The Bloomberg dollar index has surged, rising as much as 0.8% higher against all G-10 peers, its biggest advance since Jan. 26, and is on track for its first weekly gain since early July.
The move has been largely attributed to the "stronger-than-expected employment and wage gains", although as several banks commented shortly after the payrolls report came out, "everything is in place for a classic short-squeeze."
However, the real reason why the dollar is spiking today is following comments from Gary Cohn who said that he’s “confident” tax reform can be accomplished by year-end and together with House Ways and Means Committee Head Brady, underscored that another Homeland Investment Act, or HIA2, plan to repatriate offshore dollars is coming:
*BRADY: GOVT SET TO DELIVER `PRO-GROWTH" TAX REFORM THIS YEAR
*BRADY: GOVT POISED TO ACT ON TAX REFORM FOR 1ST TIME IN 31 YRS
*CHIEF GOP TAX WRITER: JOBS REPORT SHOWS TOO MANY STILL HURTING
*REP. KEVIN BRADY: JOBS REPORT SHOWS `STEADY PROGRESS"
*COHN: ECONOMIC GROWTH WILL HELP PAY FOR TAX REDUCTIONS
*COHN: WE"RE WORKING FOR MAJOR TAX REDUCTIONS
*COHN: WE ARE COMMITTED TO AS LOW A RATE AS POSSIBLE FOR COS.
As a reminder, the original Homeland Investment Act of 2004 provided for a one-time tax holiday in 2006 on the repatriation of foreign earnings by US corporations. Back then, companies repatriated €300b in 2005, 5x more than in preceding years. As a result, the DXY was up 12.2% in 2005. While the dollar was generally favored by interest rate differentials, and also some of the repatriation would have been dollars held in offshore accounts that would not have required an FX component to them, the HIA provided a significant USD bid.
As several banks, most notably Citi notes, Democrats are under pressure to support HIA while tech companies, which are major donors to the party, are one of the major beneficiaries of repatriation. There are anecdotal reports in DC of intensive lobbying of Democratic lawmakers taking place by these firms, which would suggest that even if the Fed disappointed in the next few months, HIA 2 alone could provide a much needed tailwind to the USD.
And, in an amusing tangent, so far the White House response to today"s data has been "very disciplined and professional" with Trump also sounding more polished in his WV rally last night. This has prompted various analysts to concludes that Generally Kelly is getting a grip, which is also dollar bullish.
That said, not everyone is convinced, and CIBC’s Bipan Rai saying that “today’s number is just a short-term vehicle to express intraday dollar trading rather than a shift in strategic view.” Though, he adds, the USD is due for a “corrective snap back."
States fed up with the phony, manipulated central bank currencies are starting to move away from the failing system – and prepare to hedge themselves against the worst case scenarios of monetary collapse.
Though the Federal Reserve clearly dominates the U.S. and global economy, some U.S. states are making moves to reestablish real money, and shift away from the burdensome and oppressive central bank currency.
With the financial system so broadly manipulated by central bank printing – and the experiment over the past eight years of zero interest, unlimited – many leaders are looking for a safe haven and a guard against the downturn of weak spots of debt-based money printing as the default means of exchange.
Put more simply, Utah may soon lead the way of putting “trust” back in God and gold, rather than in God and the Federal Reserve.
A new law proposed in the House there would allow for a repository of physical gold, and encourage and facilitate official business of the State being conducted with funds backed by or drawn from the value of this stored wealth – a subtle move that is nonetheless revolutionary in scope.
A bill introduced in the Utah legislature would build on the state’s Legal Tender Act, creating a foundation for further action to encourage the use of gold and silver as money, and take another step toward breaking the Federal Reserve’s monopoly on money.
Rep. Ken Ivory (R-West Jordan) introduced House Bill 224 (HB224) on Jan. 27. The legislation would add several provisions to state law designed to encourage the use of gold and silver as legal tender. Passage would set the stage for expansion of gold repositories in the state and authorize further study on several sound money policies.
Specifically, HB224 would authorize the investment of public funds in specie legal tender held in a commercial specie repository. Under existing code, “specie legal tender” means gold or silver coin and bullion. “Commercial specie repository” means an institution that holds or receives deposits of specie legal tender that is located within the state. Practically speaking, passage would give the state the option to hold funds in gold and silver instead of Federal Reserve notes.
Things probably wouldn’t change overnight, but it would certainly be noticed by the banking class.
According to the definitions set in place by the founders of this nation, only gold and silver represent real currency.
Article 1 Section 10 of the U.S. Constitution makes clear that only gold and silver are to be used as payment, but it is hardly what takes place in the modern economy:
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
While Texas made a big move in 2015 to set up a gold bullion depository in the state, Utah – historically a very independent and conservative state – is also now attempting to get back on solid footing. As SHTF reported:
As Money Metals Exchange explains, Texas’ move to repatriate gold is a big deal, centered around distrust of Wall Street financial markets and a keen eye on schemes surrounding the physical possession of gold.
When Governor Greg Abbott signed House Bill Number 483 in his own hand on Friday, Texas gave a big gold “finger” to Wall Street and will soon bring $1 billion in gold bars back to the Lone Star State.
[…] In fact, those with the fiduciary responsibility for managing the Texas gold are feeling less certain than ever.
Many European nations – like Germany – have been repatriating their gold bullion holdings, billions of which have been until recently retained by the NY Fed and other central bank vehicles, while Russia and China, among other world powers, have been accumulating massive amounts of gold at a rate never before seen in history.
Much of it is being soaked up in stealth, and through back channels on the market to downplay the size of the purchases, but close observers are acutely aware of the fact that many states are attempting to build up enough personal collateral to guarantee their relative place if/when the dollar reserve standard is officially dissolved, and a new global exchange takes over.
Of course, individual states in the United States can also make similar moves, and thereby stave off the effects of bankruptcy and potential currency collapse in the foreseeable future.
Would states see a return to prosperity and independence if they used sound money and avoided the debt trap and control instrument of the Fed?
The answer should be obvious, but many would be surprised at how it plays out, if it were allowed to happen.
If states and foreign nations are putting this much stock in gold, given their knowledge of economic events yet to unfold, should you be placing your trust in gold, silver or other precious metals as well?
Keep your eyes on Utah… and if it takes hold there, other states that want more freedom.
