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Main Menu * Home * Archives * Special Reports * Transcript Archive * Media * More * About * FAQ * Contact * * * * * * THE REIGN OF THE U.S. DOLLAR MAY BE COMING TO AN END – HERE’S WHAT YOU NEED TO KNOW Shah Gilani Apr 28, 2023 In the wake of the COVID-19 pandemic, the world has seemed more upside-down than usual from a socioeconomic perspective. We’ve experienced massive upheavals in nearly every aspect of business, from the way we work to the restructuring of supply chains, and even the breakdown of globalization itself. Well, as if that wasn’t enough, there’s another potential change coming on the horizon that could blow everything we’ve seen so far out of the proverbial water. Now, the U.S. dollar’s global reserve currency status is being attacked in a concerted fashion, which is something that’s never happened before. If you’re not familiar with how a currency achieves “reserve” status, it’s first and foremost about its use in trade, specifically global trade. Historically, as powerhouse countries extended their reach globally, selling their domestically made goods, and more importantly, buying foreign goods – whether they were spices, commodities, or finished products – they pushed their own home currency as the common means of exchange. The “reserve” status moniker is a modern affectation pertaining to foreign countries acquiring reserves of the global leader’s currency in order to transact in that currency. The global leader’s currency isn’t put into general circulation in other countries, but is instead held in bank accounts, mostly in foreign countries’ central banks, as part of the reserves they stockpile. Simply put, once every country is using your country’s money to buy the world’s most important resources, you’re on top. The U.S. dollar has been on top for 103 years now, and it’s been great for American economic power and American hegemony. But there are groups out there who want to see all that end. And history paints a grim picture every time it happens: the toppling of a country’s reserve currency status has historically been followed by the country’s demise. So here’s what you need to know about how we got here, as well as the political and economic forces that made and have kept the dollar supreme. A BRIEF HISTORY OF RESERVE CURRENCIES There have been six reserve currencies throughout history, with each reigning between 80 to 110 years. The Portuguese Colonial Empire, the first global trading powerhouse, pushed its trading partners to transact in the real, or “royals,” which were mostly coined from gold. The Porto real dominated global trade for 80 years, from 1450 to 1530, when the Portuguese Succession and Iberian Union brought the real’s prominence to an end. Spain was next up. For 110 years, from 1530-1640, Spain’s global reach and its silver real, or real de plata, backed and minted in silver, were the envy and global currency. Until that is, the Dutch occupation, Catalan Revolt, fall of the Iberian Union, and Thirty Years’ War. The consolidated global power of the Netherlands, mostly the result of far-reaching trade and land acquisitions conducted by the Dutch East India Company, saw the Dutch guilder rule global currencies for 80 years, from 1640 to 1720. Then the Dutch East India Company ran into solvency issues and the Anglo-Dutch Wars began. Next up? The French. From 1720 to 1815, a 95-year run, the French livre, later franc, dominated global trade. The French Revolution, followed by the Napoleonic Wars, set the stage for France’s demise and the expansion of the British Empire. For 105 years, from 1815-1920, not only did Britannia rule the seas, the British Empire covered close to 33 million square kilometers. That’s about one-quarter of the total land area of the planet. Its currency, the pound sterling, was the coin of the realm. The ravages of World War I marked the beginning of the end of the British Empire and the pound. And that set the stage for the dollar to rise. HOW THE UNITED STATES ACHIEVED RESERVE CURRENCY STATUS American ascendancy started with a few key facts. First, the U.S. wasn’t ravaged by World War I. Second, the nation’s total wealth (no pun intended) more than doubled during the Roaring Twenties. Third, the U.S. thrived through World War II and at its end was the strongest, richest, most powerful nation in the world. All this helped ensure the dollar’s place as the new global reserve currency. But two manifest destiny endeavors by the U.S. cemented the dollar as the undisputed, singular, true reserve currency, and attached additional monikers to reserve currency status, “store of value” and “safe haven.” First, just before World War II ended, in August 1944, America’s power elite convened a meeting of 44 countries at Mount Washington Hotel in Bretton Woods, New Hampshire. Staking its claim on and in the new world order coming with the end of the War, the American hosts laid out their plan for reconstruction and resurrection of global trade and devastated economies. That plan, known as the Bretton Woods Agreement, essentially foisted the U.S. dollar to top of the heap, to solo premiership, as the principal global currency linked to gold and linking all other currencies to the dollar. The new monetary system that pegged a U.S. dollar to 1/35th an ounce of gold went into effect in 1945. Since the dollar was directly pegged to gold, all other currencies could be pegged to the dollar and not fluctuate inordinately, save for country-specific balance of payments and debt-to-GDP issues. This had the desired effect of smoothing out currency exchange rates, easing trade, and (most importantly for American hegemony) cause foreign governments, banks and their central banks to stockpile dollars alongside gold as their primary “reserves.” The biggest benefit of commanding the world’s reserve currency is that everybody uses it and needs to own it. That demand for the dollar makes borrowing easy and cheap for the U.S. Treasury, since foreign dollar reserve holders use their dollars to buy Treasuries and buy more dollars to invest in America and American assets. The second “manifest destiny” event took place in the 1970s. The U.S. was the largest oil consumer on the planet when the Arab Oil Embargo caused oil prices to quadruple. To tie Middle East interests to American interests, specifically Saudi Arabia and Iran – the Middle East’s largest producers of oil at the time – Secretary of the Treasury William Simon in 1974 constructed what became known as the petrodollar regime. The petrodollar regime was an understanding that the U.S. would contract and buy huge amounts of oil from both Saudi Arabia and Iran, paying in dollars, which the Saudis and Iranians would invest in U.S. banks and Treasuries. They would also get discounts on U.S. military equipment, especially fighter jets, that the two countries wanted to possess. An additional kicker (that’s not openly admitted to) was that the Saudis and Iranians could count on the U.S. for military help if they ever needed it. With oil, the most widely traded and used commodity on the planet, now priced in dollars, it occurred almost naturally that most other commodities would be priced in dollars. That sealed the deal for the dollar as the most prominent trade currency in the world. And as far as global trade in dollars goes, the amount is staggering. As far as American hegemony and power based on the dollar as the global reserve currency, that’s even more staggering. But it’s also a problem. We’re going to be talking about this more over the next couple of weeks, so stay tuned for next week’s installment. I’ll tell you why so much trade in dollars is a problem, why American hegemony emanating from dollar power is a problem, who’s mad as hell about it, who’s doing something about it, and what they’re doing. But honestly, you can already see the capital shifts happening already as America moves away from globalization and is starting to rebuild its domestic capacities again. Infrastructure is a dominant theme in government spending, with billions of dollars being allocated to update critical resources like roads, water lines, and the electric grid. I’ve been watching an opportunity forming in a small company with contracts already in place that could be worth as much as $40 billion. The founders said they’d be closing their doors to new investors in April, but after a few conversations, they’ve extended that deadline to May 1. Shares are going for less than $5, but when the deadline ends, Wall Street and institutional investors are going to crowd the rest of us out. So now is the time to get in, and I have all the details here… LEAVE A REPLY CANCEL REPLY Your email address will not be published. Required fields are marked * Comment Name * Email * Website Notify me of followup comments via e-mail. You can also subscribe without commenting. Δ CUSTOMER LOGIN * Money Map Report Not a member? * Hyperdrive Portfolio Not a member? * Extreme Profit Hunters Not a member? SIGN UP FOR TOTAL WEALTH As a member of Total Wealth, you’ll not only get the big picture according to Shah. You’ll also find out how to trade it for maximum gains. What’s more, you’ll get it all free of charge. By submitting your email address, you will receive a free subscription to Total Wealth and occasional special offers from Money Map Press LLC and our affiliates. Unsubscribe at any time. Please read our Privacy Policy. Website Message RECENT COMMENTS * Albert J Pumila on The Easiest Way to Beat Inflation Right Now * Harry on The Scary Stock Market Volatility Accelerator You’ve Never Heard Of – Until Now * Albert J Pumila on How to Profit as Rental Demand Soars * Dana Deer on Today’s Action: Use HYG to Profit Off “Junk Debt” * James E. O'Brien on Today’s Action: Use HYG to Profit Off “Junk Debt” FEATURED VIDEO SHAH’S LATEST PICKS * A Sideways Market is Perfect for These Easy TradesMay 2, 2023 * These Two Tech Stocks Have Upside Potential – Here’s the PlayMay 1, 2023 * Another Profit to End the WeekApril 28, 2023 * Two More “Out of the Box” WinsApril 27, 2023 * Profit Alert on VIX and SPYApril 26, 2023 FOLLOW SHAH ON TWITTER FOLLOW SHAH ON FACEBOOK Search for: * Home * Archives * Special Reports * Transcript Archive * Media * More * About * FAQ * Contact * Privacy Policy * Terms and Conditions * Do Not Sell or Share My Personal Information * Contact Us Copyright © 2023. 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