Demise of the US Dollar Hegemony
I just wanted to take a few seconds to highlight two articles that have come out recently. These two articles further strengthen our thesis that the fall of the U.S. dollar as the global reserve currency seems imminent. I have explained this at length in previous posts, so I won't go the "why" again. I want to point out that this shift is happening right now in real-time.
I'll cut straight to the point to keep this brief, the fall of the dollar aligns with the goals of all parties involved. China and Russia will be less vulnerable to sanctions imposed by the States. China will then be able to migrate to a consumption economy (Dual Circulation policy.)
The fall of the dollar allows the U.S. to claw back some of its manufacturing base while at the same time inflating its debt away (at the expense of taxpayers.)
What does this mean for us, the holders of U.S. currency? It ultimately means a weaker dollar, increased inflation, preceded by a period of stagflation. Like we outlined in our first letter, we see the global economy headed towards decentralization, not globalization. At this point, the most logical course of action would be to run baskets of regional currencies, and why not have those currencies backed by a neutral global reserve asset like bitcoin.
TLDR; Buy bitcoin and hold on for dear life.
If you want to see the shift in regime happening at breakneck speed for yourself, go ahead and read the two articles we have linked below.
Russia Calls to Reduce U.S Dollar Use
“Speaking to Chinese media before the start of his visit, Lavrov said Moscow and Beijing were compelled to develop independently of Washington in order to thwart what he said were U.S. attempts to curb their technological development.
“We need to reduce sanctions risks by bolstering our technological independence, by switching to payments in our national currencies and global currencies that serve as an alternative to the dollar,” Lavrov said, according to a transcript of his interview released on Monday.
We need to move away from using international payment systems controlled by the West.”
“With foreign purchases of US Treasury securities down to zero during 2020, the US depends mainly on the Federal Reserve to absorb the avalanche of new debt on its balance sheet, which rose by $3 trillion over the past year. A falling dollar does double duty: It raises the domestic inflation rate, prompting households to save more (to compensate for a fall in the value of existing savings), and it cheapens domestic assets to attract foreign flows.”
“A strong currency will appeal to Xi’s sense of national grandeur. The predilection for a strong currency echoes the Meiji restoration motto of “Rich country, strong army” (Fukoku kyōhei (富国強兵) and its Chinese equivalent fuguo qiangbing (富国强兵) of the Warring States period. It is quite possible for both Xi and Biden to get what they want, or, better said, to learn to want what they will get in any case.”
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