Will the U.S. Dollar Collapse?

America may be headed for a tumble. A big one.

Since 1944, international trades have used our dollar as the world’s reserve currency. As Reuters reports, from 1999 to 2019, it accounted for 96% of international transactions. These days? the U.S. currency now only accounts for 58% of international trade currency.

Thing are changing. Fast.

          We keep thinking we’re the biggest kid on the block. But there’s growing competition, and we may soon be the ones missing our lunch money. Or worse.

          BRICS (Brazil, Russia, India, China, and South Africa) form more than 40% of the world’s population and over 25% of the world’s financial economy. (The term was originally coined in 2001 to describe the “fastest-growing states,” they have been predicted to dominate the global economy by the year 2050.)

          That timeline got sped up when the U.S. sanctioned Russia upon its invasion of Ukraine. The Biden Administration is now playing a dangerous game. Russia now has no incentive to abide by our rules. And if we don’t find ways to make ourselves financially indispensable to the likes of the ascendant BRICS nations, the U.S. dollar may be pushed aside on the world stage.

          How will this affect us? Badly.

Remember when the cost of eggs surged to five dollars? Imagine spending $400 for the same dozen. This isn’t so far-fetched. In fact, a similar scenario happened before to once-prosperous countries.

          Take Germany.

In the early 1900’s, the German mark equaled the strength of the British shilling, the Italian lira, and the French franc. Then came the 1923 collapse. Suddenly, the mark fell to the absurd value of a trillion marks to one American dollar, due to international politics and Germany’s massive war debt.

New York Magazine journalist George Goodman once wrote, “My [German] father was a lawyer, and he had taken out an insurance policy in 1903…It was a 20-year policy, and when it came due, he cashed it in and bought a single loaf of bread.”

          Of course, everyone in Germany suffered—not just insurance holders. In response, the German government printed million and then billion-dollar marks. It didn’t matter. Food riots exploded as farmers refused to sell their hard-earned produce for a pittance. Soon, townspeople marched into the countryside to loot farms, tearing down all sense of law and order.     

          If that seems too unlikely to happen here, consider the Tequila Effect, a more recent example of a devalued currency, this time in Mexico. To help Mexico avoid Germany-like hyperinflation, the U.S. gave them a $50 billion “bailout” in 2021.

          So, are we next?

Today, the U.S. owes a whopping $31.4 trillion. If we default on this, all that money comes due. But what happens when no one wants to bail us out? Our currency value will take a sudden dive.

          Anyone paying attention knows Biden’s administration has utterly mismanaged our foreign relationships, sowing discord between onetime allies like Saudi Arabia—whom we now depend on for oil. This, because of senseless oil drilling moratoriums when we could (still be energy) independent.

          Returning to Russia, in the last few years, we’ve all but told them to take their business elsewhere though they were once a trading partner. And of course, they said, “No problem. We have other friends,” and found other players. Meanwhile, we’ve stop producing real GDP assets misbelieving green energy is our north star.

          And just in case it isn’t clear, our “Let’s go Green and stay clean” approach will literally kill our currency. The value of our dollar is based on speculation and good faith (since 1971), and that faith is slipping.

          Big time.

          The U.S. now faces a critical junction in the global economy. We must take care of our own debt. We must return to energy independence. And we must stop shoving our holier-than-thou (empty) moralism on other nations.

          In short, it’s time to clean up our own backyard. Otherwise, our own currency will become the next mark. And our way of life will vanish.