2023-04-05_Is_the_US_Dollar_Losing_Its_Reserve_Currency_Status
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00:00:59.900 | Welcome to Radical Personal Finance,
00:01:01.200 | a show dedicated to providing you with the knowledge,
00:01:02.800 | skills, insight, and encouragement you need
00:01:04.640 | to live a rich and meaningful life now
00:01:06.600 | while building a plan for financial freedom
00:01:07.980 | in 10 years or less.
00:01:09.340 | My name is Joshua Sheets.
00:01:10.380 | Today is Wednesday, April 5, 2023.
00:01:14.080 | Today on the show, I want to discuss
00:01:16.480 | the potential for the U.S. dollar
00:01:19.520 | to lose its status as the world's reserve currency.
00:01:23.720 | There have been various news articles
00:01:26.320 | and various chatter that I have been observing
00:01:28.120 | online that seems to be, as best I can tell,
00:01:32.100 | seems to be sparked in this most recent iteration
00:01:35.660 | by a recent announcement from the nations of China
00:01:39.640 | and Brazil that evidently they're going to do
00:01:42.980 | some form of trade deal in their own currencies.
00:01:46.540 | And people are taking this and extrapolating out from it.
00:01:50.080 | I'll cover that more in just a moment.
00:01:52.320 | Now, the short version is quite simply
00:01:55.260 | that I don't think this is really anything new.
00:01:58.360 | I have been paying attention to finance for,
00:02:01.560 | I guess call it 15 to 20 years now.
00:02:03.660 | And in that period of time, I have consumed hundreds,
00:02:07.660 | perhaps hundreds of careful articles
00:02:10.700 | analyzing and predicting the doom of the U.S. dollar.
00:02:13.680 | And during my entire lifetime,
00:02:15.840 | those articles have all come to naught.
00:02:18.840 | Now, that doesn't obviously mean
00:02:21.180 | that they couldn't actually come to something.
00:02:24.560 | But today I want to try to present a series of arguments
00:02:28.120 | as to why it's unlikely to come to be a problem.
00:02:33.120 | So the outline of the show,
00:02:35.760 | the TLDL, too long, didn't listen, is quite simply this.
00:02:39.940 | I'm not particularly concerned about the U.S. dollar
00:02:43.840 | losing its status as the world reserve currency.
00:02:46.400 | I'm less concerned about this idea today
00:02:49.140 | than I was four or five years ago,
00:02:52.040 | primarily due to my own personal experience.
00:02:54.080 | I'm gonna present some arguments
00:02:55.480 | as to why the U.S. dollar is going to continue
00:02:58.280 | to be the world's reserve currency for a good long time.
00:03:01.880 | But then I'm gonna share with you
00:03:03.720 | towards the back half of the show,
00:03:04.920 | how to hedge your bets and how to be protected
00:03:07.300 | in case I am wrong.
00:03:09.320 | So let's just read a couple of headlines here
00:03:11.440 | to set the stage.
00:03:13.040 | I went onto Google News,
00:03:14.360 | I searched dollar to try to find some bricks.
00:03:18.940 | I searched for bricks, currency, et cetera.
00:03:21.440 | Most, this doesn't seem to be a particularly
00:03:24.240 | mainstream thing.
00:03:25.320 | There's not a lot being talked about
00:03:27.680 | in any kind of large mainstream newspapers.
00:03:29.760 | Wall Street Journal, New York Times,
00:03:31.080 | Washington Post, et cetera, not a big feature.
00:03:34.200 | Now we can find a few articles,
00:03:35.720 | for example, here's one on Schiff Gold,
00:03:38.320 | Peter Schiff's company,
00:03:40.120 | headline, "Bricks Nations Developing 'New Currency'
00:03:43.480 | as Quest for Global Dedolorization Accelerates."
00:03:47.240 | First couple of paragraphs,
00:03:48.120 | "China and Brazil recently finalized a trade deal
00:03:50.640 | in their own currencies,
00:03:52.160 | completely bypassing the dollar,
00:03:53.720 | but that's not the only bad news
00:03:55.120 | for the world's reserve currency.
00:03:56.980 | Last week, a Russian official announced
00:03:58.760 | that the bricks nations are working to develop a,
00:04:00.640 | quote, 'new currency,'
00:04:02.160 | yet another sign that dollar dominance is waning.
00:04:05.100 | State Duma, the Russian Legislative Assembly,
00:04:07.800 | Deputy Chairman Alexander Babakov,
00:04:10.160 | said the transition to settlements in national currencies
00:04:12.480 | is the first step.
00:04:14.040 | We've already seen this occur with recent oil deals
00:04:16.040 | between India and Russia being settled in currencies
00:04:18.440 | other than dollars, et cetera.
00:04:20.360 | The articles go on.
00:04:21.640 | If we, here's a DW article, Deutsche Welle from Germany,
00:04:28.360 | business, Brazil, March 27 is the date,
00:04:31.080 | "A new world order?
00:04:32.080 | Bricks nations offer alternative to the West.
00:04:35.200 | Predictions about the bricks countries
00:04:36.640 | as the fastest growing economies haven't quite panned out.
00:04:39.040 | Instead, the alliance is now offering a diplomatic forum
00:04:41.840 | and development financing
00:04:43.240 | outside of the Western mainstream."
00:04:45.120 | It talks a little bit about the currency
00:04:47.080 | and challenging the World Bank model, et cetera.
00:04:49.640 | Here's a website that's called First Post.
00:04:54.440 | It seems to be an Indian website.
00:04:56.720 | I haven't dug into it deeply,
00:04:58.320 | but it seems to be an Indian news site of some kind.
00:05:02.000 | Headline, "Dumping the dollar.
00:05:03.160 | Will a new bricks currency
00:05:04.840 | replace the US currency for trade?
00:05:07.200 | The bricks collective comprising Brazil, Russia, India,
00:05:09.860 | China, and South America is working on a common currency
00:05:13.400 | in an attempt to ditch the US dollar
00:05:15.160 | and push back against America's dominance.
00:05:17.840 | The move comes as Moscow and Beijing
00:05:19.880 | call for de-dollarization in the face of Western sanctions."
00:05:23.760 | There are others, but you get the idea.
00:05:25.400 | Now, the question is, how do you,
00:05:27.000 | there are always news headlines.
00:05:28.800 | And if you're new to this,
00:05:29.800 | if you are super passionate about this,
00:05:32.800 | I wanna caution you that you need some perspective.
00:05:35.840 | And so I'm not quite yet an OG in the finance space,
00:05:40.840 | but I'll probably be there pretty soon.
00:05:42.680 | And I have observed a significant change,
00:05:47.840 | in my thinking over the years,
00:05:49.240 | as I have been involved in this space.
00:05:53.120 | When I was younger, I would take these articles
00:05:55.080 | and these news, I'd freak out,
00:05:56.520 | consider that they're certain, et cetera.
00:05:58.600 | And today I'm filled with a whole long list of questions
00:06:02.120 | to try to understand what is,
00:06:04.960 | you know, to try to understand what to do
00:06:08.640 | and how to judge the veracity of headlines.
00:06:11.680 | Remember that newspaper headlines are basically propaganda.
00:06:15.600 | And so it's easy to announce that you are,
00:06:20.240 | it's easy to announce that you're exploring a new currency
00:06:24.400 | for the BRICS nations.
00:06:25.880 | That's wonderful, and that's a great propaganda effort.
00:06:28.480 | To actually create and implement a currency,
00:06:31.600 | that's another thing.
00:06:32.800 | It's like, it's easy for a 20-year-old guy
00:06:35.480 | to announce that he's exploring for a supermodel wife,
00:06:39.720 | but to actually bring it to fruition
00:06:41.800 | is a very different thing.
00:06:43.440 | And if you look at the old guys in the finance space,
00:06:48.440 | what I observe, people who are seasoned
00:06:50.880 | or experienced investors, what I observe is,
00:06:53.240 | it's not that they discount the possibility of,
00:06:55.960 | say, for example, the US dollar
00:06:57.360 | losing its World Reserve currency status.
00:06:59.200 | They don't discount the possibility.
00:07:00.360 | Of course it's possible.
00:07:01.800 | But that they put it into perspective to say,
00:07:04.920 | all right, what's gonna replace it and how and why?
00:07:08.200 | For example, here was Nassim Taleb's tweet today.
00:07:12.640 | He says, "You will only start worrying
00:07:14.320 | "about the dollar status as a reserve currency
00:07:16.420 | "when you see long lines outside the Brazilian,
00:07:19.260 | "Russian, Iranian, and Chinese consulates
00:07:21.200 | "full of young professionals seeking immigration visas."
00:07:24.200 | And it's a pretty fair argument,
00:07:26.680 | meaning seeking immigration visas
00:07:28.880 | to go from the United States to those nations.
00:07:31.980 | Now, having stood in multiple immigration lines
00:07:34.800 | to leave the United States and go to some of these places,
00:07:38.960 | I look at it and I realize that,
00:07:42.200 | hey, there are people who are doing it.
00:07:44.760 | But my years being outside of the United States
00:07:47.860 | have come to cause me to actually appreciate
00:07:50.880 | the United States, the US dollar, more than ever before.
00:07:54.720 | And so I say to you, as someone who, again,
00:07:58.180 | at one point was very concerned
00:08:00.120 | about the collapse of the US dollar,
00:08:02.960 | I don't like that word, I'm using it for dramatic effect,
00:08:05.080 | but paid a lot of attention to these kinds of arguments.
00:08:08.240 | Today, I look at the world from a different perspective,
00:08:11.040 | having lived outside the United States,
00:08:12.840 | and I want most of my money in dollars.
00:08:15.940 | Not all of it, which we'll get to in the second half,
00:08:17.780 | but I want most of my money in dollars.
00:08:20.160 | Now, some months ago, about three months ago,
00:08:22.280 | I happened to listen to a presentation,
00:08:25.000 | a video, a YouTube video, by Peter Zaihan
00:08:28.080 | called "Global Currency, The Dollar Ain't Going Nowhere."
00:08:31.440 | Now, Zaihan is someone who I have mentioned repeatedly
00:08:33.960 | in past months, listener of the show turned me on to him.
00:08:37.320 | My first book of his that I read
00:08:39.840 | was his most recent one called "The End of the World
00:08:42.760 | As We Know It As Just the Beginning."
00:08:44.340 | I found it quite powerful and persuasive,
00:08:46.720 | and I appreciated him presenting a series of clear arguments
00:08:50.600 | that I was able to factor into my own thinking.
00:08:53.240 | Because he's clear on his reasons and his arguments,
00:08:56.240 | it gives me good data to think about.
00:08:58.040 | Since that time, I have gone back
00:09:00.200 | and finished all of his previous books.
00:09:02.660 | In fact, just yesterday, I finished reading
00:09:05.600 | the last of his books that I had not previously read.
00:09:09.500 | And I don't think that's necessary, by the way,
00:09:11.360 | for most people.
00:09:12.200 | I like to do it 'cause I like to understand
00:09:13.740 | where someone's coming from.
00:09:15.080 | I like to understand where someone has been right and wrong
00:09:17.440 | and try to understand what someone's perspective is.
00:09:19.760 | And I think I now have a pretty good understanding
00:09:23.260 | of what his particular opinions are.
00:09:25.600 | But I thought that, as I've spoken with people in real life
00:09:30.040 | about their concerns about the collapse of the dollar,
00:09:33.440 | et cetera, I have found myself turning several times
00:09:36.440 | to this video that he created.
00:09:38.000 | It's eight minutes long and his discussion of the subject.
00:09:41.460 | And I think it's a powerful discussion
00:09:43.380 | because he gives good arguments that we need to consider.
00:09:46.860 | So I'm gonna begin today,
00:09:48.300 | not by talking about all those Zaihan books,
00:09:50.300 | but actually one more comment.
00:09:52.060 | I would say that one of the things that's interesting,
00:09:53.820 | his predictions over the last,
00:09:56.220 | I think it was about eight years of writing,
00:09:57.960 | that I have consumed of his, are fairly consistent.
00:10:00.860 | Many of them have come true, not all of them.
00:10:03.620 | But his method and his model that he has presented
00:10:07.560 | is clear and straightforward
00:10:09.460 | and is a very useful mental model to consider.
00:10:12.520 | Now, we're not gonna dig into all of the depths
00:10:14.660 | of that stuff.
00:10:16.140 | I'm not gonna put four books into this show.
00:10:18.260 | I'm saying that I respect his analysis
00:10:21.420 | and his ability to quickly and clearly present arguments.
00:10:25.580 | Let's begin the video here by Peter Zaihan.
00:10:28.260 | - Zaihan here coming to you from Colorado
00:10:29.820 | where eight inches of snow turned into 16 to 18
00:10:32.380 | because you know, mountains.
00:10:34.300 | Now, today I wanted to talk to you about global currencies.
00:10:37.020 | Every few months to couple of years,
00:10:38.860 | a new conventional wisdom takes hold
00:10:40.580 | that the United States is in its final years,
00:10:42.540 | if not final months,
00:10:43.540 | and some big political thing is gonna happen
00:10:45.700 | that is gonna dethrone the US dollar as the global currency
00:10:48.900 | and all American power will unwind with that.
00:10:51.620 | There is no part of that logic chain
00:10:53.900 | that has ever been correct,
00:10:55.420 | but these stories keep persisting
00:10:57.140 | because there is no shortage of people out there
00:10:59.140 | in the world who are anti-American and can't do math
00:11:01.740 | and have no sense of history.
00:11:03.060 | So here we are one more time.
00:11:05.300 | Now, let's begin right there.
00:11:07.460 | This is what I have observed over my years
00:11:10.220 | of being involved in finance.
00:11:12.060 | And I've watched a lot of people get sucked into this.
00:11:14.980 | Remember that when you want to sell,
00:11:17.940 | sell an idea, sell a product, et cetera,
00:11:20.700 | one of the triggers that you can push
00:11:22.580 | is the trigger of fear.
00:11:24.540 | Fear is a very powerful motivator.
00:11:27.300 | And when you have the ability to push on fear,
00:11:30.520 | you can cause people to take action.
00:11:32.860 | And so in the space where you get in,
00:11:35.740 | so if you want to sell something,
00:11:38.140 | if you can create fear, the fear can often,
00:11:41.060 | and urgency, then that can often cause people
00:11:44.220 | to take action to try to buy your product.
00:11:47.460 | Now, there's an element of which this can be healthy.
00:11:50.420 | There are things, for example,
00:11:51.840 | that we try to put fear into people.
00:11:54.560 | I try to put fear into my children of cars.
00:11:57.380 | I want them, if they see a car moving around them
00:12:00.260 | and they hear motor,
00:12:01.300 | I want a motor that's on,
00:12:03.100 | or they see a driver who's in the car,
00:12:04.700 | I want them to be afraid of the car
00:12:06.380 | and turn and run away so they don't get run over.
00:12:08.940 | And of course, there are many versions of that
00:12:11.220 | where we want to properly instill a fear,
00:12:14.100 | or if you don't like that word, a respect for it.
00:12:16.940 | But we also don't want to be manipulated by fear.
00:12:19.380 | And this is a space in which we are constantly
00:12:23.020 | subject to people trying to manipulate us with fear,
00:12:27.380 | and especially in the financial markets.
00:12:29.220 | Where is this most prominent?
00:12:30.520 | Well, clearly, the sale of things like gold,
00:12:34.340 | silver, gold coins, silver coins,
00:12:36.680 | a lot of it is pushed by fear.
00:12:39.620 | Bitcoin, right?
00:12:40.580 | Use Bitcoin because the dollar
00:12:42.180 | is gonna lose its world reserve status.
00:12:44.080 | A significant amount of this is both fear and greed
00:12:47.340 | put together, which is a powerful combination.
00:12:49.340 | The reason I say greed is everyone's hoping
00:12:51.400 | that their Bitcoin that they buy today
00:12:52.980 | becomes a hundred bagger,
00:12:54.300 | increases by 100X and they're super rich.
00:12:56.380 | Just like the same thing with gold coins.
00:12:57.740 | If the US dollar falls apart and it collapses,
00:13:00.800 | my gold coins are gonna be worth 100X.
00:13:02.920 | And I had over the years, people tell me,
00:13:05.080 | you know, my little stash of silver
00:13:06.800 | is gonna be able to buy me five houses
00:13:09.080 | and I'm gonna be rich in the new economy.
00:13:11.280 | I think that it's fatally flawed,
00:13:13.520 | but this is just an expression of greed and fear.
00:13:16.480 | And you put these two together
00:13:17.720 | and people commit tons of irrational deeds.
00:13:20.840 | Even in the, I see this a lot
00:13:22.920 | in the internationalization space.
00:13:24.880 | And again, I'm sort of involved in these markets.
00:13:27.180 | I talk about these topics,
00:13:28.760 | but a lot of it is played up on fear.
00:13:31.320 | Leave the United States
00:13:32.240 | 'cause the United States is gonna turn
00:13:33.340 | into a nightmare place
00:13:34.360 | and it's just gonna be hell on earth
00:13:35.600 | and it's better everywhere else
00:13:36.640 | 'cause the US dollar is gonna lose
00:13:38.440 | its status as the world's reserve currency.
00:13:41.480 | And as Zaihan says here,
00:13:43.480 | he says it's never been true and it's not true.
00:13:45.760 | And he's gonna present his arguments as to why.
00:13:48.180 | I also believe that it has not been true.
00:13:50.960 | It is not true.
00:13:52.040 | And it is not likely to be true in the medium term,
00:13:55.480 | as long at or at least as far out as we can see.
00:13:58.540 | Not the same possible.
00:13:59.860 | I insure against it.
00:14:01.280 | Notice I said insure, not plan for it.
00:14:03.840 | I insure against it, but I think it's improbable.
00:14:07.260 | So let's get into some specific arguments here.
00:14:09.260 | - Step one, US power is not a result
00:14:11.220 | of its position as the global currency.
00:14:13.060 | It's the other way around.
00:14:14.900 | The global currency has to be able to impose by force,
00:14:18.040 | if necessary, some sort of packs on the trading system
00:14:21.560 | to allow trade to happen in the first place.
00:14:23.620 | And right now the US Navy is more powerful
00:14:26.020 | than that of all other navies combined
00:14:27.700 | by about a factor of seven.
00:14:29.300 | And if you consider that the world's second
00:14:31.420 | and third most powerful expeditionary navies
00:14:34.060 | are the Japanese fleet and the British fleet,
00:14:36.740 | and you throw them in as American
00:14:38.900 | for this force projection factor,
00:14:40.700 | you're now talking in excess of 12 to one.
00:14:43.100 | So honestly, there's never been any math there.
00:14:46.140 | And there's no danger to the US position
00:14:47.900 | from a strategic point of view.
00:14:50.540 | - All right, let's deal with that argument.
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00:15:22.640 | - First argument, the US dollar is not the source
00:15:27.280 | of American strength.
00:15:30.280 | Rather, the US dollar is the reserve currency
00:15:34.400 | because of American strength.
00:15:37.520 | And the simplest way to define strength
00:15:40.120 | as is using a military calculation as Zaihan does.
00:15:45.120 | Many people believe that if the United States dollar
00:15:48.400 | lost its status as the world reserve currency,
00:15:52.440 | then the power of the United States
00:15:54.800 | would plummet on a world stage
00:15:57.720 | and that the entire country and economy would implode.
00:16:01.960 | And one thing I am very persuaded of by reading it
00:16:05.120 | a bazillion times in Zaihan's book
00:16:06.640 | is that that is not true.
00:16:08.480 | The United States is one of the least involved countries
00:16:12.280 | in the world in terms of international trade.
00:16:15.240 | The United States doesn't really trade.
00:16:17.040 | It doesn't need to, doesn't want to.
00:16:19.360 | Basically, if you buy Zaihan's analysis,
00:16:22.160 | and again, backed up with facts and figures,
00:16:24.000 | you can look at the United States specifically,
00:16:26.920 | North America in a focused way,
00:16:29.440 | and the Western Hemisphere of all of the Americas
00:16:32.620 | as basically just a region that sits off by itself
00:16:35.360 | and doesn't really much care what happens
00:16:37.240 | in the rest of the world.
00:16:38.600 | That is not the case for many other nations in the world.
00:16:42.640 | And so this is one of the things
00:16:44.920 | that makes the United States hard to predict.
00:16:46.680 | Basically, the United States has enabled internationalization
00:16:51.680 | over many decades now,
00:16:54.380 | but the United States has not really ever been involved
00:16:56.440 | in internationalization.
00:16:57.700 | Basically, all the United States does
00:16:59.600 | is purchase the goods from around the world,
00:17:02.320 | which has helped other nations to build their economies
00:17:05.240 | and become strong and wealthy and powerful,
00:17:07.620 | but the United States has never really gotten that involved
00:17:10.360 | in international trade.
00:17:12.720 | This is, to me, one of the things that I missed
00:17:15.240 | for a long number of years,
00:17:16.640 | and I'm very grateful for my reading of all these books
00:17:18.980 | to put it into perspective.
00:17:20.760 | I misunderstood how isolated
00:17:25.120 | and self-sufficient the United States is as a country.
00:17:30.120 | And it's really, really fascinating to think about
00:17:33.200 | and recognize where I missed it.
00:17:34.880 | One of the biggest things that I missed
00:17:36.760 | was even what happened in the shale revolution.
00:17:39.640 | Now, I knew the United States had become energy independent
00:17:43.720 | and was now an energy exporter,
00:17:45.480 | but I didn't understand
00:17:46.880 | the great fundamental transformation.
00:17:51.360 | And this has been one of the huge keys
00:17:53.920 | to the transformation of the US system
00:17:56.460 | and even involvement in global affairs over the last decade.
00:17:59.600 | The United States has always been extraordinarily independent
00:18:04.440 | in terms of its ability to function as a nation
00:18:06.700 | due to its basic geography,
00:18:08.320 | wonderful, abundant farmland,
00:18:10.480 | great natural borders that protect it,
00:18:12.940 | surrounded by close allies,
00:18:14.480 | a great manufacturing tradition,
00:18:16.520 | great intellectual property tradition, et cetera.
00:18:18.520 | The United States is basically,
00:18:20.120 | if you cut the United States off
00:18:21.480 | from the rest of the world today, 100%,
00:18:23.960 | the country would be fine.
00:18:25.360 | There would certainly be a recession.
00:18:26.780 | There would be hard times as companies go bankrupt, et cetera,
00:18:29.920 | but there's nothing fundamentally that couldn't be done.
00:18:32.160 | The country within its borders could make everything.
00:18:34.320 | It has all the resources.
00:18:35.800 | There would be some missing rare earth elements
00:18:38.160 | and whatnot for lithium batteries.
00:18:39.760 | There are things that the country imports,
00:18:41.080 | but generally speaking, the country would be fine.
00:18:44.220 | The biggest thing it was missing for a long time
00:18:46.420 | was abundant energy as US oil flows diminished over time,
00:18:51.220 | and that was where the United States was involved
00:18:54.260 | for a time in securing its oil flows.
00:18:58.060 | But since the shale revolution,
00:18:59.460 | the United States now has more energy
00:19:01.260 | than it needs for its own consumption.
00:19:03.300 | And one of the things that Zeihan is prone to point out
00:19:06.860 | is if you bring together North America
00:19:09.540 | and include Canada and Mexico,
00:19:12.200 | you have an incredibly powerful three-country conglomerate
00:19:17.200 | that has everything in abundance,
00:19:19.420 | abundant energy, abundant workers, et cetera.
00:19:21.980 | It can basically cut itself off.
00:19:24.040 | So the United States doesn't derive its value from,
00:19:28.860 | excuse me, the US dollar does not derive its value
00:19:33.860 | from the fact that it is the world's reserve currency.
00:19:36.400 | Rather, it is the world's reserve currency
00:19:39.840 | because of the nation.
00:19:42.300 | Now, here's my example to try to make this more evident.
00:19:45.780 | If you go into, if you say,
00:19:47.500 | "Okay, I want an alternative to the US dollar,"
00:19:49.580 | and you're looking around for a competing currency,
00:19:52.780 | there are a handful of options that you can look at.
00:19:56.080 | Of course, there are many countries around the world
00:19:57.980 | that have currencies, hundreds of them,
00:20:00.640 | and you could go and you could participate
00:20:03.300 | in those countries' currencies.
00:20:04.940 | But there are a few that will generally float to the top.
00:20:08.040 | Now, in terms of big ones that people would know,
00:20:10.040 | you might have a currency like the euro.
00:20:12.960 | That's not often a super popular alternative to the dollar.
00:20:16.320 | A lot, not very many people come and say,
00:20:17.920 | "I wanna take my money and put it in
00:20:19.760 | "from dollars into euros."
00:20:21.320 | And there are a few reasons for that
00:20:22.700 | because many of the issues that plague the dollar
00:20:24.800 | have plagued, affect the euro worse.
00:20:27.460 | But there are a few that people are often common to.
00:20:30.040 | And one of them is,
00:20:32.080 | there are a few that people often really want
00:20:34.080 | that they mention.
00:20:34.960 | And one of those is the Swiss franc.
00:20:38.520 | I want you to think about what that represents.
00:20:42.180 | On an international stage,
00:20:43.680 | the reputation that the Swiss franc has
00:20:46.380 | is that of being a currency of a nation that is isolated,
00:20:51.380 | that is relatively independent,
00:20:54.160 | that is neutral,
00:20:55.480 | and that has a strong basic core to its economy.
00:20:58.680 | That's the idea, that's the perception that exists.
00:21:01.400 | True or not, doesn't matter.
00:21:02.560 | That's the perception that exists.
00:21:04.040 | And I think the Swiss franc is fine
00:21:05.760 | in terms of as an alternative for some of your money.
00:21:10.760 | That's fine.
00:21:12.640 | But when you think about the Swiss franc,
00:21:15.080 | everything that is true about the Swiss franc
00:21:17.640 | in terms of the nation of Switzerland
00:21:20.200 | is true on a scale of 100 to the United States generally.
00:21:24.540 | And that would be, I think,
00:21:28.360 | an important point to start with.
00:21:30.000 | The dollar is valuable because of the nation itself
00:21:35.000 | that is basically an isolated, independent,
00:21:38.040 | self-sustaining, autonomous nation
00:21:40.520 | that has everything it needs
00:21:42.040 | and has a huge economy that's just built around it.
00:21:45.680 | When you add in the military power argument
00:21:47.880 | and the fact that the US military is the military
00:21:51.820 | that has the ability to control everything militarily
00:21:55.200 | in the world, then it becomes much more powerful.
00:21:58.800 | And that military component,
00:22:00.760 | while probably none of us love it,
00:22:03.320 | I don't love it myself as an American,
00:22:05.480 | I don't love what the US has done,
00:22:07.680 | I can see that sometimes good, sometimes bad,
00:22:10.360 | sometimes positive, sometimes negative, it's a mixed bag.
00:22:14.040 | But the truthfulness of it,
00:22:16.160 | since it is true that the United States is so,
00:22:18.880 | as Zahin said, is seven times bigger,
00:22:22.000 | the US Navy is seven times bigger
00:22:24.840 | than all the other navies of the world combined,
00:22:28.520 | you can see the level of military dominance.
00:22:31.120 | And when you get into the world of money,
00:22:33.160 | you want your money to be from somebody
00:22:35.040 | who is militarily powerful and militarily dominant.
00:22:38.360 | Let's continue the analysis.
00:22:40.660 | From an economic point of view,
00:22:41.820 | the idea is that people, countries will just stop using it.
00:22:45.600 | And the scuttlebutt of the moment
00:22:47.840 | is that a number of countries are negotiating,
00:22:50.000 | or at least talking about publicly,
00:22:52.080 | joining the BRICS group.
00:22:54.360 | Now, BRICS is a group of four large developing economies,
00:22:59.320 | Brazil, Russia, India, and China.
00:23:01.400 | It's a grouping that was put together
00:23:02.780 | by some finance guy back in the 2000s,
00:23:04.800 | and all he meant by it was,
00:23:06.520 | "Hey, look, these are four big countries
00:23:08.160 | "with big bond markets,
00:23:09.260 | "we might wanna consider trading these as a group."
00:23:11.600 | That's all he's ever thought about it.
00:23:14.280 | But the leader of the BRICS countries
00:23:15.640 | do get together from time to time to shop.
00:23:18.600 | No meaningful policy has ever come out of it
00:23:21.540 | because these countries don't really trade.
00:23:23.920 | I mean, they all trade with China, of course,
00:23:25.480 | but they don't trade with one another.
00:23:26.740 | So there's a reason to caucus with Beijing,
00:23:28.880 | but the rest of it is just kind of fluff, always has been.
00:23:31.560 | And so when I see stories about other countries
00:23:34.120 | such as South Africa or Argentina,
00:23:36.480 | or now Saudi Arabia, starting to join, I'm like,
00:23:38.880 | "Oh, this is really boring,"
00:23:41.920 | because these countries really have nothing in common.
00:23:44.220 | But anyway, as the conspiratorial logic goes,
00:23:47.680 | if they stop using the US dollar, then the US is doomed.
00:23:52.200 | Well, they'd have to start using something else.
00:23:56.000 | And none of them, none of them
00:23:57.880 | want to use each other's currencies
00:23:59.560 | because that would give that country a leg up.
00:24:02.120 | - So let's stop there.
00:24:03.400 | Recognize, if you're not gonna use the US dollar,
00:24:06.160 | what is the alternative?
00:24:07.720 | If you're not gonna use the US dollar,
00:24:12.560 | what is your alternative?
00:24:14.640 | On a personal level, before we go to the country level
00:24:16.880 | where Zaihan is going, on a personal level,
00:24:19.480 | think about that right now.
00:24:20.520 | If you're not gonna use the US dollar,
00:24:22.240 | what is your alternative?
00:24:24.120 | If you're worried about the US dollar
00:24:28.960 | and you're not currently using an alternative,
00:24:33.280 | I don't believe that you're actually worried about it
00:24:36.360 | because any alternative that you think
00:24:37.960 | could replace the US dollar in the longterm
00:24:41.200 | is an alternative that you should be using today.
00:24:44.240 | If you believe that the Chinese yuan
00:24:47.200 | is going to replace the US dollar
00:24:49.160 | as the world's reserve currency,
00:24:51.040 | then you should have a bank account
00:24:53.920 | in which you transact and you save money in yuan.
00:24:57.680 | If you believe that Bitcoin is going to replace the US dollar
00:25:01.160 | as the world's reserve currency,
00:25:03.280 | then your money should be not only stored in Bitcoin,
00:25:07.040 | but transacted in Bitcoin.
00:25:09.720 | And while this is increasingly possible,
00:25:11.740 | for many years now, this has been the Achilles heel
00:25:14.440 | of the Bitcoin movement,
00:25:15.880 | is can we actually transact in Bitcoin?
00:25:20.800 | Are we transacting directly in Bitcoin for Bitcoin exchanges
00:25:24.600 | without going through the US dollar
00:25:27.160 | as an intermediary in our exchanges?
00:25:32.160 | If you believe that gold is going to replace the US dollar,
00:25:37.180 | then are you not only saving in gold,
00:25:40.320 | but are you transacting in gold?
00:25:44.640 | If you believe that the world's reserve currency
00:25:47.000 | is going to replace the US dollar
00:25:49.000 | as the world's reserve currency,
00:25:51.000 | then you should have a bank account in Bitcoin.
00:25:54.000 | If you believe that the world's reserve currency
00:25:57.000 | is going to replace the US dollar
00:25:59.240 | as the world's reserve currency,
00:26:01.240 | then you should have a bank account in Bitcoin.
00:26:04.240 | If you believe that the world's reserve currency
00:26:07.240 | is going to replace the US dollar
00:26:09.240 | as the world's reserve currency,
00:26:11.240 | then you should have a bank account in Bitcoin.
00:26:14.240 | If you believe that the world's reserve currency
00:26:17.240 | is going to replace the US dollar
00:26:19.240 | as the world's reserve currency,
00:26:21.240 | then you should have a bank account in Bitcoin.
00:26:24.240 | If you believe that the world's reserve currency
00:26:27.240 | is going to replace the US dollar
00:26:29.240 | as the world's reserve currency,
00:26:31.240 | then you should have a bank account in Bitcoin.
00:26:34.240 | If you believe that the world's reserve currency
00:26:37.240 | is going to replace the US dollar
00:26:39.240 | as the world's reserve currency,
00:26:41.240 | then you should have a bank account in Bitcoin.
00:26:43.240 | If you believe that the world's reserve currency
00:26:46.240 | is going to replace the US dollar
00:26:48.240 | as the world's reserve currency,
00:26:50.240 | then you should have a bank account in Bitcoin.
00:26:53.240 | If you believe that the world's reserve currency
00:26:56.240 | is going to replace the US dollar
00:26:58.240 | as the world's reserve currency,
00:27:00.240 | then you should have a bank account in Bitcoin.
00:27:03.240 | If you believe that the world's reserve currency
00:27:06.240 | is going to replace the US dollar
00:27:08.240 | as the world's reserve currency,
00:27:10.240 | then you should have a bank account in Bitcoin.
00:27:12.240 | If you believe that the world's reserve currency
00:27:15.240 | is going to replace the US dollar
00:27:17.240 | as the world's reserve currency,
00:27:19.240 | then you should have a bank account in Bitcoin.
00:27:22.240 | If you believe that the world's reserve currency
00:27:25.240 | is going to replace the US dollar
00:27:27.240 | as the world's reserve currency,
00:27:29.240 | then you should have a bank account in Bitcoin.
00:27:32.240 | If you believe that the world's reserve currency
00:27:35.240 | is going to replace the US dollar
00:27:37.240 | as the world's reserve currency,
00:27:39.240 | then you should have a bank account in Bitcoin.
00:27:41.240 | If you believe that the world's reserve currency
00:27:44.240 | is going to replace the US dollar
00:27:46.240 | as the world's reserve currency,
00:27:48.240 | then you should have a bank account in Bitcoin.
00:27:51.240 | If you believe that the world's reserve currency
00:27:54.240 | is going to replace the US dollar
00:27:56.240 | as the world's reserve currency,
00:27:58.240 | then you should have a bank account in Bitcoin.
00:28:01.240 | If you believe that the world's reserve currency
00:28:04.240 | is going to replace the US dollar
00:28:06.240 | as the world's reserve currency,
00:28:08.240 | then you should have a bank account in Bitcoin.
00:28:10.240 | This is interesting to me because this is where my family history is from.
00:28:13.240 | It's a great story, wonderful story.
00:28:15.240 | You should read it to your children.
00:28:17.240 | It's called Little Britches Series by Ralph Moody.
00:28:19.240 | Father and I were ranchers.
00:28:21.240 | In this story, written decades and decades ago,
00:28:24.240 | Moody talks about this time
00:28:26.240 | in which there wasn't enough money available.
00:28:29.240 | He describes how one year there was plenty of money
00:28:33.240 | and all the farmers and ranchers were working for each other.
00:28:37.240 | They would go and help each other bale hay and stack hay.
00:28:40.240 | They would get paid in money and there was money circulating the economy.
00:28:43.240 | But then something happened, and this was about 1905,
00:28:46.240 | and there wasn't any money available.
00:28:48.240 | He describes, without it being a focus of the story,
00:28:50.240 | he just describes in the terms of narrative
00:28:52.240 | how difficult that period was when there wasn't money available.
00:28:56.240 | There wasn't money available for trade.
00:28:58.240 | It wasn't available.
00:29:00.240 | They couldn't interact with each other.
00:29:02.240 | So what they wound up doing is his family
00:29:04.240 | wound up actually being quite well off
00:29:06.240 | Comparatively speaking,
00:29:08.240 | previously they had been simply subsistence farmers
00:29:11.240 | and other people were richer than them
00:29:13.240 | because other people were working for money.
00:29:15.240 | Well, his family became wealthier
00:29:17.240 | because they didn't have any money, but they did have stuff.
00:29:20.240 | But they were interacting with one another
00:29:22.240 | and they had to use IOUs, so men would come and work for them
00:29:25.240 | and he would have IOUs for their hay and their hay crop, etc.
00:29:28.240 | He describes it as being a very difficult time
00:29:31.240 | and a lot of people were wiped out.
00:29:33.240 | And so it's interesting because this ties to something
00:29:35.240 | that I have thought about for years.
00:29:37.240 | When I was younger, I was very attracted to the idea
00:29:40.240 | of having a gold-backed currency.
00:29:43.240 | That always seemed like a great idea.
00:29:45.240 | Of course you would want something,
00:29:46.240 | you want money that's backed by something solid.
00:29:48.240 | You want currency that's backed by something that is real,
00:29:51.240 | that is available.
00:29:52.240 | But what I didn't understand,
00:29:54.240 | and I still have a hard time articulating clearly
00:29:56.240 | in a teaching way,
00:29:58.240 | is to why the concept of a gold-backed currency
00:30:02.240 | was dropped in the first place.
00:30:05.240 | And if you can't defend this, if you can't say it clearly,
00:30:10.240 | then I think you have a hard time describing it.
00:30:12.240 | Now, you can take the conspiratorial view.
00:30:15.240 | Well, we wanted to drop the gold-backed currency
00:30:17.240 | so that the government could spend money without limits.
00:30:20.240 | Okay, I'm open to that, but I find it hard to believe
00:30:24.240 | in just the hardcore conspiracy view of anything.
00:30:27.240 | I find it hard to believe that it just doesn't jive
00:30:30.240 | with my experience of human nature.
00:30:32.240 | There may be always ulterior motives, etc., hidden motives.
00:30:36.240 | We all have that.
00:30:37.240 | But the hardcore conspiratorial perspective
00:30:40.240 | seems hard for me to justify.
00:30:42.240 | So what were the problems with a gold-backed currency?
00:30:45.240 | And how were those problems alleviated
00:30:48.240 | or intended to be alleviated by a fiat currency
00:30:52.240 | that has no fundamental backing?
00:30:54.240 | And this sense of lubrication is one of those issues.
00:30:58.240 | Now, to point out what Zahan says is it's not just
00:31:01.240 | that you need a currency that has a size of trillions of dollars
00:31:06.240 | in our current number, but rather you need something
00:31:08.240 | that has that as excess in order to lubricate global trade.
00:31:12.240 | So understand clearly that the scale of currency
00:31:15.240 | that is necessary to do global business,
00:31:18.240 | global transactions, etc., you need a huge amount of it.
00:31:22.240 | And that doesn't mean that your currency
00:31:24.240 | has to be in the tens of trillions.
00:31:25.240 | That means you have to be able to lubricate
00:31:28.240 | the exchange of tens of trillions.
00:31:30.240 | Your currency needs to be even bigger,
00:31:33.240 | which gets us to probably the single biggest constraint
00:31:37.240 | on being a global currency.
00:31:39.240 | You have to not care what happens to the value
00:31:42.240 | of your currency in any given day.
00:31:45.240 | Because if there's a trade surge and demand of your currency
00:31:47.240 | goes up, then all of a sudden supply of your currency
00:31:49.240 | has plummeted and you're dealing with very real
00:31:51.240 | economic distortions at home.
00:31:53.240 | This is, I think, a very important point
00:31:56.240 | that we need to talk about.
00:31:58.240 | Because there's a huge difference here
00:32:01.240 | between the American perspective and the global perspective.
00:32:06.240 | And this is something I appreciate very deeply
00:32:08.240 | now having lived outside of the United States for four years.
00:32:12.240 | Americans don't think about foreign exchanges
00:32:16.240 | in any meaningful way.
00:32:18.240 | They don't pay much attention to it.
00:32:21.240 | Yes, it's an academic idea that you read an article
00:32:24.240 | in a financial publication about the strengthening
00:32:26.240 | of the dollar or the weakening of the dollar.
00:32:28.240 | But that makes no fundamental difference
00:32:30.240 | to the average American on a daily life.
00:32:32.240 | Because Americans earn in dollars,
00:32:34.240 | they bank in dollars, they spend in dollars, etc.
00:32:37.240 | And yes, there is inflation.
00:32:39.240 | We all know that since its inception,
00:32:41.240 | the dollar has lost 97% of its value.
00:32:43.240 | We understand that.
00:32:44.240 | But at this point in time, inflation is well
00:32:47.240 | baked into the cake.
00:32:48.240 | It's just understood and assumed by all of us
00:32:50.240 | that our currency is going to inflate.
00:32:52.240 | And so the average American doesn't care
00:32:56.240 | what the value of his currency is on a global stage.
00:32:59.240 | But if you go to almost any other country,
00:33:02.240 | everybody except the very poor understands
00:33:05.240 | what is happening in terms of exchange rates.
00:33:08.240 | Talk to your average Canadian,
00:33:09.240 | your average Canadian is going to have a pretty decent idea
00:33:12.240 | of the general range of the exchange rate
00:33:15.240 | between Canadian dollar and US dollar.
00:33:17.240 | Talk to your average Mexican,
00:33:19.240 | they're going to have, again, not the very poor,
00:33:21.240 | but most international, kind of middle class and up people
00:33:24.240 | are going to have some connection of what
00:33:26.240 | the current value is of the Mexican dollar
00:33:28.240 | to the US dollar.
00:33:29.240 | And on and on it goes.
00:33:31.240 | And so this is, so the United States,
00:33:34.240 | you have to have, so what Zayhan's argument here is,
00:33:37.240 | you have to have a currency where nobody even cares.
00:33:40.240 | And it's very hard, and that's one of the things
00:33:42.240 | that the United States government
00:33:44.240 | and the Federal Reserve has been able to do.
00:33:46.240 | They can manipulate the value,
00:33:47.240 | or they can allow the value to fluctuate massively,
00:33:51.240 | and nobody really cares.
00:33:53.240 | And the people don't care, and the government doesn't care,
00:33:55.240 | and the Federal Reserve doesn't care.
00:33:57.240 | That's his point.
00:33:58.240 | And that's very different.
00:34:00.240 | And to be clear, that stems from, at its core,
00:34:04.240 | the relative isolation and independence
00:34:07.240 | of the United States.
00:34:09.240 | A nation that derives a lot of its income
00:34:11.240 | from trading with the United States
00:34:13.240 | would never have that degree of flexibility
00:34:17.240 | that the Americans themselves have.
00:34:19.240 | - The value of your currency in any given day,
00:34:22.240 | because if there's a trade surge
00:34:23.240 | and demand of your currency goes up,
00:34:25.240 | then all of a sudden supply of your currency is plummeted
00:34:27.240 | and you're dealing with very real
00:34:28.240 | economic distortions at home.
00:34:31.240 | So your currency has to be so huge
00:34:35.240 | that you don't care that global exchange in it
00:34:39.240 | is moving around every day.
00:34:41.240 | And that means you also need to be able
00:34:43.240 | to run a persistent trade deficit,
00:34:46.240 | because you have to be able to provide currency
00:34:49.240 | for everyone who wants to trade everywhere at any time,
00:34:52.240 | and you cannot sign off on each individual transaction.
00:34:56.240 | That makes the list down to one already,
00:35:00.240 | because the Europeans couldn't do it
00:35:02.240 | because they have to run a trade surplus
00:35:03.240 | because their demographics are so aged
00:35:05.240 | they will never be net importers again.
00:35:08.240 | It can't be the Chinese.
00:35:09.240 | The Chinese are the most manipulated currency
00:35:12.240 | in human history.
00:35:14.240 | They print two to five times as much currency every month
00:35:16.240 | as the US Fed did at the height
00:35:19.240 | of our monetization programs in 2007 to 2008,
00:35:22.240 | and then again during COVID.
00:35:24.240 | Everything that everyone says is wrong with the US dollar
00:35:27.240 | is actually wrong with the Yuan by a factor of 10 more.
00:35:31.240 | And every time the Chinese start to loosen up
00:35:33.240 | their capital controls in an attempt to have
00:35:35.240 | a bigger role for their currency internationally,
00:35:37.240 | a half a trillion to a trillion dollars of private savings
00:35:40.240 | floods out of the countries in a matter of months,
00:35:43.240 | and they have to slam that window shut again.
00:35:46.240 | So, there is no reason to expect the US dollar to go anywhere.
00:35:50.240 | In fact, let me put this in historical terms.
00:35:55.240 | The need to have a large, liquid, stable currency
00:35:58.240 | maintained by a country that doesn't care
00:36:00.240 | what happens to it every day is so huge,
00:36:02.240 | so central to trade, that even at the height
00:36:04.240 | of the British-Spanish confrontations
00:36:07.240 | in the late colonial period, the Brits were using
00:36:10.240 | almost exclusively Spanish currency to lubricate
00:36:13.240 | their slaves' rum-finished goods trade triangle
00:36:17.240 | between the Caribbean colonies, the American colonies,
00:36:20.240 | and the British mainland.
00:36:22.240 | I want you to take special note of that comment.
00:36:25.240 | Again, the comment is, hey, there's a war going on
00:36:28.240 | between the Spanish and the Brits,
00:36:31.240 | and yet still the Brits are using the Spanish currency
00:36:34.240 | in order to lubricate trade.
00:36:36.240 | Money is so integral to our system,
00:36:40.240 | that if we don't have enough money,
00:36:43.240 | then everything collapses, and you will use
00:36:46.240 | the money of your biggest competitor.
00:36:49.240 | This is one of the things that you see all around the world.
00:36:52.240 | You go to whoever the biggest enemy of the United States is,
00:36:57.240 | in ideological terms, be it, I don't know,
00:37:00.240 | maybe Russia right now, or China, or Venezuela,
00:37:03.240 | or Cuba, etc.
00:37:05.240 | But I haven't traveled in all those nations,
00:37:07.240 | but in every one of those nations,
00:37:09.240 | the U.S. dollar is incredibly valued by most people.
00:37:13.240 | In some cases, especially those in Latin America,
00:37:16.240 | it is the de facto currency that is used,
00:37:19.240 | even by those who are an ideological enemy.
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00:37:52.240 | Brits were using almost exclusively
00:37:55.240 | Spanish currency to lubricate their
00:37:58.240 | slaves' rum-finished goods trade triangle
00:38:01.240 | between the Caribbean colonies, the American colonies,
00:38:04.240 | and the British mainland.
00:38:06.240 | Another good example.
00:38:08.240 | At the height of the Vietnam War,
00:38:11.240 | the Vietnamese were using the U.S. dollar
00:38:14.240 | in their international exchange because there was no option.
00:38:16.240 | You want a more recent example, look at what's going on with Russia.
00:38:19.240 | The Russians are under financial constraints right now,
00:38:22.240 | sanctions put on them by the Americans, the Europeans, and others.
00:38:25.240 | And so they tried to pull a lot of their petroleum earnings,
00:38:28.240 | which comes in in euros and dollars,
00:38:30.240 | and they tried to push it into Chinese yuan
00:38:32.240 | as kind of a stick it to the West.
00:38:34.240 | Well, a few months later, they tried to then pull it out,
00:38:36.240 | and the Chinese were like, "Well, no, we really don't want these yuan back."
00:38:39.240 | And so the Russians just lost tens of billions of dollars.
00:38:43.240 | There is simply no example at any point through human history
00:38:47.240 | of the unit of exchange for global trade
00:38:50.240 | of anything other than the global hegemon
00:38:52.240 | and the largest economy writ large.
00:38:55.240 | It's just not possible.
00:38:57.240 | Now, on this point, recognize this applies today
00:39:01.240 | in your own practical experience.
00:39:04.240 | There is one currency that you can spend
00:39:07.240 | in any country in the world today.
00:39:10.240 | That currency is the U.S. dollar.
00:39:13.240 | And I have proven this myself in every country I have been to.
00:39:16.240 | There is one currency, and that is the U.S. dollar.
00:39:20.240 | When I travel, although I will often carry some money
00:39:23.240 | from a regional currency, which I'll get to in a moment,
00:39:26.240 | I always carry U.S. dollars,
00:39:28.240 | and I always carry U.S. dollars in small denominations.
00:39:31.240 | And there have been various times where I have settled bills.
00:39:35.240 | You go to a restaurant, you don't--
00:39:37.240 | if for whatever reason you're not using a card
00:39:39.240 | or the card doesn't work or whatever,
00:39:41.240 | then I'll pay in U.S. dollars.
00:39:43.240 | Now, I will usually often--
00:39:45.240 | in some cases, they'll just accept it directly--
00:39:47.240 | but in many cases, I'll just give a slight premium for it.
00:39:50.240 | Hey, the bill would come out to $4 or $8 in exchange.
00:39:55.240 | I'll just pay $10.
00:39:57.240 | And if you bump up the exchange a little bit,
00:40:00.240 | the merchant is often very happy just to receive dollars.
00:40:03.240 | The point is that on a very real level,
00:40:06.240 | you can go around the world with one currency,
00:40:08.240 | and you can pay with U.S. dollars.
00:40:11.240 | Until that changes, I don't see--
00:40:15.240 | and that's the reason I'm talking in these terms.
00:40:17.240 | I'm not talking about settling international petroleum purchases.
00:40:20.240 | I'm talking about you and me with the scale that we can see with our eyes.
00:40:24.240 | Until that changes and the U.S. dollar is not desired
00:40:27.240 | by ordinary people, ordinary shopkeepers
00:40:30.240 | in any country in the world or in most countries of the world,
00:40:34.240 | the status of the U.S. dollar as a reserve currency
00:40:37.240 | is not in question.
00:40:41.240 | Now, there are, of course, regional currencies.
00:40:44.240 | And so, for example, the euro is a powerful regional currency.
00:40:47.240 | You can take a euro, and you can spend it.
00:40:50.240 | It'll be accepted in many places around Europe,
00:40:53.240 | even if the euro is not the standard currency.
00:40:57.240 | You can spend euros in a casual way in Switzerland or in Sweden
00:41:01.240 | or in Turkey, et cetera, because you're close enough to it.
00:41:05.240 | But the euro is not accepted in Latin America or in Asia
00:41:08.240 | the way that the dollar is.
00:41:10.240 | And so what I'm trying to do is give you just a very simple idea
00:41:13.240 | to back up Zahin's claim, which is on a big international space,
00:41:17.240 | with what you and I can see with our own eyes.
00:41:19.240 | Point through human history of the unit of exchange for global trade
00:41:24.240 | being that of anything other than the global hegemon
00:41:27.240 | and the largest economy writ large.
00:41:29.240 | It's just not possible.
00:41:31.240 | I don't mean that to sound pro-American,
00:41:33.240 | because the Americans have been on the other side of this.
00:41:35.240 | During the War of 1812, when the Brits were very close
00:41:39.240 | to destroying the United States as a country,
00:41:42.240 | our unit of exchange internally was the British pound.
00:41:44.240 | And if anything, as the world continues to deglobalize,
00:41:47.240 | you should expect the American position to entrench,
00:41:51.240 | because as global trade breaks down and goes into regional trade,
00:41:54.240 | you're going to have a series of regional hegemons
00:41:56.240 | who have tried to impose a bit of a PAX on their own neighborhood,
00:41:59.240 | and they will try to force everyone in their neighborhood
00:42:01.240 | to use that currency.
00:42:03.240 | But all of those countries will have a vested interest in not doing that.
00:42:06.240 | And as long as the US dollar is available,
00:42:09.240 | you've got a more liquid, less politically problematic currency
00:42:13.240 | that doesn't swing wildly, that is not actively manipulated
00:42:17.240 | to achieve trade advantages, and that is going to be used instead.
00:42:21.240 | So, I mean, for example, think about the Eastern Mediterranean.
00:42:23.240 | We're nearing a world where Turkey is going to be the central hub
00:42:26.240 | for all things in the Caucasus and the Middle East
00:42:28.240 | and the Eastern Med and the Balkans.
00:42:30.240 | They're going to try to get everyone to use the lira,
00:42:32.240 | but not everyone is going to want to use it
00:42:34.240 | because the Turks will, will, will use that authority
00:42:37.240 | in order to bind all these other economies more closely to them.
00:42:41.240 | Anyway, like I said at the very beginning,
00:42:43.240 | there's no shortage of people who don't like Americans,
00:42:45.240 | who have no sense of math or history,
00:42:47.240 | who are always going to trot this up every few months.
00:42:52.240 | And it means as little today as it did then.
00:42:55.240 | All right, that's it for me. Until next time.
00:42:57.240 | So there's the extent of Zaihan's video.
00:42:59.240 | I'll link to that in the comments if you want to see it.
00:43:01.240 | He is a world-class master at taking his background information
00:43:05.240 | and putting it into a short daily video.
00:43:07.240 | His YouTube channel is called Zaihan on Geopolitics.
00:43:10.240 | Wonderful, wonderful source of news.
00:43:14.240 | I don't have a ton to add, other than to say,
00:43:19.240 | show me the alternative. Show me the alternative.
00:43:23.240 | And while I won't be sad for there to be alternatives,
00:43:28.240 | one of the opinions that I still hold,
00:43:32.240 | that kind of comes from the Austrian perspective on money,
00:43:36.240 | or on economics, is that currencies should compete with one another.
00:43:40.240 | That anyone can create any currency they want for any reason
00:43:44.240 | and let them compete with one another.
00:43:46.240 | And in a limited way, I think that's what you see right now.
00:43:50.240 | You see that countries and currencies can compete with one another.
00:43:55.240 | But on that basis, there's not really, on an international competition front,
00:44:00.240 | there's not really any alternative to the US dollar.
00:44:04.240 | What is the alternative?
00:44:06.240 | We'll know that there is an alternative when we see it being used,
00:44:09.240 | and when we see the growth.
00:44:11.240 | Until then, I think any predictions of the US dollar's long-term,
00:44:18.240 | losing its status as the world's reserve currency,
00:44:21.240 | are wildly overplayed.
00:44:23.240 | And they usually come from countries who are seeking to gain a propaganda edge
00:44:28.240 | by proliferating their message, or by companies or individuals
00:44:32.240 | who are seeking to sell something out of fear and greed,
00:44:36.240 | trying to simulate people's fear and greed.
00:44:39.240 | As best I can see, the US dollar isn't going anywhere,
00:44:42.240 | and there's just no viable competitor at the moment to the US dollar.
00:44:51.240 | Now, does that mean you should do nothing and you should ignore this completely?
00:44:56.240 | I would say no, definitely not.
00:44:59.240 | And here are a few things that I think you should do.
00:45:02.240 | Number one, while it may be true, you might accept it as true, as I do,
00:45:09.240 | that the US dollar is the world's reserve currency
00:45:11.240 | and it's going to continue to be the world's reserve currency,
00:45:13.240 | but that doesn't mean that it's that way forever.
00:45:16.240 | And so there may be value in owning other currencies.
00:45:19.240 | Now, this is generally most obvious if you have some connection to another place.
00:45:26.240 | So, the Turkish lira has been greatly inflated recently.
00:45:32.240 | And so you wouldn't naturally go and say--
00:45:36.240 | by the way, this is one of Zayhan's predictions--
00:45:38.240 | that Turkey is an up-and-coming superpower, a regional superpower, for various reasons.
00:45:42.240 | I think he's probably right.
00:45:44.240 | But that doesn't automatically mean that you would go and invest all of your money
00:45:48.240 | into the Turkish lira if you don't have any connection to Turkey.
00:45:53.240 | But on the other hand, if you do have a connection to Turkey in some way,
00:45:56.240 | then, of course, some of your assets would be exposed to that.
00:45:59.240 | And whether that is Turkish banking deposits, Turkish investments,
00:46:04.240 | Turkish real estate, etc., you are going to pay more attention
00:46:07.240 | if you have a connection to that corner of the world.
00:46:10.240 | So if there is another currency that is represented to something
00:46:13.240 | that you have a connection with, then obviously consider pursuing it.
00:46:18.240 | It could be Canadian dollar, it could be euro, it could be Turkish lira,
00:46:21.240 | it could be Colombian peso, whatever it is.
00:46:24.240 | If you have a connection to a place, then obviously exposing some of your money
00:46:29.240 | and your investment structure to a local currency is going to be helpful.
00:46:35.240 | What you need to know, though, is quite simply this.
00:46:38.240 | The majority of the wealthy people in that country are trying to do
00:46:44.240 | the opposite of what you're doing.
00:46:46.240 | They want to have just enough money in the Turkish lira in order for them
00:46:50.240 | to grease the necessary financial accounts for their business,
00:46:55.240 | their investments, etc., and they want to have exposure to long-term appreciation,
00:47:00.240 | but they want the bulk of their money denominated in dollars
00:47:03.240 | to protect their money.
00:47:05.240 | So if you're in the United States and 100% of your money is in dollars,
00:47:09.240 | recognize that most of the world is sitting and looking at you with envy
00:47:13.240 | about how you get to enjoy this highly stable currency
00:47:16.240 | backed by this incredible titanic power, etc.
00:47:21.240 | So I think it's wise for you to consider diversifying some of your money,
00:47:25.240 | but recognize that it's probably of a lower priority for you
00:47:30.240 | than if you're Lebanese and you're trying to figure out how to protect your money.
00:47:34.240 | The path at this point in time is fairly obvious for most people
00:47:39.240 | that the U.S. dollar is the preferred alternative,
00:47:42.240 | and that's not due to--again, that's due to what the United States represents,
00:47:48.240 | not due to them forcing it on the world.
00:47:53.240 | Are there good alternatives to it? Absolutely.
00:47:56.240 | I think that it's perfectly reasonable for you to bank in other currencies
00:48:01.240 | and to have exposure to other currencies.
00:48:03.240 | So whether you keep accounts in Singapore, in the Singapore dollar,
00:48:06.240 | or again, Switzerland in the Swiss franc, or in Great Britain with the pound,
00:48:10.240 | really any number of these are okay,
00:48:14.240 | even if they're rather smaller currencies, right?
00:48:17.240 | The Swedish kroner or something like that,
00:48:19.240 | where, okay, there's a relatively small currency, but it has some independence,
00:48:23.240 | that can be a great move for protecting some of your money.
00:48:27.240 | Just like owning some gold coins that you keep in your safe
00:48:32.240 | or in your safety deposit box or in storage in another country,
00:48:35.240 | this is a great insurance play.
00:48:37.240 | But don't think that that's not appropriate for all of your money.
00:48:41.240 | If you have a million U.S. dollars and you're actively involved in business
00:48:45.240 | and you just say, "I'm going to go put all this money into gold coins
00:48:48.240 | held in offshore cold storage somewhere," that would be a really bad move.
00:48:53.240 | And I think the same thing, especially when we come to other potentially global options.
00:48:57.240 | So many people want to get out of a regional option.
00:48:59.240 | They say, "What's a global option?"
00:49:01.240 | Well, in a digital world, maybe there's a digital alternative.
00:49:03.240 | This is the argument in favor of bitcoins,
00:49:06.240 | the argument some people put in favor of other cryptocurrencies.
00:49:09.240 | And while these things have been beaten up massively,
00:49:13.240 | there is probably an increasing relevance for these in the future
00:49:18.240 | because we are living in a world--
00:49:22.240 | So think about where we've come from.
00:49:25.240 | There was a day and age in which the British were running their empire
00:49:29.240 | with the Spanish doubloon being the currency of exchange.
00:49:35.240 | That's the reason why, incidentally, we have what's called the Treasure Coast
00:49:38.240 | in South Florida, where I'm from.
00:49:40.240 | The Treasure Coast is called this because of all of the Spanish shipwrecks,
00:49:43.240 | all the shipwrecks, where the boats were full of gold.
00:49:47.240 | All the gold and the gold coins going all around is what made these spectacular shipwrecks.
00:49:51.240 | So there was a day in which they literally had to transact in gold coins.
00:49:56.240 | Then you had the development of paper currencies,
00:49:59.240 | and you had various IOUs that became paper notes.
00:50:03.240 | And then those notes at one point were connected to,
00:50:06.240 | anchored to some sort of limiting factor.
00:50:09.240 | So if you had a $20 bill, but that was redeemable for gold upon presentation,
00:50:13.240 | then that was disconnected.
00:50:16.240 | So this money was traded on a global basis.
00:50:19.240 | And then it was paper money.
00:50:21.240 | So you had pallets of bills going around the world.
00:50:24.240 | And while there are still pallets of bills moving around the world--
00:50:27.240 | I forget the numbers, but I think it's probably half of all U.S. currency
00:50:30.240 | is outside of the United States--
00:50:32.240 | but now it's just digits on a screen.
00:50:34.240 | It's just a form of accounting of digits on a screen.
00:50:37.240 | So I don't deny that we could invent beautiful new digital systems of accounting.
00:50:41.240 | That's possible.
00:50:43.240 | I just simply deny that they're currently a significant factor in global trade
00:50:47.240 | or in most people's personal lives.
00:50:49.240 | But if the marketing efforts continue and people continue to believe in them
00:50:53.240 | and they start to use them over time, who knows?
00:50:56.240 | Five years from now, 15 years from now,
00:50:58.240 | they could be more and more of a factor in our lives.
00:51:00.240 | We don't know.
00:51:02.240 | And so having exposure to those is smart.
00:51:05.240 | Please, and I have a course, right?
00:51:07.240 | BitcoinPrivacyCourse.com.
00:51:09.240 | By the way, there haven't been enough of you going and getting that.
00:51:11.240 | So if you haven't gotten my Bitcoin course,
00:51:13.240 | go to BitcoinPrivacyCourse.com.
00:51:15.240 | Learn how to buy Bitcoin completely anonymously.
00:51:17.240 | Learn how to own it.
00:51:19.240 | Learn how to use it, etc., without any ties to your names.
00:51:22.240 | It's a fabulous, fabulous tool.
00:51:24.240 | But don't put all your money in Bitcoin, please.
00:51:26.240 | The U.S. dollar is a better bet for most of your money.
00:51:30.240 | Make your moves, but don't put all your money into Bitcoin.
00:51:34.240 | The next point of protection that you need to take
00:51:36.240 | is simply pay attention to owning assets, not currencies.
00:51:40.240 | Virtually none of us should sit around
00:51:42.240 | and have all of our money in currency.
00:51:44.240 | You should own assets.
00:51:46.240 | And those assets can be bought or sold in various currencies.
00:51:53.240 | This is, of course, what we're trained to do.
00:51:55.240 | By learning how to avoid inflation, excessive inflation,
00:51:58.240 | we wind up purchasing assets, and that's right.
00:52:02.240 | Assets are companies, pieces of real estate,
00:52:05.240 | collector watches, bonds, stock options, various things.
00:52:11.240 | These are all assets.
00:52:13.240 | And while they may be denominated in dollars,
00:52:16.240 | though that can be changed in many cases,
00:52:19.240 | and it doesn't have to be denominated in dollars.
00:52:22.240 | If you own a house right now, free and clear,
00:52:24.240 | no mortgage, etc., you own a house.
00:52:26.240 | Today, you can sell your house for Bitcoin.
00:52:31.240 | Today, you can sell your house for gold coins.
00:52:35.240 | Today, you can sell your house for Swiss francs.
00:52:41.240 | Now, if the US dollar is going to lose its status
00:52:46.240 | as the world's reserve currency,
00:52:49.240 | then you should find it increasingly easy
00:52:53.240 | for you to get a fair price for your house
00:52:56.240 | if it's denominated in an alternative currency.
00:53:01.240 | When we see that your house and your neighbor's houses
00:53:05.240 | and it's a regular thing that housing transactions
00:53:09.240 | are being denominated in something other than dollars,
00:53:15.240 | that'll be a pretty good sign that the end of the US dollar
00:53:18.240 | is the world's reserve currency is approaching.
00:53:21.240 | But until then, be skeptical.
00:53:24.240 | Now, this is also true on an international basis.
00:53:27.240 | I have been in many countries around the world
00:53:30.240 | where the local currency is not the normal pricing of houses.
00:53:37.240 | Now, this is not true in countries that have a strong currency.
00:53:40.240 | If you go to Great Britain, you will find that the houses are--
00:53:44.240 | everything is priced in pounds.
00:53:46.240 | But I've seen a lot--you see this in Latin America,
00:53:49.240 | you see this in places that face significant inflation.
00:53:53.240 | I've seen a lot in Turkey where even officially,
00:53:57.240 | today, the Turkish government today
00:54:01.240 | will give you great citizenship on investment program.
00:54:05.240 | If you'll buy $400,000 worth of real estate in Turkey,
00:54:09.240 | today you can get Turkish citizenship for you and your entire family.
00:54:12.240 | You need to hold the real estate for a few years,
00:54:14.240 | then you can sell it, you can even make money on it.
00:54:16.240 | But the Turkish government denominates that not in the number of the lira,
00:54:20.240 | but in the US dollar.
00:54:23.240 | And this is--I think, again, you see this very clearly in Latin America,
00:54:26.240 | where you go throughout Latin America and frequently,
00:54:30.240 | even government processes, government issues,
00:54:36.240 | government fees are denominated not in the local currency,
00:54:39.240 | but in the US dollar.
00:54:41.240 | And then conversion is sometimes made.
00:54:43.240 | So when you see on a global basis that change,
00:54:47.240 | and when you see on a global basis your own neighborhood,
00:54:50.240 | you see that people are buying and selling houses for Bitcoin
00:54:53.240 | or for gold coins or for a different international currency,
00:54:56.240 | then I think those are good signs that the end is nigh.
00:55:00.240 | Let me very quickly--a couple of other things.
00:55:03.240 | We talked about have your own assets.
00:55:06.240 | I think having exposure to at least one international bank account,
00:55:10.240 | really smart,
00:55:13.240 | will probably for most people represent a small portion of your assets,
00:55:16.240 | but at least having some money in an international bank account is really smart,
00:55:19.240 | and this would make it a lot easier for you to get money out of the country
00:55:24.240 | if you ever needed to.
00:55:26.240 | So this is my preferred strategy is basically have a tunnel account out.
00:55:29.240 | So if I ever need to get out of one country,
00:55:31.240 | I need to have other accounts in other countries where I can quickly move money.
00:55:34.240 | If you're interested on this and on other aspects of internationalization,
00:55:37.240 | remember I sell a course at internationalescapeplan.com,
00:55:41.240 | internationalescapeplan.com,
00:55:44.240 | as to how you can get your money, yourself, your assets out of a country
00:55:48.240 | and into a better situation.
00:55:50.240 | And in that course, by the way, I go through this in a very careful way
00:55:54.240 | of showing you how you can put in place an insurance policy,
00:55:57.240 | and for most people that's all you need is something of an insurance policy.
00:56:01.240 | You don't need to take action and move to another country,
00:56:03.240 | probably not recommended for most people.
00:56:06.240 | You just need an insurance policy in case things ever did change
00:56:09.240 | because while today the situation in 2023 may be fairly obvious,
00:56:14.240 | we don't know what the situation is going to be like in 2043.
00:56:17.240 | We may have guesses, but we don't know.
00:56:19.240 | So preparation in advance, long before you ever need it,
00:56:22.240 | that's the time you buy insurance policies,
00:56:24.240 | internationalescapeplan.com.
00:56:26.240 | Here's the last set of comments that I want to focus on.
00:56:30.240 | There are a lot of people in the United States
00:56:33.240 | who are frustrated with the state of our society,
00:56:39.240 | and I'm one of those.
00:56:42.240 | And different people have their own reasons for disillusion or frustration.
00:56:48.240 | If you look around the political space,
00:56:51.240 | you won't find many people who will stand up and say things are going great.
00:56:56.240 | I can't remember the last time I heard someone stand up
00:56:59.240 | and just unequivocally say things are going great.
00:57:02.240 | Even the most positive of us--I try to be pretty positive,
00:57:05.240 | focus on what's going well--but even the most positive of us
00:57:08.240 | would basically say, "Look at all these things that are going well,"
00:57:12.240 | and yet recognize there's a whole bunch of stuff that's not going well.
00:57:17.240 | I think that's true.
00:57:19.240 | Don't put these things together.
00:57:22.240 | Don't assume necessarily that they're related.
00:57:26.240 | Don't assume that cultural change--
00:57:29.240 | don't assume that bureaucratic incompetence--
00:57:32.240 | don't assume that that automatically means the death of the country's money.
00:57:37.240 | They're not necessarily connected.
00:57:40.240 | They may be related loosely, but they're not directly causal.
00:57:45.240 | Financially, militarily, the United States is a powerhouse.
00:57:51.240 | It doesn't mean the country may not have all kinds of issues. It does.
00:57:56.240 | Financially and militarily, the country is a powerhouse.
00:58:00.240 | And those things--and at its core, for all of the things wrong
00:58:04.240 | with the United States, there's a lot of stuff right with it.
00:58:08.240 | And that is worthy of appreciation.
00:58:12.240 | If you're going to find an alternative to the dollar,
00:58:14.240 | you've got to find a country where things are going better
00:58:17.240 | and where their currency is way better on all of those issues
00:58:20.240 | and can do all of the things that the U.S. dollar does.
00:58:24.240 | And I don't see it. I don't think it exists.
00:58:27.240 | Hope this helps you. Be encouraged.
00:58:30.240 | Think as rationally as you can. Try to learn as much as you can.
00:58:34.240 | And then take appropriate levels of protection for your own situation.
00:58:39.240 | As I've said, I look at this and I want to ensure.
00:58:43.240 | So I ensure against the U.S. dollar, but I don't--
00:58:48.240 | I'm not out on the hardcore end of just not having any connection with it.
00:58:53.240 | And if you have counterarguments, I'd love to hear those.
00:58:56.240 | But I've spent a lot of time looking for them,
00:58:58.240 | and I can't find really good arguments,
00:59:00.240 | except from people trying to profit off of my fear and my greed.
00:59:05.240 | And in line with profiting off of your fear and greed,
00:59:08.240 | if you want my very reasonably priced and very rational solution,
00:59:12.240 | again, internationalskateplan.com is where you can find my internationalization course.
00:59:16.240 | Bitcoinprivacy.com is where you can--
00:59:19.240 | excuse me, bitcoinprivacycourse.com is where you can find my Bitcoin course.
00:59:24.240 | And I would encourage you to check out those resources if you haven't done so yet.
00:59:27.240 | Be back with you soon.
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