In April, Trump expressed his views on the dollar, saying, "The dollar is collapsing, will soon cease to be the world's standard, and if that happens, it will be the biggest failure of the United States in 200 years." ”
American economic expert Peter . Schiff said that the "unprecedented "weaponization" of the dollar by the Biden administration has caused countries around the world to flee the dollar in panic. ”
Musk retweeted Schiff's retweet and added his own opinion in the comments section, "If a currency is used frequently as a weapon, then other countries will shut it out." It's a very simple logic. ”
Berkshire in May. At the Hathaway shareholder meeting, Buffett said that the dollar is indeed a reserve currency now, but it may not be so in the future. The dollar can now do us a lot of good as a reserve currency, but when we don't do it well, it also brings us very big risks.
It can be seen that the US political and business circles have reached a consensus on the inevitable collapse of the dollar hegemony, and it is only a matter of time.
There are three reasons why a balloon explodes, the balloon itself, external pressure, and internal pressure.
The same goes for the collapse of the dollar's hegemony.
For the "balloon" of dollar hegemony, the balloon itself is linked to oil to bring the international currency status of the dollar; External pressures are the financial risks that the dollar brings to the world; The internal pressure is that the hegemony of the dollar has torn American society apart.
Let's analyze step by step.
1. Dollar oil hegemony
As mentioned earlier, the current international currency status of the US dollar is mainly derived from oil.
To use a rough model, the United States prints money, countries sell goods to the United States in exchange for dollars, and then use dollars to buy oil from energy countries, energy countries earn dollars, use dollars to consume to the United States, the United States invests the dollars earned in other countries' manufacturing industries, and the goods produced are sold to the United States, and so on.
The United States continues to fleece the world, and the world knows that the United States is fleece.
But this balance was not broken for a long time, until the outbreak of the Russian-Ukrainian conflict in 2022.
The United States imposed economic sanctions on Russia, forcing Russia to break the oil-dollar path.
When Russia sold oil, it switched the dollar to yuan.
This means that the path of the deal triggered by the purchase of oil from Russia will change.
Having purchased Russian oil, it needs RMB, then emerging countries need to strengthen trade cooperation with China to obtain RMB, Russia earns RMB, naturally buying and buying in China frantically ...
It can be said that the closed loop of dollar-oil circulation was unknowingly acquired by the yuan, and the oil-yuan began to rise.
Looking at this wave of dividends, China can be described as "lying down to win", the United States slammed the sanctions stick, and as a result, it shot itself in the foot. Put yourself in a position.
Under the leadership of Russia, countries have started a wave of "going to the dollar". The hegemonic core of the oil-dollar has been shaken.
2. Financial risks of the international community
The dollar is an international currency, theoretically speaking, the more dollars in hand, the more active in international trade, with the right to speak, on the contrary, when the number of dollars in hand is small or even none, the more passive in international trade.
Surplus countries naturally have more dollars in their hands than deficit countries (except for the United States, which has a money printing press).
In 2022, the ranking of global deficit countries:
(1) United States
(2) India
(3)Japan
(4) France
(5) United Kingdom
(6) South Korea
(7) Italy
...
Let's take a look at the ranking of surplus countries in the same year:
(1) China
(2) Russia
(3) Saudi Arabia
(4) Norway
(5) Australia
(6) Qatar
(7) Germany
(8) Brazil
...
It can be seen that the world's major deficit countries, except for the United States, are the doglegs of the United States.
Island countries such as Japan and South Korea do not have an advantage in exports, and once there is a deficit, they will enter a vicious circle.
With fewer and fewer dollars in hand, and the need to constantly buy raw materials to support domestic production, it will become more and more difficult to make ends meet.
Japan still has US debt to cover for a while, like South Korea, Britain, Italy if there is a deficit for a few more years, there is no money to buy raw materials.
Macron, by contrast, is more of a chicken thief.
For such deficit-type manufacturing countries, the most desirable is to be able to settle in local currency. Then hang on the crooked neck tree of the dollar, you can only wait for death.
Looking at the surplus countries, China ranks first in the world surplus by virtue of its manufacturing industry, and there is no shortage of US dollars in hand.
Others are mainly Russia, Brazil, Saudi Arabia and similar resource countries. These countries do not lack dollars, but they have long been cut leeks by the United States, and they have suffered dollars for a long time. I have long wanted to shake off the dollar and start a new one.
This is actually what Trump is talking about, the dollar is collapsing and will soon cease to be the world standard.
Behind financial hegemony is confidence, and when the whole world loses faith in the dollar, the day when the dollar hegemony collapses is not far off.
3. Social tearing within the United States
As analyzed before, the existence of dollar hegemony has led to the hollowing out of American industry, and the living space of the middle class has been seriously squeezed.
To put it bluntly, the benefits of dollar hegemony have been enjoyed by the capitalists of Wall Street and Silicon Valley, but the days of the middle and lower classes in the United States have gone back more and more.
The richest 0.1 percent of Americans own more assets than the poorest 80 percent combined.
The reason why Trump was elected president that year was because Trump wanted to make enemies of the world, return manufacturing to the United States, and find jobs for those at the bottom.
Some say Trump has divided America.
In fact, it is because American society has been divided, which led the rednecks to choose Trump.
But it also means conflict.
To return manufacturing, part of the dollar hegemony must be abandoned, so that other countries will not dump goods because of the reserve of dollars, and the US manufacturing industry will have a chance to develop.
But in this way, the interests of the domestic elite will be shaken. A depreciation of the dollar will also exacerbate the pace of the dollar sell-off.
Thankless, left and right are not people, dollar hegemony is already "crumbling" and walking at a "crossroads".