U.S. Dollar decline: Beginning of the end of the world reserve currency and weapon of mass starvation?

V

Viral

Member
If true, what do you to protect your USD assets and portfolio?

For future references:

USD Index: https://www.marketwatch.com/investing/index/dxy
GOLD: https://www.marketwatch.com/investing/future/gold
Euro: https://www.marketwatch.com/investing/currency/eurusd



Goldman Warns the Dollar's Grip on Global Markets Might Be Over
Goldman Warns the Dollar's Grip on Global Markets Might Be Over
(Bloomberg) -- Goldman Sachs Group Inc. put a spotlight on the suddenly growing concern over inflation in the U.S. by issuing a bold warning Tuesday that the dollar is in danger of losing its status as the world’s reserve currency.
With Congress closing in on another round of fiscal stimulus to shore up the pandemic-ravaged economy, and the Federal Reserve having already swelled its balance sheet by about $2.8 trillion this year, Goldman strategists cautioned that U.S. policy is triggering currency “debasement fears” that could end the dollar’s reign as the dominant force in global foreign-exchange markets.
While that view is clearly still a minority one in most financial circles -- and the Goldman analysts don’t say they believe it will necessarily happen -- it captures a nervous vibe that has infiltrated the market this month: Investors worried that this money-printing will trigger inflation in years ahead have been bailing out of the dollar and piling furiously into gold.
Goldman Warns the Dollar's Grip on Global Markets Might Be Over
“Gold is the currency of last resort, particularly in an environment like the current one where governments are debasing their fiat currencies and pushing real interest rates to all-time lows,” wrote Goldman strategists including Jeffrey Currie. There are now, they said, “real concerns around the longevity of the U.S. dollar as a reserve currency.”
The Goldman report makes clear that Wall Street’s initial reluctance to sound the alarm on inflation back when the pandemic began is fading. Having been burned badly by ominous forecasts of runaway price gains following the fiscal and monetary stimulus that followed the 2008 financial crisis, many analysts have been hesitant to repeat such calls now, especially as the economy sinks into a deep recession.
But with gold surging to record highs and bond investors’ inflation expectations climbing almost daily, albeit from very low levels, the debate on the long-term effects of stimulus has gotten louder.
The 10-year breakeven rate, the gap between nominal and inflation-linked debt yields, has risen to about 1.51%, up from as low as 0.47% in March. That’s seen real yields, which strip out the impact of inflation, plunge further below zero -- to about -0.93% on similar-maturity bonds.
Adding to the upward pressure on inflation expectations are forecasts that the Fed will soon link guidance on the policy rate to prices. That would provide at least some temporary space for inflation to run above the central bank’s 2% target.
“The resulting expanded balance sheets and vast money creation spurs debasement fears,” the analysts at Goldman wrote. This creates “a greater likelihood that at some time in the future, after economic activity has normalized, there will be incentives for central banks and governments to allow inflation to drift higher to reduce the accumulated debt burden,” they said.
Gold’s record-breaking rally highlights growing concern over the world economy. Goldman raised its 12-month forecast for gold to $2300 an ounce from $2000 an ounce previously. That compares with a value of around $1950 currently. The bank sees U.S. real interest rates continuing to drift lower, boosting gold further.
Meanwhile, the Bloomberg Dollar Spot Index is on course for its worst July in a decade. The drop comes amid renewed calls for the dollar’s demise following a game-changing rescue package from the European Union deal, which spurred the euro and will lead to jointly issued debt.
Goldman Warns the Dollar's Grip on Global Markets Might Be Over
The ICE U.S. Dollar Index hasn’t had more than three consecutive years of annual declines since the early 1970s. That’s in part because there are few viable alternatives to dollar assets such as Treasuries, the world’s biggest bond market with nearly $20 trillion outstanding.
The dollar is used in 88% of all currency trades, according to the latest triennial Bank for International Settlements survey. And it still accounts for about 62% of the world’s foreign-exchange reserves, although that’s down from a peak of more than 85% in the 1970s, IMF data show.
The the U.S. “isn’t anywhere close to losing its reserve currency status given the depth of capital markets and overwhelming volume of U.S. dollar-denominated global transactions,” said Michael Krupkin, head of G-10 FX spot trading for the Americas, at Barclays Plc.
 
  • Advertisement
  • V

    Viral

    Member

    Bye Bye Benjamin! Russia & China speed up de-dollarization process: most trade no longer conducted in greenbacks
    29 Jul, 2020 19:06

    1596072366831.png
    FILE PHOTO. Russian President Vladimir Putin and Chinese President Xi Jinping prepare for family photo session at the G20 leaders summit in Osaka, Japan, June 28, 2019. © REUTERS/Kim Kyung-Hoon/Pool


    By Jonny Tickle
    After years of talking about abandoning the US dollar, Russia and China are doing it for real. In the first quarter of 2020, the share of the dollar in trade between the countries fell below 50 percent for the first time.
    To give an indication of the scale of the adjustment, just four years ago the greenback accounted for over 90 percent of their currency settlements.
    According to Moscow daily Izvestia, the share has dropped to 46 percent, tumbling from 75 percent in 2018. The 54 percent of non-dollar trade is made up of Chinese yuan (17 percent), the euro (30 percent), and the Russian ruble (7 percent).
    The dollar's reduced role in international trade can mainly be blamed on the ongoing trade war between the US and China. Relations between the two countries have deteriorated even further in 2020, after US politicians accused Beijing of hiding the severity of Covid-19 and President Donald Trump called disease the "China Virus" and "Kung Flu."

    In January, Russian Foreign Minister Sergey Lavrov explained that Moscow is continuing "its policy aimed at gradual de-dollarization" and is looking to make deals in local currencies, where possible.

    Lavrov called the rejection of the greenback "an objective response to the unpredictability of US economic policy and the outright abuse by Washington of the dollar's status as a world reserve currency."

    Movement away from the dollar can also be seen in Russia's trade with other parts of the world, such as the European Union. Since 2016, trade between Moscow and the bloc has been mainly in Euros, with its current share sitting at 46 percent.
     
    Mrsrx

    Mrsrx

    Somehow a Member
    Staff member
    A lower currency exchange rate is generally better for exports. If the USA is truly reindustrilizing ( as Trump claims ) their economy and can hold the USD at a stable cheaper level...This will benefit them as their exports would rival Asian exports (costs going up in Asia)...If you de-dollarise you will need to jump on another currency that will mathematically go up and make exports more expensive (unless they print a lot like what the US has already done)

    Do not jump the gun many forecasted the fall of the US economy for decades but along with their strong economical allies (EU + Korea + Japan + India.....) they still command a huge currency and economic market share which is a huge advantage going forward. If this is true it is a very long term thing and the fed still has the ability to fight back and to lower its balance.
     
    V

    Viral

    Member

    US economy shrinks 32.9%, biggest decline since 1940s – as it happened
    US economy shrinks by record 32.9% in Q2
    NEWS FLASH: The US economy contracted at an annualised rate of 32.9% in the second quarter following a 5% decline in the previous quarter, according to preliminary figures released by the US Commerce Department. This compares with forecasts of a 34.1% decline.
    Consumer spending slumped 34.6% while business investment was down 27%.
     
    dyyyy

    dyyyy

    Well-Known Member
    A lower currency exchange rate is generally better for exports. If the USA is truly reindustrilizing ( as Trump claims ) their economy and can hold the USD at a stable cheaper level...This will benefit them as their exports would rival Asian exports (costs going up in Asia)...If you de-dollarise you will need to jump on another currency that will mathematically go up and make exports more expensive (unless they print a lot like what the US has already done)

    Do not jump the gun many forecasted the fall of the US economy for decades but along with their strong economical allies (EU + Korea + Japan + India.....) they still command a huge currency and economic market share which is a huge advantage going forward. If this is true it is a very long term thing and the fed still has the ability to fight back and to lower its balance.
    I don't we're talkinf about the collapse of the US Dollar, it's just that until now it's the de facto currency for international trading and its true that some countries are trying to change that.
    This was highlighted with the sanctions on Iran and Trump unpredictable actions.
    China is trying to use more its current currency, and EU are trying to develop an alternative for SWIFT.

    I don't understand the details about these but I'll check the links I found about this
     
    Mrsrx

    Mrsrx

    Somehow a Member
    Staff member
    I don't we're talkinf about the collapse of the US Dollar, it's just that until now it's the de facto currency for international trading and its true that some countries are trying to change that.
    This was highlighted with the sanctions on Iran and Trump unpredictable actions.
    China is trying to use more its current currency, and EU are trying to develop an alternative for SWIFT.

    I don't understand the details about these but I'll check the links I found about this
    Recent history shows how the dollar is protected:
    Dominique Strauss Kahn was proposing an IMF currency that is a bundle on international currencies (Yuan, Eur, Yen, CAD... + of course the USD) and was leading french polls for president
    Qaddafi was proposing gold standard for any trade with Africa and started getting traction
    Saddam Petrol for food

    I think this is not taken lightly and i would not bet against the USA to be honest. All the trade war and uyghurs and spying is getting front pages now suddenly...

    very conspiracy theory sounding...i noticed but who knows :lol:
     
    V

    Viral

    Member
    Recent history shows how the dollar is protected:
    Dominique Strauss Kahn was proposing an IMF currency that is a bundle on international currencies (Yuan, Eur, Yen, CAD... + of course the USD) and was leading french polls for president
    Qaddafi was proposing gold standard for any trade with Africa and started getting traction
    Saddam Petrol for food

    I think this is not taken lightly and i would not bet against the USA to be honest. All the trade war and uyghurs and spying is getting front pages now suddenly...

    very conspiracy theory sounding...i noticed but who knows :lol:
    True except this time around China and Russia are leading the way. Not sure the US is ready to start WW-3 to stop them…
    The last casualty of its own abusive arrogance was the British Empire and its Sterling Pound.
    Nothing lasts for ever…
     
    V

    Viral

    Member
    As much as so many hate Trump for his peculiar behavior, one might realize his own hatred toward China is caused by justifiable fear for the US future technical and economic dominance.
    It has been said who ever leads the 5G technology will rule the world.
    China is 2 years ahead of anyone else in 5G technology. This scares Russia as well.
    Here is a typical example of the US anxiety concerning 5G evolvement and spread. No wonder why they tried blaming Corona on 5G...

    US ambassador warns Brazil may face ‘consequences’ if it gives Huawei access to 5G network

    US ambassador warns Brazil may face ‘consequences’ if it gives Huawei access to 5G network
    29 Jul, 2020 13:52 / Updated 1 day ago
    Get short URL
    US ambassador warns Brazil may face ‘consequences’ if it gives Huawei access to 5G network

    © Reuters
    US Ambassador Todd Chapman has said that Brazil may face “consequences” if it allows China’s Huawei Technologies into its 5G network, referring to US warnings that Beijing fails to protect intellectual property.
    The US government has stepped up efforts to limit Huawei’s role in rolling out high-speed, fifth-generation technology in Latin America’s largest economy, Reuters said. Huawei denies it spies for China.
    Chapman told O Globo newspaper that Brazil would not face reprisals for picking Huawei, but could face consequences. “The consequences we are seeing in the world are that firms involved in intellectual property are scared to make investments in countries where that intellectual property is not protected,” Chapman was quoted as saying.
    Brazil’s far-right President Jair Bolsonaro said last month that 5G deployment would have to meet national sovereignty, information and data security requirements.
     
    L'arbalette

    L'arbalette

    Well-Known Member
    True except this time around China and Russia are leading the way. Not sure the US is ready to start WW-3 to stop them…
    The last casualty of its own abusive arrogance was the British Empire and its Sterling Pound.
    Nothing lasts for ever…
    As much as I hate Trump, his trade war with China proved that China has little to gain in going face to face against the US. And despite all the damage Trump did to the US (to its economy, to its society, to its world alliances, to its standing in the world), the US is still the first economic, military and technology power in the world. We can post as many one year-old articles as we want about the demise of the dollar, it won't change reality.

    Banking analysts are the best in the world at predicting the past. I have no idea if the dollar will crater or shoot back up in the next 12 months and I bet you 90% of the analysts don't either.

    PS. I'm only saying the above so I don't end up on @Mrsrx victime list
     
    V

    Viral

    Member
    As much as I hate Trump, his trade war with China proved that China has little to gain in going face to face against the US. And despite all the damage Trump did to the US (to its economy, to its society, to its world alliances, to its standing in the world), the US is still the first economic, military and technology power in the world. We can post as many one year-old articles as we want about the demise of the dollar, it won't change reality.

    Banking analysts are the best in the world at predicting the past. I have no idea if the dollar will crater or shoot back up in the next 12 months and I bet you 90% of the analysts don't either.

    PS. I'm only saying the above so I don't end up on @Mrsrx victime list
    Trump can force Lebanon not to buy oil with LL from Iran or in exchange for goods but cannot force Russia from selling its gas and oil to China and Europe with local currencies. At this point Europe is getting liberated from the US hegemony as we see US NATO troops pulling out of Germany. This means the Euro is gradually becoming USD main competitor along with the Chinese Yuan.

    This will also start giving Saudi Arabia the option to reducing petrodollar transactions or at least use this option as leverage to resist Trump’s hegemony over them which in return will weaken the USD further. That means the Americans can no longer print the greenback without having something to show for it unlike China and Europe who are industrialized and heavy exporters.
    Remember Great Britain lost its greatness when it could no longer force its colonies deal with the Sterling forcing it to crater.

    Her is another hint:
    Trump says US won’t protect Germany as it ‘pays Russia billions for energy’ in 1st tweet after Pentagon announces troop withdrawal
    P.S. If @Mrsrx harasses you talk to me;)
     
    proIsrael-nonIsraeli

    proIsrael-nonIsraeli

    Legendary Member

    US economy shrinks 32.9%, biggest decline since 1940s – as it happened
    US economy shrinks by record 32.9% in Q2
    NEWS FLASH: The US economy contracted at an annualised rate of 32.9% in the second quarter following a 5% decline in the previous quarter, according to preliminary figures released by the US Commerce Department. This compares with forecasts of a 34.1% decline.
    Consumer spending slumped 34.6% while business investment was down 27%.
    "US economy shrinks 32.9%" - bogus claim.
     
    SAVO

    SAVO

    Member
    so you are building hopes on a collapse of the entire global economical system before the total economic collapse in lebanon ' :D ?
     
    V

    Viral

    Member



    The economy is “leveling off,” following the worst drop in GDP on record amid the pandemic, says Mohamed El-Erian, chief economic advisor at Allianz.


    “It is the square root”–shaped recovery, El-Erian told Yahoo Finance’s On The Move.

    The economy contracted 32.9% in the 2nd quarter amid COVID related shutdowns, and then initially came back strongly as seen in last month’s jobs report and the initial improvement in jobless claims.

    “Now we’e getting the leveling off,” said El-Erian. “That is of worry because not only do we have to deal with the damage that has been created to the economy, but also unfortunately we have now become much more sensitive to any policy slippage.”

    The savings rate went up in the 2nd quarter as households received stimulus checks and grappled with uncertainty surrounding job security and COVDI-19.

    “Among the people standing in line for the food bank here in Orange County is a former baggage handler at the airport, he never thought he would not have a job,” said El-Erian. “My projection is when that person gets his job back, his savings rate is going to go up.”

    “We are going to see an increase in voluntary savings, even as jobs recover.”


    On Thursday, the Nasdaq (^IXIC) climbed into green territory after opening lower this morning along with the other major indices. This comes a day after the CEOs of Amazon (AMZN), Facebook (FB), Apple (AAPL) and Alphabet (GOOGL, GOOG) appeared before Congress.

    “The theme underlying the performance of the Nasdaq, I like. The valuation I’m less excited about” said El-Erian.

    He points to tech companies’ strong balance sheets, positive cash flow, good management and increasing demand amid the pandemic.

    “They will do well and they will continue outperforming,” he said.

    “The overall valuation — and I have been wrong for the last three and a half weeks— I exited those names in my tactical exposure. That was the wrong thing to do,” said El-Erian.

    “But it’s the overall valuation that’s the real question mark for me, “ he said.

    “I can see them continuing to outperform because they have both the resiliency and agility to manage this economy. I just don’t know wether the valuation still make sense to tell you the truth,” he added.
     
    NewLeb

    NewLeb

    New Member
    When I was in college, people (including myself) were saying the same thing: “The dollar will crash in 10-20 years.”

    Here we are today, and the American economy is on fire!🔥

    Pinning your hopes on the American economy failing (especially under Trump) is the dumbest investment decision you can take.

    Who would have thought a few years ago that this would happen to Kodak?


     
    dyyyy

    dyyyy

    Well-Known Member
    Recent history shows how the dollar is protected:
    Dominique Strauss Kahn was proposing an IMF currency that is a bundle on international currencies (Yuan, Eur, Yen, CAD... + of course the USD) and was leading french polls for president
    Qaddafi was proposing gold standard for any trade with Africa and started getting traction
    Saddam Petrol for food

    I think this is not taken lightly and i would not bet against the USA to be honest. All the trade war and uyghurs and spying is getting front pages now suddenly...

    very conspiracy theory sounding...i noticed but who knows :lol:
    6 More European Nations Join SWIFT Alternative over Iran Nuclear Deal - SWFI

    There it is, again, this doesn't mean the US will collapse It's just a small change that can affect the monopoly for cases like Iran
     
    proIsrael-nonIsraeli

    proIsrael-nonIsraeli

    Legendary Member
    When I was in college, people (including myself) were saying the same thing: “The dollar will crash in 10-20 years.”

    Here we are today, and the American economy is on fire!🔥

    Pinning your hopes on the American economy failing (especially under Trump) is the dumbest investment decision you can take.

    Who would have thought a few years ago that this would happen to Kodak?


    "Who would have thought a few years ago that this would happen to Kodak?" - to be fair C-19 gave huge push and nobody expected China virus happening even a year ago.
     
    proIsrael-nonIsraeli

    proIsrael-nonIsraeli

    Legendary Member
    6 More European Nations Join SWIFT Alternative over Iran Nuclear Deal - SWFI

    There it is, again, this doesn't mean the US will collapse It's just a small change that can affect the monopoly for cases like Iran
    Frankly it is impossible to bypass US regardless of how many SWIFT alternatives one will create.

    That is unless "Belgium, Denmark, Finland, the Netherlands, Norway, and Sweden " think that having access to Iranian Market is much more beneficial to them than having access to US Market.
     
    V

    Viral

    Member
    Dumping the dollar: Record gold price justifies Moscow's choice to abandon greenback & bet on precious metal
    31 Jul, 2020 16:11 /
    1596223522220.png
    FILE PHOTO © Global Look Press /

    By Jonny Tickle
    Washington's weaponization of the dollar in an effort to crush Russia’s economy seems to be backfiring. The policy encouraged Moscow to pivot to gold and this week the cost of an ounce broke the $2,000 barrier for the first time.
    Russia's choice to move away from storing Benjamins as a reserve currency and to gradually replace the dollar in trade was accompanied by a relentless gold-buying spree. The moves were a reaction to US sanctions, the primary tool of America's economic war on the world's largest country.
    On Thursday, an ounce of the precious metal traded at a maximum of $2,005.4 on the US COMEX Commodity Exchange. The growth in gold’s popularity is directly linked to global economic uncertainty due to the Covid-19 pandemic, with it being seen as protection against inflation as the US federal reserve money-printers work overtime.
    The price might still be on its way up, with Goldman Sachs analysts predicting a rise to $2,300 within 12 months.
    The increase in the value of gold comes as a great victory for Moscow's policy which moved vast sums away from fiat currency and toward the commodity. In the last five years, the country has spent more than $40 billion building up a massive pile of the traditional safe haven, protecting state finances from currency volatility.
    “The Americans are using the US dollar as a weapon, and Russia is absolutely correct in diversifying its foreign exchange reserves,” John Mayer, partner of the investment and consulting company SP Angel, told Moscow news outlet Gazeta. “Gold is the best liquid investment if you do not want to be held hostage by the dollar.”
    In September 2014, Russia’s gold holding was just 10 percent of the country’s entire forex reserves – now the proportion stands at 23 percent, with 2,299.9 metric tons.
    In March, Russia’s central bank announced that it would stop buying gold, leading some analysts to believe the country’s mining operations would start selling their metal abroad while the price is high. The prediction turned out to be correct, as the second quarter of 2020 saw the value of gold sales to foreign buyers overtaking gas exports for the first time since at least 1994.


     
    HalaMadrid

    HalaMadrid

    Active Member
    Orange Room Supporter
    When I was in college, people (including myself) were saying the same thing: “The dollar will crash in 10-20 years.”

    Here we are today, and the American economy is on fire!🔥

    Pinning your hopes on the American economy failing (especially under Trump) is the dumbest investment decision you can take.

    Who would have thought a few years ago that this would happen to Kodak?


    The whole point of this thread was that insider trading likely fueled the rise. But go off.
     
    Top