1. How $65 Trillion in "Hidden" Dollar Debt Can Spark the Next...

1. How $65 Trillion in "Hidden" Dollar Debt Can Spark the Next Banking Crisis

2. Officials admit this was a huge part of 2008, 2020, maybe the next one, too.

These are arguments for there being a greater risk of a global dollar shortage than a dollar glut. In essence, global lenders seem to be belatedly scrabbling for better (mostly USD based) collateral, as it becomes increasingly clear that global debt issuance (with roll-overs the majority) aren't a safe enough bet any more. This leads to demand being constricted as lending tightens. We can suspect this from trends in transport stocks, inventories, and retail discounts. There's also the impressive contango in crude oil, the inversions of various yield curves, and the falling Baltic dry index.

The signs presented for public consumption suggest we breathe a sigh of relief that the inflation dragon is being slain. The deeper signs may be that we have successfully avoided an inflationary crisis by initiating a deflationary one. What, for example, is more influential on monetary stability, seven trillion USD of Covid stimulus, or 2,000 trillion of opaque derivatives?

Despite the shallow truth that inflation, once it embeds in the public consciousness, becomes harder to dislodge, the deeper truth is that it can be stopped relatively easily by tightening. By comparison, arresting an established large-scale debt-deflationary spiral requires truly heroic fiscal efforts, in a desperate pyrrhic endgame. More helicopters than an Arnie movie.

The timing is, as always, unknown, but it seems that events are beginning to unfold at increasing rates.

I'm no expert, this isn't financial advice.