Until 2014-2015, the US Dollar index, the "DXY", followed a remarkably consistent sinusoidal pattern of long term cycles. One's 2014 self could be forgiven for holding a strong belief that this pattern would repeat itself, but this time it did something different.
Instead of peaking in line with the trend and reverting like a good complex system always should, the all-important, all-knowing, all-conquering, DXY stood its ground and has been refusing to back down no matter what the cost.
Despite the ocean of DXY analysis, a deterministicy pattern connecting the very long term patterns of the last 50 years to the current cycle has been elusive. This is a chart of the 6 year percent change of the "Dixie" showing a linear top and bottom pattern stretching over the last 50 years and confirming the suspicion that this cycle is different.
Instead of returning to the bottom of the pattern in 2014, the DXY has remained at the top of the channel for just shy of a decade, an unusual act for a currency that has undergone drastic devaluation during the same time period. Of course, the least devalued currency in a relative measurement of currencies will appear strong, even though they are all weakening.
Concerning relative strength, this is a fundamental concept for the totality of the financial markets. A trader "makes money" by trading weakness for strength and every attempt to measure progress falls back to relativity. For the budding global currency war, this relativity of currency strength is intertwined with the state's ability to tax its citizens and in the special case of global currencies, to also tax the citizens of other states, in order to pay for the security complexes that enable the taxation to exist in the first place.
What is a state without the means to enforce taxation and what is an empire without the means to enforce the global pizzo which enables its continued existence? This currency is not a piece of paper, it is the creature living at the center of the spider web in which we all live.
In late 2014, the Russian and Ukrainian conflict began, ending a long lasting era of unipolar global security and threatening the status quo hegemony. This conflict has continued for as long the DXY has remained curiously elevated at the top of its trend. A strong Dollar has historically correlated with a weak commodity sector, which in turn is historically correlated with a weakened Russia.
It may be likely that the Dixie has been held artificially high as part of the ongoing Great Power geopolitical conflict that began at the end of WWII and the beginning of the current World Order, and which escalated into a final act of desperation by the Russians in 2014. If this is the case, it may remain artificially elevated until the conflict is resolved or the cost of doing so is deemed politically unviable. The latter is unlikely as political control has rarely been as concentrated in the global historical context.
In the newly minted secular rising rate environment, which hasn't been seen since the 1940/50s, familiar arrows of causation may become confused. If the 50 year trend shown in this chart continues, the DXY may struggle to break the upward barrier that has limited its rise for the last decade, even as it continues to be a detriment to the global commodity sector in real relative terms.
Instead of peaking in line with the trend and reverting like a good complex system always should, the all-important, all-knowing, all-conquering, DXY stood its ground and has been refusing to back down no matter what the cost.
Despite the ocean of DXY analysis, a deterministicy pattern connecting the very long term patterns of the last 50 years to the current cycle has been elusive. This is a chart of the 6 year percent change of the "Dixie" showing a linear top and bottom pattern stretching over the last 50 years and confirming the suspicion that this cycle is different.
Instead of returning to the bottom of the pattern in 2014, the DXY has remained at the top of the channel for just shy of a decade, an unusual act for a currency that has undergone drastic devaluation during the same time period. Of course, the least devalued currency in a relative measurement of currencies will appear strong, even though they are all weakening.
Concerning relative strength, this is a fundamental concept for the totality of the financial markets. A trader "makes money" by trading weakness for strength and every attempt to measure progress falls back to relativity. For the budding global currency war, this relativity of currency strength is intertwined with the state's ability to tax its citizens and in the special case of global currencies, to also tax the citizens of other states, in order to pay for the security complexes that enable the taxation to exist in the first place.
What is a state without the means to enforce taxation and what is an empire without the means to enforce the global pizzo which enables its continued existence? This currency is not a piece of paper, it is the creature living at the center of the spider web in which we all live.
In late 2014, the Russian and Ukrainian conflict began, ending a long lasting era of unipolar global security and threatening the status quo hegemony. This conflict has continued for as long the DXY has remained curiously elevated at the top of its trend. A strong Dollar has historically correlated with a weak commodity sector, which in turn is historically correlated with a weakened Russia.
It may be likely that the Dixie has been held artificially high as part of the ongoing Great Power geopolitical conflict that began at the end of WWII and the beginning of the current World Order, and which escalated into a final act of desperation by the Russians in 2014. If this is the case, it may remain artificially elevated until the conflict is resolved or the cost of doing so is deemed politically unviable. The latter is unlikely as political control has rarely been as concentrated in the global historical context.
In the newly minted secular rising rate environment, which hasn't been seen since the 1940/50s, familiar arrows of causation may become confused. If the 50 year trend shown in this chart continues, the DXY may struggle to break the upward barrier that has limited its rise for the last decade, even as it continues to be a detriment to the global commodity sector in real relative terms.