The World Is Losing Its Faith In the Dollar As The World Reserve Currency
From the massive debt load, to the slow devaluing of the dollar, and the political posturing in Washington, it’s no wonder that the rest of the world is sick of the political happenings here in the U.S. Unfortunately, if Washington makes too many near crisis decisions, it could shake the world’s confidence in the U.S. dollar as the world reserve currency and the petrodollar. Pascal Lamy, the former director-general of the World Trade Organization made the comment in a CNBC interview that: “The world needs to move toward a more balanced global financial system where the U.S. economic policy and its currency are not so dominant. He also said “I personally believe that long-term it will happen that the international monetary system will be more balanced than it is today.” Lamy’s statements came out just prior to Congress’s 11th hour intervention to a debt ceiling default and just after the Government shutdown which has spurred on global volatility.
China Calls For A “New World” Order Replacing The Dollar As The World Reserve Currency
China, who holds the most U.S. debt, also stands to lose the most should the U.S. default on their debt. Has recently called for a New Year Older where the Dollar loses its status as the World Reserve Currency. China has also made preparations and provisions for the Yuan to be used as the new “petrodollar”. Several agreements have been struck with both Russia and the UK to allow the Yuan to be used as an exchange for oil.
What Happens To The U.S. If We Lose Our Status As The World Reserve Currency?
Part of the reason the U.S. has enjoyed such financial dominance and freedom to print and spend money as freely as we do, is our status as the world reserve currency. Should that status of the petrodollar and world reserve currency be lost, the U.S. will lose its ability to print money and finance its debt, which at our current level of spending could lead to our destruction. Furthermore, who would be left to purchase and furnish the U.S. debt? Without our status as world reserve currency, would anyone want anything to do with U.S. Treasuries? Should the Yuan become convertible as the new “petrodollar” the U.S. stands to lose a lot of privileges?
As an American, changes in these global financial policies could bring about a lot of hardship on the home front. It’s extremely important to stay ahead of the times and to ensure that your assets are well insulated from the economic issues to come. For more information on how to protect your portfolio against upheaval over the world reserve currency, speak to a Redhawk Wealth Advisor near you today.
“The gridlock of short-term politics can damage long-term global issues and that’s what we’re trying to address,” he added.