China and Russia have continued to dump the U.S. dollar in favor of gold bullion, yuan and rubles, in essence approaching a financial alliance. This leaves many questioning the U.S. dollar’s future as the world’s foremost reserve currency and, subsequently, the safety of their portfolios and pocketbooks.
Both countries have sought to use the dollar less in their trade settlements for several years now but have redoubled their efforts since the Trump Administration tightened sanctions. In 2015, more than 90% of bilateral trade between the two nations was conducted in dollars. So far in 2020 that number has been slashed to 46%.
In an attempt to shoulder the strain on the dollar that this and its many other issues would naturally cause, the Federal Reserve has been aggressively buying. Of course, this has created market bubbles so sizable that they would devastate many Americans unless they were corrected in a careful, measured manner.
Then COVID-19 hit our country, bringing with it joblessness, homelessness and massive national and private debt. The pressure it has placed on the economy has removed virtually any “wiggle room” our government could have had to administer a careful, measured approach to correcting the markets and preserving the dollar.
Historically, every world reserve currency has been unseated at some point, so the dollar’s days have been numbered since the beginning (as illustrated in the graph below created by ZeroHedge.com).