De-Dollarization

[nigelforbes]

Put simply, this is where the world ceases to be so reliant on USD and the implication of this.

 

At the start of this century, over 90% of global trade bills were settled in USD, today it's just over 50% and falling, the forecast is for 40-45% in 2 or 3 years. If you exported or imported something, the bill was paid in USD, today it's paid in Euro's, Yuan even Rupee's and other currencies. Is the US Dollar going the way of the English Pound and what are the implications?

 

USD is at the head of the FOREX currency tree, what happens to that tree when other currencies on the tree are stronger and more stable? Oil is priced in USD, so is Gold and other precious metals, all of which need a stable pricing currency. The IMF has reduced its USD holdings from 77% to 57% in just 20 years, the global stocking of USD has fallen by 20% over the past four years alone. All of these things suggest that USD is rapidly becoming less valued, it's already a very volatile currency and is forecast to be even more so in the future. This does not bode well for the US, lower demand for USD means lower value of the currency and debt that nobody wants to buy any more, ouch. Historically there is one solution to avert an economic catastrophe, war is one way to create demand but at what cost. Let's hope there's a better plan somewhere.

 

https://sundayguardianlive.com/news/de-dollarization-world-faces-threat-of-economic-catastrophe

 

 

 

 

 

 

 

 

https://sundayguardianlive.com/news/de-dollarization-world-faces-threat-of-economic-catastrophe

[Kwasaki]

Maybe eventually there will be just a world currencey base on Gold. 

[nigelforbes]

1 minute ago, Kwasaki said:

Maybe eventually there will be just a world currencey base on Gold. 

Whatever it turns out to be, and I've no doubt somebody will soon mention Bitcoin or similar, the effect on the US could be substantial.

[sqwakvfr]

Everything you said is true and will happen in the near future.  A few months ago I was in Singapore and was in line to exchange money.  The Chinese lady in front of me had a stack of Yuan.  The clerk  at the exchange counter was not happy to accept all these Yuan.  My turn came up and I handed the clerk two $100 dollar bills and she smiled and handed me SIN Dollars.  Of course this is just my experiences but there were an also group of Filipino men who were in transit to Manila from Kuwait and they also handed over $100 dollar bills.  The clerk was now very happy.  So the American Dollar, especially the $100 dollar bill, appears to be still the king.  It has not been replaced. At least not yet. 

 

About 15 years ago while I was working in Afghanistan and  a local kid came up to me and asked “mister you want drink?” I said yes and he showed me two bottles of Grey Goose Vodka. I thought I would never see Grey Goose in the hinterlands of Jalabad but sometimes truth is stranger than fiction. I offered him two $100 dollars bills and he said ok.  As he was putting the money away I noticed he had a large stack of $100 dollar bills. I have been to some off the beaten path places in the world and I have seen many different kinds of people(yes some were probably criminals) with $100 dollar bills.  The American $100 dollar bill has had a great run as the de facto global currency but it will probably come to an end sooner and not later.  But i do not see the Yuan replacing the dollar anytime soon.  The Euro has a better chance than the Yuan will ever have being the new global currency. 

[3NUMBAS]

money from fossil fuel sales will diminish eventually .so $ falls out of favor

[nigelforbes]

2 minutes ago, sqwakvfr said:

Everything you said is true and will happen in the near future.  A few months ago I was in Singapore and was in line to exchange money.  The Chinese lady in front of me had a stack of Yuan.  The clerk  at the exchange counter was not happy to accept all these Yuan.  My turn came up and I handed the clerk two $100 dollar bills and she smiled and handed me SIN Dollars.  Of course this is just my experiences but there were an also group of Filipino men who were in transit to Manila from Kuwait and they also handed over $100 dollar bills.  The clerk was now very happy.  So the American Dollar, especially the $100 dollar bill, appears to be still the king.  It has not been replaced. At least not yet. 

 

About 15 years ago while I was working in Afghanistan and  a local kid came up to me and asked “mister you want drink?” I said yes and he showed me two bottles of Grey Goose Vodka. I thought I would never see Grey Goose in the hinterlands of Jalabad but sometimes truth is stranger than fiction. I offered him two $100 dollars bills and he said ok.  As he was putting the money away I noticed he had a large stack of $100 dollar bills. I have been to some off the beaten path places in the world and I have seen many different kinds of people(yes some were probably criminals) with $100 dollar bills.  The American $100 dollar bill has had a great run as the de facto global currency but it will probably come to an end sooner and not later.  But i do not see the Yuan replacing the dollar anytime soon.  The Euro has a better chance than the Yuan will ever have being the new global currency. 

Yes of course, this is not a "right now" issue. But I do think a more probable outcome is that rather than have a single currency, everything will be based on a basket of currencies, where individual currencies come and go, that's pretty much what we have in parts of the global economy currently.

[expat_4_life]

The short answer to the OP is nobody knows. Plenty of speculation in financial circles and any number of podcasts.

 

It's not gonna be pretty but I'm not a pessimist. Its not in any other countries interest for the dollar economy to simply collapse. This is more like a slow moving disaster, we can see it coming so we have time to avert catastrophe.

[Kwasaki]

13 minutes ago, nigelforbes said:

Whatever it turns out to be, and I've no doubt somebody will soon mention Bitcoin or similar, the effect on the US could be substantial.

I just seen it as Gold and all world currencies valuation base on that.

Simple.

[nigelforbes]

1 minute ago, expat_4_life said:

The short answer to the OP is nobody knows. Plenty of speculation in financial circles and any number of podcasts.

 

It's not gonna be pretty but I'm not a pessimist. Its not in any other countries interest for the dollar economy to simply collapse. This is more like a slow moving disaster, we can see it coming so we have time to avert catastrophe.

It can be argued that the current banking crisis is part of that collapse and that perhaps people haven't been too active in trying to avert a catastrophe. It is after all, US interest rates and the value of the 10 year US Treasury bond that is at the heart of the current problem.

[nigelforbes]

2 minutes ago, Kwasaki said:

I just seen it as Gold and all world currencies valuation base on that.

Simple.

If only there was enough of it, unless you're hiding a bunch of course. ????

[Kwasaki]

4 minutes ago, expat_4_life said:

The short answer to the OP is nobody knows. Plenty of speculation in financial circles and any number of podcasts.

 

It's not gonna be pretty but I'm not a pessimist. Its not in any other countries interest for the dollar economy to simply collapse. This is more like a slow moving disaster, we can see it coming so we have time to avert catastrophe.

I don't see it as a problem I guess  the USA would. 

Isn't that what they took out Gaddafi. ????

[Kwasaki]

4 minutes ago, nigelforbes said:

If only there was enough of it, unless you're hiding a bunch of course. ????

My wife keeps it in the safe.  ????

[nigelforbes]

2 minutes ago, Kwasaki said:

My wife keeps it in the safe.  ????

You joke, but: my uncle got a job with a jewelry shop on Hatton Garden, right after the war. One of his tasks was to sweep the workshop floor but he was allowed to keep whatever he swept up. At the time they used a sawdust like product called sweep to collect the bits and pieces from the worktops that ended up on the floor. He put the sweep into a 50 gallon bin and when it was full he hauled it up to a smelter in Sheffield who separated the contents and credited various precious metal accounts in his name. When the gold account reached a certain level, the smelter would cast a gold ingot which he stored. When he first told me this story I went, oh yes, right, roll of eyes! Then one day he showed up for breakfast with a gold bar wrapped in newspaper, he took one down to sell to his mates in the Garden periodically, free of VAT of course. That was his pension.

[KhunLA]

I don't think it's de-dollar, more just progress in the global market, and the ability to pay with any currency you like now.    RU sanctions is proof of that, as they simply flow their money through CH.

 

Online shopping, you pick what currency you want to pay in, home or other country.  Can change any currency into any currency now when traveling, usually.

 

Almost a free floating market, almost ????

 

If they ever introduced a world currency, you know it would only benefit the banks and printers of, or plastic/app they plan to institute.

 

Although at that point, it will probably be stored in your bio-chip ????

Edited March 21, 2023 by KhunLA

[timendres]

The current evolution appears to point to a "bipolar" world. In this world, some countries will trade "outside" of USD. For example, if the BRIC nations were able to establish a currency (they are planning it), then they would be able to trade amongst themselves in this new currency. For example, India might trade with Russia in this new currency. However, India would continue to use USD for transactions with the US (and likely, Europe, Canada, Australia, etc.).

 

So it appears more and more likely that the world splits into two major "currencies", with trade occurring in the most convenient currency for the transaction. The USD would become less dominate worldwide, but would still be the currency used in "the west". In other words, it is unlikely that the USD will lose its reserve currency status in our lifetimes, but it will lose its dominance in global trade and reserves. How much so is hard to say, but it will be incremental.

 

One only needs to look at the massive purchases of gold that central banks are making. Having seen the "weaponization" of the USD (e.g., sanctions on Russia), they recognize that it makes sense to lighten up on USD reserves and hold some more gold. But USD reserves continue to dominate global reserves, simply because most global transactions continue in USD.

 

The debt based monetary system (i.e., fiat currency) has now reached the "exponential" phase of expansion, and such a system must continue to expand or it collapses. The only solution to this problem is perpetual growth, which is not really feasible anymore. Thus, the debt based system must change. However, this change will not be smooth, most likely coming in the form of a major crisis and collapse. This will be painful for everyone. And there is no way to predict the outcome. Some say it will usher in CBDCs, but this will be just a digital form of the same thing, so the problem will not be solved, only delayed further. These are interesting times indeed.

Edited March 21, 2023 by timendres

[Kwasaki]

12 minutes ago, nigelforbes said:

You joke, but: my uncle got a job with a jewelry shop on Hatton Garden, right after the war. One of his tasks was to sweep the workshop floor but he was allowed to keep whatever he swept up. At the time they used a sawdust like product called sweep to collect the bits and pieces from the worktops that ended up on the floor. He put the sweep into a 50 gallon bin and when it was full he hauled it up to a smelter in Sheffield who separated the contents and credited various precious metal accounts in his name. When the gold account reached a certain level, the smelter would cast a gold ingot which he stored. When he first told me this story I went, oh yes, right, roll of eyes! Then one day he showed up for breakfast with a gold bar wrapped in newspaper, he took one down to sell to his mates in the Garden periodically, free of VAT of course. That was his pension.

My first official job was a 5 year goldsmith apprenticeship at the end of the days works bench skins were swept and floor and any work surfaces where gold had been.

At the end of the year they had what was a working bar of gold,  forget how much but as Mr Alfred use to to say where there's waste there's gold. 

[Furioso]

   I agree the USD cannot be the reserve forever. However, right now there is no other currency to take it's place. Gold or Bitcoin probably have a better chance than either the Euro or Yuan.

  Actually, I think the current reserve status hurts the U.S.(and almost all other countries) because until something drastic happens financially the average human will continue to be extremely unhealthy(obese/morbidly obese, stressed, unhappy, relatively poor, victim of wage theft, which is a HUGE problem, etc). 

  Yes, we have a habit of looking only at the overall financial wealth of a country..and making our opinion on this one sole basis. However, there's much more going on under the surface, which very few people seem to think or care about. 

[nigelforbes]

5 minutes ago, Furioso said:

   I agree the USD cannot be the reserve forever. However, right now there is no other currency to take it's place. Gold or Bitcoin probably have a better chance than either the Euro or Yuan.

  Actually, I think the current reserve status hurts the U.S.(and almost all other countries) because until something drastic happens financially the average human will continue to be extremely unhealthy(obese/morbidly obese, stressed, unhappy, relatively poor, victim of wage theft, which is a HUGE problem, etc). 

  Yes, we have a habit of looking only at the overall financial wealth of a country..and making our opinion on this one sole basis. However, there's much more going on under the surface, which very few people seem to think or care about. 

It should be made clear that USD is one of the Reserve Currencies and not the Reserve Currency. Yes it is the largest by a substantial margin but the other Reserve Currencies still total over 41% and the RMB share is increasing. I'm certain that the use of a basket of currencies will be the future model rather than dependence on a single currency. This is very similar to using Special Drawing Rights (SDR's) which have become increasingly used and offer more flexibility than a single currency.

 

 

https://en.wikipedia.org/wiki/Reserve_currency

[nigelforbes]

The following link explains SDR's:

 

"According to the IMF, SDRs (or XDR) are an international reserve asset to supplement its member countries' official money reserves. Technically, the SDR is neither a currency nor a claim on the IMF itself. Instead, it is a potential claim against the currencies of IMF members".

 

https://www.investopedia.com/articles/forex/040215/what-are-imf-special-drawing-rights.asp#:~:text=Developing nations can use SDRs,volatility would be too extreme.

[Furioso]

38 minutes ago, nigelforbes said:

It should be made clear that USD is one of the Reserve Currencies and not the Reserve Currency. Yes it is the largest by a substantial margin but the other Reserve Currencies still total over 41% and the RMB share is increasing. I'm certain that the use of a basket of currencies will be the future model rather than dependence on a single currency.

Yes, perhaps in the future. However, if you look at these numbers the USD and the EUR have been 75% or more for 45 years! Why? Because they are much more stable than the rest of the world. True, things are really getting screwed up in the world..we literally don't know what's going to happen tomorrow, let alone next year, 5 years, decades ahead. However, Europe and U.S. are still kings in this category. It will take A LOT to knock them off their perch. 

[SABloke]

15 hours ago, sqwakvfr said:

A few months ago I was in Singapore and was in line to exchange money.  The Chinese lady in front of me had a stack of Yuan.  The clerk  at the exchange counter was not happy to accept all these Yuan.  My turn came up and I handed the clerk two $100 dollar bills and she smiled and handed me SIN Dollars.  Of course this is just my experiences but there were an also group of Filipino men who were in transit to Manila from Kuwait and they also handed over $100 dollar bills.  The clerk was now very happy.  So the American Dollar, especially the $100 dollar bill, appears to be still the king.  It has not been replaced. At least not yet. 

Why would the clerk at an exchange counter care about the currency (unless she was a major shareholder of the company ????) Is it perhaps plausible that the "stack" of Yuan had a value of thousands of SIN Dollars and required more time to process (perhaps she foresaw running out soon) and that changing your $200 was a lot less hassle. Also, why did you bother sticking around to see what other customers were exchanging - you must love exchange booths ???? I have no doubt that you might have seen a grumpy faced Singaporean clerk dealing with a Chinese customer - I just think the reason behind the attitude of the clerk carries a lot of speculation on your part.

[nigelforbes]

The motivation needs to be a desire for global economic stability and not patriotisms or existing ownership. The Pound was on its perch for a long time, but still today, decades after its fall, many still cannot get over the fact that Sterling is not the currency it once was nor the country the influencer it once was. Several alternate trade groups have been developed regional, for many countries this is a conscious effort to avoid or reduce Dollar dominance and settlement. 

[sqwakvfr]

17 minutes ago, SABloke said:

Why would the clerk at an exchange counter care about the currency (unless she was a major shareholder of the company ????) Is it perhaps plausible that the "stack" of Yuan had a value of thousands of SIN Dollars and required more time to process (perhaps she foresaw running out soon) and that changing your $200 was a lot less hassle. Also, why did you bother sticking around to see what other customers were exchanging - you must love exchange booths ???? I have no doubt that you might have seen a grumpy faced Singaporean clerk dealing with a Chinese customer - I just think the reason behind the attitude of the clerk carries a lot of speculation on your part.

I did not "stick" around.  This was just my observation and of course I could wrong.  Yes it is just speculation and you speculation about my "sticking" was wrong as well.  I just had a brief chat with the Filipinos workers because i too had worked in Kuwait in the past and knew many Filipinos OFW during my time there. 

 

 

[mania]

On 3/21/2023 at 12:11 AM, Kwasaki said:

Maybe eventually there will be just a world currencey base on Gold. 

 

[Kwasaki]

1 hour ago, mania said:

 

Thanks understood some of it so gold will still be in the main the thing to have. Yes,   No. 

[nigelforbes]

1 hour ago, Kwasaki said:

Thanks understood some of it so gold will still be in the main the thing to have. Yes,   No. 

The problem with that is the huge disparity between gold holdings by governments and their debt. The USA has 8,000 metric tonnes but has debt in the trillions of dollars, other countries hold hundreds of tonnes of gold but have very little debt. On that basis, how do you set what the price of gold should be?

[Kwasaki]

17 minutes ago, nigelforbes said:

The problem with that is the huge disparity between gold holdings by governments and their debt. The USA has 8,000 metric tonnes but has debt in the trillions of dollars, other countries hold hundreds of tonnes of gold but have very little debt. On that basis, how do you set what the price of gold should be?

Well I see what you mean I guess but I don't see why a world currency formed can't be in place  like with a world bank to let the dollar of the hook. 

Or would US not like that.? 

[nigelforbes]

11 minutes ago, Kwasaki said:

Well I see what you mean I guess but I don't see why a world currency formed can't be in place  like with a world bank to let the dollar of the hook. 

Or would US not like that.? 

I think the idea of a world currency is problematic, it makes it too easy for everyone to understand the relative value of their earnings, savings, real estate etc. If you think mass immigration to the West is a problem now, wait until everyone figures out their home country economy is really rubbish. Today, different currencies obscure that fact to some degree.

[Kwasaki]

4 minutes ago, nigelforbes said:

I think the idea of a world currency is problematic, it makes it too easy for everyone to understand the relative value of their earnings, savings, real estate etc. If you think mass immigration to the West is a problem now, wait until everyone figures out their home country economy is really rubbish. Today, different currencies obscure that fact to some degree.

So you could buy shares in a company that manufacture's rubber boats. ????