Overseas Dollar Shortage

This chart shows the cost to get US dollars in Japan. The chart for Europe is similar.

 

 

We are seeing the impact of lower US Corporate tax rates plus the zero tax for bringing back overseas profits home to the US.  The takeaway is that Japanese and Euro banks will be under a lot of stress.  Zerohedge points out that this could cause problems with selling US Treasuries.  I don’t think so.  In fact I think this will lower long rates.  Strong dollar plus high relative rates equals demand.

NOTE:  IF my analysis is wrong and long rates spike, the solution is simple, and basic economics.  Balance the budget, which reduces the supply of new Treasuries, i.e., act like adults.

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