How USA’s evil MONEY PRINTING strategy is killing the world economy? Geopolitical Case Study
The Secret Superpower of the U.S. Dollar in World Trade
In 2020, the United States of America printed 3 trillion dollars in just 3.5 months. The U.S. dollar is the secret superpower in the world of world trade.
Inflation and International Markets
Inflation in the US barely touched nine percent and was exported to other countries all across the world. The international markets have been free falling in the past few weeks.
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Impact of Interest Rates on Purchase Power
After the increase in interest rates, when Mr. Jackson pays $422 extra in his EMIs, he will only have $1,078 to spend. In total for the entire year, his purchase power will decrease by $422 multiplied by 12 months, that is by $5,064.
This way, the demand for products will go down, and eventually, the businesses will have to decrease the prices of their products to make it affordable for their customers. For example, if the cost of a car is $200,000, thousands of people will not buy it because they can only offer to buy a car at $160,000.
The Dark Truth of U.S. Printing Dollars and Quantitative Easing
In this scenario, Mr. Jackson’s savings will increase by $930 per month and by $11,160 for the entire year. With millions of people seeing a significant increase in their savings, their purchasing power also increases, allowing them to easily apply for a car loan and buy a car.
As a result, the demand for Volkswagen cars increases so much that even if VW sells the car at $205,000, people are still willing to buy it, giving VW the opportunity to increase the price of the car even more.
Printing money in the U.S. increases the demand for imported goods, which raises the price of those goods. This, in turn, increases the price of the same goods in domestic markets, leading to inflation not just in the U.S., but also in other nations.
Central banks all over the world have been injecting money into their economies at a record pace to try to combat the global recession. Interestingly, the value of the euro is actually increasing against the dollar, so now one euro is equal to $1.05.
However, the appreciation of the euro has increased the export cost of European goods, making their products less competitive in international markets. Therefore, if Germany wants to make its exports more competitive, it will have to print more money to make its products affordable.