US Dollar Domination – Just Another Footnote in
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among the majority of Americans is that the US dollar as the world's
reserve currency will maintain America's political, financial and
economic hegemony around the world for decades to come. But, if
there's one lesson to be taken from economic history, it's that
no currency survives the test of time.
As the economic
crisis continued to deepen and affect nearly every nation on earth,
many world leaders – from Europe to China – began discussing the
replacement of the US dollar as the world's monetary unit of trade.
Dismissed by some as all talk, it should now be clear that the Russians,
Arab nations, Japanese and especially China are actively moving
towards reducing the dollar's influence on global economic affairs,
and in the case of China and Japan, replacing it altogether:
China and Japan have agreed to start direct trading of their
currencies, officials announced during a visit here on Monday
by Japan’s prime minister, Yoshihiko Noda.
the world’s second-largest economy while Japan is the third largest,
and the currency agreement is part of a move away from using dollars.
Chinese officials have said recently they would like to broaden
the global use of the renminbi, also known as the yuan, and want
to see more countries move away from relying on dollars as the
the world’s largest foreign-currency reserves China has
about $3.2 trillion, while Japan holds $1.3 trillion and
any moves to reconstitute the makeup of those holdings could change
the global currency map.
officials have made it clear that they believe the international
economy is too heavily dominated by the dollar,” said Charles
States has enjoyed reserve currency status for nearly a century,
but our time may be quickly coming to an end. Some of the world's
previous reserve currencies survived for hundreds of years, so some
may argue that the US dollar still has some staying power. However,
the very same reasons responsible for the collapse of the aureus
(Roman gold), dinarius (Roman silver), solidus, gulden and pound
will be responsible for the downfall of the dollar.
(image via Zero
Hedge and Classical
really. When governments spend more money than they bring in via
taxation they are forced to devalue, sometimes very slowly, their
currency. The Romans did it by reducing the silver content of their
coinage, with some 95% of the precious metal being stripped from
their coins by the time the empire collapsed in the 4th century.
From a Historical
Perspective: The US Dollar vs. The Roman Denarius:
the above chart look somewhat familiar?
What took the
Romans nearly three centuries to accomplish, our Federal Reserve
has done in less than one hundred.
performance, of course, is not a true indicator of future results,
but given that our nation's central bank refuses to change its policies
of quantitative easing and monetary expansion, and considering that
the Chinese are attempting to completely discard the US dollar as
a tradeable instrument, the dollar's demise as the dominant global
currency will come sooner than later.
On top of that,
the United States has some $200 trillion in liabilities over the
course of the next thirty years, making it the largest debtor in
the history of the civilized world.
The fall of
currencies and empires throughout history is a constant.
It is no different
this time. Our fate, it seems, is sealed. In fact, the US dollar
vs. Silver Dinarius chart comparison above suggests that a currency
collapse is not some event that will take place in the future; it's
happening right here and now.
While we may
not have yet reached a waterfall event in which the world as we
know it comes to an abrupt end over a period of days or weeks, it's
really only a matter of time before complete confidence in the system
When that happens,
expect the unexpected. A rapid meltdown of the US dollar will lead
to an economic crisis never before experienced in the modern world,
and will likely result in our
worst fears coming to pass. Things like food shortages, interruptions to
the normal flow of commerce, a breakdown in law enforcement and
emergency response services, political upheaval and widespread social
strife are unavoidable in such a scenario. As unlikely as it sounds,
it is quite possibly the way it will all go down. Look again at
the charts above. Do you think there is any way to avoid such an
of nations, especially super-powers, is never a pleasant affair.
from SHTF Plan.
Slavo [send him mail] is a
small business owner and independent investor.
© 2011 Mac Slavo
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