Death of the US Dollar Reserve Currency… Picking Up Speed
The comments above & below is an edited and abridged synopsis of an article by Steve D’Angelo
The death of the US dollar as the world’s reserve currency will have negative effect on the lives of most Americans. Unfortunately, 99% of the population has no clue about what lies ahead.
Recent market action was a perfect example. Fear came into the markets during the North Korea missile incident and the opening of the European markets and the Dow Jones Index fell, while gold and US Treasuries increased.
However, everything reversed after the US markets opened, because the nuclear threat with North Korea, flooding in Texas and the upcoming debt ceiling issue no longer mattered.
The market has become complacent and is severely underpricing risk. The above crises would have caused the markets to sell off considerably 5-10 years ago. But it doesn’t seem to matter how much negative news there is in the economy, the markets have to continue higher, or the entire house of cards comes down.
Meanwhile, if the dollar breaches its support level, it could go into freefall, and a loss of reserve currency status looms. It is due for a bounce because it is oversold. But, once the bounce is over, we could see the dollar decline considerably as the US government deals with the debt ceiling issue.
When the dollar is no longer the world’s reserve currency, Americans will be forced to live on a lot less. They won’t be able to exchange Treasuries for oil, metals, commodities, goods or services anymore. They will need to trade goods for goods, not paper for goods.
The US still imports 6 to 7 million barrels of oil per day, providing IOUs for much of it. Last year, the US trade deficit was $502 billion, a portion of which was for oil. Without that, the economy would shrink by one-third.
The only way the US can continue is via the dollar being the world’s reserve currency. Of course, the Fed and the Treasury may speed up the printing press to balance ongoing trade deficits, but that would erode the dollar’s value.
The death of the dollar will be the end of America as we know it. Unfortunately, a tiny percentage realizes this, while 99% are completely oblivious.