Global De-Dollarization
Intro
Over the past few decades, the US dollar has dominated international commerce, with many countries using it as their primary reserve currency for trade. However, recent trends suggest that the world is undergoing a shift towards de-dollarization. Several factors such as the rise of emerging markets, geopolitical tensions, and the increasing use of digital currencies, and changes in geopolitical and economic realities have contributed to this trend.
First a little history; at the End of WW II, 44 countries were represented in a meeting that took place in Bretton Woods, New Hampshire in July of 1944. As a result of this agreement all 44 countries agreed to use the US Dollar for trade and settlement provided that the US dollar be pegged to gold, specifically 35 US dollars was redeemable to one ounce of gold.
On August 15th 1971, President Nixon reneged on this agreement when he closed the “Gold Window”
At the same time Nixon did something that would secure the value of the use dollars for an additional 50 or so years. what did he do? He bargained with OPEC countries (specifically Saudi Arabia) to only accept US dollars from countries purchasing oil. In exchange the US would act as their private army, providing them with weapons and from time to time, direct intervention on their behalf. this one move meant that countries would have to purchase US Dollars to buy oil, which in turn drove up the value of the US dollar in spite of the move to devalue it against gold.
This system allowed for relatively slow inflation, and worked great until the 2020. Actually, truth be told, the petro dollar started showing its first signs of decline when we started using it as a weapon to try and diplomatically force other countries to our will by cutting off their supply of dollars (no dollars, no oil, no oil, no economic activity), but we did not see the full consequences of the weaponization of the petro dollar till 24 February 2022. Even before that though, the petro dollar was already loosing its value significantly.
In this article, we will explore the impact of global de-dollarization on the average American consumer, address the impact of Project Sandman, the BRICS agreement, the rise and fall of the American Empire, and the impact on social disorder. We will also provide some tips on how the average American can prepare for these events and thrive in these times.
The Impact of Project Sandman
In Project Sandman, there was an agreement made between several countries to reject the US Dollar on a specific date. This agreement was the result of growing economic tensions between the United States and other nations, particularly those with large trade deficits. The US had been printing money to cover its debts and keeping interest rates artificially low, causing the dollar to lose value and global instability to rise.
The exact date of when the US Dollar would be rejected wasn’t publicly disclosed, but it was known to be approaching rapidly. This decision among countries to reject the US Dollar was seen as a major challenge to the US, as it lost its status as the world’s dominant currency, destabilizing its economy even further.
To prepare for this day, many countries began diversifying their foreign currency reserves by purchasing euros, yen, and other currencies. In addition, some countries sought to move towards a more gold-backed currency standard to protect their assets.
This agreement to reject the US Dollar on a specific date caused a great deal of uncertainty in the financial world as it would have far-reaching implications for the global economy. The US government scrambled to address the situation, but ultimately failed to prevent the rejection of the US Dollar.
When the day arrived, the rejection of the US Dollar caused a financial shock in the US and globally. The US economy suffered a severe recession, sending shockwaves through the global economy. Many financial institutions collapsed as investors lost confidence, leading to major changes in the global balance of power. Ultimately, the decision to reject the US dollar altered the economic landscape for years to come.
The Impact of the BRICS Agreement
The BRICS (Brazil, Russia, India, China, and South Africa) have recently signed an agreement to establish a new development bank to provide infrastructure and other types of development funding to their member countries. This bank will operate independently of the World Bank and IMF and will be denominated in currencies other than the US dollar.
This move signifies a shift away from the US dollar as the world’s dominant currency for international transactions. As the BRICS countries become more influential in the global economy, it could result in reduced demand for the US dollar, potentially leading to a decline in its value. This could result in higher import costs for American consumers, as foreign goods become more expensive due to a weaker dollar.
The Impact on the Rise and Fall of the American Empire
The US has been the world’s dominant superpower since the end of World War II, and a significant factor behind this dominance has been the US dollar’s position as the world’s dominant reserve currency. However, recent trends suggest that the US’s superpower status could be threatened if the dollar’s dominance declines.
A decline in the dollar’s value could lead to higher inflation, a decrease in purchasing power, and a reduction in the US’s ability to finance its trade deficit. This could also lead to a decline in the US’s global influence and geopolitical standing, potentially leading to weaker diplomatic relations with other countries.
The Impact on Social Disorder
De-dollarization could also potentially result in social disorder in the US. A weaker dollar could result in decreased purchasing power for many Americans, leading to rising poverty levels, and increased social unrest. This could also lead to an increase in civil unrest and protests, which may negatively impact the economy and financial markets.
The Likelihood as a Percentage Value of These Things Happening
It is challenging to predict the exact likelihood of de-dollarization, as several factors could influence this trend. However, it’s essential to note that the trend towards de-dollarization has been gaining momentum in recent years. For example, the use of the dollar in international payments has decreased from nearly 100% in 1975 to less than 40% today. Furthermore, several countries, including China and Russia, have been stockpiling gold, suggesting a shift away from the dollar.
What the Average American Can Do to Prepare for These Events and Even Thrive in These Events
While the trend towards de-dollarization could have negative implications for the average American consumer, there are several steps they can take to protect themselves and even thrive in these events. Here are a few things that the average American can do:
(PLEASE NOTE: The author is not a Financial Adviser and does NOT have a financial background! The following does NOT constitute financial advice and should NOT be treated as such, it is provided for entertainment purposes only! )
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Diversify Your Investments: American consumers should diversify their assets to reduce their exposure to the dollar. This could include investing in foreign currencies, gold, real estate, and other assets.
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Reduce Debt: American consumers should aim to pay off their debts as much as possible, as a declining dollar could result in higher interest rates and increased borrowing costs.
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Increase Savings: American consumers should aim to save more to build a financial safety net in case of an economic downturn.
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Prepare for Inflation: American consumers should prepare for the possibility of inflation by investing in assets that can withstand inflationary pressures, such as inflation-protected securities or real estate.
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