What will happen if Dollar die

WHEN you hold a dollar bill in your hand, take a moment to appreciate the intricate work that goes into its production. The dollar die is a testament to the precision and expertise required to create our currency, making it one of the most durable forms of money in circulation.

We treat money as something sacred, but money means nothing.

Let's take a look back at history and see how many currencies in history have disappeared.

Roman Empire: They devalued their currency by reducing the gold content in it. They even tried using silver to do the same thing, but those coins would wear out with use, which at least doesn't happen with gold.
Byzantine Empire: Its currency was severely devalued. Initially, Solidus was known for its purity and stability, but over time, the emperor began to reduce the gold content to cover expenses.

French Revolution: The revolutionary government issued massive amounts of paper money backed by land confiscated from the church and nobility. However, the over-issuance of these notes without a solid backing led to hyperinflation. The economic collapse exacerbated political and social instability and contributed to the rise of Napoleon Bonaparte.

19th Century: As we all know, the 19th century is closely associated with the gold standard, which promoted significant economic growth and financial stability in many parts of the world (Industrial Revolution, international trade, etc.).

20th Century: At the beginning of the 20th century, with the outbreak of World War I, we saw that all countries that were on the gold standard abandoned the gold standard. This led to the Great Depression. Throughout history, there has been only one way to eliminate this: through gold. This metal has unique properties.

In fact, countries that have tried to do the same thing with silver have always failed.

For example, Britain, China and India in the late 19th century. It is well known that gold cannot be mined at a rate higher than 5%, making it an asset worth owning throughout history.

Warren Buffett has been very critical in saying that gold does not generate cash flow nor does it generate any business profits, both of which are true.

This is an argument made by many, but let me tell you the mechanics of money.

Companies in the United States use U.S. dollars to trade and do business. The more they do, the more dollars they get, and therefore, the more money they get.

Where does this money come from?

The total amount of money controlled by the central government.

Now the country prints worthless money so that people can buy more of the company's products, thereby increasing the stock price.

However, some things never change in the government balance of payments:

Gold: The demand for gold is fixed and the growth is known. Unless we find more gold in the space race.

Residential land: Same as gold.

Bitcoin: Demand limit is 21 million.

This will make the previous three appreciations closely linked to the circulation of the US dollar.

For example, more mobile phones can only be sold if people have more money or credit. This money or credit is obtained from banks by increasing the total balance at the central bank.

The relationship between stocks and gold.

 Percent increase in global printed money = Percent increase in gold price + Percent gold discovered.

If it prints at 9%, we can say that the price of gold will increase by about 6-7% (it has been the case since 1971).

Now many of you will say that Apple's returns are great, and that's true. Of course, if you say the S&P 500 has higher returns, that's not true. Even if it is true, it is because the United States is still a world power until today, and most of the returns come from the United States, including global companies such as Apple and Amazon. Much of this money comes from Europe, which has weighed on the performance of European stocks.

So, do all stocks in the world have a higher total return than gold?

The answer is NO.

All currencies that are not tied to anything valuable (mainly gold) have either disappeared or lost too much purchasing power.

When the dollar is surpassed by other currencies, whether physical or digital, gold or Bitcoin, the index does not fall; we simply realize that its appreciation has been useless. In fact, one of the indexes with the highest returns is the one in Argentina.

What's the benefit? Useless because while your peso may appreciate in value, every day you buy less in your home country and less elsewhere in the world.

The US dollar is the world's largest payment currency and has a high status in the world. Most countries in the world have foreign exchange reserves in US dollars. It is understood that at the peak of the US dollar, almost 90% of global trade was settled in US dollars. Although the Bretton Woods system has collapsed, the hegemony of the US dollar still exists.

Nowadays, the United States, as the world's largest economy, has very high consumer demand. Many goods are imported from abroad, so the circulation of U.S. dollars in the world is very large. At the same time, Wall Street in the United States is the global financial center and controls the world. capital. Many countries have also bought U.S. Treasury bonds. The world is very dependent on the U.S. dollar, and the hegemony of the U.S. dollar has never been shaken.

What will happen if Dollar die?Let’s take China as an example:

 What problems will arise when China no longer uses U.S. dollars for international settlements? At present, most countries still recognize the US dollar and do not recognize the RMB, so China cannot use RMB for settlement. If you don't use U.S. dollars for settlement, you have to use other currencies, such as the other country's currency, gold, or barter. In this case, China needs to reserve the currencies of the countries it trades with or a large amount of gold to be able to conduct foreign trade.

This approach is very troublesome and has certain risks. For example, when China does business with some small countries, the currencies of these small countries are not stable. When these currencies depreciate or expand, the currencies of these countries that China reserves will depreciate, and China will face very large losses.

Using gold for settlement is also a way, but the price of gold also fluctuates internationally. Fluctuations in gold prices will bring inconvenience to transactions, and if transactions are entirely conducted in gold, the United States' control over China will be simpler. Therefore, China will not do that! The barter transaction method is very ancient and very inefficient, so it is very unrealistic in contemporary society to use barter for transactions.

In addition, we all know that oil transactions are pegged to the U.S. dollar. If you want to buy oil, you must pay in U.S. dollars. China is a major oil importer and has a very large demand for oil. If China does not use US dollars, it will not be able to import oil, which will bring a devastating blow to China.

The same is true for China's chip industry! Inseparable from US dollar settlement.

Without the dollar, other countries will face the same problems as China.

Therefore, if the dollar suddenly disappears, the world will fall into chaos, endless war will be inevitable, and the world will once again enter a long period of darkness! Of course, the U.S. dollar will eventually be slowly introduced to the historical stage one day. There may be several new world currencies in the future monetary system that will dominate the world economy. Although we don’t know who they are, we firmly believe that they must represent the future!