Japan had an added issue that I think gets overlooked. They had demographics that turns against them. This put a cap on their economy and actually turned their employment situation upside down. They had no producers but a lot of people who required services.

This is why I am so negative on Western Europe. They are facing the same situation over the next decade. The US at least has immigration that offsets declining birth rates.

Why is this important? Because it will help to keep the USD as the reserve currency. I fully expect the other nations to default on their currencies and issue a reset at the same time. This will keep them from standing out.

I do not expect the US to partake. It will protect its currency and its debt (at least the 30 year).

This will end up pushing capital flow to the US. It is the big advantage it has. China is on everyone's radar yet nobody trusts them. Hence, I think they will have a problem, long-term, getting the international money flight.

All this will keep the Fed in a very powerful position globally. We tend to look at things from a US perspective alone yet the position in the world matters. It allows the US to operate from a different set of rules than other countries.

That said, I do expect there to be a rough patch for all governments, including the USG. This will make life tough for the Fed for this decade. It will also make life great for equities.

If the result of productivity, capital, flows to the US from around the world, essentially, the USD is not backed by the $21 trillion US economy, but a fair portion of the $80 trillion global economy.