Matthew Piepenburg, a partner at Von Greyerz, stated that the United States is already in an economic recession, and the global debt crisis has made economic growth mathematically impossible.

Piepenburg stated in an interview that this is a critical moment comparable to 1971 (when the US closed its gold window), and a currency crisis is already brewing and erupting.

Due to the potential weakness in the economy, traditional economic indicators such as unemployment rate, consumer price index (CPI), and core personal consumption expenditure (PCE) cannot reveal the whole truth.

Piepenburg emphasized that the global debt crisis is a decisive factor in the current global macroeconomic situation. The view that the United States is not facing or about to face a hard landing is not advisable. In a world filled with complexity of debt, currency, and precious metals, decision-makers are still striving to optimize and find ways to bypass the mathematical challenges of excessive debt burden and inability to achieve growth, in order to achieve a true soft landing. Economists and policy makers focus on optimization, but overlook the complexity of the economy under high debt burdens.

Piepenburg listed a series of warning indicators, including inverted and re inverted yield curves, the highest number of commercial bankruptcies in 13 years, record high credit card default rates, stagnant manufacturing and retail sales, and weak manufacturing and automotive sales.

And the Federal Reserve ignored the reality represented by these indicators. Piepenburg stated that its latest interest rate cut indicates that "the good days of the US economy are over" and the economy cannot withstand a higher and more sustainable interest rate environment.

Foreign investors also lost confidence in the US dollar and began to sell their US treasury bond bonds. If the preference for the US dollar decreases, the demand for US treasury bond bonds will decline, and the influence of the US dollar will also decline; When demand decreases, it can only be devalued and inflated. The US government is currently in a dangerous situation and must make a choice between supporting the bond market and supporting the currency.

With such a high level of debt, raising interest rates cannot curb inflation, and ultimately a choice must be made between the bond market and the currency. In order to support the bond market, it is necessary to depreciate the currency (as is currently the case), which is also the reason for the rise of gold.

The current option is to devalue the currency to support the bond market, which has a particularly severe impact on the middle and low-income groups. As countries search for alternatives to the US dollar, gold is gradually becoming the preferred means of preserving value.

In summary, the US debt crisis has made it difficult for the US economy to grow, and the economy may have fallen into recession, putting pressure on the US dollar index, which is good for gold. Investors need to pay attention to the election results of the new US president, as well as the policies to be implemented in the future, which may affect the future direction of the US economy and the US dollar index.

Daily chart of the US dollar index