The US dollar is it losing its Global Reserve status in today’s video I want to talk to you about the value of the US dollar and what to expect in the near future this is of course a very complex topic because there is economics there’s politics and finance involved additionally
Given the accelerated development and Adoption of digital currencies understanding who and understanding what affects the value of what you have in your bank accounts is extremely important the US dollar is fiat currency will walk through its biggest risks we’ll talk about who controls
The fiscal system here in the United States what gives value to the US dollar as we know it now we’ll talk about its limitations and how its possible loss of the world’s Reserve currency status might be on the horizon Fiat money is a type of currency that is not backed by
A commodity such as gold or silver for example as you know in 1971 when President Nixon took the United States and inherently the entire world off of the gold standard more and more red flags have been raised there are signs that its collapse might just be a question of when
And not a question of if especially since many economies are working to reduce their Reliance on and their exposure to the US dollar China is very much interested in its Yuan becoming stronger we are already seeing the dollar playing less and less of a role in portfolios of central
Banks around the world the geopolitical tensions served as a reason as a catalyst for a number of countries to diversify away from the US dollar among them are China and Saudi Arabia this is a really interesting partnership because oil is priced using the US dollar right now which
Really helps it to maintain its status as a global Reserve currency Saudi Arabia is an accelerated talks with China to accept Yuan instead of dollar for oil that Beijing buys if an agreement is reached and most likely will be there’s no doubt that it would have a substantial
Impact on the value of the United States currency first if we want to know what to expect in the future we should understand who is in control of the money supply who are the main stakeholders so there are four groups first central banks central banks have Monopoly over the production of money
The Federal Reserve manipulates the interest rates and keeps them either low or raises them if it wants to tighten its monetary policy then there are those who create laws policy makers in other words this is the second group even though central banks create money virtually out of thin
Air they don’t really have the authority to decide how that money is spent that is the responsibility of policy makers our government the third and the fourth groups are investors and industrialists industrialists are investors to an extent have a certain level of influence over the second
Category through lobbying but really they’re the ones with the capital and tangible resources the collapse of the success of any fiat currency including the US dollar is really driven by these four groups of people so we just covered who controls the financial system now speaking about
Whether or not fiat currency will eventually collapse we need to understand what gives it value since there are no gold and silver reserves that back today the United States Federal Reserve is required to hold collateral that is equal to the value of the dollars in circulation but
Here’s the tricky part this collateral is the US government issued debt so in the case with the US dollar here’s what it means in practice in reality there are two reasons it has value first because investors and lenders around the world believe that the US government will repay
Its debts because debt serves as collateral here right and two the US dollar has value because the US government says it does so to sum it up Fiat currencies require government backing to exist they require public trust in the government cryptocurrency on the other hand
Doesn’t need that with that being said it is not too surprising that cryptocurrencies have been a very popular alternative it’s not subject to control of any particular group or entity in contrast to fiat currency because most cryptocurrencies aren’t backed by central banks
They get their value from different sources Bitcoin for example generally has its value determined by the market logic of supply and demand when demand goes up so do prices this brings us to the limitations of a fiat currency and the US dollar specifically because there is
Nothing preventing a central bank from printing exponential amount of cash there may be times when Regulators print too much and devalue the currency to the point that inflation spirals out of control or they might tighten the policy increase interest rates too aggressively and send an economy into a
Recession monetary policy which may or may not be driven by a variety of reasons including of course political ones has the power to wipe out the value of their currency the value of the United States dollar is determined by how the US economy performs so as you can see the system
Allows central banks to have a lot of influence on the economy because they can control the money supply with the emergence of cryptocurrencies Fiat money which again has been largely controlled by central banks around the world needed rescue just the other day a former security advisor said that
We need cbdc’s as soon as possible because crypto is a threat and so that’s where cbdc’s emerged as a counterbalance to the decentralized digital currencies such as Bitcoin for example remember what we said earlier in this video Fiat money is currency that’s backed by The public’s faith in
The government it has no intrinsic value unlike commodity currency which is linked to the prices of a commodity such as gold or silver instead Fiat money derives its value from the trust people place and the governments that issue it with its value tied to a government a fiat currency can
Significantly depreciate if the issuer runs into trouble there’s a saying any kind of Crisis can be good so the collapse of FTX for example was needed in order to Blacklist crypto and to introduce the quote unquote solution to the problem to sum it up this means that a certain
Percentage of your portfolio of your assets must always be kept intangible non-monetary assets such as precious metals real estate or other forms of items that are tangible store of value given how quickly the cbdc process moves forward it only makes sense to start preparing for it now keep
An eye on the developments and consider the pros and cons of Fiat money when making decisions about saving and or investing that’s it for today if you enjoyed this video you might want to watch one of
My recent videos where I walk you through what you should do now to prepare for more interest rate increases this year thank you for watching the video and for supporting my channel subscribe on YouTube and Rumble give the video a thumbs up if you learned something new and share it with
Your friends and family thank you for watching and I will see you in my new one tomorrow take care
