It Should Be
A Four Day Weekend
Reality is something we write about as often as it crosses the thread. Let’s face it folks it’s time to take a four-day weekend. Although I’ll have a “paid” article out sometime this weekend, otherwise it’s an important family weekend that we trust all will enjoy.
We’ve been gifted the thoughts of Mahdi Nikpour again today and the more he talks the more I listen. I hope you agree and gain benefit from another person’s thoughts. I look forward to receiving a couple more articles from others relating to different areas of “investment” interest. They are experts in their fields so the more the merrier. Until then you are stuck with me and Mahdi so let’s read what he has to say.
The Dollar's Grip Might Loosen
A Look at De-dollarization, New Kids on the Block and Why It's All Shaking Up
The world of money is having a bit of a shakeup. The U.S. dollar, the undisputed king for decades, is facing some heat. Don't get me wrong, it's still in the top , but whispers of change are getting louder. Let's dive into why the dollar's throne might be getting a little wobbly and who the potential challengers are.
Why the Dollar Might Be Feeling the Squeeze
Imagine you're the world's go-to currency for everything from buying oil to trading stocks. That's been the dollar's comfortable spot for a long time. But a few things are putting a cramp in its style:
New Kids on the Block: The Euro and the Chinese Yuan are flexing their muscles. They're becoming more attractive options for international transactions. Think of it like having new, flashier restaurants opening up next door to your favorite diner.
Political Squabbles: When the U.S. uses dollar-based sanctions as a weapon, it makes other countries nervous. It's like having your credit card company freeze your account every time you have a disagreement with a friend. It’s no wonder some countries are looking for alternative payment methods.
Uncle Sam's Growing Pile of Bills: The U.S. national debt is getting pretty hefty. This makes some folks question the dollar's long-term strength. It's like wondering if your favorite store will still be around if they keep spending more than they earn.
BRICS Wants to Break Free
The BRICS club, Brazil, Russia, India, China and South Africa, is all about reducing their reliance on the dollar. They are all like teenagers trying to break free from their parents' credit card. But it's not easy. Here's why:
The Dollar is Everywhere: Imagine just trying to convince everyone to stop using a particular brand of phone because you want to use a different one. That's the very challenge BRICS faces. The dollar is deeply embedded in global trade and finance.
Missing Pieces: BRICS countries need a more robust financial infrastructure to make their currencies more attractive. It's just like trying to launch a new phone company without any cell towers.
Not Enough Buyers / Not Enough Sellers: BRICS currencies aren't traded as much as the dollar. This makes them less appealing for international transactions. Think of it like trying to sell a rare comic book at a flea market, there just might not be enough collectors interested.
Geopolitical Tensions: Unlike the relatively unified “Europe”, BRICS members like China and India have had historical and ongoing geopolitical disagreements. This is more like trying to form a band with musicians who constantly clash over musical styles and past rivalries.
Economic Divergence: The BRICS economies are at “vastly different” stages of development. China, a powerhouse, might not share the same economic goals as South Africa and other members. It's like trying to write a song when some band members are jazz enthusiasts while others prefer heavy metal.
Geopolitics Adds Another Layer
The recent addition of countries like UAE, Saudi Arabia, Egypt, Iran and Ethiopia to the BRICS group shows how politics plays a role in this currency drama. In addition, some countries facing U.S. sanctions, are looking for ways to avoid getting financially choked. It's like finding alternative routes to avoid a traffic jam caused by roadworks.
Learning from Brexit: Breaking Up is Hard to Do
Remember Brexit? The UK's messy divorce from the European Union is a cautionary tale for de-dollarization. Leaving a dominant economic and financial system is a very complicated business. It requires planning and a lot of negotiation. Disentangling yourself from your ex's Netflix account is a walk in the park compared to this.
Cryptocurrencies & DeFi: The Wild West of Money
Cryptocurrencies and Decentralized Finance (DeFi) are like the new kids at school, all flashy and promising a different way of just doing things. They offer an alternative to traditional currencies, but there are some red flags:
Prices That Jump Around Like a Jump Rope: Cryptocurrencies are known for their wild swings in value. Imagine buying a coffee one day and it costing twice as much the next, that's the volatility crypto can bring.
The Rule Book is Still Being Written: There are still a lot of unknowns when it comes to regulating cryptocurrencies. It's like playing a new game with no clear rules, which can be risky for businesses and investors.
Central Banks Don't Like Losing Control: Governments are very wary of DeFi taking away their power to manage their currencies. It is like parents getting nervous about their kids getting into a relationship that they don't understand.
The Future: A Currency Shuffle
The future of global reserve currencies is likely to be a mixed bag. The dollar might not be king forever, but dethroning it won't be easy. We'll probably see a multipolar system emerge, with different currencies playing a bigger role in different regions.The economic cycle is alive and well. Central banks and governments use hawkish and dovish policies to navigate the economic cycle and avoid a crash. They constantly seek solutions to adapt to changing economic conditions. Cryptocurrencies & DeFi might also become more mainstream, but they'll need to address the challenges of volatility, regulation and how to survive in economic cycles.
Mahdi lives in a part of the world that’s affected by what’s transpiring. I’ve been tuned to the dollar’s demise since Nixon. In my opinion, it’s a good mix with both sides just being on point. Well back to cutting the grass as it rained down here in Texas. We will take all we can get. If you have time this weekend check out Ticker EDU. We’ll have a few more courses uploaded next week bringing the total to three courses with fifteen sections total. Not too shabby and a great source to learn the “right way” from those with experience. Starting with a foundation is important. We do that in the 1st course. It’s followed by the bricks, all of the various investment types you need to understand. Next week we’ll add in the mortar that ties it all together with the 3rd course.
That more than gets you started especially if you follow me here and on LinkedIn. We have more personally designed offerings with our “1-on-1” tutorial but like others, we suggest you start with the basics. As always thanks for your patience and suggestions. Have a happy holiday weekend. By the way, I bought 2024 September VIX 20 calls as this market needs to correct before it goes higher.
Mine eyes have seen the glory of the coming of the Lord in many ways. The song may have value to many different people in many ways. Being victorious in a war-like way is one, accepting that Jesus served as a Messiah giving his life for our sins is another. I have been blessed to take care of those in my family who needed help as they aged, I learned a lot from each of them, especially as they prepared to “meet their maker”. It seemed to me, regardless of their actual religion, all had a preconceived notion that some of their teachings were shortsighted. As I’ve aged and taken their thoughts and life into consideration, I can see they were right. It’s always good to learn from others especially when they know more than you. Enjoy your holiday weekend.