Gold Ounce Price vs. DXY Index

 

There has always been an inverse relationship between gold price and the dollar. One of the measurement scales of the demand for the dollar is the DXY index, which is the average index of the dollar equivalent of 5 countries’ currencies. If the DXY index is increasing, it means that the demand for dollars in the world is increasing. As can be seen in the graph, the reverse relationship between the dollar DXY index and the gold ounce price in the last year is quite clear. With the DXY rising, the gold price is falling and vice versa. The DXY index has started to decline accordingly, as the reserve currency of the dollar has weakened more and more, and gold has started to attack. This was an expected development.

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Central Bank Digital Currency

 

The monetary system is changing as a natural target of technological development. The time to say goodbye to fiat papers and coins is near. In this new financial system, when the economy starts to shift to digital environments, money cannot be expected to remain in its old form. In addition, we know that in the old system, the intermediary financial structures that created the money, namely the commercial banks. With the digitalization of money in the new system, it seems that commercial banks are coming to an end, thanks to the digital money issued by central banks.

It seems that most of the seigniorage revenues of these structures will be included in the state budget, thanks to the state’s control of the money in digital form to a large extent. Thus, we will open our accounts directly in the central bank. According to some, it seems that the state’s control in the financial world will expand thanks to the change in the form, printing and control of money. In this way, it is inevitable that all commercial and economic activities are reshaped and the control of capital and the way it is created will change.

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FED Balance Sheet in the Monetary Crisis Process

 

We see the balance sheet of the US central bank Fed in the chart. After the 2008 crisis, the Fed printed approximately 4 times the amount of money it printed in 200 years. The balance sheet, which was around 800 billion dollars until 2008, increased to 3 trillion dollars after the 2008 crisis. As of March 2020, when the first wave of the great financial crisis we were in came, it increased its balance sheet, which was around 4 trillion dollars until then, to 7 trillion dollars. At the beginning of the crisis, Covid gave money directly to the unemployed households in the economy that was closed due to the 19 epidemic, using a method called “helicopter drop”. Here we understand once again that every money printed since 1971, when money was cut off from gold, is a debt, a debt of interest. This debt was borne by the state in Japan and to the public in Switzerland.

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Global Debt

 

Information showing the ratio of total government debt to global production (GDP) globally is given in the graph. When we look at the chart, we see that the total global government debt was 2.28 times the total production in 1999, 3 times in 2009 and 3.19 times in 2019. This globally increasing debt gives an idea about how fragile countries are in the financial crisis we are in.

I suggest you also read my “global debt” article on this subject. Global Government Debts-to-GDP Ratio

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