In economic war everything is related. You hurt my export with tariffs, I hurt your bonds market, and your real estate, and your banking…
I build economic models of islands and of big countries.
And what you learn is : all sectors of the economy are related!!
Something happens here, it flows to the other sector. Something happens with tariffs and it flows to the labor market and you lose your job.
And it goes from the labour market to the financial sector. Because without your job, you can’t pay your mortgages! So the banks suffer.
This also happens globally.
Take the tariffs of USA on China, on Europe. On Germany. On Denmark.
Those are in the real sector. On goods.
Also affecting the external sector. Where you trade with others.
You think you are done. I raise tariffs and I’m done!!
But like I said: everything is linked.
And this is what people often don’t see!! The links.
Ok you raise tariffs, I am China and Europe and I got less exports now. Because you made my products more expensive for your citizens.
But I, China, got 700 billion USD of your bonds. I European countries each got billions of your bonds.
If I dump these bonds, I sell because I don’t trust you any more, now it has flown into the financial/monetary sector. And the banking sector.
I sell your bonds. The prices of your 10 year bonds go down.
If prices of bonds go down, the yields of bonds go up.
Imagine the 10 year bond yield moves up from 4% to 5%. Or from 4% to 6%.
Now your banks that are loaded with 10 year bonds of say 3% are all at a loss!!
It entered your banking sector now.
Banks are making losses. Some of them collapse.
People lose their deposits.
Now you have to print money. To save the banks.
This is great for Bitcoin. Because you cannot print Bitcoin.
Now at higher costs for money, your real estate suffers.
It entered the real estate market.
If people were getting mortgages at 4% plus 2% first, at 6%, now with higher yields mortgage also could be at 8%.
Now nobody can afford a home.
You see how it can bounce back to you?
If you have a debt of 38 trillion USD, check who is holding your bonds.
Check the yields.
Check what could happen.
PS: in this scenario islands in the Caribbean are also at a higher costs. Because their central banks raise their interest rates based on what happens in the USA because their currencies are pegged to the US dollar.
Runy
Island Wealth
I build economic models of islands and of big countries.
And what you learn is : all sectors of the economy are related!!
Something happens here, it flows to the other sector. Something happens with tariffs and it flows to the labor market and you lose your job.
And it goes from the labour market to the financial sector. Because without your job, you can’t pay your mortgages! So the banks suffer.
This also happens globally.
Take the tariffs of USA on China, on Europe. On Germany. On Denmark.
Those are in the real sector. On goods.
Also affecting the external sector. Where you trade with others.
You think you are done. I raise tariffs and I’m done!!
But like I said: everything is linked.
And this is what people often don’t see!! The links.
Ok you raise tariffs, I am China and Europe and I got less exports now. Because you made my products more expensive for your citizens.
But I, China, got 700 billion USD of your bonds. I European countries each got billions of your bonds.
If I dump these bonds, I sell because I don’t trust you any more, now it has flown into the financial/monetary sector. And the banking sector.
I sell your bonds. The prices of your 10 year bonds go down.
If prices of bonds go down, the yields of bonds go up.
Imagine the 10 year bond yield moves up from 4% to 5%. Or from 4% to 6%.
Now your banks that are loaded with 10 year bonds of say 3% are all at a loss!!
It entered your banking sector now.
Banks are making losses. Some of them collapse.
People lose their deposits.
Now you have to print money. To save the banks.
This is great for Bitcoin. Because you cannot print Bitcoin.
Now at higher costs for money, your real estate suffers.
It entered the real estate market.
If people were getting mortgages at 4% plus 2% first, at 6%, now with higher yields mortgage also could be at 8%.
Now nobody can afford a home.
You see how it can bounce back to you?
If you have a debt of 38 trillion USD, check who is holding your bonds.
Check the yields.
Check what could happen.
PS: in this scenario islands in the Caribbean are also at a higher costs. Because their central banks raise their interest rates based on what happens in the USA because their currencies are pegged to the US dollar.
Runy
Island Wealth