The DXY index continues to show a recovery of the strength of the dollar to around pre Covid levels.
My thoughts are that if the dollar is strong and rates go up (which tends to make the dollar stronger domestically speaking at least), then could we be heading towards deflation?
With high inflation and high rates it could stall the velocity of cash a lot and help accelerate this deflationary process along with a strong dollar.
Just think, we could have 4x the amount of cash in circulation but if nobody is spending it then the market will come down. Regardless of that, I hear American savings are low again so most consumers have spent their money already anyway.
What do you think?
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