Reserve Currency Status in Jeopardy?
You’ve heard about cancel culture. What if the rest of the world ran out of patience with the weaponization of the US Dollar and decided to CANCEL the dollar?
If the U.S. dollar was “cancelled” by the global community, it would impact your day to day living in almost unimaginable ways. The US dollar’s current status as world reserve currency affects the value of every dollar you’ve earned and saved. Right now, some 55% of foreign central bank reserves are held in US dollars. 90% of foreign currency exchange is either into or out of dollars.
These numbers are in decline. If trends away from the dollar continue or accelerate, it’s bad news for every American.
It’s a simple matter of supply and demand. If there is less global demand for dollars, the steady supply of dollars that our Fed continually churns out will stay here at home to inflate prices at the grocery store, the gas pump and everywhere else.
Your standard of living would degrade precipitously if the dollar was “cancelled” as would the quality of life of nearly everyone around you.
We’re already seeing what exponential jumps in energy prices are doing, not just in the US but even more so abroad. In Germany electric bills have gone up 600%.
What would your disposable income look like if your power bill went from $250 to $1750 a month? Your local grocery store would face a corresponding jump and would have to add zeros to the prices of everything in the store to accommodate and stay in business. Many businesses would go under altogether.
Vacation plans become a thing of the past as your time horizon gets much shorter. Your savings are quickly absorbed by inflation and your credit cards are maxxed out or cut off. All your time and energy is suddenly required to feed and house your family and figure out a new normal. Does your salary keep up? You’d be begging for a raise or a cost-of-living increase every month. Your employer might not be able to keep up with payroll needs and rising costs themselves and they might be forced to lay people off. Unemployment would skyrocket all around you and your first world problems would begin to feel like a dream of the past.
These are just some of the possibilities that come with a currency shock.
What would you fall back on if there was a more significant inflationary shock here in the US?
Gold and silver are UNCANCELLABLE and a vital component to the savings strategy of today’s savvy investor.
Central banks around the world know this. They know that throughout history, whoever holds the most gold has the most power. Gold was what gave the dollar global dominance in the first place at Bretton Woods in 1944. Uncoupling our economy from gold has led us to today’s troubling dynamics in banking and finance.
If billionaires and banks are gradually divesting themselves of overvalued paper stocks and accumulating gold and silver, shouldn’t you as well?
If the dollar did experience a significant degradation in status in international banking and finance, your gold holdings would be there to help bridge the gap and keep your family afloat until the next “Bretton Woods” or stable currency was worked out. You could have confidence knowing that even if all your dollar denominated assets went to zero, God forbid, you wouldn’t be destitute. You would have something to tide you over that would maintain purchasing power.
If you’re like me, that peace of mind is worth its weight in gold. After the news cycle on certain days, you NEED that comfort to sleep at night.
Call Lear Capital today to get started, now – when GOLD and SILVER prices are affordable!