Did you know that 60% of global foreign currency reserves are in American (U.S.) dollars?
There’s trouble on the horizon – many countries with very large economies are drifting away from using the dollar as their international trading currency.
As this drift continues, it will eventually cause enormous economical problems for the average American citizen.
Intercountry Japanese—Chinese Trade to Bypass the U.S. Dollar
In 2013, China and Japan –the former possessing the second biggest economy in the world and the latter possessing the third biggest— both signed a binding agreement with each other. The agreement is that they now use their own currencies (the Chinese Yuan and the Japanese yen, respectively) in their intercountry trades, cutting out the U.S. dollar completely. News of this agreement wasn’t publicized all that well by many American media organizations, leaving most Americans completely ignorant of this change in world economics.
By 2015—2016, China’s ever-expanding economy is predicted to surpass the United States’ current economy.
Intra-BRICS Trade Now Bypasses the U.S. Dollar
Brazil, Russia, India, China, and South Africa (known collectively as BRICS) have signed between them two pacts to stimulate the growth of intra-BRICS trading links. These pacts will allow credit for BRICS businesses by allowing them to use a BRICS member’s local currency, when operating in said country.
In the last five years, intra-BRICS trade has grown exponentially (at a rough 28% constant), but it is still far below each member’s full economic potential.
Russia and China utilize Rubble and Renminbi in Trades
For quite a while now (a year plus), the Russian Federation and China have utilized their own currencies to trade with the other, instead of using the U.S. dollar as done in the past.
Investors should know this important nugget of information, because they can use it to help make profits when exchanging currencies during trades.
The Yuan Presence in Africa Grows
Since 2009, the African continent’s most prominent trading partner has been China. Due to Chinese investments and purchases in different types of mines and well-established businesses, the Yuan is becoming more widely used and circulated on the continent.
A source from Africa’s largest bank has stated, “We expect at least $100 billion [roughly equal to RMB768 billion] in Sino-African trade […] to be settled by 2015.”
UAE and China Trades to Use Own Currencies in Oil Trading
The UAE (United Arab Emirates) has agreed with the Chinese outlook regarding the U.S. dollar: they have agreed to use their own respective currencies in oil purchases and trading, instead.
Even if the UAE is a small country, this is still a blow to the long-used petrodollar system.
India’s Iranian Oil Purchases – with Gold!
For quite a while, Iran has called for the world to move away from using the U.S. dollar in international trading – India is now using gold to purchase its oil from Iran.
Saudi Arabian Crude Oil and Chinese Trades
You would think that the United States or even Russia is Saudi Arabia’s most prominent customer – guess again! China is the most prominent buyer of Saudi Arabia’s crude oil supply, and a huge refinery is currently being constructed through a joint agreement.
With this in mind, how long do you think Saudi Arabia will cling to the petrodollar? Market analysts say, “Not for long!”
United Nations’ Members Seek a New Global Reserve Currency
Members of the United Nations have discussed and then concluded that a replacement for the U.S. dollar, as the world’s reserve currency, needs to be found. The United Nations wishes for a “[…] a new global reserve system […] that no longer relies on the U.S. dollar as the go-to reserve currency.”
International Monetary Fund Suggests “Bancor” to Replace World’s Currencies!
The IMF [International Monetary Fund] has called for a new global, international currency to be created, to replace the U.S. dollar. Their report, entitled “Reserve Accumulation and International Monetary Stability”, suggested that there should be a central bank to regulate inter-currency trades between countries, as well as actually handling the issuing of the new currency itself. They tentatively called their proposed currency the “Bancor”.
International Opinions and Views of America
Due to the many, many questionable and unpopular decisions made by the American government in recent decades, many countries’ opinions about the United States have become very negative – a stark contrast to when America was loved globally in the last century.
When abroad, it’s sadly common enough to see many Americans posing as Canadian nationals, even when in Europe, to avoid any potential stigma or negative treatment that’s attached by just being an American citizen.
Due to this unpopularity, many nations now have a stronger incentive to abandon the U.S. dollar as a medium for international trade.
If the U.S. dollar’s reign as the world’s premiere reserve currency ends, major economic changes are going to hit the United States and its citizens’ lifestyles like a force of nature, greatly overshadowing the 2008 recession.
How This Will Affect the American Way of Life:
- A high interest rate on both properties and automobiles
- Surges in the prices of fuel, clothing, food, and luxuries
- Costly and difficult debt financing
Mercifully, these events will not affect the average American in the immediate future, but recognising that these events are happening, and that they are going affect America as a whole, is important to know.
If the predicted, upcoming economic troubles come to pass, the global attitude of abandoning the U.S. dollar as a trading currency could be most disastrous for the currency’s value, leaving it practically worthless. Experts predict that the opinion of abandoning the dollar is going to continue to spread even more in just a few years, so be prepared for it.
It’s a very risky game, but investors can also make money trading currencies, if they carefully analyse the benefits and risks beforehand.