Is the USD going to lose World Currency Reserve Status?

The world is abuzz with talks about the United States Dollar and the potential for it to lose World Currency status, is this a fantasy or could it really happen in our lifetime?

For a while, I have been sharing info and my thoughts on why I think this will happen eventually... It may not happen in the next few years, and there are a lot of factors at play for the dollar to lose Reserve status, but many of those factors are now playing out in the DeDollarizaiton movement.

For one, BRICS is on the rise and more countries are joining, and many of them want off the hegemony that the USD has. The trade for Oil and other commodities is being done outside the use of the USD and with other national currencies as payment, or trade in settlements in other commodities. The BRICS alliance has chosen not to use the USD for settlement in trade and is working on alternative payment systems, and this includes involvement with the Bank for International Settlements (BIS) and the CBDC project mBridge which uses Blockchain and DLT technology.

Having the World Currency Reserve status has given the US an unfair advantage over the rest of the world, they could create this money out of thin air and with a few keystrokes can bring it into existence for others to borrow and make interest payments on. By creating endless USD and loaning them into existence for global commerce and expansion, you inflate the currency and thus devalue it... but more importantly, countries are making interest payments on these borrowed funds, and the US did nothing to create them. At some point the debts have to get paid, or will countries revolt and we have a global Debt Jubilee and stop paying the US for interest.

The US Federal Reserve is a private bank and has been a "Rent Seeker" by creating these currency units into existence and lending them out, this is inflation and thus we are seeing prices of all goods rise around the world, and the devaluation of the US dollar. So anyone saving in USD should be worried as it will continue to devalue at this pace. Interest payments to the Federal Reserve will continue to rise as more Treasury Notes get issued.

However, there is a case to be made for a strong USD, why it may not lose World Currency Status, and why the PetroDollar trade may not be over. Brent Johnson, CEO of Santiago Capital and creator of the Dollar Milkshake Theory discusses his view on the potential of the Dollar becoming stronger and why it isn't going away any time soon. He does make some valid points in this video interview, but he acknowledges the potential does exist for other countries to move away from the dollar... it's an interesting video to watch.

Did the Saudis Just Kill the Dollar? Brent Johnson Shares his thoughts in this video, click here to watch it.

“The reason the U.S. needs to print more money is because there's a demand for it,” says Brent Johnson, CEO of Santiago Capital and creator of the Dollar Milkshake Theory. He tells Daniela Cambone that the petrodollar will not be jeopardized despite recent headlines. Johnson explains the history behind why Saudi Arabia began selling oil primarily in dollars in the 1970s and why this practice will continue. “Saudi Arabia has always had the option to sell oil in currencies other than the dollar. They do so to a limited extent, but even when invoiced in another currency, it's still priced in US dollars,” he says. Johnson also discusses the political troubles in Europe due to the Russia-Ukraine conflict, stating, “I feel like the whole Ukraine situation is, in many ways, the U.S. sacrificing Europe.” Watch the insightful interview to learn more about Johnson's thoughts.

I don't think the dollar is not going away any time soon, but if US spending continues and if the Federal Reserve continues to inflate the dollar supply, it should continue to lose value over time compared to other hard assets, and in particular Gold. Here is the latest presentation video I created about "A Case for Investing in Gold"

Financial Liberties Presentation June 2024 - A Case For Investing In Gold.

However, I do think the US Federal Reserve is concerned over the value of the Dollar, and as a Private company, you don't want the value of the product you create to go to Zero or stop being used globally... so you have to be creative in finding ways to keep your product relevant and in use. We'll see what happens, but if Trump does get elected, he seems to want a strong economy and a strong dollar and is willing to penalize countries that want to move away from the USD in a trend called DeDollarization. So the dollar can continue to exist as the Reserve Currency, but it will take the might of the US military and threats of sanctions and tariffs to keep the global hegemony that the Dollar has had over the last 50 years.

Watch our Recent Video on Trump & Tariffs - Good or Bad...

Only time will tell how this all plays out... but "Time is our Friend", so use it wisely and diversify to protect your assets.

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Vin Maru, Editor for Financial Liberties.