At what point would you begin to become concerned that the U.S. dollar is officially in trouble?
Maybe the ballooning deficit and debt loads don’t seem that important. And perhaps some are not impressed by the Federal Reserve’s unprecedented expansionary monetary policy over the past decade.
Maybe the launch of the PetroYuan (a direct threat to the petrodollar arrangement) was not enough to have somebody concerned. Or even to find out that months after its inception, its adoption is growing. While now speculation centers on a possible Yuan-denominated precious metals contract (which sure sounds as if it has to be in almost direct response to the current COMEX system).
But even if all of those conditions, as well as everything else that’s going on in the world both politically and economically didn’t phase somebody, consider the most recent news. That 14 African nations are holding a meeting to discuss using the Yuan as their reserve currency.
Central bankers and officials from 14 African nations will discuss the viability of using China’s yuan as a reserve currency for the region, Xinhua reported on Tuesday.
At least in my opinion, hosting a meeting to discuss using the Yuan as the reserve currency takes the decline of the dollar into an entirely new phase. It’s also worth considering that these events are unlikely to be taking place on a whim, and that the participants are fully aware of the impact of their actions.
There’s a school of thought that the deaths of Muammar Gaddafi and Saddam Hussein had more to do with their attempt to circumvent the dollar system, rather than oil or the reasons publicly cited (which is not to say that it might not involve all 3, but at least that their threat to avoid the dollar played a large role).
“Gaddafi also wanted to detach his oil sales from the dollar, i.e. no longer trading hydrocarbons in US dollars, as was the US / OPEC imposed rule since the early 1970s. Other African and Middle Eastern oil and gas producers would have followed.
Saddam Hussein had the same idea. He promised as soon as the murderous and criminal embargo imposed by the UN – of course dictated by Washington – would end in 2000, he would sell his petrol in euros. He was killed.”
Certainly I cannot “prove” this to be true. Although for whatever it’s worth I do get the feeling that the quote is far more likely to be a realistic representation of what happened as opposed to the story that was presented to the public. Which is why it’s pretty stunning to hear about the current meeting taking place.
Although based on all of the other actions China, Russia, Iran, and others have taken to begin living outside of the dollar system, it’s almost as if it was just a matter of time.
It’s fascinating to imagine how someone might have reacted if you had told them back in 1998 that the events we’re witnessing today would actually be occurring 20 years later. That the Federal Reserve would have come up with something called “quantitative easing.” That they would actually take the money supply from $800 billion to over $4 trillion. And that they would do it all while convincing the world that this is somehow actually normal.
That as the debt was crossing $20 trillion, the projections would already be talking about reaching $30 trillion in the near future. Or that the government would lose over 21 trillion dollars, and when questioned as to what happened, only remove the evidence.
Yet the events have manifest. And it seems as if the rate of decline of the dollar is actually even picking up steam at this point. Which used to concern me quite a bit. As I used to believe that the end of the current financial system, whenever it occurred, would necessarily have to be a “bad” thing.
Although when you consider that the currency has been printed to the point where the dollar has lost approximately 99% of its value, I now wonder if what emerges on the other side of this collapse might be a moment of great liberation. Just imagine if the people were given back even one-tenth of what has been stealth taxed via inflation, and everybody woke up to find out they’ve just received a 10-time salary increase.
It’s stunning to think what’s possible, and also how it’s finally occurring right in front of our eyes. In terms of staking claim to that idea from at least a financial perspective, I continue to believe that precious metals, hard assets, or select cryptocurrencies (with well positioned and executed business models) are the primary ways of doing that.
Because while the timing of an actual sharp break in the markets remains somewhat unclear, the events that would facilitate such an outcome, such as a meeting about a new reserve currency, are taking place as we speak.
-Chris Marcus
June 6, 2018