You’ll be able to tell your kids about how the US dollar was once the strongest currency in the world, and you were there to watch it fall into ruin. This week the federal reserve rolls out the first stages of the new US digital dollar, which will bring about more control and surveillance of Americans. At the same time, China and Saudi Arabia are moving to settle oil transactions in the Chinese Yuan currency. What does it all mean for the US dollar?
Something odd is happening to the U.S. dollar in your pocket. It’s quickly become worthless… not just in terms of inflation and buying power… but try to pay for something with US paper currency in your pocket, and you’ll be met with resistance… you’ll be told, we don’t accept cash. We’re digital now.
Given that the dollar is so embedded in the system of international transactions, the United States has turned it into a tool to bleed other countries by collecting seigniorage revenue.
- To boost its domestic economy, the United States often pumps excess money into global markets during periods of economic expansion, creating the illusion of a worldwide boom.
- Aggressive interest rate hikes have led to a global liquidity tightening, resulting in capital outflows and currency depreciation in emerging markets.
BEIJING, April 4 (Xinhua) — The world is holding its breath for a simmering bank crisis in the United States triggered by the spectacular collapse of Silicon Valley Bank and Signature Bank.
Across the Atlantic, the repercussions are reverberating. As European banks, including Switzerland’s Credit Suisse, edge closer to a similar crisis, concerns are growing that the regional crisis could become systemic.
The real culprit for the festering crisis is the U.S. Federal Reserve (Fed)’s monetary policy based on the U.S. dollar’s hegemony, which has, on several occasions, plundered global wealth.
PLUNDERING WORLD WITH SEIGNIORAGE
After World War II, the United States deliberately established the dollar’s hegemony.
In the third quarter of 2022, the dollar comprised nearly 60 percent of global foreign exchange reserves. In January 2023, the dollar accounted for about 40 percent of international payments.
Given that the dollar is so embedded in the system of international transactions, the United States has turned it into a tool to bleed other countries by collecting seigniorage revenue.
With a 100-dollar greenback that costs only about 17 cents to print, the United States could reap 100 dollars worth of goods and services from other nations.
Just as former French President Charles de Gaulle grumbled more than half a century ago, the United States enjoyed “exorbitant privilege” and “deficit without tears” created by its dollar and used its worthless paper note to plunder the resources and factories of other nations.
From the gold dollar, the petro dollar to the credit dollar, and now to the debt dollar, over the past decades, the world has been witnessing the basis of the dollar as an international currency weakening.
To salvage the dollar’s hegemony, the United States has recklessly exhausted all military, finance and trade means, attempting to continuously export risks to and reap benefits from other countries through the lucrative dollar business.
CREATING GLOBAL ASSET BUBBLES
To boost its domestic economy, the United States often pumps excess money into global markets during periods of economic expansion, creating the illusion of a worldwide boom.
After the international financial crisis in 2008, the Fed introduced multiple rounds of quantitative easing.
Following the outbreak of the COVID-19 pandemic in 2020, it implemented “unlimited” quantitative easing, pushing global inflation to a 40-year-high, forming a colossal asset bubble and exacerbating risks to the world economy.
While the oversupply of U.S. dollars has brought “inflationary pressures not seen in a generation” to the United States, other economies were hit harder. In February, annual inflation in Argentina breached the 100 percent mark for the first time since 1991.
Most of the excess dollars are exported to other countries through imports and overseas investment, allowing the United States to harvest the wealth of other countries at nearly zero cost.
The oversupply of the dollar also creates “irrational prosperity” that deviates from the actual economic situation and exacerbates the turmoil in the global financial market.
More economists are wakening up to the detriments of the current dollar-based monetary system.
The current dollar-centered monetary system does not reflect the dynamic global market, said David E. Sumual, chief economist of Bank Central Asia, the largest privately-owned bank in Indonesia, noting that sudden policy changes of the Fed always cause volatility in other countries.
But the Fed will continue to manipulate global markets and wreak havoc on the world economy, so long as other countries don’t cut their reliance on the dollar.
Analysts have warned that the Fed had driven up asset bubbles worldwide to an extremely dangerous level, and the first signs of those bubbles bursting are beginning to appear.
After years of frothy markets, real trouble is on the horizon.
EXACERBATING GLOBAL DEBT RISKS
While the Western banking industry is teetering on edge of catastrophe, the Fed shows no signs of stopping its rate hikes.
Since March last year, the Fed has raised interest rates nine times in a row, with a cumulative rate hike of 475 basis points. The U.S. interest rate now stands at the highest level since September 2007.
Aggressive interest rate hikes have led to a global liquidity tightening, resulting in capital outflows and currency depreciation in emerging markets.
According to data from the International Monetary Fund (IMF), the pressure on debt repayment for countries denominated in the dollar has increased sharply. More than 60 percent of low-income countries are already at high risk of or in debt distress.
If the past is any indication, once a country falls into debt distress, its assets would be exposed to U.S. plundering.
In 1998, when asked can the United States weather Asia’s financial storm, Jeffrey E. Garten, then the dean of the Yale School of Management, said that “big American firms ought to stay the course in Asia, taking advantage of unprecedented opportunities to buy assets cheaply in industries that have been closed to significant foreign investment.”
Garten’s words became a prophecy later fulfilled, and similar scenarios of U.S. capital pouncing on industries in vulnerable economies have played out repeatedly.
As the Fed flip-flops on its monetary policy, the United States also suffers temporary economic pain. Still, with its hegemonic currency, Uncle Sam can shuffle the risks to others and emerge largely unscathed from a crisis it started.
After the global financial crisis of 2008, it took the European Union 13 years to return GDP per capita to its pre-crisis level, while it only took the United States two years to do so.
Despite a brief jolt, the United States continues to plunder the world.
However, the abuse of the dollar, the weaponization of global financial infrastructure and the country’s irresponsible monetary policy are backfiring and eroding the U.S. credibility.
According to data from the IMF, the dollar’s share within the global reserves fell by more than 10 percentage points compared with 20 years ago. The declining trend shows no sign of ending.
Start Insulating Yourself from an Unstable Economy
Those who have taken steps to insulate themselves from the instability of the markets have made prudent choices to invest in their future through lucrative investments. Dry goods, precious metals, land and skills are some of the hard assets that many economist such as Gerald Celente and Marc Faber stress.
While the ramifications of an impending economic or currency collapse are life alteringly severe, my family’s personal preparedness plans have always been focused on a well-rounded approach that would ensure we’re ready for anything that gets thrown our way – not just an economic crisis. The strategy that we try to employ considers as many variables as possible.
Natural disasters such as hurricanes, earthquakes, flood, solar flare
Man-made calamities like currency hyperinflation, cyber-attack, EMP detonation, nuclear fallout or global conflict
Personal emergencies like a job loss, injury or over-extension of credit
Preparing for these type of setbacks requires a bit of organization, a plan of action, necessary investments such as preparedness supplies and long term investments (hard assets such as food, land, precious metals, etc.), and a controlled financial budget
- Get out of debt. Those in Washington believe the debt crisis can be inflated away. We don’t have the luxury to think this way. In fact, they are making a common mistake that many households make. They are failing to see the signs that their financial budgets are skewed. By ignoring the problem, they have put our well being in jeopardy. Pay attention to what is going on in the economy: the the economy is stagnant, jobs are becoming scarcer, the middle class is dwindling and now food prices are beginning to sky rocket that will no doubt bring you hardship later on. This is not signs of a thriving market and certainly no time to carry debt, so start taking steps to eliminate it while there is still time. Downgrade your cable package, drastically cut unnecessary spending, start cooking homemade-from-scratch dinners (you’ll save money and will use your food pantry investment.
- Invest in an emergency pantry. Did you know that nearly 23% of your grocery bill is spent on processed foods and sweets? Rather than spending it on GMO filled junk, you can use that money to invest in a food pantry. One of the best decisions my family made into our future livelihood was to eliminate our debt by simplifying our lifestyle, and by creating a food pantry based on the 25 most popular pantry goods. We looked at purchasing our food stuffs as an investment and knew this common sense approach is what would help us stay afloat if we ran into financial or economic issues. Through this small investment of time and resources, we are consuming today at yesterday’s prices.
- Grow a garden. If food prices are rising, this is the time to grow your own food. Not to mention reduce your intake of chemical fertilizers and GMO foods by creating an organic garden filled with heirloom quality fruits and vegetables. I am a firm believer of knowing where your food source is coming from. Likewise, heirloom seeds are an invaluable commodity and hold the key to long term sustainability – and survival, in some cases. Investing in these meager seeds can hold the power to sustained longevity and health.
- Invest in precious metals. If you have the money to invest, precious metals are a very lucrative investment that will retain their value. Throughout the history of man, precious metals are what has made the world go around. Many start their precious metal collection buying junk silver and silver coins. Silver allows you to make modest, weekly investments of anywhere from $5 to $50 dollars and still build a store of wealth. A single ounce of gold stores more value than silver. If you need portability for a large amount of wealth, gold coins and bars will be your primary precious metals investment. With less than a pound of coins in your purse or backpack you can conveniently move $25,000 in value. When buying gold or silver, buy from reputable sources like your local coin shop or an online dealer like Apmex or Kitco. Read more about this type of investment.
- Purchase fertile land. Trend forecaster Gerald Celente is an advocate of self-sufficiency and the survival mentality. Marc Faber and Jim Rogers have suggested that buying farmland and learning to work that land will not only make you rich in the future, but help you to provide for yourself. These economists, forecasters and financial advisors are not just blowing smoke and arbitrarily recommending you learn to be more self-sufficient. They see a trend, globally, and that trend suggests an inflationary environment that will not only cause increased prices for essential goods, but the possibility that those essential goods you are used to acquiring with little effort today will be much more difficult to come by in the future.
- Start a bartering community. Given our free falling economy, what better way to trade skills and save a dollar than by the barter system? This is also a great time to branch out into the community with likeminded individuals. Look into barter groups in your area and check out these tips to help you barter better.
It’s Not If, But When
We’ve all heard the reports and seen the tell-tale signs of the storm brewing on the horizon. As a whole, we cannot continue to bury our heads in the sand and ignore the ever-growing issue of our economic instability. Start taking steps to lead a more self-reliant lifestyle and invest into your future wellbeing. The tips provided above can help you gain a greater edge in readying yourself for the uncertain future.
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