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De-dollarization Marches On

Where does the dollar go from here? And will it take your savings with it?

China stock market price graph display. Dragon as background means China economy concept. Stock market graph showing up trend economy. Red text price ticker board. Success in China business. No flag.

You might have heard it said that China is our “banker” in a sense. They have been reliably hoovering up our debt for years. The USA is $34 trillion in debt – and that figure grows every day. But who are we borrowing from?

Strong global demand for the US dollar has meant we can issue more and more debt – like “printing money” but the inflationary effects are exported abroad via treasury auctions.

The problem is our politicians have gotten quite comfortable with this situation and happily spend like drunken sailors – with apologies to drunken sailors. There is no sense of fiscal discipline in Washington. See: the latest Ukraine spending package, etc.

There are no brakes on the runaway train. But there could be a brick wall down the track…

The globe is slowly de-dollarizing, including and especially China.

If Washington keeps spending, but the world stops buying our debt, guess what? The inflation has no where to go. It stays here at home – on your grocery store shelves, eating up the value of your savings.

Unstoppable force, meet immovable object.

China has become a net seller of our debt, just recently selling a record $53.3 billion worth of our debt. This is a stark about-face and an ominous trend. Was this accelerated by Biden’s trade war and sanctions?

China is currently down to less than $800 billion in US treasuries.

China is also settling more and more trade in yuan vs dollars. See the trend line here.

Japan is now the biggest foreign holder of our debt, but their economy is a mess.   Could they be forced to sell US debt to prop up the weak yen? What would that do to inflation here at home?

The only reason the dollar is “strong” right now is other fiat currencies are doing even worse. The GLOBAL economy is in trouble everywhere. Every country has debt problems and can’t stop printing and spending. It’s a race to the bottom. This is the reason fiat currencies have a life span and eventually collapse. It is hard for politicians and world leaders to maintain fiscal discipline when they have a printing press. The temptation is just too great. It is, sadly, just human nature. But citizens pay a terrible price.

Gold can’t be printed out of thin air. That is why it has functioned as money and a store of wealth for 8,000 years of recorded human history – going back to Biblical times and even before.

Central bankers and people who want their savings to survive when the house of cards collapses are piling into gold instead.

Are you diversified with precious metals? Call Reagan Gold Group. We can get you started! But don’t delay. Based on current events and basic math, we believe prices are only going up from here. A small allocation of gold and silver just makes sense, for nearly any portfolio. But call us and let’s discuss your unique situation!