The United States derives its power from the fact that the rest of the world accepts the dollar as the international reserve currency. This privilege allows Uncle Sam to capture half of the world’s savings and, by extension, live far beyond his means. The best demonstration of American exuberance is their chronically deficit trade balance which shows a hole of 79 billion dollars for the month of May alone …
Kissinger, the machiavell behind petrodollar
To understand how the United States can display a constantly negative trade balance without consequences, we must return to the collapse of the international monetary system. Bretton Woods.
The end of Gold Standard should have dug the grave of the dollar but it was not thanks to … Henry Kissinger. The latter was well aware that the end of the Gold Standard was going to encourage all the countries of the world to get rid of the dollar and, thanks to an explosive historical and geopolitical context, will therefore try the greatest poker coup in the United States to date: the petrodollar…
Thus, Saudi Arabia, a pistol on the temple (it is a bit of history that we will tell soon on Thecointribune), undertook in 1974 to respect two things:
– Sell your oil EXCLUSIVELY in dollars;
– Investing surplus dollars in debt American.
It was from this moment that the dollar became irremovable because oil is already the raw material the most imported in the world. The old continent, even if defying American hegemonic ambition, must bow down and accumulate dollars to get black gold.
And those dollars, while waiting to be spent, are invested in American debt. This “Dollar circuit” helps prevent the depreciation of the greenback despite a regularly negative trade balance.
The illusion of wealth
Americans can consume things they do not produce and raw materials they do not own. They enjoy an economy based on consumption and debt without having to save or produce. To put it another way, the World works for an empire that will never repay its debt.
But all good things come to an end and the dollar empire will not last much longer when we know that Russia and China have the main geopolitical strategy of removing the dollar from international trade.
“It seems to me that our American partners are making a colossal strategic mistake,” said Putin in 2018 before adding that “This is a typical mistake of any empire “. For the Russian Tsar, the United States ignores the consequences of their actions because their economy is strong and the dollar is still hegemonic. However “The consequences come sooner or later”.
The day of judgment is approaching and the bill risks being salted after so many years of excess. The Fed’s printing press and the massive budget deficit following the Covid crisis will not that speed up the putrefaction process of the dollar which will dissipate the power of Uncle Sam.
Trade balance and current account balance
The trade balance American clearly shows why Americans live beyond their means.
However, this metric does not always tell the whole story. Indeed, it is possible for a country to display a deficit trade balance but a current balance in balance, even in excess. The reason being that the country in question can attract a lot of tourists or foreign investments, for example.
However, the observation is also clear since Washington’s current account has been loss-making every year since 1982…
We have never been so close to a collapse of the US currency and therefore an explosion in the value of the real currencies of gold and Bitcoin. The era of the dollar’s exorbitant privilege as an international reserve currency is coming to an end, as is the standard of living for Americans.
Child of Satoshi, the alchemist who turned a cryptographic algorithm into gold.
I’m talking about monetary geopolitics, not shitcoins.