Dollarization: Impact on Global Economy and US Dollar

The dollarization process is accelerating, impacting global economies and the role of the US dollar as the world's reserve currency.

### The Future of the US Dollar: The Rise of Dollarization and Its Global Impact
* 💵  Dollarization, the process of countries becoming less dependent on the US dollar for global trade, is starting to happen, and some predict that the **US dollar's role as the world's reserve currency may diminish in the next 20 years**.
* 🌍  Russia, North Korea, and Vietnam have recently formed alliances that aim to **reduce their reliance on Western currencies like the US dollar**, with Russia even **ceasing US dollar trades on its leading financial marketplace, the Moscow Exchange**, in response to sanctions.
* 🃏  The current world order, often likened to a high-stakes poker game, sees the G7 and BRICS countries as the major players, with these alliances forming in response to events like the **2008 global financial crisis** and the use of **sanctions by powerful countries**.
* 💰  Control over a country's currency is a key objective in this global game, as **weakening a currency can have significant economic and political consequences**.
* 🇺🇸  The US dollar's status as the world's reserve currency has allowed the US to prosper, but the rise of dollarization poses challenges, such as **slower investment growth** and **higher inflation**.
* 🇷🇺  For Russia, the move away from the US dollar is an attempt to **reduce its dependence on Western currencies**, but it also **undermines the confidence in the ruble**.
* 📈  While dollarization is a real phenomenon, it is happening slowly, and it is possible that **multiple reserve currencies, including the US dollar, could coexist in the future**.

so just like Rallio predicted, the next phase of dollarization is starting to happen. Do you really think that the end of the US dollar as a global Reserve currency is anywhere near the Horizon? Well, I think it happens in my lifetime. I think it could happen in the next 20 years or earlier. Russia and North Korea, two of the world's most sanctioned countries, are forming a team along with Vietnam in the latest countries to join this Alliance. Now, these partnerships have a huge impact on the global economy and the role of the US dollar because just recently Russia stopped allowing trades of US Dollars and Euros on its leading Financial Marketplace called the Moscow exchange or MMox in response to the latest round of sanctions like Europe's sanction on Russia's gas. So everything that's happening right now sort of marks a new chapter in this economic standoff between Russia and the west and it's also part of Russia's strategy to rely less on Western currencies. So in today's video, I want to talk about what the

current world order is today where it's going, and how this will affect those country's economies, currencies, and how this will affect the US dollar. So there's a lot to talk about, including how this will affect us and our future Generations. So let's get into it. Hi, my name is Andre J. Hope you're doing well. Come for the finance and stay for Global macroeconomics part 4. Now, full disclosure, this is something that's very personal to me, and I'm very passionate about this because I'm a product of two different worlds. My mom was born in Russia. My dad was born in Ukraine. So let me start the dramatic music and set the stage by talking about something called the current world order. Picture a poker table where there are over 100 players, and they're all playing a high stakes game. Now this deck and how the cards are shuffled and how the cards are dealt is sort of like the current world order and why the world is the way it is. And when countries are missing a specific card, sometimes they are allowed to trade.

with each other exactly what they need, and they can trade weapons, oil, currencies, and other commodities. And when they do, they mostly use something called the world's reserve currency, which as of right now is the US dollar. The dollar is the most stable currency in the world, which is why it also accounts for over 88% of all global transaction actions, and no other currency comes even close to this. It's this system that some people like to refer to as the petrodollar system that's allowed the United States to prosper for over 50 years thanks to money from all over the world being parked into US assets like treasuries, stocks, real estate, and everything else. It's one of the reasons why the United States and its citizens are one of the wealthiest in the entire world. But now let's take a look at the world's wealth, the world economy. The estimated GDP of the entire world as of last year was about $15 trillion, and most of that can be divided into two separate categories, two different teams that

together control roughly 75% of all this money now. The first team is sort of the varsity leading team, which is of course the G7. The G7 is made up of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. In other words, the seven biggest and most advanced economies in the world. Now, if the G7 represent the seven most powerful players in this game, then the BRICS countries would represent their biggest rival. The BRICS are Brazil, Russia, India, China, South Africa, and many more. As many as 59 other countries are showing interest in joining the BRICS alliance at the BRICS October Summit, which is held in Russia. And it's also why the BRICS team has doubled since the start of 2024 and now includes countries like Iran, the United Arab Emirates, Ethiopia, and Egypt. So those are the two different teams. Now let me show you who controls what in terms of the global economy and the world's wealth. The BRICS control over $30 trillion of this $15 trillion global economy. The G7, which

is at the top of the leaderboard control over $46 trillion, but together those two teams control about 34% of the global economy. The 25% that's left is the rest of the world's countries, which don't belong to any teams yet, but they are being recruited. The question is, why is the world starting to make teams right now? And the answer is, it's been making teams for a while now. One of the more recent examples of why they're doing this is the 2008 Global financial [Music] crisis. A few days away from the ATMs not work, suddenly folks are getting wiped out. I asked her we had her for a great depression, and Berik said, You know, it looks like way now. At the time, the G7 team, remember that's the most advanced economies in the world, got together to come up with a global rescue plan to essentially save the world from economic collapse. And some of the programs they came up with are programs like TARP, the Troubled Asset Relief Program for

example which was meant to stabilize the US's financial system and restore economic growth and mitigate foreclosures in the wake of the 2008 financial crisis. But some countries felt like the 2008 financial crisis was partially created by the greed of one country's banking system. And if we allowed that country's system to fail, it would have affected the entire game. The world's economy would have been hurt. So they had to bail that one player out. And some countries felt like it was at their expense. But here's the thing about this game. If a powerful team decides that another player is not playing this game fairly, if they're powerful enough, they can place what are called sanctions on another country, which is kind of like restricting a player's ability to fully play the game. Just 2 weeks ago, for example, billions of dollars worth of Russia's frozen assets will be used to pay for relief in Ukraine. In 2010, in response to Iran's nuclear program, the G7 imposed an oil embargo, financial sanctions, and trade restrictions. In 2006

there were sanctions against North Korea in order to curb their nuclear ambitions. In 2011, there were sanctions against Syria imposing asset freezes, travel bans, and trade restrictions against the Assad regime in response to the Syrian Civil War and a fight for human rights. In 2017, there were also sanctions against Venezuela in response to the political and economic crisis. Now, whether this use of power is right or wrong depends on where you live and what you value. That's not the point of the story. The point of the story is that this is what's led to the formation of these teams to try to create their own game that they believe will be more fair for them. That is the world order, those are the players, and that is the game. The question is, what are they all playing for exactly? Like, what's the grand prize here? And the answer is money. Now, when I say money, I don't mean money like what you and I think money is. Countries can just print more of this stuff. Instead, when I say money, I mean control over what money actually is.

for a country, money is its currency, and a currency is an idea. Because if you can control and weaken a country's currency, it can have some very real consequences. A weaker currency can potentially lead to higher interest rates, which means it's now more expensive for that country to borrow money from other central banks, which in turn can lead to higher borrowing costs for its consumers, and that, in turn, affects inflation. When a country's currency is affected, it can change people's perception of it, their confidence in it, and in turn, confidence in that country, and that can affect a country's politics, elections, and it can even cause social unrest. That's the prize that country are playing for right now: control over money as an idea. That's why in 2024, a phrase you might hear a lot is dollarization, dollarization, dollarization, dollarization, dollarization. Now, dollarization sounds scary like some conspiracy theory, but dollarization does not mean the end of the US dollar. All it means is the world becoming less dependent on using only

dollars for global trading. And it's not some conspiracy that some people think is happening, it's actually happening and it's speeding up. Just recently, for example, China ditched a ton of US Treasury bonds. Saudi Arabia also became less dependent on the dollar by joining China's Ember system, which is a central bank digital currency which the US wants nothing to do with because that doesn't help the US dollar. And now, for the first time in 24 years, the president of Russia went to North Korea to form a mutual defense pact to become less dependent on the Petro dollar system. Overnight, Russian President Vladimir Putin was welcomed on a red carpet by Kim Jong-un and lavished with the warmth of a good friend. For Putin, his last visit to North Korea was 24 years ago to meet Kim's father. The two leaders Outcast and isolated, that's partially because Russia and North Korea are two of the most disliked players in this high stakes game. Both Russia and North Korea are two of the most sanctioned countries in the world, so the idea is

they'd like to team up. Now, this is not a new agreement between Russia and North Korea. In fact, this agreement dates all the way back to 1961 because there was almost an identical agreement between the USSR and North Korea. Now, the USSR eventually collapsed in 1991 and became the Russia we know today, so that agreement ended. But the language between this new pact and the old one in 1961 is pretty close. Now, the question is, why are these countries really doing this? If you're watching the optimistic side of news, you might believe that all they want is a multi-polar world, which is a world where power is shared by more than just a couple of countries. If you're watching the pessimistic side of news, then what Russia really wants is military aid with the pointless war in Ukraine. They want artillery and ammo. In exchange, North Korea allegedly gets access to cheaper oil and more modern nuclear and missile technology. That's why we saw this very public show of affection between Kim Jong-un and Vladimir Putin. Kim is

showing love to Putin and vice versa. The world saw them in a limousine together. It's all part of the season 1 of the dictators and limousines getting coffee. Just kidding, just seeing if you're still awake. A lot of people think this stuff is boring, but I find it really interesting. Now, the second thing that Russia's trying to do is ditch what they consider toxic currencies, referring to the US dollar and the Euro. That's why the Moscow Exchange recently ditched the US dollar and Euro trading pairs. And that means people in Russia won't be able to exchange their rubles and their assets into dollars or euros. The other recent development is Russia teamed up with Vietnam to further lessen their dependence on the US dollar. And what kind of message is Putin trying to send to the West and its allies by visiting Hanoi after North Korea? Well, Vietnam and Russia are comprehensive strategic partners, the highest level that Vietnam has, and Russia was the second one after China. So again, all of

this is just another small step toward dollarization. The question is, how does this affect the United States? The short answer is, it's generally not a good thing for people living in the United States because if there's less foreign money being parked inside the United States, less money leads to slower investment growth, and it can also lead to higher inflation for longer if more and more countries don't need US Dollars like they used to. But Russia ditching US dollars is also not a good thing for the Russian economy either because that undermines the confidence of the ruble as a currency. It makes people not want to hold rubles because it limits their exit points. That's why people stand in super long lines just to get their money out, and that's if they can. It's like imagine a free freeway that's completely closed or freeway exits that are shut completely off. If you do that, you have to build new exit points somewhere else. That's why Putin has to rely on China, which is why the default trading pair of the ruble is now

the Yuan, and all this does is it empowers China's economy, but not Russia's, and that's why some people are partially worried that it will be the Chinese Yuan that will someday replace the US dollar. But if you look at data, the Chinese yuan is far behind the US dollar in terms of uses on a global level, and there's a lot of global wealth management that's doubling down on dollars and leaving behind their Chinese Yuan because they don't trust it either. Now you can watch that video somewhere up here, but if you made it this far, here's what I personally think. As someone who was born in Russia and came to America at the age of nine, I consider myself to be first and foremost an American, but Russia is also a big part of my family's history and culture. I used to go back to Russia every year to visit my grandparents, but now I can't go back because I would immediately be drafted into the military to fight Putin's pointless war. And in many ways, I'm ashamed of what the Russian

leadership have chosen for its people because so much of this pain is coming at their expense, and it didn't need to be that way. Russia had such a bright future. It was once part of the G8, the varsity team Putin used to hang out with the big guys, the countries with the best economies. But because all dictator seek power and more influence, it made him arguably one of, if not the single wealthiest person on the entire planet, at the expense of the Russian people. And in 2014, Russia invaded Crimea, and they got kicked out of the G8. Every time I went back to Russia, I was reminded just how good I have it here in the US. One time, I was trying to help my uncle buy an apartment in Russia where I'm from, and out of curiosity, I asked what the interest rate was. And for context, the US averages for a 30-year mortgage at the time was 2 and 1/2 to 3%, the good old times not that long ago back in Russia.

they told me 72%. It blew my mind, but for them, that was extremely low because today Russia's interest rates are in the double digits. That's because no one trusts the ruble as a currency, so the country cannot borrow money at a lower rate. And you can imagine what that has done to its purchasing power on a global level. Also, for some comparison, US prices right now are going up by 3.4% per year. That's the US inflation rate. And we complain about it because we're used to 2% per year. Russia's inflation rate, by comparison, is 8%, which is basically what the US inflation rate was at the height of the pandemic when prices were exploding. That's what the Russian people are going through right now and what they will probably be going through for many, many years. And that's because unlike the US, Russia does not have a global asset market that the world is buying. No one can name a single tech stock that's coming out of Russia. There's no real

opportunities for the Russian people to preserve their wealth, like we have here in America, and there's no money left over for the middle class, and what is left is eaten up by inflation that was created to pay for one man's artificial war. And on that level, I think it's pretty sad because it didn't need to be that way. But as far as the US dollar goes, I still think the US dollar isn't going anywhere. Yes, dollarization is happening, it's real, but it's happening extremely slowly. Maybe in my lifetime, there will be another world Reserve currency that can exist at the same time as the US dollar. Even Jerome Powell, the chairman of the Federal Reserve, said he could see a world where there might be two World Reserve currencies that exist at the same time, which is pretty crazy. It's also possible to have more than one large Reserve currency. There have been times when that was the case, so it's not really clear. Who knows, it might even be a central bank digital currency as well.

you can watch that video somewhere up here. And if you want to follow the events of Russia specifically, check out Jake's videos on Russia and Ukraine. They're amazing, and he does a wonderful job of researching and putting them together. I'm going to continue to follow the world events because a lot is happening, and occasionally I'll upload some personal finance videos about dividends, AI, Bitcoin, whatever else it is. But for now, I'm having a lot of fun putting together these longer documentary-style videos. Let me know what you think of them, and as always, I hope you have a wonderful rest of your day. Smash the like button, subscribe if you haven't already, don't forget to grab your free stocks. Links are down below, and then go track them automatically with a spreadsheet linked down below in my Patreon. Thank you so much for watching this video. I'll see you back here on Monday and Friday, sometimes on Wednesday. I'll see you soon. Bye-bye.

DeDollarization: Why Russia, North Korea, & Vietnam Teamed Up

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The Potential Shift Away from the US Dollar as a Global Reserve Currency

Russia, North Korea, and Vietnam are forming an alliance and moving away from the US dollar, impacting the global economy.

The current world order, dominated by the US dollar as the world's reserve currency, is facing potential change as these countries seek to rely less on Western currencies.

The shift could have significant effects on the economies, currencies, and future generations of the countries involved, marking a new chapter in the economic standoff between Russia and the West.

The G7, consisting of the most advanced economies including the US and Japan, and the BRICS countries, with a growing alliance including China and India, control 34% of the global economy.

The formation of these teams can be traced back to the 2008 financial crisis, which led to global rescue plans and programs like TARP.

Powerful teams like the G7 have the ability to impose sanctions on other countries, impacting the world economy and international relations.

The Global Power Struggle for Control Over Currency

Sanctions have been imposed on North Korea, Syria, and Venezuela, leading to a power struggle for control over currency.

Weaker currency can result in higher borrowing costs, inflation, and social unrest, leading to the manipulation of a country's politics and elections.

Countries are now moving towards dollarization and seeking alternatives to the US dollar to reduce dependency, causing a shift in the global trading system.

Russia and North Korea's Renewed Alliance and Its Impact

Russia and North Korea have re-established a 1961 agreement, potentially for military aid and economic benefits.

The alliance aims to reduce their dependence on the US dollar, as seen through Russia's recent actions with Vietnam, which could negatively impact the US economy and undermine the confidence of the Russian ruble.

This shift in alliances and economic partnerships has the potential to disrupt global investment and inflation.

The Impact of the Chinese Yuan and the Russian Economy

The Chinese Yuan is not yet a major global currency, as it lags far behind the US dollar in terms of usage and trust.

The Russian economy is struggling, with extremely high mortgage interest rates and double-digit inflation, leading to a significant loss of purchasing power for the Russian people.

Russia's lack of a strong global asset market is contributing to its economic challenges and is causing prolonged financial hardship for its citizens.

The Future of the US Dollar and Reserve Currencies

The US dollar is unlikely to be replaced as the world's primary reserve currency in the near future, with a potential for coexistence with another reserve currency.

Jerome Powell has suggested the possibility of two world reserve currencies coexisting, and there is historical precedent for multiple large reserve currencies.

The rise of a central bank digital currency could also impact the future global reserve landscape.