Many currency experts believe that China, a rising currency powerhouse, could soon take the dollar’s long-held place as the world’s most desirable currency.
Summer 2017 — If you had to guess, what would you say has been the world’s most widely used currency for the last 90 years?
The U.S. dollar, of course.
The dollar is instantly welcome all over the earth. Many governments hold a large portion of their reserves in dollars. Crude oil and many other commodities like gold and silver are priced in dollars. Business deals around the world are conducted in dollars.
But times can change very rapidly, as history shows. Many experts believe that China, the latest currency powerhouse, could soon take the dollar’s long-held place as the world’s most desirable currency.
For the first time, China’s yuan has just joined the International Monetary Fund’s elite basket of reserve currencies. This is a highly rare event: the last currency so honored was the euro in 1999!
China is actively angling to become the new global reserve currency of tomorrow.
ALL RESERVE CURRENCIES RISE AND FALL
Believe it or not, most global reserve currencies only hold their status for about 100 years. A good factoid to know, considering that the U.S. dollar is currently in its 95th year.
Why is the dollar under threat? America is swiftly passing $20 trillion in national debt and accelerating. The economy is in the grips of a Federal Reserve that is rapidly losing the confidence of investors.
Our government’s plan to boost domestic spending and defense budgets while cutting taxes will only accelerate our debt’s expansion and hasten the decline of the dollar.
CHINA: EAGER CONTENDER FOR TOP CURRENCY POSITION
China has achieved an incredible milestone in its campaign for recognition as a global economic power. When China’s yuan was added to the International Monetary Fund’s basket of reserve currencies, it was elevated to the status of the U.S. dollar, the yen, the euro and the British pound. This basket determines currencies that countries can receive as part of IMF loans.
According to the People’s Bank of China, China will use this opportunity to further reform its economy and financial markets to promote global growth. But the real story is that China has openly called for the yuan to replace the U.S. dollar as the world’s currency.
This is a financial threat that should be taken seriously. China is the world’s largest exporter and the second largest importer of merchandise goods. By 2025, China is projected to build enough skyscrapers to fill 10 New York-sized cities!
What will happen to your dollar-based assets when the greenback’s reign as the world’s reserve currency comes to an end? Are you prepared for massive inflation, higher interest rates and higher living costs?
There is only one asset to own if the dollar has in fact seen better days: gold.
YOUR PURCHASING POWER HAS BEEN CRUSHED
According to Ron Paul, the Federal Reserve has been devaluing the dollar over the last 100 years, siphoning money from the wallets of savers into the pockets of debtors. In 1971, Nixon unlinked the dollar from the bedrock of gold with a stroke of a pen. Since then, the dollar has dropped more than 90%.
It’s something every American needs to face, as painful as it is.
According to Paul, if the Fed continues its current easy monetary policy direction, the U.S. economy is in danger of collapsing, especially if confidence in the dollar declines.
What currency will replace the dollar if it is no longer the world’s reserve currency?
Whether it is the yuan, or another currency like the euro, is anyone’s guess.
Either way, retirement investors would be wise to consider diversifying into alternative safe-haven assets like gold and silver for their retirement IRAs.
