The end of the dollar as we know it – By: Andy Langenkamp – Reviewed. The Worlds Economic Woes vs. The U.S economy – Septemeber 1, 2019
There are a handful of countries all over the world, which could survive economically in theory without the U.S dollar, but in order to do this, we’d have to also remember something called global stability. One of the main reasons the world had world wars revolved around democratic countries not having the ability to pay their bills. What did the Nazis come to power? Germany at the time was broke, Germany basically tried to do what the U.S was successful at, which was Print Money to pay its bills, however, the problem Germany faced when it Printed money was that most of the world was on a Gold Standard and viewed money in terms of what they could trade it in for Gold.
Germany’s financial economy then hyper-inflated and similar to ISIS in the middle east, the poor people of that era wanted a quick solution to their dilemma. Hitler during that period provided a fast solution to Germany’s then economic woes. A war breaks out and via the leadership of the United States peace was restored, temporarily. What happened next was a series of other wars that continuously broke out because of Hyper-inflation. When currencies or the money system fails, war is inevitable.
The European Union as an example is more solvent than the United States is financially, but The EU also does less for the world than the United States does. When Trump asked members of the NATO to pay their fair share, members of the NATO laughed assuming this was something that funny. Although I have a lot of Libertarian views, I do have a Milton Friedman approach to looking at the world for what it is. Without the U.S presence in many parts of the Middle east, Africa and Europe, without the U.S presence in the Ocean, there’s an assumption that trade will move smoothly. There’s an assumption that Pirates and other delinquents won’t emerge once they notice that the U.S military would have left.
The U.S dollar is propped up or the worlds reserve currency for a good reason first off is the U.S military which is second only to Russia with its nuclear capabilities, the U.S quasi Free-market-system, which unlike most other regions in the world isn’t dominated by Regressive taxation and excessive regulations. In most European regions, regressive taxes are the name of the game and of course, this equates to less consumption which forces up unemployment, causing their populations to decrease and also growing their government welfare dependency.
Now, regarding a Gold or a commodity-backed financial system, most people are open to this, but being that commodities are scarce, the questions most Governments will have to ask themselves is how will they handle Austerity measures? Because the fiat monetary system shouldn’t be taken for granted, especially if you’re a socialist. Fiat money, Keynesian economics, and fractional reserve banking is making socialism possible, if there’s a Gold Standard, Socialism doesn’t have a chance in hell. Cuba, China, and Russia didn’t initially want to be Communist countries, they dissolved into Communist countries, how? Because Socialism is expensive and eventually the government micromanaging the economy has to be consolidated, especially in a monetary system where the money is backed by Gold.
To date, Capitalism is the only systems in which could sustain a Gold-backed currency model and most countries all over the world are anti-capitalism and anti-austerity measures. This, in a nutshell, is why the markets have decided that America is the worlds reserve currency. Now, obviously most politicians who don’t understand the market will shout claims that might tickle the fancy of people, but even if there was a decree to remove the U.S from world reserve currency status, it would have to be the actions of the U.S politicians and congress that would ultimately decide the fate of the U.S dollar.
Money in the modern era all revolves around policy, America is a rare country that fights for Capitalism and because of this, it’s the world that would suffer if America either decided to change policy. Now, what I will say is I’m 100% against the last rate cut that Jerome Powell made. I say push those interest rates up and keep pushing rates up until all of this funny money gets out of the system. However, the market doesn’t need to cut the U.S from reserve currency status to send a message, what the market needs to do is pull out of failing investments.
There are tons of financial companies that should be bankrupt, but they’re being propped up as investment fall, solvent banks are going to have to be conservative, but the truth is the Federal Reserve should be leading the way. There’s a fiduciary duty of all the banks and the bottom line is all the banks are waiting on Jerome Powell to pull the plug. I thought Powell had the heart to do it, apparently I was wrong, quite possibly what’s happening is what I assumed would happen is during Donald Trump’s second term in office the crash will happen.
My reasoning for preferring Donald Trump being in office for the coming crash is because Donald Trump knows it feels like to be in Bankruptcy court, Trump understands bankruptcy. Bankruptcy in case people don’t know is a negotiation process with your debtors, where you might pay back a few cents on the dollar to your creditors in exchange for whatever it is. Being that America does so much for the stability of the world economy, The U.S with the right negotiator would come out winning which would be a good thing for the markets.
However, if let’s say a Bernie Sanders, an Elizabeth Warren a Creepy Joe Bidden wins the 2020 election and there’s a market crash, this would be a global disaster if you ask me. Because the average politician doesn’t understand finances and would probably give up too much. With that established, I have to go back to replace the U.S reserve currency status with who? Ever since China became a world reserve currency, people haven’t exactly been flocking to the Renminbi, the currency market still is ‘A MARKET’ after all. When investors invest in something, they look at everything. So the only logical replacement for the U.S dollar would be Gold and a Gold-backed currency equates to Austerity measures! That means bye-bye socialism and any thoughts of it!
People completely forget why many countries are Marxist because in a Gold-Backed currency any thoughts of socialism will result in an authoritarian taking over the country. Socialism struggles with fiat money, it doesn’t work at all when money is backed by something tangible. I’m kind of annoyed with some of the mainstream writers, I honestly wish some of you would research economic history. The Libertarian argument for Gold is a sound argument, I, of course, disagree, because I personally believe you have to change the culture before resorting back to a Gold-Backed currency, however, the Libertarian argument is still a sound argument. The arguments made by Keynesians from my standpoint have a hard time comprehending the market and analyzing what the market wants.
The market wants stability, currently, empire America provides that stability, is America perfect? Of course not, but currently it’s the best option and that vote of confidence is reflective in the Market.
Interesting times ahead!