Economic Collapse

by Nick Giambruno

 

The ramifications of the US dollar losing its status as the world’s premier reserve currency are difficult to overstate.
It will likely be the tipping point at which the US government becomes sufficiently desperate to implement official restrictions on the movement of people and their money, nationalization of retirement savings, and other forms of overt wealth confiscation.
In just the past 100 years, the international monetary system has collapsed three times: in 1914, in 1939, and in 1971 when Nixon severed the dollar’s last ties to gold. It appears we are soon due for another major reshuffle of the current dollar-centric international monetary order.



Nobody knows the exact date on which the US dollar will lose its prized status, though it is objectively clear that we’re moving in that direction.
The majority of international trade is conducted in US dollars. This means that most countries that wish to engage in trade need to first buy US dollars on the FX market. This creates demand for the dollars—in many cases that would not otherwise exist—which translates into value for the dollar.
Imagine the aggregate effect on the value of the dollar that comes from this arrangement. It’s enormous.
It has allowed the US government and citizens to live way beyond their means for decades. It also gives the US government immense geopolitical leverage. They can pick and choose who they want to cut off from the US-dollar-based financial system—and by extension the vast majority of international trade.
All of these unique benefits, which have been taken for granted for decades, will disappear when the dollar loses its premier status. That is when the US government is likely to be desperate enough to enact the restrictive measures that we all fear. It’s not just the economic or financial consequences you need to prepare for—though they are important—you also need to prepare for the sociopolitical consequences of an economic collapse as well.
It’s probably not going to happen tomorrow, but it’s clear the direction the bankrupt governments of the US and most of the West are headed.
Once the dollar loses its status as the world’s premier currency, your options to take protective action will likely have significantly narrowed, if not disappeared altogether.
Hence the premium on taking action before that happens.
International diversification is your ultimate insurance policy to protect you from not just the financial, but also the sociopolitical effects of an economic collapse.