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As the world order changes, I think there are two prominent investment outcomes we can bet on:

Outcome #1: The US Dollar Will Lose Its Privileged Position

The decline of America’s geopolitical influence is another enormous headwind for the US dollar.

Suppose the world thinks the US military is the ultimate backstop of the US dollar. What does it mean for the US dollar’s credibility when a ragtag group of insurgents from one of the poorest countries can defeat the military which backs it?

If the mighty US military couldn’t secure its partners in Afghanistan, how can it protect its other allies?

Taiwan, South Korea, Japan, Western European countries, and the Gulf Arab states are likely pondering this.

It wouldn’t be surprising to see them make security arrangements with US adversaries—such as China, Russia, and Iran—that exclude the Americans.

In fact, this has already happened with Saudi Arabia, a crucial player in the US-led world order. Saudi Arabia is the linchpin of the petrodollar system, which has underpinned the US dollar since Nixon removed its last links to gold in 1971.

In a matter of weeks, Saudi Arabia has: Restored relations with Iran. Restored relations with Syria and welcomed it back to Arab League. Supported multiple OPEC+ oil production cuts against American wishes. Announced an end to the war in Yemen. Agreed to sell oil in other currencies. Decided to join the Shanghai Cooperation Organization (SCO).

The US recently sent its CIA director to Riyadh to tell the Saudis the Americans feel “blindsided” amid these seismic shifts in Saudi foreign policy.

In short, a paradigm shift in Saudi policies signifies a paradigm shift in the US dollar because of the petrodollar system.

However, Saudi Arabia is not the only US ally hedging its geopolitical bets recently. France, India, Japan, Mexico, Brazil, and others are making moves to cozy up to the Eurasian geopolitical block.

The big question is, how long will the world continue to hold the paper liabilities of a bankrupt and declining government?

The only reason the US government has managed to avoid severe consequences from its monetary policies is the US dollar’s status as the world’s premiere reserve currency, thanks to Washington’s military and economic dominance that has prevailed since the end of World War II. However, as this dominance wanes, so will the dollar’s purchasing power.

The US government’s ability to hide the effects of its rampant money printing by offloading trillions of dollars to foreigners is nearing its end.

That’s terrible news for the US dollar.

Fake money comes from government. Real money emerges from the market. Government currencies are terrible money because they are easy to produce with a potentially unlimited supply. The free market wouldn’t choose government confetti as money without laws forcing their use.

https://www.zerohedge.com/geopolitical/graveyard-empires-top-investments-world-order-collapses