The video discusses the potential decline of the US dollar as the world's reserve currency. China and Brazil have recently struck a deal to trade in their own currencies, ditching the US dollar as an intermediary. This move is seen as a threat to the US dollar's status as the global reserve currency. The video's creator cites billionaire Ray Dalio's theory that the world's reserve currency changes every 100 years, with the US dollar's dominance potentially coming to an end.
The video examines the three metrics that determine the value of the US dollar: exchange rates, demand for 10-year treasury notes, and foreign currency reserves. While the US dollar's value has been weakening since 2020, it still remains the dominant global currency. However, other countries, including China, Russia, India, and Brazil, are slowly shifting away from the US dollar.
The video's creator believes that the US dollar's status as the global reserve currency is not under immediate threat, but notes that the dollar is being traded less and faces increasing competition from other countries. The creator advises viewers to focus on what they can control, such as diversifying their investments, saving money, and investing regularly, rather than worrying about the potential decline of the US dollar.
Here are the key facts extracted from the text:
1. China and Brazil have struck a deal to trade in their own currencies, ditching the US dollar as an intermediary.
2. The US dollar has been the world's most powerful currency for 80 years, serving as a reserve currency.
3. A reserve currency is a currency accepted globally, pegged to the value of other currencies.
4. The US dollar has been the reserve currency since 1945.
5. The British pound was the reserve currency before the US dollar, holding the position for 105 years.
6. Reserve currencies have never lasted forever, typically changing every 100 years in a transition that lasts 10-20 years.
7. According to Ray Dalio, the rise of a new reserve currency follows three categories: the rise, the top, and the decline.
8. The US dollar's value has been gradually weakening since 2020, but it is still higher than it has been in the last 20 years.
9. The demand for 10-year US Treasury notes has increased with higher interest rates.
10. Foreign currency reserves have been declining, with the US dollar at its lowest level in 25 years.
11. China and Brazil transact around $150 billion annually, which will no longer go through the US.
12. China has been shifting away from the US dollar since 2010, and other countries like Russia, India, and Saudi Arabia have also made similar moves.
13. The BRICS economies (Brazil, Russia, India, China, and South Africa) have joined forces to transact in their own reserve currency, separate from the US dollar.
14. Elon Musk has tweeted that the US policy has been too heavy-handed, making countries want to ditch the dollar.
15. The US stimulus following the financial crisis started a currency war, cheapening the US dollar to boost America's economy.