from Outsider Club:
Almost exactly 44 years ago (as of August 15), former U.S. President Richard Nixon announced that the administration would be taking some extreme measures to combat the worsening currency war situation.
People were rapidly losing faith in the dollar, so Nixon imposed national price controls, initiated a pretty significant surtax on foreign imports, and banned the conversion of dollars into gold.
Flash forward to present time and we’re smack in the middle of yet another ever-worsening currency war situation — with China, this time.
In fact, leading global economist Chen Yulu says the yuan will be a legitimate rival to our dollar in just 15 years. Wei Jianguo, Vice Minister of Commerce of the People’s Republic of China, thinks it’ll take closer to two full decades. Some others think the yuan is already positioned on the brink of displacing the dollar in Asia.
This is both an interesting and curious thing because today’s reserve currencies are no longer backed by gold, making their value less static, more vulnerable. The last time we experienced any kind of “similar” transition in the world’s reserve-currency, it also marked a notable shift in economic power at large.
Last century, the world moved from the pound towards the dollar, recognizing America’s newfound dominance over Britain. Yet, we were allies with similar views on values, economics, and governance. China and the U.S. simply don’t share that level of camaraderie.
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