Monday, October 12, 2020

๐Ÿ‘‰3 Reasons why The Dollar is Losing its Reserve Status !!

๐Ÿ‘‰3 Reasons why The Dollar is Losing its Reserve Status !! As goes oil, so goes the dollar. A Dollar Crash is Coming. The Dollar is gradually losing its World Reserve Status. Today The world is having serious doubts about the once widely accepted presumption of American exceptionalism. The era of the US dollar’s “exorbitant privilege” as the world’s primary reserve currency is coming to an end. China has been selling US bonds for a few years. Japan's purchase is not keeping up with supply from the treasury. The domestic economy can't buy all the new supplies because that causes the repo crisis last year. The Fed has to buy all the new deficit spending bond by using freshly printed Dollars. They are essentially fueling the stimulus with the Trust in The Dollar. This Trust is not infinite. There may not be one single replacement as of yet. The answer is a basket replacement, where the USA will still likely be first among equals, but not pre-eminent. Just in the last three years, The Dollar has fallen from 63% of global reserve holdings to 58%, part of a 30-year trend. At some point, a tipping point will be reached. Since 2000 the US dollar has declined as a reserve currency. The dollar will certainly be ceding primacy to a mixed basket. While the US dollar will be the largest single currency in the basket, instead of having a hard to justify the premium for its market value, it will face the same buffeting and assessment that other currencies now live under. Will most Americans know or care? Not in any immediate, material way, but make no mistake about it, at the low and middle end of society, Americans will be noticeably less well off than they have been, both in comparison to their parents and to similar people in the rest of the developed world. In the short term, there is a devaluation. A big one and probably the replacement with a basket of currencies weighted for the relative volumes of trade and administered by a recognized independent body...( that debars the World Bank and the IMF ). The position of the US currency is a relic of Bretton Woods. The best days are behind it. But America fights to ensure the benefits are not taken away. Other potential rivals are not yet strong enough to take the crown, and it will take a joint effort. But it is on the train. And when it happens ( more likely as a basket of currencies ), America will be left to pick up the pieces. That task will include the Deficits and the sheer volume of dollars repatriated. The British went through this, and the cost to the British people also recovering from World War 2 was enormous. The US dollar is overvalued at least by 40% against emerging and resource-based economies. A currency that is devalued by 40% can still remain a reserve currency. There is no requirement that there be a replacement for the US dollar. All that is needed is a DXY devaluation, along with higher interest rates. That's all, and there is a precedent in history for both. The US actually has a trade surplus against the world when measured in terms of hard physical goods, i.e., a massive physical goods surplus against China in exchange for a paper that is being unilaterally being printed by the Fed. This has been a most excellent bargain since 1971. I think what the rest of the world is now waking up to is that they want something more tangible or they want a lot more of those dollars in exchange for the same physical goods, and also vehicles to park those dollars, which will yield a lot more than what the treasury bonds currently offer. Therefore, the dollar has to go down in value, and interest rates have to go up—both significantly. The value is placed on it by the people. When they stop pretending it is worth something, it will collapse. Welcome back to The Atlantis Report. You are here for your daily dose of the truth, the whole truth, and nothing but the truth. Please take a second to click the like button. Many of you have asked me where they can buy silver and gold bullion. You will find in the description box the links where you can buy American Silver Eagle; Or Silver Bars or Rounds. I highly recommend that you start stacking some Silver Bullion for the future. The place of The Dollar as the world's reserve currency has been around for decades, and nothing has been done about it. But three things are now different: First is the fact that the US now accounts for only 10 percent of global trade and 15 percent of global GDP but half of the trade invoices and two-thirds of global securities issuance. This is stressing financial systems and causing a lot of hurts. Secondly, the Trump presidency has made much of the world reassess the assumption held since World War 2 that the US could always be relied on. The Trump administration will not last forever, but it will leave a legacy: it is now clear to the world that the US political system is not as robust as it was once thought. Who knows how future presidents will act, and how they might choose to weaponize the US dollar? Thirdly, in the past, there has been no real alternative to the US dollar, which is a major reason why the dollar hegemony has endured. But now it is possible to create a virtual reserve currency from a network of digital central-bank currencies. Of course, the role of the US dollar will not vanish overnight. But it seems likely that its days as a global hegemony are numbered, and with it the US dollar's strength. It will be interesting to observe the effect on the US consumer over the next decade or so. The timing is uncertain, but the US dollar's decline does look inevitable. The system now denies inflation, prints money that goes to wall street, which hands it out tax-free to the 48% of the country that own stocks. The ones who own stocks benefit from the printing. The other 52% just get the inflation the bill for bailing out the banks for selling fraud as AAA and stagnant wages that is not measured. The dollar blows up when the 52% can't afford a roof over their heads or to eat. Due to the recent American overuse of our stranglehold on financial settlements to damage our enemies with sanctions, in particular against Iran and North Korea but also Russia. Alternatives will be found, effective ones eventually, which may provide a crack in the dike that spreads into a flood of dollar workarounds. The U.S. weaponized SWIFT. Asian and Middle Eastern countries have had enough, moving away from SWIFT onto their own systems. People underestimate the impact of Saudi Arabia, Iran, Turkey, Russia, China, Egypt, Israel, UAE, Bahrain, etc. getting off SWIFT. This is not about the dollar. It's about the petrodollar. The EU and China will benefit tremendously from new emerging technologies, and so will the USA, but in relative terms, countries, and regions without oil and gas will benefit the most. It won't happen overnight, though, but we'd better start learning to live within our means because, in the future, we won't be able to print our way out of trouble as easily. As goes oil, so goes the dollar. Not to mention Digital Yuan and Ripple's XRP. The Saudi transferred over $400B US Dollar through XRP, bypassing SWIFT and the Dollar, saving a lot of money and time. As the US stop innovating the strength of the US Dollar currency and banking system, new technologies are going to challenge and eventually replace the Dollar on the world stage. No more unlimited deficit spending and sanction power. In theory, the U.S. dollar should depreciate based on Current Account considerations. But for that to happen, foreign Central Banks -- including PBC, ECB, and BOJ -- would have to stop accumulating reserves to prevent their local currencies from appreciating against the U.S. dollar, and excess global savings (financial flows) would have to stop coming to the U.S. Also, China would have to lift all capital outflow restrictions on the yuan, including eliminating the $50k annual personal allowance limitation. So, as Yogi Berra once said: “In theory, there is no difference between theory and practice. But in practice, there is.” A great reason to onshore U.S. manufacturing! We off-shored a good chunk of our industrial base to save money (labor costs). Now, significant U.S. dollar devaluation could change that calculus. The dollar is right where the federal reserve has manipulated it to be. When the Federal Reserve is the only one in the country allowed to price fix, this is the result. Markets with price-fixing from the federal reserve we don't have markets. The cause of the savings decline is from the federal reserve policy. The Fed has made it illegal to save. They have destroyed the time value of money and given it away to its owners the too big to jail banks. Bailing out banks who sold fraud as AAA with the interest that savers once got. The banks used to be partnerships where if they took on to many risks, it was the partners who suffered. That all changed in 1980 when the banks became a corporation. Nowadays, profits go to management with stock options, and bonuses and the stockholders, taxpayers, and savers pay for the loss with bailouts. Also, in 1980 after putting off the losses on the public, it increases the risk of gerrymandering the way inflation is the measure. If we used the 1979 way of measuring inflation, it would have been well over 10%, and the 28 trillion of printed money would have never been allowed to be printed and then stolen. It is the for sale to the highest bidder politician and the federal reserve robbing and pillaging the treasury that has gotten us to this point. The riots in the street are not from the police killing the black man in the streets; it is just the spark. The riots are from the federal reserve policies destroying the saver and his time value of money, giving it to the banks and wall street to commit more and more crimes with it. From denying inflation while the politician sells out the countries jobs and way of life to the highest bidder while the rule of law looks the other way. The FEDs mission since 1913 is coming to its last innings. The lender and buyer of last resort mean they are buying it all. As currencies devalue, the only safe haven will be the true money of gold and silver. Gold will be 10k and silver 350 Oz within five years. Bitcoin will be 50k or worthless as backed by nothing. From a historical perspective, the US is showing classical signs of empire in decline: ambitions and expansion far beyond its natural borders, internal contradictions surfacing, question marks over economics. However, historical perspective shortens time frames; in reality, empires were falling gradually over a century or centuries. All fiat currencies in history have failed from abuse from the banker and their politician. All currencies in history have failed in the end, sort of by definition: When civilization fails, its currency fails. The Pound lost its hegemony over the global financial system ONLY after fighting two epically expensive world wars. America has done the same,$7 trillion wasted in middle eastern wars. America is now in full tilt retreat. From unsuppressed insurgencies in our cities to gross political dysfunctionality to gargantuan fiscal debts, both public and private, we are now headed down a road from which we will not return. Strap into your seats tight; it's going to be a very bumpy ride. This was The Atlantis Report. Please Like. Share. Leave me a comment. Subscribe. And please take some time to subscribe to my back up channels; I do upload videos there too. You'll find the links in the description box. You will also find a PayPal link if you want to make a donation. Thank you wholeheartedly to all those of you who have donated. Stay safe and healthy friends! Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.

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