How familiar are you with the economy and the history of money? As prices begin to rise, we must understand WHY they are rising so quickly, and how the dollar plays a role.
There are many posts on which cryptocurrency or hot stock to buy, but what about the economy as a whole? In this video, I discuss things that aren’t discussed in mainstream media, such as the role of the dollar in the world economy as the reserve currency.
These events can have a tremendous impact on crypto and the stock market, but it doesn’t get the attention it deserves. It’s critical we pay attention to current events in the economy and how they can affect us. For example, Russia has announced they are going to STOP using the US dollar. If that happens and other countries follow suit, that could have a tremendous impact on life as we know it here in the United States.
Points to Consider
- Reserve Currency. Did you know the dollar is NOT the first reserve currency of the world?
As you can see, the US dollar is the most recent global currency, but it’s not the first. This chart also shows how long currencies were global currencies. if history repeats itself, how much time does the US dollar have left? Will it lose that status in the near future?
2. Petrodollars. Per an agreement with Saudi Arabia, the U.S. and Saudi Arabia agreed to set oil prices in U.S. dollars. That meant any other country that purchased oil from the Saudi government would have to exchange its currency into U.S. dollars before completing the sale. That led the remaining OPEC countries to follow suit and price their oil in U.S. currency. Read more about petrodollars HERE.
Thanks to this agreement, every country in the world is required to keep American dollars to purchase oil. But ask yourself: what if the world didn’t need to use petrodollars? How would that impact the value of the US dollar?
3. Russia. Russia recently announced they will stop using the US dollar. Per a report:
The move was announced at the St. Petersburg International Economic Forum on Thursday by Finance Minister Anton Siluanov. “Like the central bank, we have decided to reduce investments of the NWF in dollar assets,” he told reporters, according to a Reuters translation, adding that the NWF will instead invest in euro, Chinese yuan and gold assets.Read the full article HERE.
What makes this important news? Per former U.S. Treasury official, Michael Greenwald:
“What alarms me is if Russia, China, and Iran each creates central bank digital currencies to operate outside of the dollar and other countries followed them,” he told CNBC’s Hadley Gamble on Wednesday. “That would be alarming.”Read the full article HERE.
If more countries decide to follow Russia’s lead, that could pose severe risk for the dollar.
4. Gold Purchases. As countries talk of decreasing their exposure to the dollar, they are purchasing gold. Gold is used to protect against inflation and a falling dollar value. Russia, China, Hungary, and many Fed Banks have increased their purchase of gold reserves.
Hungary’s central bank raised its gold reserves to 94.5 metric tons from 31.5 tons, citing “long-term national and economic policy strategy objectives.” This marked one of the most significant central bank gold purchases in decades.Read the article HERE
Here are the top gold-holding countries in the world:
It’s important to note even though gold isn’t discussed in mainstream media, countries around the world hold tons of gold in their vaults. If the dollar loses reserve currency status, gold will play a key role in preserving wealth.
5. Trade Deficits and National Debt. The United States have been running trade deficits consistently for several years. In other words, we import much more than we export.
This doesn’t bode well for the US dollar if it ever loses the world reserve currency status:
- How will the US repay its debts?
- What products and services can the United States sell to other countries around the world to remain competitive and relevant?
It’s critical the US gets its debt under control and increase exports.
In addition, the US debt has now exceeded 30 trillion dollars.
What Does It All Mean?
If the dollar loses world currency reserve status and decreased use by countries around the world,we could be looking at the following:
- Decreased demand for the dollar worldwide
- Reduced value/purchasing power of the dollar
- Increased prices for goods and services (inflation and/or hyperinflation)
- Inability of the government to print money to finance various projects and services
Life as we know it in the United States could be changed for years.
Call To Action
By understanding how money works, we can better prepare ourselves for any changes that come our way. This means doing something to protect yourself and your assets. In other words, having a strategy is a must. One of the best things a person can do is begin to purchase physical gold and silver coins and bars. Purchasing the physical metal instead of the etf assures that you have the actual metal and is yours no matter what happens. Each have been used as currency for thousands of years, and may be the best way to survive these unprecedented times.
Another option is to invest in cryptocurrencies. Each of these investments are outside of the US dollar and may be protected from currency crashes. Doing your own research is strongly advised.
Get more great tips on finance and the economy in my book Invest For Success: Millionaire Wealth Strategies Not Taught in School. Available on Amazon in eBook, paperback or audible formats.
Our children should know how to protect themselves as they get older. Pick up a copy of my book Planting Seeds: The Children’s Guide to Entrepreneurship. Available in English, French, and Spanish.