by Graham Summers, Gold Seek:
The US Dollar rally, combined with the ECB’s policies are at risk of blowing up a $ 9 trillion carry trade.
When the Fed cut interest rates to zero in 2008, it flooded the system with US Dollars. The US Dollar is the reserve currency of the world. NO matter what country you’re in (with few exceptions) you can borrow in US Dollars.
And if you can borrow in US Dollars at 0.25%… and put that money into anything yielding more… you could make a killing.
A hedge fund in Hong Kong could borrow $ 100 million, pay just $ 250,000 in interest and plow that money into Brazilian Reals which yielded 11%… locking in a $ 9.75 million return.
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