Why the World Order Just Changed?

How did the US commit economic suicide? In this post, I will explain just that and suggest how you can prepare for the new world order and the economic difficulties that are coming our way.

Petrodollar, the old world order

In my last post, I explained that we live in a Fiat monetary system. It’s a concept that serves governments to print a lot of extra money so that they can implement their policies. At the end of the day, you, the currency holder, pay its cost through inflation.

So bearing this concept in mind, let me introduce you to a few more.

In the 70s, the US government made a deal with South Arabia. They would export oil and sell it uniquely in US dollars. This means that whoever wants to buy oil first has to buy US dollars to pay for it. And because all countries need oil, all countries have to buy dollars first. This made the dollar become the strongest currency, boosting the US economy and becoming the world reserve currency. Shaping a new world order.

What is the world reserve currency?

It’s a common asset that countries use for trading and saving. In other words, countries around the world keep their savings and buy and sell their commodities in US dollars.

But as the US government controls the money supply of the dollar, it is not so much a neutral asset. Whatever policy they implement affects all countries. And also, whatever those countries do with their dollar may affect back to the US. This last point leads us to today.

The western bloc freezes the Russian foreign reserves

In recent weeks, the western bloc has frozen the foreign currency reserves of Russia. Basically, they’ve just frozen their bank accounts in dollars and euros. Most western governments think this is justified and harmful only to Russia. But there are only trade-offs in economics, and I’m afraid the west did not properly calculate its sanctions.

Let me explain by asking you first: If your bank froze your friend’s money, for whatever reason. Will you still keep your money in that bank?

Most likely, you would take your money out of it. Right now, the central bankers around the world are thinking in the same way. If they can use their dollars and euros only if their political views are aligned with US and EU, they will start getting rid of their foreign reserves.

What will be the consequences?

This might not happen from one day to another; it is a slow process. But eventually, countries will start getting rid of their USD reserves. This will devalue the dollar, breaking its status as the world reserve currency. If everyone is selling dollars, their price will drop. If dollars value less, prices of things will be higher. You need more dollars to buy the same goods.

Also, in an environment where countries get rid of their dollars. The US will have more difficulties selling its debt, causing a rise in interest. Currently, its levels are astronomical, 130% of GDP (US) and 100% (EU), so if the interest rise, they will not be able to pay their debt back, ending in bankruptcy. Alternatively, they will print more money out, which will lead to even higher inflation levels, and the citizens will be the ones paying for that debt.

A new world order

This might sound like a bold prediction, but if you wouldn’t trust a bank freezing your friend’s account, then the consequences of the west actions are inevitable. The trust in money has been broken, and it will take a long time until it is recovered.

Unfortunately, people will not understand the consequences of this event until it is too late and they are caught up in the transition. But those who are aware of it have the chance to take action.

As usual, this is not investment advice but a recommendation to increase your financial education and learn how to navigate these times; I’m doing it every day.

The era of paper money is over, and commodity-based economies will take the lead. So take a look at my stock portfolio for inspiration. Remember that gold and/or silver always play a role in monetary system transitions and when a new world order is born..

And last but not least, subscribe and share this post with everyone, and I will keep you posted on the economic threats that are around the corner.
If you want to explore this idea more deeply, you have an easy 3-step video version by George Gammon. And for a bit nerdier version, you can listen to Luke Grom m en or to Zoltan Pozsar.