Coming Global Dollar Shortage? An ugly possible scenario.

Here's the latest scenario making the rounds in Japanese financial market circles. Over the next year or so, the yen will continue to weaken. The trend suggests a [yen]150 yen-dollar rate, mostly because the dollar will continue to strengthen. After all, the United States is tightening monetary policy and Japan is not.

By early next year, the U.S. economy will likely be flirting with recession. With President Biden's fiscal measures now having been spent, fiscal policy will become a net negative in the macroeconomic equation. Inflation will continue to erode the purchasing power of consumers. So consumption will seriously erode.

By early next year if not sooner, the Federal Reserve will become nervous about further tightening. Some policymakers will talk about ending tightening policies. The dollar will weaken as a result of such talk, but the recession will continue. The U.S. trade deficit will shrink. The result: The rest of the world will suffer from a severe dollar shortage as a result of the shrinking of the U.S...