There are few truisms about the world economy, but for decades, one has been the role of the United States dollar as the world’s reserve currency… But new research reveals that what was once a privilege is now a burden, undermining job growth, pumping up budget and trade deficits and inflating financial bubbles. To get the American economy on track, the government needs to drop its commitment to maintaining the dollar’s reserve-currency status.” – Zero Hedge
Well now that’s an incredible spin. At least it’s an attempt at socializing the unavoidable.
The way I understand this is that the U.S. Government has been adamantly protecting the Dollar’s reserve & petrodollar status with all their might, just like they’ve been extending stability in America using every trick in the book. Most of this time this is called protecting national security or the American way of life, but in any case it’s overshoot.
But things seem to be changing course. Now instead of all good news, we’re hearing about a new threats to stability everyday in the news: increasing climate change, Iran nuclear deal, Israel/Hamas war, Ukraine war, new cold war with Russia, ISIS/ISIL growing threat, open borders, an Ebola epidemic, and now the Enterovirus-D68.
This latest story on the possible dumping of the reserve status won’t make big headlines because it’s boring and most people have no idea what it means.
Some say the reserve & petrodollar status are tied directly to the massive strength and growth America has experienced over the last 40 years. So suggesting that we bow-out of that global role and pull back is an about-face in policy and direction.
I think things on a smaller scale with more diversity are more sustainable. So I can’t say I don’t think it’s a bad idea, but two things remain true:
- This signals publicly that the Feds are considering the idea and that the loss of the reserve status is officially on the table. Investors in the U.S. Dollar have undoubtedly taken note.
- Things are clearly on a course to destabilize. The pressure from the tides that have held back the tides may now break through our defenses. So the powers-that-be have two choices, allow the dike to break naturally at the weakest points or choose which points for it to break in the hope of averting a larger disaster.
If I’m right, this also gives more reason for the drums of war, and hints at what may be sacrificed.
What to Do?
We can only speculate and see what’s within the realm of possibility. It’s just simple math and accepting the real direction of trends. I’ve been tracking them for some time and only recently been making noise about what I see.
In a nutshell, destabilization and change seem to be rapidly increasing in potential. Everything from the weather, to the markets, to geopolitical instability… things are beginning to move more in flux. A new world order of some kind will be needed, wether we like it or not.
This all reminds me of living in the desert southwest when I was a teenager (AZ) and young adult (NM). When it rains in the desert and you’re out for a hike, you need to pay careful attention to the arroyos & washes and see where water can flow. Sometimes there is no danger. But if the rain is heavy enough those arroyos & washes can flash flood or rise uncontrollably. The ground also becomes a sticky mess. The lichen on the rocks become slick too making them functionally steeper than they look. So be prepared to get home when it starts to rain in the calm & quiet desert. Your surroundings may change quickly, and ironically… especially in the Fall.
Photo of storm clouds over Sedona, AZ, not far from where I went to high school.