END of Dollar!? BRICS Currency Coming!? Here Are The FACTS!!

in 1944 a few weeks after Allied troops stormed the beaches of Normandy in the Final Phase of World War II began representatives from 44 countries gathered at a hotel in the northeastern United States they were there for the Bretton Woods conference an event which would shape the economic future of the post-war world one of the results of Bretton Woods was that the U.S dollar officially became the world's Reserve currency that is other National currencies were pegged to the dollar which was itself backed by America's Mighty gold reserves the dollar has been the world's Reserve currency ever since the primary medium of exchange and pricing mechanism for international trade and debt and the most popular National currency for Nations and investors to hold America's enduring economic and Military might has long maintained this status quo but in the rapidly Changing Times we're living through there are Rumblings that the dollar status could be under threat so is the dollar really on the decline and if it is what might replace it as the world's Reserve currency now there are many national currencies and some are more stable and tradable than others this has been the case throughout history and it underscores the necessity of having a reliable Reserve currency that everyone is happy to trade with one that's backed by a wealthy stable and Powerful Nation this makes trade easier and smoother and eliminates the need for countries to trade in Risky occurrences that may lose much of their value in a short space of time over the centuries various National currencies including the French franc Dutch guilder and British pound have been used in this way on average Reserve currency status lasts for around 100 years and as Ray dalio and others have pointed out the dollar has now been preeminent for over a century by this metric it's living on borrowed time that's because although Bretton Woods cemented the dollar status as the world's Reserve currency it has actually been effectively so since 1920 the U.S passed the Gold Standard Act which made the dollar fully convertible to gold at a fixed rate of 20.67 per ounce this meant that other countries could exchange their currencies four dollars and then convert said dollars into gold which helped to stabilize the International Financial system but that was then today you don't need to look far to see evidence that many countries are now trying to move away from the dollar China and Saudi Arabia are discussing using the Chinese Yuan for oil trades while India and Russia are reportedly doing the same with UAE Dirhams as the medium of exchange Brazil and China are looking to trade using their own currencies instead of the dollar too and it's no coincidence that most of these countries are members of the brics which we'll look at later on but they're not the only ones just recently China and France completed a liquefied natural gas trade using Yuan and that's before we get to countries like Iran and now Russia which have been effectively cut out of the Global Financial system by Western sanctions but before we look at the challenges facing it let's see how the dollar was able to gain its status in the first place as the 20th century dawned Britain was the dominant Global power and the Pound The Reserve currency the British Empire was at its height the Royal Navy dominated the Seas and men in top hats with accents even plummier than mine basically called the shots ah the good old days now this all changed with the first world war when the nations of Mainland Europe plunged into industrial scale Slaughter Britain was sucked into the conflict and although it and its allies eventually emerged Victorious the cost was enormous Britain and its colonies lost nearly nine hundred thousand men and Britain's economy was devastated with the country's debt rising to seven billion pounds by the end of the war in 1918. that's well over 400 billion dollars in today's money now it's not quite accurate to say that Britain was bankrupted by the first world war but its economy and thus its Global standing took a huge blow and crucially it's Johnny cun lately Ally the United States which pitched up to the fight in 1917 was the real winner it emerged economically unscathed and perfectly positioned to take Britain's place at the top of the global pecking order the dollar became the world's most stable currency fast forward a couple of decades and Europe was at it again only this time in even more devastating fashion by the end of the second world war Europe and much of Asia lay devastated and the U.S had become the global superpower not only had its lands and industries remained Untouched by the fighting but it had supplied its allies with much of the materials and financing for beating the Germans and Japanese its economy had boomed as a result and the American Century was well underway now crucially much of the wartime Aid America supplied to its allies had been paid for in Gold meaning Uncle Sam was now sitting on an absolute mountain of the stuff at Bretton Woods it was agreed that this gold would now be redeemable at a fixed rate of 35 in ads the dollar was backed by these gold reserves and other countries could of course redeem their dollars at the same rate and fun fact Britain ran up a huge debt to the United States during World War II which it began paying back in 1950. the final payment of 83 and a quarter million dollars was made in 2006. presumably all that money went to help bail out insolvent U.S banks two years later let's move on the years that followed Bretton Woods have been defined and shaped by U.S dominance nothing emerged to challenge the dollar status despite the Cold War and the emergence of many Communist governments who were ideologically at odds with the United States however the gold-backed and supposedly Rock Solid safety of the dollar was ended in August 1971 by none other than the sitting U.S president Richard Nixon I have directed secretary Conley to suspend temporarily the convertibility of the dollar in the gold or other Reserve assets except in amounts and conditions determined to be in the interest of monetary stability and in the best interest of the United States in response to Rising inflation a trade deficit and the escalating costs of the war in Vietnam Nixon took the dollar off the gold standard no longer did every dollar in circulation have to be backed by a fixed amount of gold in a vault at the Federal Reserve or Fort Knox or wherever this action by old tricky Dicky became known as the Nixon shock and it ushered in the era of Fiat money from then on the dollar only had value because the United States said it did backed up by its International standing and Military might with the dollar no longer backed by gold other currencies naturally followed suit on the one hand the fact that governments could now effectively create more money out of thin air helped fuel Decades of global growth but on the other it made national currencies more vulnerable to inflation and devaluation any crisis of confidence could see currencies and economies go into free fall or like the good old British pound progressively lose value over time but while the Fiat money era may have been bad news for many currencies the dollar was still backed by the most powerful country on Earth the Soviet Union the world's only other superpower at that time finally collapsed in 1991 further strengthening America's standing in the world the U.S economy has remained the world's largest in spite of all the financial crises that have battered it over the years whatever difficulties the United States has faced it has always been better place to weather them than other countries and until relatively recently no other nation has come close to challenging America as dominance there's also the not insignificant matter of oil the lifeblood of any industrial economy as well as Nixon's abandonment of the gold standard the 1970s also saw the United States sign an agreement with Saudi Arabia to denominate oil sales in U.S dollars in exchange the U.S agreed to provide military protection for Saudi Arabia and other Gulf countries this resulted in the creation of the Petro dollar that is dollar denominated revenues from oil exports the dollar was now the reserve currency for oil transactions to effectively creating a demand for U.S dollars as it becomes necessary for countries to hold dollars in order to purchase oil this further entrenched the dollar as the dominant currency in international trade and finance and many other countries began holding U.S dollars as part of their foreign exchange reserves put simply if you wanted to buy oil as all non-oil producing countries have to do or participate in international trade well you had to hold dollars whether you liked it or not with the World Hooked on oil it was now also hooked on dollars giving the the U.S enormous influence over global financial markets it's also made the Global Financial system more vulnerable to fluctuations in the U.S economy and monetary policy that's why we're always paying such close attention to what the Federal Reserve is up to or what's happening in the U.S economy their effects are felt far beyond the United States because of all those dollars almost every other country holds now perhaps the main reason why many are beginning to question the Dollar's future as the world's Reserve currency is the rise of China over the last 20 or so years a once backwards and impoverished communist autocracy has in recent decades become the world's second largest economy albeit one that's well still a communist autocracy China's growth has been astonishing and as the world's newest superpower it has begun to flex its muscles across the globe its belt and Road initiative has seen it finance and build infrastructure structure projects in many developing countries helping to Foster links between China and the global South while also projecting Chinese influence far beyond its borders the people's Liberation Army is the largest military force in the world China is the world's largest exporter of goods the second largest importer the largest consumer of energy and the largest producer of Steel cement and many other Industrial Products the massively expanded Chinese middle class is a huge economic force in itself free-spending Chinese tourists are a fixture at destinations across the world while many Chinese have also invested in properties overseas this sort of economic heft is arguably far more influential than military might in projecting a country's power overseas and in recent years China's economy has been predicted to overtake that of the United States by the end of the decade however it should be noted that this narrative has being called into question more recently whatever the case China and its economy are the most credible threat to the continued dominance of the US and the dollar and for those Nations which are not natural allies or even outright enemies of the United States and the West in general China is becoming a new center of gravity there's no doubt that we're moving towards a bipolar World some would even call it a new Cold War where you're either with the us or with China and over the course of several decades of dominance the U.S sure has managed to make a few enemies around the world tensions with China meanwhile are rising especially over Taiwan China views Taiwan as its territory and has hinted that it may be ready to seize it by force the U.S has committed to defending taiwan's Independence as a liberal democracy there are fears that following Russia's invasion of Ukraine last year Taiwan may be the next major Battleground many are also of the opinion that U.S influence is beginning to wane or that the country is starting to step back from its role as the world's policeman this could create a vacuum into which China would look to expand and then of course there's the brics Brazil Russia India China and South Africa this block of non-western aligned Nations appears to be forging closer ties and are even discussing creating their own common currency to rival the dollar there's also talk of expanding the block to include other countries whose relations with the US are either already at Rock Bottom see Iran or on the decline see more concerningly Saudi Arabia remember that petrodollar agreement with the Saudis agreed back in the 70s was a major driver of dollar dominance in the year since Russia invaded Ukraine and kicked off a proxy war with the U.S and its allies the brics countries are becoming a more pronounced counterweight to the U.S sphere of influence Russia is now of course an international Pariah but its fellow bricks have either been supportive or carefully neutral since the war in Ukraine began Saudi Arabia's relations with the US have meanwhile declined sharply in the last couple of years with the Kingdom's effective head of state Muhammad bin Salman now actively seeking closer ties with China and a recent cut in oil production by OPEC orchestrated by the Saudis underscores how in the words of the Washington Post quote for better or worse the era of American hegemony in the Middle East is over not even the most hardened of Washington Hawks can claim that the U.S isn't facing the most serious threat to its standing in the world since the height of the Cold War this enmity on the part of some can perhaps be best explained by a remark made back in 1971 by one John Connolly the United States Secretary of the Treasury during the Nixon Administration at a meeting of Finance ministers and Central Bank governors in Rome in December 1971 Connolly reportedly said quote the dollar is our currency but it is your problem recall that Nixon had taken the dollar off the gold standard just a few months earlier now the context and exact wording of Connolly's remark has been questioned in the years since but whatever the case it sums up neatly how the Dollar's dominance has never been universally popular as we've seen actions taken by the U.S federal reserve can have implications around the world and these have been keenly felt especially in the past couple of years the quantitative easing we saw during the pandemic that is the huge growth in the money supply of the United States and the inflation that came about as a result have affected all countries that hold dollars as the FED has raised interest rates to fight this inflation those countries with dollar denominated debts pretty much every country in the world world have seen those debts become more expensive dependence on the dollar puts many smaller and poorer countries at the mercy of the United States and this was in large part the reason behind El Salvador's adoption of Bitcoin as legal tender back in 2021 a desire to reduce the effects of Reckless money printing by the United States and move away from U.S influence then there's the fact that the U.S is able to effectively weaponize the dollar against its enemies Iran has suffered this fate for years but perhaps the most striking example came in the wake of Russia's invasion of Ukraine just days after Putin's Army crossed the border the U.S froze around 630 billion dollars of Russia's dollar reserves and began moves to cut Russian Banks off from the Swift banking system nothing better illustrates to other countries around the world just what could happen to them if they fall fell of the US and it's no coincidence that the aforementioned efforts by brics countries and others to move away from Dollar dependence have come since then so a number of big economies are drifting ever further away from the United States and even discussing creating their own currency dependence on the US dollar has been shown to have severe consequences if you piss the Americans off and in any case it's been a problem for many countries for years China is asserting itself across the world especially in places like Africa which the US has largely ignored we covered this in a recent video by the way which is linked to in the description the US's relationship with the world's biggest oil producer is under strain many countries not just those opposed to the US are beginning to use other currencies for trade and as if that wasn't enough many are now predicting that the land of the free itself could be headed for some serious internal strife next year's presidential election is going to be shall we say a rather fraud Affair now taking all this together you could be forgiven for thinking that the Dollar's time is as good as up it has been over 100 years after all so maybe this is just the natural Order of Things asserting itself but before you start pricing everything in Yuan or wondering whether you'll be able to get your hands on bricks bucks or whatever they're going to be called just hold up a bit it's not quite so clear-cut for starters while the era of the dollar being the world's Reserve currency may be coming to an end that's not to say that end is going to come anytime soon despite everything that's been going on over the past few years the US is still the most dominant country in the world with its largest economy and one of its most stable currencies remember Fiat currencies like the dollar the Yuan the Euro the Yen etc etc are all backed by the power influence and Prestige of the Nations that issue them so consider this one fact for example collectively the brics countries are projected to spend 378.5 billion dollars on defense in 2023 add in those brics wannabes Saudi Arabia and Iran and that rises to 465.7 billion dollars China India Russia and Saudi Arabia all spend more on defense than almost any other country by the way thing is the United States is projected to spend 778 billion dollars on defense this year that is some serious military hardware technology and expertise backing up the buck and no one else can even come close to matching the us on this front even collectively then consider that for all its many problems the US is still doing pretty darn well in comparison to most other countries around the world for example China is facing some serious economic headwinds its economy is largely reliant on the property sector which is looking decidedly well properly its zero covered policy has been an unmitigated disaster and the Yuan itself has its own troubles moreover the yuan is centrally controlled by the People's Bank of China and by extension the ruling Chinese Communist party or CCP central control means that the yuan's value is subject to political influence as the CCP has the power to manipulate its exchange rate in order to achieve its policy goals the yuan's value is not free-floating in other words this creates uncertainty and risk for foreign investors and businesses who may be concerned about potential currency manipulation and the impact it could have on their Investments or their operations in China furthermore the ccp's history of tight Capital controls and restrictions on the convertibility of the Yuan have long limited its use and acceptance abroad are other countries likely to adopt the yuan in the knowledge that the CCP can and does manipulate it for its own ends well some perhaps but not many there's also the fact that China is sitting on a demographic Time Bomb this year for the first time in decades China recorded a decline in its population and the expectations are that India will surpass China as the world's most populous nation sometime this year now that may not be an issue today but future Prosperity is dependent on there being people to bring it about while the U.S and indeed most western Nations face population growth issues of their own it's likely that immigration from Central and South America should be enough to sustain the U.S labor force into the future good news for the dollar elsewhere Russia was already experiencing potentially catastrophic population decline even before it began sending its young men to die in Ukraine or else watch them flee the country to avoid that fate its economy is now having to cope with the cost of the war even if the impact of Western sanctions is open to debate South Africa meanwhile can barely keep the lights on Brazil has any number of social political and economic issues on its plate ditto India which as it happens doesn't see eye to eye with its neighbor and rival China on everything while Iran is well Iran of those Nations opposing the United States Saudi Arabia may be in the strongest position given its Almighty oil reserves but whether or not it really wants to cut ties with the us or merely strengthen its hand in future negotiations is a moot point there's also the fact that the Saudi real is pegged to the dollar knots like that aren't easily unraveled in short while the move away from the dollar has definitely begun it will likely take decades and even then it's unlikely that it will be replaced entirely the world of the future is looking like being split between Chinese and American spheres of influence and that means the dollar is going to continue to feature heavily yes the Yuan will take some of the Dollar's market share and a brics currency if they're ever able to agree on one would undoubtedly be an attractive opportunity for many countries that don't naturally align with the US bear in mind though the EU struggles with its own common currency and those countries are much more politically and geographically aligned than the bricks and anyway the dollar status is so entrenched it will be difficult to dislodge as Barons put it quote the pricing of oil and many other Commodities in dollars isn't the cause of the greenback's role in the world economy but a reflection of it the U.S capital markets depth breadth and transparency are its bedrock and are overlaid by its military dominance and legal system put simply No Other Nation or group of Nations is going to be able to completely replace what the United States brings to the table to back up the Mighty Dollar having said all that of course there is a viable alternative to any Fiat coin that's gaining traction with every passing day one that isn't controlled by Any Nation or single entity one that can be transferred easily and quickly between parties with no intermediary one that is entirely censorship resistant decentralized and cannot be seized so will we someday see Bitcoin as the world's Reserve currency maybe that could be something the whole world will be able to get on board with

Channel: Coin Bureau

Views: 369,902

Keywords: crypto, cryptocurrency, coin bureau, dollar, us dollar, end of dollar, crypto news, crypto market, crypto market update, crypto update, crypto news today, btc, china, china economy, us economy, money, finance, more crypto online, coin bureau news, crypto world, fed, china yuan vs dollar, BRICS, russia, money history, inflation, dollar dominance, u.s. economy, fiat, dollar is doomed, gold, gold reserve, ww1, ww2, dollar price, pound price, british pount, yuan price, dollar gold, bitcoin

Id: 7IeqSwoTUJU

Length: 24min 42sec (1482 seconds)

Published: Wed Apr 12 2023