What happens if the United States loses its status as the world’s reserve currency? – The Northern State Journal
Imagine, if you will, that we are in 2025 and the world is still in the grip of crippling stagflation. Prices are skyrocketing and a recession has killed countless jobs. The world is looking for answers, and the United States is not offering the right ones.
As BRICS collaboration, from Brazil, Russia, India, China and South Africa, is gaining momentum in economic and financial sectors and creating ex-US financial pathways, it there is a real possibility that the United States will lose its status as the world’s reserve currency. .
Penalties, what penalties?
As the war between Russia and Ukraine continues, Russian President Vladimir Putin seems out of step with US sanctions. Intended to interfere with their ability to access goods and services and hopefully change their behavior; unfortunately, for the United States, it does not work.
Russia is an important player in the BRICS and is making allies of countries like Turkey as these nations consider adding several other independent states to their list of collaborators. This particular set of circumstances allowed the Russian president to largely circumvent the sanctions imposed on him and his country by the United States.
Meanwhile, there has been a serious pullback in revenue when considering these sanctions. In 2021, Russia was one of the top 40 export markets for the United States. In February 2022, the United States exported approximately $497.5 million worth of materials to Russia in the form of heavy equipment, aerospace technology, healthcare, electrical equipment, and vehicles. By March 2022, those revenues had fallen to $101.1 million and by May to an even lower $77.4 million.
Even taking into account special general licenses issued by the US Treasury Department, tighter restrictions imposed in April 2022 reduced such inbound revenue to a meager $57.99 million in June 2022.
Where are we going?
As the world suffers from inflation, recessions and stagflation, countries are looking for a leader. Who will rise up and fix the major economic problems facing just about every nation in the developed world?
As China pushes to institute the yuan as the new global reserve currency, a power struggle between East and West is brewing, and the undertones are reverberating around the world.
In 2015, China took its first steps towards becoming a player in the global economic market by creating its own “World Bank”. The new Shanghai-centric development bank is a multi-billion dollar investment by BRICS countries to bypass the US and the IMF.
Leading nations including Britain, Germany, Australia and South Korea have signed up to join the New Development Bank, effectively leaving only the United States and Japan on the sidelines .
Taiwan and the Asian Development Bank
As Russia continues its war on Ukraine, the United States and China clash in Taiwan, and China struggles with declining credit. The Asian Development Bank (AfDB) reportedly refused to continue lending to China after 2025, reducing its lending to $7.5 billion between 2021 and 2025 from $9 billion previously.
As key AfDB stakeholders, Japan and the United States clash with China over their threats against Taiwan. But it looks like the AfDB could bow to outside pressure to cut lending to the world’s second-largest economy.
China is dealing with its credit and housing issues. The United States has sworn to protect Taiwan should China decide to invade the island nation. There are, however, serious complications to this dynamic. Although officially an independent state on paper, Taiwan is not recognized by the United Nations as such. China sees Taiwan as a rogue island that must return to Chinese control. The 23 million inhabitants of the island feel quite differently.
With tensions tense between the United States and Russia and between the United States and China, could all this economic and political combustion lead to World War III? It’s entirely possible, especially if China decides it has no choice but to invade Taiwan.
China displayed its military might in large-scale exercises after President Nancy Pelosi and Senator Ed Markey and four other politicians landed in Taipei on separate visits.
China saw the delegations as “American interference” and accused Taiwan of undermining peace. The Chinese Ministry of Defense said: “The Chinese People’s Liberation Army continues to train and prepare for war, resolutely uphold national sovereignty and territorial integrity, and will resolutely crush all forms of separatism and of foreign interference in “Taiwan independence”.
Joseph Wu, Taiwan’s foreign minister, replied, “Authoritarian China cannot dictate how democratic Taiwan makes friends.
The United States may still suffer
If China goes to war with Taiwan, it would mean deep economic waves for the United States. But if China manages to usurp the United States and become the world’s reserve currency, things are going to get really bad. Virtually overnight, the US dollar would become the paper on which it is printed. Its purchasing power, which has been declining for some time, would bottom out.
Not to mention all the US debt that China holds could come due, further devaluing the dollar. What does this mean for the average citizen? This means that your paycheck, in which you put in 40 or 80 hours of your time and labor, is worth pennies instead of dollars.
Affording basic necessities such as food, water, shelter and clothing becomes obstacles and, in some cases, insurmountable problems. There are no rainy day funds to save for that trip to Disney World or a trip to the beach. It’s grinding day after day just to afford a meal.
Preparation is key
We’ve all seen and laughed at the doomsday preppers flooding YouTube with their “Top 10 Ways to Find Food in the Wild.” But what if they know something you don’t? It’s not just the “preparers” warning people of the coming financial catastrophe headed for the United States.
Market analysts and financial experts are reading the signs and saying nothing good is in store for us any time soon. In fact, most think things will get worse. Do you have a strategy if the United States loses its global reserve currency?
Fortunately, there are some key areas to cover when choosing to put things in order. First, cover your financial assets. Investments and everything related to the stock market are tied to the US dollar. Your stock portfolio and 401K plans are all in fiat currency. As soon as the US dollar loses its value, your portfolio collapses.
The best way to preserve your wealth is to convert your portfolio and any excess liquid assets into physical gold and silver. Owning physical gold and silver is the only way to protect your purchasing power if the dollar bottoms out. Unfortunately, investing in commodities is not enough to save your wealth because it is tied to the stock market and, therefore, to the dollar.
In addition to investing in gold and silver, find ways to protect your home. Access to energy, ability to barter, security, and access to food and water are essential to prepare in case the dollar becomes invaluable.
Whatever debt you have now will follow in a currency reset. Regardless of the world’s reserve currency, you’ll still owe your mortgage, credit card, car, and school fees. The big difference is that those dollars are now only worth pennies. It will be two, three or even ten times harder to pay for anything, including food, water, accommodation, etc.
Those who don’t plan…
Have a plan in place for these vital basics. It will be an advantage for your family if the worst should happen. Now is the time to start sourcing. Buy shelf-stable foods, including milk. If you can grow food on your land, start doing so. If you can fence your property, do it. Can’t afford modern security measures like cameras and metal window bars? Place threatening-looking plants around your property to deter anyone from attempting to enter your property uninvited.
It’s not easy to look at American society and think that something is really going to change. But the signs of the times are everywhere for who knows where to look. Things will get worse before they get better. How much worse? No one can really tell until we’re there, but it’s certainly ideal to be prepared should the worst happen.
Suppose the US dollar loses its status as the world’s reserve currency and becomes virtually worthless overnight. In this case, people will feel much better about themselves if they have a six-month supply of stable food, access to clean water and energy – especially if you work from home and need the internet to do it – and the ability to barter things they can’t produce or store for themselves.
And never forget that all your skills are also a barter tool. If you can build, grow food, repair cars, etc., these skills become a way for you to support yourself and your family. Sharpen them! Making yourself invaluable is a great way to ensure that you can protect and support your loved ones in times of crisis and a heavily devalued dollar.