Is the US Economy Being Pesoized by Inflation?

"Pesoization" typically refers to a process in which a country's citizens or investors lose faith in their own currency and begin to use a more stable currency for transactions and savings.

The US dollar is the world's reserve currency, and it is widely used for international trade and financial transactions. The US economy is also the largest in the world, and the US dollar therefore is considered a safe haven for investors during times of uncertainty.

However, anybody who walks outside his or her home these days realizes that there is extraordinary and visible inflation in the costs of virtually all goods and services in the US economy. We are living through a cycle of inflation that is akin to that which has occurred in emerging market countries and has led those countries’ citizens to flee their own currencies.

Hence, it is becoming my belief that with the Fed acting so far behind the curve and unable to bring inflation under control and with the US government facing a debt ceiling, we may see large-scale fleeing the US dollar in favor of foreign currencies and precious metals through the end of 2023 and into 2024. In addition, bitcoin's continued existence and its failure to go silently into the night is also a consquence of the loss of faith in the US dollar.