It’s Over: China Just Broke The US Dollar

What's up guys? This is Graham, so he's official. China and Brazil have

just

reached an agreement to get rid of the US

dollar

. slowly cutting ties with the United States and unsurprisingly this is the first to go so today let's break down exactly what is happening why is this happening what does this realistically mean for everyone watching and if Is this a matter of concern or not because I have to say this is something that needs to be taken very seriously after billionaire Ray Dalio previously described the impending crash of all major economies as we know them how these cycles often occur so regularly and how we can best prepare for what is to come. they are based on predictable events that occur roughly once every 100 years, although before I begin I should warn you that the Like button is also in danger of not being squashed by YouTube's algorithm, so if you don't mind hitting the Like button liking or subscribing is a big help so thank you all so much and now with that being said let's get off to a good start so like a quick 60 second recap to get you all up to speed on what's going on as of now and over the last 80 For years, the US

dollar

has been the most powerful currency in the world because it is known as a reserve currency, this refers to a currency that is accepted throughout the world and since 1945, the US dollar has held that position due to its security, strength and stability,

just

like when the system was first created.

He embraced it as a way to keep investment prices, exchange rates, and commodities like gold oil stable, knowing that whatever currency he held, its value was tied to that of the US dollar. between them, it is useful to have a universal currency accepted around the world with a predictable value to carry out those transactions; otherwise, you risk being paid in a currency that may be difficult to exchange or may have fallen in value over time. you can convert it back to your native currency so think of this as a global transfer of value via the US dollar everyone agreed to be safe of course the US also benefits from this because more countries use the US dollar more Countries hold on to those dollars and we have greater purchasing power as a result, but the US dollar is apparently at risk of losing that reserve currency status and to understand why look no further than Ray Dalio's changing world order, as he explains throughout history there is a constantly shifting world order between leading economy and rising economy and over time one will not be able to make way for something new for example before 1945 the reserve currency was in the hands of the pound sterling which lasted 105 years after the French Revolution followed by the Netherlands followed by Spain and Portugal and Venetian Gold and so on with the understanding that reserve currencies have never lasted forever and about every hundred years they change in a transition that lasts between 10 and 20 years, so what causes this?

Ray Dalio points out that this could be summed up in three categories: the rise at the top and the decline during the rise after each new reserve currency, there is a period of peace, some prosperity is people, BET and borrow on that system , this is usually characterized by a strong education. critical thinking character development and work ethic that enables innovation new technologies and other resources for a continuous increase in productivity however to finance that continuous increase in productivity there has to be a system to borrow and allow people from all over the world turn your currency into investments that share the success of making that happen in fact ray dalio points out that all successful reserve currencies followed the exact same path leading of course to the top at the peak the general consensus is that people will earn more their time becomes more valuable relative to other countries who would be willing to do the same job for less, plus other countries have the ability to take the blueprints for the latest innovation and then copy it for a fraction of cost, reducing the leading powers' competitiveness.

However, the tipping point comes when people lose faith in the reserve currency, refuse to buy it and would rather sell than reinvest the profits, leading of course to decline. Ray Dalio explains that during an economic recession, if the country cannot sustain its own debts, it has to choose between defaulting and printing more money and they are always going to choose to print more money which devalues ​​the currency increases inflation and since the 1990s the central bank has already stepped in three times to finance and the industry collapses once in the.com bubble once during the mortgage crisis and again during the coveted shutdown it is historically said that when a government has trouble financing itself during bad economic conditions or rising inflation, the rich move their assets to places Investments and currencies in which they feel more secure and give way to other nations eventually take the place as the reserve currency, surprisingly, it explains that these events have been repeated constantly since the Roman Empire and while no two changes have ever been exactly the same there is a similar blueprint we could look at today to determine what might happen in the future now in this case the value of our dollar is weakening see that The dollar is not only valued at one dollar, although technically one dollar is always equal to one dollar, although it is actually tracked against three different metrics, the first is the exchange rate to other currencies, the second is the demand for notes of the 10-year Treasury and the third is what's known as foreign currency reserves, which is a really fancy way of saying how many US dollars other countries have now when it comes to the exchange. rate to other currencies it is true that the value of the US dollar has been gradually weakening since 2020.

However, the US dollar is higher recently than it has been in the last 20 years despite the recent fall to second place in As for the holding treasury lawsuit the notes say this is essentially just a 10 year loan to the government and people who want a safe place to store their money will essentially buy these and then get a guaranteed return on their principal in terms of our own currency through the US dollar value has been going up along with interest rates which means the higher the rates the more demand there is to buy those higher yielding bonds which is good for the US dollar and third in terms of foreign exchange reserves.

This is where things are put. a little less bullish because as you can see the US dollar has been falling steadily as other currencies start to take its place and as CNBC reports were now at the lowest we have seen in 25 years this of course brings us to what is happening. At this time, on March 29, it was announced that China and Brazil reached an agreement to trade in their own currencies and abandoned the US dollar as an intermediary. This would essentially allow them to trade directly with each other without having to buy US dollars in the process and they currently do about $150 billion in transactions each year that no longer go through the US.

Now keep in mind that this doesn't this is the first time something like this has happened China has been slowly moving away from the US dollar since 2010 Russia and India abandoned the US dollar a year ago and Saudi Arabia recently said it was open to the idea of ​​trading the Chinese yuan, without mentioning that China, Russia, Brazil, India and South Africa have already joined to transact in their own reserve currency, which is separate from our referenced dollars. like bricks so this isn't exactly something that came out of nowhere but could have a significant effect in fact as Great Capital points out on Twitter China trade volume skyrocketed with Russia war and Ukraine with sanctions that allowed them to gain an even stronger foothold in international trade, but is this really something to worry about?

Could the United States be heading towards a time when it is no longer the reserve currency? Even though the future of the US dollar looks uncertain, there is currently nothing close to being able to take its place now, of course it certainly doesn't inspire more confidence to hear that China's economy is supposed to outperform the US. dominance isn't going anywhere any time soon, frankly, a lot would need to happen first if there was a new reserve currency, and despite a massive Black Swan event undermining America's role in world trade, it might not happen or may not happen in a way that we can reasonably predict, of course, this is not to say that there is no concern of turning everything even with Elon Musk tweeting that this is a serious problem. wants to get rid of the dollar combined with excess government spending forcing other countries to absorb a significant part of our inflation with that, it's no wonder why the Barons recently reported that US stimulus because there is a very real danger of that other countries want to compete even Saudi Arabia signed a new trade deal and ultimately that will put a lot more pressure on the United States but at the end of the day the reality is that the US dollar is traded less there is more competition between countries and that's not going to go away anytime soon however I personally think the US dollar as a reserve currency is not going anywhere it's still the number one spot by far and most of the headlines you see just want clicks I think that spending your time worrying about this is going to be incredibly unproductive, especially when there are much more looming issues that should be discussed a lot more, like increasing the use of the debt limit, which will likely take a significant cost to the markets if both sides can't compromise, which is why I tend to believe that it's always a good idea to understand what's going on and why this is happening, but instead focus your time on what you can control, whether you do or No. re diversified whether or not you save enough money, whether or not you have a steady income and whether or not you invest on a regular basis, that's why I think focusing on that will make you a lot more money than thinking about the possibility that maybe one day the US won't be the world's reserve currency at some point, possibly in our lifetime, plus if you focus on what you can control you'll be in a much better position to subscribe if you don't already It has, because why not?

I hope you enjoy the video and if you subscribe it helps tremendously so with that being said thanks so much for watching as always feel free to add me on instagram and don't forget you can get that free stock with your sponsor. public.com Below in the description when the code gram when you make a deposit enjoy thank you very much and see you next time