Americans ignore the importance of the concept of global currency reserves. It is crucial, but no financial media has discussed it. The American public simply believes that the state operates in dollars as a currency and has no knowledge of its global role in trade and banking. Change will have a strong impact, and an era will end. The shock wave may exert its influence in the same form this year, thus highlighting the importance of the global currency reserve.
The meaning of currency reserves
People usually hang this word, but never explain its meaning. The first is strict meaning, followed by the practical significance. The US dollar acts as a global currency reserve because US Treasury bonds are the core standard for bank reserves. The national banking system of countless countries has a core foundation. They maintain core asset volumes and ratios. It is not gold, but US Treasury bonds. This is mainly because US Treasury bonds are denominated in US dollars. Of course, such an approach can have a huge impact and is also crazy. The use of debt as a core asset in the global banking system is completely reckless and mad, and a systemic crash will inevitably occur. This is the heresy concept and risk from bankers.
The practical significance of the global currency reserve system is that trade is paid in dollars. Shipped oil, grain, container ship shipments, etc., are all paid in US dollars, usually short-term US Treasury bonds. Of course, international contracts such as consulting services and IT system installations are written in dollars and payments. As a result, countries that want to buy foreign goods and services are required to hold large amounts of US Treasury bonds in their banking systems in preparation for completing trade payments.
Eventual loss of privilege
The "Dollar King" is destined to lose the privileges it enjoys. The phenomenon of maintaining the global dollar financial system is widespread and serious. It has generated huge dissatisfaction and strong resistance, as well as concerted action towards a non-US dollar platform. These actions are mainly from the East. When the status of the global reserve currency is lost, the American public will face serious problems that have never been encountered before. They will be very confused. They will be deceived on a large scale. Think about import price inflation, supply chain shortages and civil strife. Using an international credit card to operate the US economy and the US government, but never repaying, the time for doing so is always limited. When the status of the reserve currency is lost and there is no privilege, the shock will begin.
Paid by Oriental Control Trade
Eastern countries control manufacturing plants that are critical to global economic output. This is especially true after the outsourcing industry that Western companies have built is fully formed. First, ring 1980 601 099 Pacific, attending stocks circle. This was followed by India, Brazil and a series of developing countries that urgently needed further development. The West controls the financial markets, all paper instruments and all sophisticated market manipulation machines. If the East has something to control, then it must control the manufacturing department. Therefore, these countries headed by China and the Pacific Rim are in the process of formulating trade payment terms. The current payment standard is US Treasury bonds. But this will eventually change, and when it really changes, the dollar will officially lose its global reserve currency status. The impact will be huge. The Eastern countries, under the umbrella of the Eurasian Trade Zone, will be able to request changes in the form of trade payments. Think about the Chinese yuan, the Russian ruble, or the gold coupon that will soon be born. Manufacturing power determines who has the power to make trade payment terms. The risk to the US economy is that many sectors may face supply disruptions, most notably the retail sector. The Belt and Road Initiative, tailored for large projects, has been implemented outside the dollar-dominated hemisphere.
Crude oil as a junction
The initial impact is most likely to occur in the crude oil market. The key area for the oil dollar standard that lasted for 40 years is the Arabian Gulf region. OPEC has always been dominated by Saudi Arabia, while the latter is dominated by Anglo-American companies and bankers. Saudi Arabia is in a fierce clash with Qatar, and the oil dollar link has been broken. Saudi Arabia also fought with Yemen in order to steal energy reserves. If the truth is made public, then Saudi Arabia will go bankrupt and be torn apart. Let me talk about the natural gas group led by Russia, Qatar and Iran. This group is in the formation stage. The next important event will be that China will win the right to pay Saudi Arabian oil in RMB. Next are Kuwait, Oman, the United Arab Emirates and other Arab oil powers. The event will mark the last few nails of the oil dollar coffin, and the oil dollar has been disintegrated for three years.
The release of the new Heath dollar
This is inevitable, a new dollar that is only used domestically. Some people have been discussing this topic for more than two years. This is not stupid, but the reality that is approaching as time goes by. Soon, the Eastern countries will not accept US Treasury bonds as a means of payment for trade. They will reject the dollar for reasons such as unreliable, fraudulent activity, mismanagement, and so on. The US dollar backed by the US dollar and super currency inflation, namely quantitative easing. This means that the rules that limit the dollar amount are relaxed and African-style currency inflation is allowed. Since the US dollar is the global reserve currency, this approach is reckless and extremely irresponsible. All national banking systems have been hit by quantitative easing policies. The back of the dollar king is also war, sanctions and war threats. The oil powers that did not use the US dollar as a payment method were invaded, such as Iraq, sanctions, such as Iran, and the monks are still in the midst of global wars such as Russia.
Rejecting the dollar as a payment currency will mark the beginning of an important new chapter in modern history. The end of the oil dollar standard will mean the desperate need of the NatGas Group and the urgent need to release the new Heath dollar. Considering the $550 billion foreign trade slogan, the US government will see the new Heath dollar face huge depreciation pressure and may depreciate by 30% every six months. The US government will most likely find a wrong backing for the new currency. They may show a pseudo-golden support, like the notoriously absurd deep deposit account. They may also show an inappropriate oil reserve as part of the foundation. Always remember that the value of strategic oil reserves is about $7 billion. So the trade deficit requires 80 times the reserve to fill the annual trade deficit. The US government spends about 1.2 to 1.5 trillion US dollars. This also inevitably requires raising funds to fill. In order to raise funds to repay US government debt and make up for the trade deficit, a domestic dollar depreciation will be necessary. The US government will face tremendous pressure to attract foreign investment. Of course it is not needed now because it relies on printing machines and lever machines. However, the fundamental factors in the real world are crucial. As import prices climb and demand falls, products will be in short supply and shelves will be vacant. The next step is social unrest. It is expected that there will be turbulence and devastating events in three areas – supermarkets, gas stations and ATMs.
Gold influence
When the dollar king loses its prestige, privilege and reserve currency status, the entire financial system will be greatly affected. When the dollar king is abandoned, countries will compete to find a stable core tool as the foundation of the global financial system. This time people will think of gold. Since the money supply has increased five-fold in the past few years, the solution will be that gold will find its right price – five times the price. This is inevitable. This is like the rising water level in the Bay of Fundy in Maine, as well as the water level in New Brunswick and Nova Scotia in Canada.
With the birth of gold trading vouchers, gold will enter the financial system through the field of trade payments. It is expected that China will make this introduction in the future. China will kick the dollar king and wear gold-made boots. Eastern countries will require appropriate decent trade payment methods. The United States has greatly weakened the impact of the dollar in banking and trade. A huge abyss change will happen. The price of gold is likely to go through some problems. Gold prices may vary in every global region, depending on the level of corruption and integrity. The West will try to keep the price of gold at a low level, while the Eastern countries will strive for the price of gold per ounce. The price of gold will rise to $2,500, $5,000, $8,000, and finally $12,000. This is inevitable, just as the water level will rise after a night of heavy rain.
Geopolitical reality
The failure of the dollar in the Middle East is a signpost for every country seeking help. A series of wars to defend the dollar is a signpost for every country looking for a better top partner. There are no Belt and Road plans and projects in Europe that cannot survive. All trade will pass through China and Russia, while China and Russia will lead the Eurasian Trade Zone and provide a security blanket for the SCO. An important factor is that Russia is a country with zero debt, while the United States is bankrupt and unable to save itself. The failure of the oil dollar helped Iran, Qatar and Russia. The US government’s sanctions against Russia will be insignificant. European countries are striving to resume diplomatic relations with countries such as Russia, and the US government’s sanctions against Iran have had the opposite effect. Iran began a gold oil exchange transaction with India.
The global currency will be replaced. The prices of financial markets are dominated by derivatives, and the purpose of these derivatives is to make banks that are too big to be solvable. The Fed’s hyper-monetary inflation policy aims to make these large banks have cash flow. Without buying bond derivatives, large banks will face bankruptcy like banks in Spain and Italy. But the United States is a special country. The emerging Natgas Group will trade mainly in RMB, rubles and Euros. The US government is busy setting obstacles. The dollar king will face the end, which everyone can see. When gold enters the payment system, an exciting moment will come. The long-standing repression of gold investors will also come to an end.
This article was translated from Phoenix iMarkets from MarketOrcale
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