We haven’t seen emerging market currencies crash like this in over a decade, and analysts are warning that if this continues we could witness a devastating global debt crisis.

Over the past decade, there has been an insatiable appetite for cheap loans in emerging market economies, and a very substantial percentage of those loans were denominated in U.S. dollars.

When emerging market currencies crash relative to the U.S. dollar, lending dries up and servicing the existing loans becomes extremely oppressive, and that is precisely what we are witnessing right now. This week, most of the top headlines in the financial media have been about the crisis in Turkey.

via Emerging Market Currency Crisis Could Destabilize Global Financial System

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Emerging Market Currency Crisis Could Destabilize Global Financial System

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