Many economists and market analysts have put forward an argument that the US monetary regulators and their
policies (or lack thereof) are a threat to the value of the US dollar, hence, to the economy. Yet that's not the only source of risks for
the US currency. The second huge ongoing and increasing hazard to the
USD is America's increasing abuse of the dollar monopoly position as a
trading currency in the form of financial sanctions used a weapon
against other countries or companies whose contribution to the economies of those countries is of national security interest.
This
weaponization of dollar by the US has touched upon not only countries
like Iran or Venezuela, but on the EU, India, China etc. This source of
risk and moral hazard is not covered by the so-called "democratic
independent" media at all (especially in the US), but it is a big deal when even the nominally
closest allies of the US, like the EU, are getting seriously scared about the
dollar-dependent international transactions because of the risk of US
whimsically shutting down the system for those whom the US "doesn't
like". (Iran oil purchases by the EU are a prime but by no means only
example).
Economic giants like the EU and China may already well be working
seriously on creating alternative safe mechanisms and institutions to
provide relatively safe transactions and account settlement mechanisms and instruments alternative to the US dollar, and many other countries
may join the effort. This is because the US dollar has been turned by
the US into a poison pill that presents a national security concern par
excellence for those countries and blocks.
For the last decades the US dollar has been well protected against the
inflation not least because there has been unflagging demand for and use
of the US currency for the internal trade, which, in turn, has been
supported by the growth of the big developing economies. The US has got
accustomed to this sweet dreamland reality where the inflation just doesn't exist,
totally forgetting that this exclusive gift of inflation immunity has
been granted to the US by the WORLD because of the exclusive TRUST in their currency
by the rest of the world using it for the whole international trade
(which is big). This allowed the US to "print" money for decades without
any serious risk of inflation. Yet collapse of this trust because of
the US abusing its privileged position as the World Mint, and creation
of the alternative instruments and institutional mechanisms for
international payments can change things dramatically and historically
on this front.
If the world's patience is pushed over the edge by the US
and an alternative to the US dollar monopoly is created not only will
demand for dollar fall in comparison to today's levels in terms of its
proportion to the growth of world economy and trade, but even the
existing national reserves of dollar, if only for the reason of national
security, may start to be drastically wound down through exchange for those future
instruments used in lieu of the US dollar.
It is not hard to imagine the
character of implications caused by this kind of transition and loss of
the USD monopoly status (and a bad loss too because its cause is not
technical but the failure of the world trust that is much harder to
restore than direct economic value) on the inflationary environment and
even on the "apparent" GDP of the US. A goodly chunk of the world
economic pie that the US has always considered totally its own "fair-earned" lunch can vanish in a relatively short period of time because in reality
it has never been the product of American economy, but its been RENT that the US
has been exacting from the rest of the world for using its money for
that part of the product that is internationally traded (exported and
imported) not only between the US itself and other countries, but also
(and mainly) between those other countries in their exchange of goods and services.
The ripples of fear have spread around the globe about the toxic danger
of the US dollar, and the media (including the US media) keeps silence
about it, even though the implications can be life-changing for the
future generations of Americans.
