Will A China Cold War Mean Currency Wars?

This year is a year of trouble inside many countries and change for the US dollar bullish index ETF (NYESARCA: UUP).

A lot of things have happened, but one thing is that this is the year that the Secretary of state of the United States declared a new Cold War on China in a recent speech. But he said this is not a war of containment like the last Cold War – instead it is a war in which the enemy is not the Chinese people, but the Chinese government itself. He seems to want it destroyed. It seems as if no one has paid attention to this speech inside the United States, but it is driving a wave of anger inside China where it is being shown to the Chinese people on TV to make them feel under siege so that they will worship their leaders and ignore their hardships and the detention camps and what has happened to Hong Kong.

Meanwhile, on our television sets President Trump talks about a “China” virus to gather support to win reelection and distract from the total mess of things inside the Unites States many of which that he is not responsible for, but these remarks by his Secretary of State are more ominous, because the Cold War was an event that defined decades of US foreign policy and history in which a few moments came in which the world came to a hair trigger to annihilation.

As a child for a few years I lived in West Germany, because my Dad was in the US army helping defend the forces of “freedom” against Soviet attack, which was more imaginary than real. He rose up to become a Colonel with a 20-year career in the military.

For us 2020 has also been a year of huge gyrations in the financial markets. It’s the year that gold and silver have come alive as the US dollar has rolled over as the US economy has gone into the worst contraction since the 1930’s.

One thing I ask myself is how in the world can the US win a new Cold War against China when the US government deficit is completely exploding and it has a higher debt/GDP than China does? What is the strategy to win? Is this going to lead to currency wars?

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