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Economic stimulus, cheaper dollar: Is inflation next?

According to some sources 22% of all U.S. dollars ever created were created in 2020.

Brian Splitt, Technical analyst

October 9, 2020

4 Min Read
Stacks of bills

I want to paint a picture of something that could be brewing, and as they say, would be “big, if true.”

Thinking back over how things have evolved since the beginning of the year, movements in both world events and in the value of goods has been extremely volatile. There is a lot of energy in the marketplace which has been a byproduct of economic stimulus. A client called this morning to let me know his “COVID and PLC money” was deposited in his account -- a half million dollars all at once.

I read this week that 22% of all U..S dollars ever created were created in 2020. That alone is staggering. There is simply more money out there chasing what happens to be, at this moment, a shrinking supply of goods.

Below is a chart of the U.S. Dollar Index. I will let the chart speak for itself, but it is not difficult to see that it is currently riding against an up-trend that has been in place for the last nine years.

If the U.S. dollar falls, we could see a major inflationary event in our future. Arguably one of the biggest presidential elections in our country’s history is just weeks away and will likely play a part in our currency for years to come.


I have been tracking the combined value of 1 Soybean + 1 Corn + 1 Wheat, all front month, for the last few months and this week’s settlement is the highest since June of 2015. Except we are not in the middle of pricing in a summer weather rally like 2015.

Related:USDA report could be game changer for agriculture

The current move happens to be a perfect storm of economic stimulus, domestic and international production declines due to dry weather globally, and extremely strong demand, which months ago looked like a pipe dream due to shutdowns.

Something is brewing; the combined value of S+C+W is already up $0.7375 for the month of October and $3.415, or 19.9% since the end of the 2nd Quarter. While day-to-day headlines will continue to discuss the stock market, grain markets are showing returns that rival the DOW’s 16% return since the end of the 2nd Quarter.


There are still pieces that need to fall into place for this all to come to fruition and we believe the dollar is one of the most important pieces. But one has to wonder where grain prices will be if the combined value reaches some basic retracement levels and adds another $2.50 or $5.00?

Oh, and by the way, if you think this is likely or even possible, these combined values for next fall’s contracts offer a discount to current values.

Feel free to contact me directly at 815-665-0463 or anyone on the AgMarket.Net team at 844-4AGMRKT.

Related:Be proactive to hit your profitability goals

Reach Brian Splitt at 847-946-2080 or [email protected]


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About the Author(s)

Brian Splitt

Technical analyst, AgMarket.Net

Brian began his career in the financial services industry with expertise in insurance products, stocks, bonds, mutual funds and annuities. Brian studied technical analysis and migrated to commodities where he has built a successful career. As a technical analyst with AgMarket.Net, he utilizes prior price or volume action or trends to predict future price moves and break down agricultural balance sheets. Brian is a decorated combat veteran of Operation Iraqi Freedom as well as a member of a Gold Star Family.

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