The United States is a world superpower that is also known as the “leader of the free world. It has the dollar which is the world reserve currency. It has the world’s largest military and biggest economy.
All these are impressive, but ask yourself:
How much does the world really NEED the United States? What exactly are we bringing to the table?
How much influence does the United States really have on the global economy? What products or services does the U.S. provide to the rest of the world that it needs?
Recent events may have shown how vulnerable the US is to the rest of the world:
- Supply Shortages
Many items Americans use on a daily basis come from overseas. Many of our clothes, medicines, electronics and medicines are exported from India and China.
Everywhere I go, I see gas stations, Walmart, grocery stores, used car lots and call centers. Are these the types of jobs that can sustain a country during economic hardships? Can we export these products to other countries?
Once upon a time, our country was a producer nation with factories making products being shipped around the world. Today, we are primarily a service or consumer nation. As the world changes, we MUST change along with it.
2. Losing the Petrodollar System?
A key component of U.S. dominance is the petrodollar system. Created in the mid-1970’s, the petrodollar deal was an agreement between the United States and Saudi Arabia where all oil sold would be sold in US dollars. Read more about the petrodollar deal HERE.
Lately, there has been talks between Saudi Arabia and China to sell oil to the Chinese in yuan:
Saudi and Chinese officials are in talks to price some of the Gulf nation’s oil sales in yuan rather than dollars or euros.
The two nations have intermittently discussed the matter for six years, but talks have reportedly stepped up in 2022, with Riyadh disgruntled over the United States’ nuclear negotiations with Iran and its lack of backing for Saudi Arabia’s military operation in neighboring Yemen.Read the full article HERE.
This could have a devastating effect on the American economy: this would decrease the demand for billions of US dollars. This reduction in demand could decrease the purchasing power of dollars, causing items to become more expensive.
3. Russia’s Shift to Gold?
When Russia invaded Ukraine on February 4, 2022, the world was outraged. Many countries imposed stiff economic sanctions on the country to punish them for their actions. One such sanction was to remove Russia from the SWIFT system, which is the international payment network used by countries to conduct international transactions.
In addition, countries froze Russian bank accounts stopped accepting payments in rubles, the Russian currency. Russia was basically banned from conducting transactions.
To get around the sanction, Russia has partnered with countries that have not placed sanctions on them. The following countries have ignored requests to sanction Russia and continue to do business with them:
- United Arab Emirates
Russia is a large exporter of many products the world needs:
- Crude petroleum
- Natural gas
Instead of bowing down to these sanctions, Russia President Vladimir Putin has demanded unfriendly nations wishing to buy their oil and natural gas do so using Russian rubles or with gold:
Russian President Vladimir Putin said on Thursday that the country would halt gas deliveries to buyers from what he called unfriendly states unless they switched to payment in rubles.
“If such payments aren’t carried out, we will consider this a violation of responsibilities on the part of buyers, with all the consequences that flow from that,” he said. “All existing contracts will be halted.”Read the full story HERE.
In addition, the Central Bank of Russia has officially announced that, as of March 28, 2022, the Russian Ruble currency is BOUND to Gold. The rate is 5,000 Rubles per gram of gold bullion.
Both of these situations mean less American dollars will be used to conduct transactions, which could be another devastating blow to the American economy and US dollar.
4. Increasing Trade Deficit
Another problem for the United States is the growing trade deficit:
The US trade deficit widened to a record high of $89.7 billion in January of 2022 from an upwardly revised $82 billion in the previous month and above market forecasts of an $87.1 billion gap.
In other words, the United States buys $89 billion dollars more in exports than it exports.
Call to Action
The world is slowly changing right before our eyes. many of the things we take for granted as a country (the purchasing power of the dollar, reserve currency status, etc.) could be gone. If that happens, where will that leave us?
This could cause the cost of imported goods to increase even more and push the country into a severe economic recession.
It’s critical we as individuals focus on the following:
- Become producers and learn how to make our own money. This includes having multiple streams of income and passive income. This means starting your own business. Starting a business allows you to raise prices of your products or services that can keep up with inflation.
- Purchase gold and silver coins. If inflation increases, the price of these precious metals tends to increase. This could be critical for enduring turbulence in the economy.
- Stock up on food and essential items. if inflation increases, you want to have the things you need before they become too expensive to purchase.
Having a plan of action is critical. Don’t wait until it’s too late to protect yourself. This information isn’t taught in school, but is needed to survive going forward.
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