Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Yeah. Today's Q and A is the US dollar at
risk of no longer being the reserve currency. This is
brought to you by Melissa and Ashes check Mark Collections.
Each day I feature a listener question that is sent
by one of these methods. You may email me Brian
Mudd at iHeartMedia dot com, hit me up on social
at Brian Mud Radio. May also use the iHeartRadio talk
back feature. We would love it if you would love
(00:21):
us inside of the app, make us your number one
preset the Brian Mud Show podcasts my podcast number two
preset that way, we are always there for you for
free on demand. Happy day. And while you're in there,
look for the little microphone button. You see it, you
tap it, you may lay down the message right there,
maybe for a future Q and A. Today's note this.
I'm a longtime listener in highly respect your research ethic.
(00:43):
Appreciate that the talk of the dollar being removed as
the world standard has subsided a little bit, but I'm
still concerned as the consequences seemed devastating to our country
and every citizen. Will you please discuss what would need
to happen and the likelihood of this happening. Thanks for
all you do, well, thank you, I really appreciated. And
a lot of this has to do with the US's
(01:03):
debt and deficit issues, and actually was something that President
Trump was speaking to when he met with Federal Reserve
Chairman Drome Powell at the FED yesterday, specifically about lowering
interest rates. He had this to say, every point is
worth three hundred and sixty five billion dollars, So we
want to get the rates down. Yeah. So when you
(01:24):
hear Trump, you know, talking about interest rates, his wants
things to be more affordable for you. Also wants to
the service on the debt to be a lot less.
You know, that number is thrown out there the well
greater than three hundred billion dollars. That is how much
annually per one percent in the Federal Reserve funds rate
(01:45):
it costs just to service the existing US debt. And
so with the Federal Reserve funds rate at four and
a quarter percent to four and a half percent, you see,
you know how if we were a lot lower with
would be now. Of course, the the question is would
that spark inflation if rates went lower? That is why
the Fed has continued its current policy. Next week figures
(02:10):
been an interesting week, but the Fed unlikely to change
interest rates anyway. Diving into about the dollar, the US
dollar losing its status as the world's reserve currency, it's
been seriously oversold. In my opinion, I think the risk
of it happening over the New Yar term it might
not be zero, but I mean, like whatever you could
(02:31):
get to that's as close to zero without being there.
And when I was just kind of like thinking of, Okay,
what is something that in theory could happen but has
a next to no chance of happening, and a tsunami
hitting South Florida, tsunami wiping out South Florida was on
that in theory it's possible. One has never been recorded,
So we're kind of in that territory here for the foreseeable.
(02:53):
And I'll explain the reason there had recently been chattered
about the US dollar losing its status as the world's
reserve currency was due to what some had dubbed the
Rio reset, the recent seventeenth annual meeting of the Bricks
Countries or Brazil, Russia, China, and South Africa. In Brazil,
it was hyped to be a meeting that would lead
to the end of the US dollars we know it.
(03:15):
In reality, it was the least relevant of these seventeen
meetings today. In fact, it was so irrelevant that for
the first time, Chinese President shishiing Thing didn't even attend,
and neither, by the way, did Russian President Vladimir Putin.
He joined virtually at one point, So without the two
biggest players even there. I mean it gives you an idea.
(03:36):
By the end of the summit, headlines like this were
essentially all that came out of it. Bricks is sliding
toward irrelevance. The Rio Summit made that clear. Okay, So
before going any further, it is probably important to take
a step back explain what the US dollar being the
world's recurrency, reserve currency means. It's actually an official declaration
(03:58):
ratified by what was known as the Britain Woods Agreement
during the World War Two. So preceding the Britain Words Agreement,
you had gold that was the reserve currency around the world.
But there's a problem. During wartime, you had a limited
amount of gold available that wasn't an official way to
be able to try to transact, and so countries were
(04:20):
trying to figure out, Okay, what the heck do we
do to create a new system to keep things going
for the war. That is where the United States, in
this agreement became the world's backstop. The US dollar became
the world's reserve currency, and when we won the war,
that ended up sticking, right. So what does that actually mean? Well,
(04:44):
with the dollar being the world's reserve currency, it means
that no matter where you buy a commodity anywhere in
the world, anytime you're talking about wholesale commodities being purchased,
you're painting US dollars. You could buy a barrel of
oil in Florida, you could buy a barrel of oil
in China, You're having to do it in US dollars.
(05:07):
Everything has to be converted because commodities are US dollar denominated.
That is the term for it. This is similar. The
exemple I'd like to use is like air traffic control
and pilots. Doesn't matter where you fly from too, doesn't
matter where you're stationed. As an air traffic controller. You
must speak English fluently, so there aren't any communication issues.
(05:31):
Now would that be in the case the US dollar
being the backstop to every commodity that exists out there?
Obviously creates a ton of demand for dollars, right, And
so if the US were no longer, if the dollar
was no longer the reserve currency, I mean, shoot, people
might start talking about dollars the way people do pesos.
(05:54):
So why wouldn't this happen? Well, the number one reason
that it's not really conceivable for the foreseeable future is
you can talk about the US and our problems all
day long. What's the better solution? Else? What are you
(06:15):
going to go to? There is no viable alternative. And
you know any time, by the way you hear people
hyping this stuff like the Rio reset, what it was
China going to overtake the United States because China wanted to?
I mean, so to give you an idea in the
size of these numbers we're talking about too, the US economy,
(06:37):
we account for twenty six percent of the world's GDP,
just us, We're over a quarter of the world's economy.
The US dollar much more than that, The US dollar
accounts for a fifty eight percent share of total global
wealth reserves. What does that mean? You take all the
other currency around the world, all the other value around
(06:59):
the world, you get to forty two percent. That is
the share we're talking about here, to give you an idea,
the closest competition, which is China. They are nineteen percent
of the world's GDP. Their currency, the yuan, is only
two percent of the global reserves. So we're talking twenty
(07:22):
six compared with nineteen and then fifty eight percent to
two percent. There is simply no comparison. There is no
viable alternative. And that isn't even talking about the political piece.
The political piece is obviously a no go to what
countries other than the existing axis there of Russia and
(07:44):
Noko with Little rocket Man and with Iran and that.
Other than them, who's going to go along with this?
Nobody right now, You're not going to have Europe. That
leaves us to go with chiesiing Ping in China. So
you know that. And again, even if everybody else did,
we still are a majority at fifty eight percent. So
(08:07):
it just hopefully that puts in perspective the reality on
the ground in order for something to change that dynamic
again for the foreseeable, you're talking about us having to
get involved in World War three and lose it. That's
what would have to happen for there to be that
(08:27):
kind of a political realignment, we would have to lose
World War three. Now, the wild card in this conversation,
this is the thing to watch over time, is the
adaptation of crypto. The real threat is not China to
the US dollar. The real threat long term to the
way that things are transacted is digital currency decentralization. And
(08:52):
I have no idea what that would look like or
how it would go down. But it's also super early.
That's something else that even if it goes that way,
it's not going to happen for the foreseeable either. To
put that in perspective, the total market cap of all
cryptocurrencies around the world is about four trillion dollars, just
under four trillion yesterday. To put that in perspective, I
(09:14):
mean a lot of money. Heck yeah, but it's less
than the value of Nvidia alone. Okay, so in Vidia
the corporation is worth about four hundred billion dollars, more
than all crypto assets combined. There just is nowhere near
the size or scale to even begin to scratch the
(09:35):
surface of having even all of them, let alone one
token like bitcoin replaced the US dollar, even if everybody
decided they are going to adapt to it, but that
is the one I would watch over the longer term
and see what comes of it. That I think would
be the more likely scenario. But again, for the foreseeable
(09:57):
US dollar will remain the world's reserve currency, and there
really isn't anything that is even close. Conversationally, the people
who talk about this stuff are generally trying to scare
you into buying something
Yeah. Today's Q and A is the US dollar at
risk of no longer being the reserve currency. This is
brought to you by Melissa and Ashes check Mark Collections.
Each day I feature a listener question that is sent
by one of these methods. You may email me Brian
Mudd at iHeartMedia dot com, hit me up on social
at Brian Mud Radio. May also use the iHeartRadio talk
back feature. We would love it if you would love
(00:21):
us inside of the app, make us your number one
preset the Brian Mud Show podcasts my podcast number two
preset that way, we are always there for you for
free on demand. Happy day. And while you're in there,
look for the little microphone button. You see it, you
tap it, you may lay down the message right there,
maybe for a future Q and A. Today's note this.
I'm a longtime listener in highly respect your research ethic.
(00:43):
Appreciate that the talk of the dollar being removed as
the world standard has subsided a little bit, but I'm
still concerned as the consequences seemed devastating to our country
and every citizen. Will you please discuss what would need
to happen and the likelihood of this happening. Thanks for
all you do, well, thank you, I really appreciated. And
a lot of this has to do with the US's
(01:03):
debt and deficit issues, and actually was something that President
Trump was speaking to when he met with Federal Reserve
Chairman Drome Powell at the FED yesterday, specifically about lowering
interest rates. He had this to say, every point is
worth three hundred and sixty five billion dollars, So we
want to get the rates down. Yeah. So when you
(01:24):
hear Trump, you know, talking about interest rates, his wants
things to be more affordable for you. Also wants to
the service on the debt to be a lot less.
You know, that number is thrown out there the well
greater than three hundred billion dollars. That is how much
annually per one percent in the Federal Reserve funds rate
(01:45):
it costs just to service the existing US debt. And
so with the Federal Reserve funds rate at four and
a quarter percent to four and a half percent, you see,
you know how if we were a lot lower with
would be now. Of course, the the question is would
that spark inflation if rates went lower? That is why
the Fed has continued its current policy. Next week figures
(02:10):
been an interesting week, but the Fed unlikely to change
interest rates anyway. Diving into about the dollar, the US
dollar losing its status as the world's reserve currency, it's
been seriously oversold. In my opinion, I think the risk
of it happening over the New Yar term it might
not be zero, but I mean, like whatever you could
(02:31):
get to that's as close to zero without being there.
And when I was just kind of like thinking of, Okay,
what is something that in theory could happen but has
a next to no chance of happening, and a tsunami
hitting South Florida, tsunami wiping out South Florida was on
that in theory it's possible. One has never been recorded,
So we're kind of in that territory here for the foreseeable.
(02:53):
And I'll explain the reason there had recently been chattered
about the US dollar losing its status as the world's
reserve currency was due to what some had dubbed the
Rio reset, the recent seventeenth annual meeting of the Bricks
Countries or Brazil, Russia, China, and South Africa. In Brazil,
it was hyped to be a meeting that would lead
to the end of the US dollars we know it.
(03:15):
In reality, it was the least relevant of these seventeen
meetings today. In fact, it was so irrelevant that for
the first time, Chinese President shishiing Thing didn't even attend,
and neither, by the way, did Russian President Vladimir Putin.
He joined virtually at one point, So without the two
biggest players even there. I mean it gives you an idea.
(03:36):
By the end of the summit, headlines like this were
essentially all that came out of it. Bricks is sliding
toward irrelevance. The Rio Summit made that clear. Okay, So
before going any further, it is probably important to take
a step back explain what the US dollar being the
world's recurrency, reserve currency means. It's actually an official declaration
(03:58):
ratified by what was known as the Britain Woods Agreement
during the World War Two. So preceding the Britain Words Agreement,
you had gold that was the reserve currency around the world.
But there's a problem. During wartime, you had a limited
amount of gold available that wasn't an official way to
be able to try to transact, and so countries were
(04:20):
trying to figure out, Okay, what the heck do we
do to create a new system to keep things going
for the war. That is where the United States, in
this agreement became the world's backstop. The US dollar became
the world's reserve currency, and when we won the war,
that ended up sticking, right. So what does that actually mean? Well,
(04:44):
with the dollar being the world's reserve currency, it means
that no matter where you buy a commodity anywhere in
the world, anytime you're talking about wholesale commodities being purchased,
you're painting US dollars. You could buy a barrel of
oil in Florida, you could buy a barrel of oil
in China, You're having to do it in US dollars.
(05:07):
Everything has to be converted because commodities are US dollar denominated.
That is the term for it. This is similar. The
exemple I'd like to use is like air traffic control
and pilots. Doesn't matter where you fly from too, doesn't
matter where you're stationed. As an air traffic controller. You
must speak English fluently, so there aren't any communication issues.
(05:31):
Now would that be in the case the US dollar
being the backstop to every commodity that exists out there?
Obviously creates a ton of demand for dollars, right, And
so if the US were no longer, if the dollar
was no longer the reserve currency, I mean, shoot, people
might start talking about dollars the way people do pesos.
(05:54):
So why wouldn't this happen? Well, the number one reason
that it's not really conceivable for the foreseeable future is
you can talk about the US and our problems all
day long. What's the better solution? Else? What are you
(06:15):
going to go to? There is no viable alternative. And
you know any time, by the way you hear people
hyping this stuff like the Rio reset, what it was
China going to overtake the United States because China wanted to?
I mean, so to give you an idea in the
size of these numbers we're talking about too, the US economy,
(06:37):
we account for twenty six percent of the world's GDP,
just us, We're over a quarter of the world's economy.
The US dollar much more than that, The US dollar
accounts for a fifty eight percent share of total global
wealth reserves. What does that mean? You take all the
other currency around the world, all the other value around
(06:59):
the world, you get to forty two percent. That is
the share we're talking about here, to give you an idea,
the closest competition, which is China. They are nineteen percent
of the world's GDP. Their currency, the yuan, is only
two percent of the global reserves. So we're talking twenty
(07:22):
six compared with nineteen and then fifty eight percent to
two percent. There is simply no comparison. There is no
viable alternative. And that isn't even talking about the political piece.
The political piece is obviously a no go to what
countries other than the existing axis there of Russia and
(07:44):
Noko with Little rocket Man and with Iran and that.
Other than them, who's going to go along with this?
Nobody right now, You're not going to have Europe. That
leaves us to go with chiesiing Ping in China. So
you know that. And again, even if everybody else did,
we still are a majority at fifty eight percent. So
(08:07):
it just hopefully that puts in perspective the reality on
the ground in order for something to change that dynamic
again for the foreseeable, you're talking about us having to
get involved in World War three and lose it. That's
what would have to happen for there to be that
(08:27):
kind of a political realignment, we would have to lose
World War three. Now, the wild card in this conversation,
this is the thing to watch over time, is the
adaptation of crypto. The real threat is not China to
the US dollar. The real threat long term to the
way that things are transacted is digital currency decentralization. And
(08:52):
I have no idea what that would look like or
how it would go down. But it's also super early.
That's something else that even if it goes that way,
it's not going to happen for the foreseeable either. To
put that in perspective, the total market cap of all
cryptocurrencies around the world is about four trillion dollars, just
under four trillion yesterday. To put that in perspective, I
(09:14):
mean a lot of money. Heck yeah, but it's less
than the value of Nvidia alone. Okay, so in Vidia
the corporation is worth about four hundred billion dollars, more
than all crypto assets combined. There just is nowhere near
the size or scale to even begin to scratch the
(09:35):
surface of having even all of them, let alone one
token like bitcoin replaced the US dollar, even if everybody
decided they are going to adapt to it, but that
is the one I would watch over the longer term
and see what comes of it. That I think would
be the more likely scenario. But again, for the foreseeable
(09:57):
US dollar will remain the world's reserve currency, and there
really isn't anything that is even close. Conversationally, the people
who talk about this stuff are generally trying to scare
you into buying something
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Las Culturistas with Matt Rogers and Bowen Yang
Ding dong! Join your culture consultants, Matt Rogers and Bowen Yang, on an unforgettable journey into the beating heart of CULTURE. Alongside sizzling special guests, they GET INTO the hottest pop-culture moments of the day and the formative cultural experiences that turned them into Culturistas. Produced by the Big Money Players Network and iHeartRadio.
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.