Reset
of the Global Currency
The recent Symptoms blog investigated government debt as an underlying reason for the US trade war. Another reason was teased in the Fiat blog last fall, discussing eventual reset of the US dollar as the global currency. Let’s dig a little deeper on the fiat USD.
Regarding the US dollar, Lyn Alden reports “The cost of the Petrodollar system, from 1974 to the present, is that by having so many entities around the world hold dollar-denominated assets (US Treasury bills) for lack of a better alternative, it artificially increases the purchasing power of the US dollar. The extra monetary premium reduces the US’ export competitiveness and gradually hollows out the US industrial base.” She then continues with “To supply the world with the dollars it needs, the US runs a persistent trade deficit. The very power granted to the reserve currency issuer is also what, over the course of decades, begins to poison it and render it unfit to maintain its status.”
In plain English: The US dollar can’t maintain its status as global currency.
Does this indicate there’s a method behind the madness of the US trade war? Here’s what a couple key players in the US had to say:
Stephen Miran, Chairman of the US Council of Economic Advisors (aka the economist who has Trump’s ear), published a paper (2) last fall titled “A Users Guide to Restructuring the Global Trading System”. The paper considers tariffs as a tool the US government could use to reorder the global economy while retaining the world’s reserve currency. Financial thought leaders are now pointing to this person and his paper as an example of method.
In plain English: Tariffs are part of a plan to try and save the US dollar.
Scott Bessent, US Secretary of the Treasury, stated in an interview last summer “In the next few years, we are going to have some kind of grand economic reordering. Something equivalent to a new Bretton Woods. There’s a very good chance that happens in the next four years and I’d like to be a part of it.” (3) Bretton Woods refers to the world economic order initiated in 1944 as WW2 ended and later replaced by the Petrodollar in 1974.
In plain English: There will be a reset of the global currency soon.
What does this mean for Canadians? It means we should Be Prepared for a global currency reset. As mentioned in Fiat, currency resets historically mean a return to tangible assets to back the global currency. Gold, other commodities (oil, copper, silver, etc.), and/or Bitcoin may all have a role to play in backing the future global currency and their value will probably go up when this reset occurs.
I recommend you think about including some portion of one or all these tangible assets in your portfolio. We have.
1. Broken Money, Lyn Alden, 2023
2. A User’s Guide to Restructuring the Global Trading System, Stephen Miran, Hudson Bay Capital, November 2024