I don’t want you to think I am an expert on this subject. However, I do follow it enough that I understand what is going on and what the consequences are if the US Dollar is no longer the worlds reserve currency.
Earlier this week Russia and it looks like Saudi Arabia will soon follow. Will now be using the Yuan as their reserve currency. The Yuan is Chinas currency. Some emerging countries may soon follow such as Brazil, Iran, India and South Africa.
So what does it mean that the US Dollar is the world’s reserve currency?
It means that it is the most widely used currency for international transactions and is held by central banks and governments around the world as a store of value. Oil is traded in dollars. This status gives the US dollar significant advantages in the global economy, including lower borrowing costs for the US government and greater economic influence.
If the US dollar were to lose its reserve currency status, it could have significant economic consequences.
For example, the demand for US dollars would decrease, which would likely cause its value to decline relative to other currencies. This could lead to inflation in the United States and higher borrowing costs for the government, as well as lower demand for US Treasury bonds.
In addition, other currencies could gain greater prominence in the global economy, potentially reducing the United States’ economic influence. This could make it more difficult for the United States to finance its current account deficit, which is the difference between its imports and exports. In the long term, the United States could face a decline in its standard of living as a result of reduced economic growth.
Overall, losing the reserve currency status would have significant economic consequences for the United States and the global economy.
I know I am providing you a very high-level overview of what it means and the consequences.
So now let’s look at how it impacts you personally.
1.If the US dollar loses its status as the world reserve currency, its value could decline relative to other currencies, which could lead to higher prices for imported goods. This would increase the cost of living for Americans, as they would have to pay more for goods that they are used to buying at lower prices.
2. Inflation: If the US government has to pay higher interest rates on its debt, it could lead to inflation as it would need to print more money to meet its obligations. This could lead to higher prices for goods and services, which would make it harder for Americans to make ends meet.
Read an earlier post I made about inflation here.
3. Reduced economic growth: If the US dollar loses its status as the world reserve currency, it could lead to reduced economic growth, as the country would face higher borrowing costs and reduced access to global markets. This could result in lower job creation, reduced salaries, and weaker overall economic conditions.
4. Higher interest rates: If the US dollar loses its reserve currency status, it could lead to higher interest rates for American consumers and businesses, as they would face higher borrowing costs. This could make it harder for them to access credit and invest in new projects, which could hurt economic growth.
You already know that your dollar is weaker because your money isn’t going as far as it used to. Inflation is eating your money as we speak. So if the dollar loses its worlds reserve currency status, it will be worth even less.
Again, I am not an expert on this topic. But I do know that the more the dollar is weakened it means you need to get the money you do have in to things that don’t lose value and will only gain in value as it becomes harder to get.
Things such as Real Estate. Real Estate for the most part is a great place to store your money, because it goes up in value as inflation goes up.
I am not a gold expert. But keep in mind the value of gold doesn’t fluctuate much. So although gold may not make you a lot of money, it isn’t the point. By storing dollars in gold you are hedging against inflation. Because gold will go up with more inflation while your dollar value goes down.
Our inflation rate in America is still high right now. They say it is 6.04%. Which is bullshit, because they are not calculating real housing costs into that equation and you know from your own personal experience that your grocery bill is much higher than 6.04% from two years ago. So I don’t trust that number. My guess is it is closer to 20%. But I am not an economist. I can just speak from my own experience.
I share this information with you so you can stay informed and make financial decisions to protect yourself. Some experts say there is no way that the US dollar will lose its world reserve currency status. But when was the last time any of it was actually being talked about? Never during my lifetime that I can remember.
To your success and your future.
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