Capitalism is a self-cleansing mechanism. Although at times it requires adjustments, for the most part is functions well on its own. The financial market, which is the last bastion of capitalism, is a very sophisticated and intelligent structure that mirrors the economy and the flow of money.
It is rare to see the stock market, the US Treasury market, and the US Dollar going down at the same time. During times of economic stress and uncertainty, risky assets (equities) sell off, and the money usually goes into safe investments (Bonds). If the Bonds sell off as well, it helps the US dollar because higher interest rates make the currency more attractive. But lately, all three of those asset classes have gone down at the same time. It means one thing: The world is selling the United States. Let’s hope it’s temporary; otherwise, we’re in big trouble.
Dennis
