Dollar inflation?
With massive growth in US dollar supplies, wouldn’t we see a massive debasement of the US dollar vs higher interest rate currencies?
Wouldn’t we also see a debasement of currencies that are pegged to the US dollar:
Aruban florin
Bahamian dollar
Bahraini dinar
Barbadian dollar
Belize dollar
Belarusian ruble
Bermudian dollar
Cayman Islands dollar
Cuban convertible peso
Djiboutian franc
East Caribbean dollar
Eritrean nakfa
Hong Kong dollar (narrow band)
Jordanian dinar
Lebanese pound
Maldivian rufiyaa
Netherlands Antillean gulden
Omani rial
Qatari riyal
Saudi riyal
Salvadoran colón
United Arab Emirates dirham
(rise in costs in these countries)
Wouldn’t we then see a massive rise in the value of real assets vs the US dollar, eg: GOLD?
Wouldn’t this rise in gold be further exacerbated by risk associated with credit and financial market assets? Wouldn’t we see investors flight to safety to these assets?
Wouldn’t it be wise to buy gold if you now held US dollar assets?
Am I on the right track?