The recent spat of articles concerning the trend to De-Dollarize is concerning. The idea that other Nation States are settling their trade in local currencies rather then the Benton Woods favored USD it telling us something. It is telling us that they want to be independent of the capricious sanctions placed on Russia indicating that it could happen to them. It's kind of a bully in the school yard tale. The US is the biggest and meanest kid in the playground and unless you bow down and pay homage to it you get whacked.
The USD is found in Trillions outside of the US and much of that is held in US Bonds, mostly shorter duration now but there are still some long duration bonds out there too. The US Bond is Guaranteed by the US Government and that Guarantee is considered rock solid because the US enjoys a free printing press to ensure the Bonds get paid. Well, that is the case but when it said the Bonds will get paid they mean the Interest not the principle. The US Debt ensures that. It will never get paid but it will get inflated away, meaning when it is time to roll over bonds due the Treasury simply issues new bonds at the then current interest rates to "roll over' the debt. This can go on for almost literal perpetuity. It inflates the USD and devalues it. The US Citizens as taxpayers pay for this hidden tax in higher prices. Lovely.
So if trust in the USD wanes as spawned by the bully in the school yard tactics, the trust in the US Bond also wanes and less and less buyers show up at the auctions to but US Debt Instruments ie the US Bond. Gradually, the buyers thin out and the demand for US Bonds falls short for the roll overs so interest rates have to rise in order to attract buyers and price in their perceived risk. When even that fails, the Federal Reserve shows up with a printing press and buys the bonds. This is sometimes so large as to shake rates down some but it is again inflationary and the wheels go round and round.
The present respite as reported says interest rates are to go down. Then employment gets a big number and that hope falters. If rates are ties to inflation as mentioned, then we should see higher rates and higher inflation in the coming months and years. The US is on the precipice if not already in a debt dooms day cycle. There may not ever be a default in the classic sense of non payment but the purchasing power of the USD will get even lower as if that is really possible. It is. Hyperinflation can set in and we are off to the wheel barrels to carry in enough cash for a loaf of bread. It can and does get ugly. Social unrest becomes the norm if not revolution whether at the voting booth or on the street. Trust in the US election system indicates we could see it on the street. Hunger has a way of doing that especially with such a serious wealth gap. Ai, chihuahua!!!
So what is one to do. First, be aware of the trend to de-dollarize. Second, hedge against it and inflation by getting out of the USD. That can be done by holding physical Gold and Silver and limiting USD holdings to what is absolutely necessary for day to day exchange. Converting bits of gold and silver to cash is fairly easy and liquid. Gold and Silver are both traditional hedges against a devaluing dollar/inflation and also in today's environment a hedge against increasing likelihood of a currency reset. That could bring in the CBDC but it will still be Fiat money and even worse due to its surveillance potential. Yikes, Big Brother will be everywhere and privacy will have had its last hoorah in the US.
How much of what I write is speculation? Very little if any at all. But to see what is happening you must look beyond the main stream media which is at this point an arm of the Leftist Democratic Party. They don't care about the People but they do care about Power and maintaining it. The CBDC is an excellent tool the Bully can use to get everyone bowing down. OhThank you overlords for your kind handouts.
I am less than optimistic about the USD, US Bond and Freedom that some newer Citizens never saw in the first place. Some are calling for a Debt Jubilee but I say add in a Law and Regulation Jubilee to the mix. Heavy regulation slows business and occupies all with almost meaningless bureaucratic bullshit. That is not Freedom but the deep nanny state used to beat us over the head. Who doesn't like to be bludgeoned. Yes, it's better than William Wallace's having been drawn and quartered.
The new battle cry must be a return to Gold and Silver as money (that is money per the US Constitution) and a return to privacy rights and property rights…FREEDOM!!!
Best,
Donn Marier
DM-Your Own CFO