Dear Reader,
Over the weekend, Trump threatened to impose 100% tariffs on any country that ditches the dollar when it comes to trade.
We don't talk politics at Behind the Markets, but we do talk policy.
Here's my take:
While I'm not a fan of his solution to the problem of the dollar losing its role as the reserve currency of the world…
I am grateful and happy that he's talking about it.
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Biden Administration Makes Shocking Admission: U.S. Dollar is Toast
Treasury Secretary Janet Yellen recently admitted that nations around the world will continue to dump the U.S. dollar…
If you have any money in U.S. dollars, go here now and see why you must move your cash before September 30th.
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We've been pounding the table on this for over a year now. It's one of the reasons we got bullish on gold last year before it started this historic run.
If you look at the facts, the dollar is losing its status as the world's reserve currency.
China has been chipping away at it…
They've gone to Brazil, Argentina, Iraq, Russia and other countries and gotten them to start ditching the dollar for trade in the Chinese yuan.
Word leaked a few months ago that Saudi Arabia was ending its 50+-year petrodollar agreement to price oil in U.S. dollars.
If you're up for a deeper dive, I put together a whole exposé on what this means for investors – Go here to watch "Biden's Biggest Cover-Up" before it comes offline.
China had been trying to get everyone to trade in yuan for years. And everybody kind of laughed at them because nobody took their internal capital market seriously and there's a bunch of reasons why China wasn't ready for prime time.
But then, the Biden administration made what I think will go down as a historic mistake…
With the whole world watching, they locked Russia's central bank reserves right after Russia invaded Ukraine.
That was a line that had never been crossed before with a big country…
It was the "nuclear option."
China was ready for an "in," and China attacked.
The U.S. made what looks like a mistake, and China moved. It's like a chess match.
When the U.S. froze those reserves, crossed that line, China went to every country and said, look what they're doing. You can't trust these guys with your money. They'll just snatch it if you don't do what the U.S. says. We would never, ever do that to you.
China's been able to use this issue to sit down with countries and move them away from USD.
This is part of the great power competition happening between the U.S. and China.
China's on the attack.
And let me tell you…
This is not hyperbole – I am not exaggerating when I say, having the world's reserve currency is a privilege.
If we didn't have this, interest rates would be 5 percentage points higher…
Unemployment would be 5 percentage points higher – it would double.
Everything in this country would be worse off:
Your IRA… your retirement accounts, your pension – everything would be 25% less if the United States did not have the world's reserve currency.
This is serious business – very serious business.
And I am glad that one of our two major party candidates is talking about this.
This is the first time I've heard this discussed in a presidential election since, gosh – I don't remember when.
Now, at Behind the Markets, we can't be partisan – we have to be ruthlessly objective to be competent investors.
Just like I don't have an opinion on the bull side, I don't care about the bear side – I only care about the right side…
The same is true in politics.
Democrat, Republican, I'm looking at policies that help the U.S. keep being this incredible engine of innovation – the policies most likely to help the U.S. economy in getting new companies and new jobs.
Those are policies that I am most focused on.
But if the U.S. loses its role as the world's reserve currency, that will cut our net worth down by 25% top to bottom and as Trump rightly said, that will be worse than losing any war.
If you have any serious amount of money in U.S. dollars, go here now and see why you must move your cash before September 30th.
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