What’s Next for the US Dollar?

I think the biggest question in the economic room right now is the following: “Will the USD continue to function as the world’s reserve currency for the foreseeable future?”

My answer: “Probably not.”

Why is this? It’s because recently that status has been over-abused. It’s abused every time we get further in debt, it’s abused every time we give it away through multi-billion dollar handouts overseas, and it’s abused every time the government pins the inflation problem on domestic spending instead of wasteful spending and increasing the money supply.

You see, there would be no inflation problem if more money is not printed – in fact there would be substation deflation. I argue there would even be negligible inflation if domestic needs which slightly exceed incomes were the only spending that happened.

What pushes inflation over the edge happens when billions and trillions are printed and shipped to certain parties or interests. This huge amount of cash usually first lands itself in financial institutions and defense contractors and then trickles its way down to smaller local banks and businesses after inflation has already occurred.

If the Federal Reserve lowers interest rates, I think we’ll see ballooning asset prices and a true reckoning with the start of a hyper-inflationary period.

Ways I see to protect against this:

  1. Secure more assets
  2. Invest in commodities
  3. Invest in yourself and your skills

 

In other words, a well trained craftsman in any trade will continue to provide the same utility value as he or she did before – and will ultimately be able to charge the same amount in terms of utility value regardless of denomination.

A house is a house, and is worth a house.

A bar of copper is worth a bar of copper, always.

 

I think the next reserve currency HAS to be backed by something, and the USD has enjoyed decades in the from the 1700’s to the 1970’s being backed by GOLD. And from the 1980’s it has been backed by OIL. That has somewhat fallen apart as of late, as much effort is made to re-instate the petrodollar. See https://geopoliticaleconomy.com/2023/08/10/us-saudi-arabia-sell-oil-dollars-chinese-yuan/

All of this is conjecture, but I hope you’re prepared either way.

 

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