Is the USD collapsing ?

Federal Reserve Balance Sheet

With an all out effort to support the US economy, the Federal Reserve besides keeping the interest rates close to zero, it has started its unlimited 'Quantitative Easing' by printing more USD in an unprecedented manner. As a result its total assets went up from $ 3.77 trillion to $7.169 trillion within 9 months from 9 September 2019 to 8 June 2020.

On Monday, 15 June, when the Dow opened with a plunge to 24,854 level, losing 751 points, Federal Reserve announced that it will begin purchases of up to $250 billion individual corporate bonds. That will expand its total assets to $7.419 trillion.

Federal Reserve was created on 23 December 1913. From 1913 to 2008 over a period of 95 years, its assets purchased added up to only $0.925 trillion.

Due to the 2008 financial crisis, in a series of 'Quantitative Easing' program, its assets added $3.565 trillion within 6 years from 2008 to 2014.

And now due to Covid-19 pandemic unlimited QE policy, the total assets of Federal Reserve has gone up by $3.399 trillion within 9 months. Soon it will add another $250 billion to its assets.

National Debts to GDP

US's total public debt as a percentage of its GDP has reached a staggering 106.77% by end of 2019. In 1981 it was only 30.6%. It reached 65.3% by 1995 but dropped to 54% by 2001. From second quarter of 2008 of 64.11%, after a series of QE programs since then it finally reach a record high of 106.77% by end of 2019.

GDP is expected to drop by 12-15% by Q2 of 2020 and at the same time Federal Reserve is buying Treasury bonds and mortgage-backed securities at unprecedented speed. By end of 2020 how high the percentage will reach?

USD Vs other currencies

Looking at the long term monthly chart of USD/EUR, USD/GBP, USD/AUD, USD/SGD and USD/MYR, by comparing the performance of USD to that of Euro, Britain pound, Australian and Singaporean dollars and lastly Malaysian ringgit, it appeared to me that USD has already started its long journey to the South. In all the cases, USD is currently forming its wave C down trend.

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