The declining use of the US dollar as a world reserve asset is expected to cause a global dump of dollars, leading to inflation in the United States. Andy Schectman predicts a move towards Central Bank Digital Currencies (CBDCs) and The Great Reset. Saudi Arabia and the BRICS coalition could lead the de-dollarization trend, triggering a potential crash in asset prices. If this happens, the government could introduce CBDCs as a solution. Schectman also highlights Lael Brainard’s support for modern monetary theory through digital means.
The declining use of the US dollar as a world reserve asset is expected to cause a global dump of dollars, leading to inflation in the United States as the currency returns to American shores.
As a result, interest rates will increase, followed by a possible fall in asset prices, which can open the door to the implementation of Central Bank Digital Currencies (CBDCs) and The Great Reset.
Andy Schectman, the President and Owner of Miles Franklin, who is an expert in monetary and economic history, predicts a grim future for the United States as the world moves away from the U.S. dollar as a world reserve asset.
Schectman claims that the BRICS coalition consisting of Brazil, Russia, India, China, and South Africa could take the lead in creating their own reserve currency to compete with the U.S. dollar.
According to the speaker, the BRICS countries are coming together to challenge the power and dominance of the US dollar, which they see as hypocritical and hegemonic.
They have expressed interest in potentially pegging their currency to gold or other commodities. As part of this effort, the BRICS will be discussing the creation of an alternative to the US dollar at their meeting in Durban, South Africa in August.
During an interview with Michelle Makori, the Lead Anchor and Editor-in-Chief at Kitco News, Schectman stated that the use of the US dollar as a weapon during the conflict between Russia and Ukraine has accelerated the decision to abandon it. He argued that the Western sanctions on Russia, coupled with the expulsion of Russia from the SWIFT payment system, have made other countries hesitant to use the US dollar.
As a result, there has been a growing trend among nations to move away from the dollar.
“Since the weaponization of the dollar in 2022, it [de-dollarization] seems to be spinning much, much faster,” Schectman stated.
The interviewee highlighted Saudi Arabia as a potential catalyst for significant de-dollarization. He explained that if Saudi Arabia were to announce that it is willing to accept other currencies in exchange for its oil, this could trigger a large-scale movement away from the US dollar.
He predicted that many countries that have held dollars for the past fifty years would lose interest in holding them, causing a rapid and substantial sell-off of dollars. He warned that this could result in a surge of inflation impacting the West, which he likened to a tsunami hitting the shores.
CBDCs and The Great Reset
Schectman argued that as dollars flow back to the United States, there would be a sudden increase in interest rates to make up for the decline in purchasing power.
He claimed that this would result in a significant decline in the value of assets like real estate, stocks, and bonds, which had increased in value due to the Federal Reserve’s loose monetary policy.
According to Schectman, there has been a significant expansion in the money supply over the past few years, leading to a substantial rise in asset prices.
If there were a crash in asset prices, the government could introduce Central Bank Digital Currencies (CBDCs) as a potential solution.
CBDCs are digital tokens issued and managed by the Federal Reserve and function as a type of fiat money. They could be presented as a means of assisting individuals who had suffered a loss of wealth due to the crash in asset prices.
Initially, CBDCs would be offered as a way to provide financial support to those affected.
“That’s when they would come in and roll out their new CBDC,” he predicted. “This gives them cover to roll it in.”
The interviewee gave the example of Lael Brainard, who is the Vice Chair of the Federal Reserve and will soon become the Director of the National Economic Council.
He mentioned that Brainard supports the concept of modern monetary theory (MMT), which posits that a relaxed monetary policy can boost the real economy, particularly by directly providing cash transfers to households and individuals.
Schectman said that Brainard aims to apply modern monetary policy through digital means, such as directly delivering it to people’s smartphones.
He speculated that it is possible that in the next few years, she may implement a Central Bank Digital Currency to manage a new system arising from the aftermath of a potential crash in asset prices.
In conclusion, the potential decline in the use of the US dollar as a world reserve asset could have significant consequences for the United States, including inflation, rising interest rates, and a possible crash in asset prices. Andy Schectman believes that Central Bank Digital Currencies (CBDCs) and The Great Reset could be the solution to mitigate these effects. The BRICS coalition and Saudi Arabia may lead the de-dollarization trend, and the introduction of CBDCs could provide financial support to those affected by a potential crash in asset prices. The implementation of CBDCs could also be facilitated by Lael Brainard’s support for modern monetary theory and her aim to deliver it through digital means. As the world’s financial landscape continues to shift, it will be interesting to see how the United States and the rest of the world adapt to these changes.