I’m sorry, but how is the USD “dying?” 💵
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Geopolitical strategies are underway to replace global dependency on the dollar as universal currency. Lot of countries are already leveraging multiple options. BRICS formation is solely to reduce this. Plus the tarrifs and reduction in trade leads to less usage of dollars. Listing just some reasons which came top of the mind.
Not far at all. Russia has destroyed its own economy, Brazil is alright, India and China are competing for low end manufacturing, and South Africa is languishing. These do have the potential to be stronger economies, but they aren’t even on the same page.
There are a few risks that are showing, explained as simply as I could:
1. BRICS - this is Brasil, Russia, India, China, Saudi Arabia, South Africa and a few other nations trying to replace the dollar with their own Crypto Based reserved currency. Essentially they are trying to replace the core treasury banking system (SWIFT) with their own version. If successful it will mean that you do not need to first trade into dollars to then buy the currency you wanted to trade with.
2. The BRICS countries have been moving their gold reserves out Europe and US and back into their own soil. Which is one of the reasons gold is reaching all time highs.
3. US's debt to GDP is at 12:10 (120%) currently. Meaning US need 120 income to just be able to pay its debts. The risk comes when you have to borrow more to pay of your existing debt, leading to a crash. If stronger countries see US as about to crash they would not want to hold or trade with Dollars.
4. Japan is going through its own economic turmoil, factors that could be contributing is aging population and low birth rates. Many of the industries (technology, cars, etc.) are moving to China and South Korea. We have seen this with how badly Nissan and Honda are doing. Even Sony has lost in the TV and audio space. This has led to Japan needing to raise interest rates which is putting a damper on how Japanese banks usually operated. Ie Japanese industry would export high volume thus having a surplus of dollars in the bank, these banks would buy US debit (bonds) as they were safe. Japans government did not want their yen to be strong against other currencies to encourage exports,and thus kept their government bonds at negative interest rates. But now they are increasing interest the Japanese banks are looking to sell US bonds as they see them as risky due to feeling US might default on their debt.
5. The k shaped economy of US and the way AI stocks are making a high percentage of the SnPs growth. I believe there are some figures (bravos research and Capital.com) that show even though US month on month growth was like 5%, 4% was just the AI boom and without this US would have been classed as being in a resession.
6. Trump being the definition of VUCA as a person to deal with.
There are a other factors but hopefully you can see how their is a reason many countries are looking at the dollar as not being a stable resurved currency, from a generalistic purspective.
Also - how is it at risk of losing world reserve currency status? Genuinely asking.
The petro dollar seems to be weakening as china comes back online and tariffs cause issues with supply chains and sales. Then there is the fact that some in government want a weaker dollar to boost exports. Is it as bad as you hear on the news? Not at all. That said it is a shift from the past where the strong dollar was often seen as the goal.