Dollar Falls, Bonds in Turmoil: Recession Accelerating?

As the recent debate comes to a close, the dollar has entered into a decline, while the Chinese yuan has appreciated, marking an increase of approximately 3000 basis points. This shift reflects a critical moment in global finance, where the implications of a nation's economic standing ripple through international markets.

In ancient times, wise ancestors advised that "empty talk harms the country while practical work enriches the nation." However, it seems that in today's world, investors are preoccupied with watching two presidential candidates engage in a war of words on stage. The focus appears misplaced, as merely relying on a debate to salvage a faltering American economy borders on wishful thinking.

Whether the Democrats maintain power or the Republicans take the reins, both parties face a formidable conundrum: how to untangle the complex web of the U.S. dollar, bonds, and economic viability? It leaves the American populace with a critical decision to make come election time: do they choose to dive into a frying pan or leap into a fire?

Despite the U.S. government regularly releasing economic data compiled by various agencies at fixed intervals, a broader timeline reveals a troubling narrative. Since January 2023, there have only been six instances where the labor data showed an increase in job numbers. Contrastingly, thirteen reports reflect downward revisions, and some employment statistics were adjusted downwards on two separate occasions. This situation not only signals deteriorating employment conditions but also raises grave questions regarding the trustworthiness of these official figures.

It’s disheartening to acknowledge that many are aware of the manipulated data being disseminated. The U.S. itself recognizes that the world is aware yet still assumes that it can operate above scrutiny. Shockingly, if we calculate the corrections made, the U.S. job data from the past two years demonstrates an inflation level of nearly 50%.

Even with the bleak reality laid bare, major media outlets and financial institutions continue to applaud the so-called strong economic data coming out of the U.S. The Secretary of the Treasury has even touted that the economy is landing softly after a barrage of interest rate hikes. This phenomenon perfectly illustrates a quote by Jim Morrison: "Whoever controls the media controls the minds of the people."

Discussions around the manipulation of economic data in mainstream media have become a taboo subject, almost like a dark secret. The moment it is brought into the light, it faces immediate condemnation. As long as the U.S. refuses to acknowledge its falsification, its employment statistics can safely remain within an acceptable margin of error.

This situation somewhat parallels the narrative around Chinese missile capabilities. When addressing employment challenges, the presidential candidates deftly avoided proposing any concrete solutions. Instead, they choose to hurl accusations at one another during their debates.

In light of the pressing economic challenges facing the U.S., these candidates merely engage in mutual attacks and put forth their visions, yet fail to articulate actionable solutions. With the national debt now ballooning to a staggering $35 trillion, the situation becomes increasingly desperate.

The U.S. federal government's debt interest expenses have shattered records, amounting to a staggering $3 billion paid out daily, a figure that has tripled compared to a decade ago and doubled over the past two years. By the second quarter of this year, the cost of interest payments on federal debt was estimated at $1.1 trillion annually.

The question looms: Who will bear the burden of this debt if tax cuts are granted purely for electoral gains? Will the U.S. follow the example of Britain, announcing national bankruptcy upon assuming office to evade responsibility? Such drastic measures would undeniably accelerate the already declining U.S. economy, leading it toward deeper turmoil.

After the debate, the dollar initiated a fresh decline, leading Wall Street traders to sell off dollars in exchange for yuan. The yen also continued to strengthen against the dollar, while the Nikkei index dropped by 1.49%, indicating a tumultuous night ahead for U.S. stocks as well.

As of this writing, the dollar has concluded its upward trend, falling by 0.28%, while the yuan appreciated by 0.24%. The market assessment indicated that the dollar's decline was largely due to the perceived likelihood of Kamala Harris winning. However, this circumstance cannot alter the dollar’s trajectory; it faces inevitable decline amid poor employment figures and a wavering stock market.

To address the numerical shortfalls, reliance appears to lie solely on the Federal Reserve implementing rate cuts and engaging in unlimited quantitative easing. Such strategies will inevitably lead to excessive liquidity, thereby triggering dollar depreciation. Ironically, this solution aims to sidestep accountability regarding national debt, rendering this high-profile debate essentially fruitless.

Regardless of who assumes power next, it is crucial to recognize that no singular force will descend from above to wield political strength to rescue the American and global economies from their current dire state. There is no denying that neither candidate resembles the strong leadership of Ronald Reagan nor the tenets established by Jimmy Carter.

Ultimately, the decision looms large for the American people: do they choose to leap into the uncertainties of a frying pan, or plunge into the depths of a fire? This choice is emblematic of a larger struggle that many nations face today, caught in a cycle of political theater, economic turbulence, and a critical need for authentic solutions.