/ world today news/ Russians should sell their dollars as soon as possible and buy euros, yuan and gold instead. Such advice was given by businessman Oleg Deripaska on social networks. Of course, some economists talk about the “death” of the dollar year after year for decades, but when this is the recommendation of the billionaire, the founder of “Rusal”, it is worth hearing .
Deripaska published his post in response to an interview with financial analyst Robert Kiyosaki, who in 2008 predicted the bankruptcy of Lehman Brothers, which marked the beginning of the US subprime crisis, which then escalated into the global financial crisis.
Kiyosaki following the closure of two major US banks Silicon Valley Bank Signature Bank recommended buying more gold, silver and bitcoin as he predicted a “hard landing” for the US economy.
“If the cheerful investor turns out to be right by even 10%, then it looks like the time has come to sell dollars very, very quickly and buy some euros and a lot more yuan and gold,” Deripaska wrote in a comment to the interview.
In his next message, he added that the US risks losing the “sacred status” of the holder of the highest credit rating AAA, “although it has long ceased to reflect the fundamentals of US public finances, but is rather an element of political and psychological support for US global financial dominance’.
Although this has not yet happened, on March 14 Moody’s downgraded its outlook for the US banking system from stable to negative.
According to the billionaire, China can accelerate the fall of the dollar if it decides to act in this direction.
“If the Chinese banks, led by the People’s Bank of China, do not even start selling Treasuries, but simply stop buying US debt in the same volumes, then we will see interest rates on US Treasury loans at 8-10%, which means the US federal budget deficit will soon double,” he said.
Under such conditions, the once fantastic predictions of the collapse of the dollar no longer seem so unrealistic. Andrey Kochetkov, a leading global research analyst at Otkritie Investments, believes that although the collapse of the US currency is not yet visible, its devaluation is likely to accelerate and real assets such as gold will gain more and more weight.
— The history of the “collapse of the dollar” is very long, it is not a quick process. In the last 110 years since the Fed was created, the dollar has devalued 100 times. I mean, somehow it still happens.
Recently, this rate of depreciation has been accelerating, especially when measured against gold prices. Even 20-25 years ago, gold was 6-7 times cheaper than today. The Fed’s policy has not changed recently, although they have raised rates.
If we take so-called real interest rates, they are still negative. The core US consumer inflation rate for February was 5.5%, the current rate of 5% is below that figure.
The higher the Fed rate, the more problems begin to appear in the US economy, as we saw last week with the example of two bank failures. Most likely, there will be no real positive growth in the US, because it will cause irreparable damage to their economy.
This means that at some point the Fed will have to limit its fight against inflation, which will never reach its 2% target because the amount of dollar debt in the world is so large that it exceeds the amount of existing assets. And the global economy has a mechanism that gradually brings asset prices into line with the available money supply.
Therefore, Kiyosaki’s predictions are fully justified, especially since the world is now in the process of changing dominant empires and financial systems.
“SP”: Is this process really going?
– The fact that the US and the G7 countries decided to use the currency as a weapon led to a sharp drop in confidence in the currency systems of these countries. We see that the policy of the central banks of developing countries is changing, they are starting to get rid of the currencies of developed countries in favor of real assets, for example gold.
Last year, global central banks bought gold at the fastest pace in 25 years. This suggests that they trust the historical monetary asset more than fiat currencies, which, firstly, depreciate as a result of inflation and, secondly, due to the policies of these countries.
The less governments invest in US and European debt instruments, the more distrust in these currencies will grow and the more their value will fall, leading to high levels of inflation. And inflation, in any case, is the depreciation of the currency, no matter what rate is given to the Fed.
“SP”: Can it be said that the dollar should be thrown out “very quickly”, as Deripaska wrote?
– The process of devaluation of the dollar will certainly continue, but most likely it will not be fast, but gradual, which we will observe in the prices of gold, oil and other assets. Real asset prices will rise while the purchasing power of the dollar and other developed world currencies will fall.
There is also a very big nuance that is not usually talked about. The volume of American debt, not only public but also corporate, is becoming such that it is no longer serviceable by global finance.
There simply isn’t enough money in the world to convert it into American debt. When this happens, the value of such debt and such currency begins to lose its appeal. This in turn provokes further asset inflation, in our case the depreciation of the dollar.
However, there are economists who still believe that nothing threatens the dollar on the world stage for now.
“This kind of advice for the population is purely theoretical,” says Lazar Badalov, Candidate of Economic Sciences.
– “Those who kept their savings in dollars in bank accounts and this money was frozen due to sanctions, were forced to either convert it into rubles or somehow transfer it abroad,” he said.
“One way or another, those who wanted to get rid of the dollar have already done so. And those who do not want to sell their dollars will not do so even after advice, be it from Deripaska or someone else,” he says the expert.
On the merits, the falling dollar is a perennial theme. There is a category of economists who are always waiting for the collapse of the dollar. I don’t think we are in that situation now. Premises for a decline in the US currency appear from time to time, as the economy is cyclical. But now we see neither a sharp depreciation of the dollar, nor that it will happen in the short term. This is mostly speculation.
Translation: SM
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