When the US starts printing money, it will lead to a lot of destruction of assets because China will also start selling their UST causing interest rates to jump. I can see a weird situation where inflation starts to jump but also interest rates jumping as well.
If you want to go down that route, you can say that the US can also cancel its own debt by threatening every country that owns its debt with nuclear missile attacks if they don't cancel the debt.
This is actually great for the US. As you said, every other country will deflate their own currency so the dollar will likely not change that much relative to the other currencies. The inflation will make people want to spend money, especially a spent up demand is released as the eco use normalize. We may see rapid economic growth.
This is likely going to be the outcome. All the savers will ultimately be shafted, as was done in times we moved off of gold standard.
The real cost of living will just keep rising as many jobs just won't come back despite this printing of money.
yes, it all goes to the fed, then to the tax payers.
and all that bounce back to where it began, and the 1% uses it to either buy realstate or save the money in a way its immune to the incomming inflation, making things worse in the long run
> Perversely, this could be great for stocks, bonds, and other assets nominally
Nominal stock values are still climbing despite the mire of bad news.
> nobody in their right mind would buy 10 or 30 year Treasuries with the goal of holding to maturity
What the hell else are big "cash" holders going to do with their dollars? Put it in a bank which then immediately gives it to the Fed? Try to fill a giant, expensive Scrooge McDuck warehouse with individual greenbacks?
30-year yield is 1.56%. The tiny yield compared to holding stock for 30 years is the huge premium the holder pays for safety.
Not even just the West. The Asian "tiger" economies are all heavily export oriented. If China, Japan and Korea cannot sell to the US, there is no viable plan B; Europe is in no state to absorb all of that, to say nothing of poorer countries.
Chinese consumer purchasing power has certainly grown, but not enough, and if anything the Chinese social safety net is thinner than the American one and they have still not fully recovered from their lockdowns. And CNY has a long way to go before it's as liquid as USD.
All roads lead to the Federal Reserve. Stores defaulting on rent payments starves landlords for cash. Landlords unable to service mortgages or pay taxes starves banks and state/local governments. Banks starved for money turn to the Fed for bailouts. States starved for cash turn to Washington. Washington issues bonds which the Fed buys because nobody in their right mind would buy 10 or 30 year Treasuries with the goal of holding to maturity.
The Fed's balance sheet has exploded higher (>20% GDP), with no end in sight:
https://fred.stlouisfed.org/series/WALCL
Where does it all lead? There are two options:
1. Default on the national debt.
2. Currency depreciation.
The most likely outcome is (2). One way or another, the dollar is headed lower. Perversely, this could be great for stocks, bonds, and other assets nominally. The problem is the size of the dollar depreciation that would be required to bring the Fed's balance sheet back under control.
The only problem is that the dollar happens to be the world's reserve currency. As the Fed does its best to slaughter the dollar bull, every other country is printing money as fast as possible to depreciate their own currencies.
Nobody knows where this mess ends.