Bidenomics and the Weakened Dollar is a Looming Economic Crisis!

Written by John Anderson.

The weakened dollar has made imports more expensive, exacerbating already high inflation rates. In response, the U.S. Federal Reserve has aggressively raised interest rates to combat this inflation. However, these measures have had limited success, as domestic businesses struggle to find the dollars needed to pay for materials and retain employees.

Bidenomics, the economic policies under President Biden, has been criticized for contributing to the dollar’s decline. This depreciation has led some countries to explore de-dollarization, aiming to reduce reliance on the U.S. dollar as the global reserve currency. Should this trend continue, the economic repercussions for the U.S. could be severe, though some experts believe a complete shift might not occur for another decade or more.

The U.S. economy under Biden has faced multiple challenges, including open borders, high taxes, strict regulations, and rising interest rates. These issues have eroded global trust in the U.S. dollar, further fueling the de-dollarization movement. Despite the current necessity of the U.S. dollar for global trade, this shift is gaining momentum.

The Global Movement Toward De-dollarization

A recent Bloomberg report highlighted that China sold a record $53.3 billion worth of U.S. Treasury and agency bonds in the first quarter. This move, aimed at supporting the weakening yuan, is part of a broader strategy to accumulate gold. Other wealthy nations are also increasing their gold reserves, indicating a shift away from reliance on the U.S. dollar.

If foreign countries were to abandon the dollar en masse, the economic implications for the U.S. would be significant. Losing key trading partners like Saudi Arabia, which historically traded oil in dollars, would be particularly problematic.

The Saudi Arabia Agreement: Fact or Fiction?

There have been conflicting reports regarding the existence and expiration of a 50-year “petrodollar” agreement between the U.S. and Saudi Arabia. According to RT, there never was a formal agreement, only informal arrangements established in 1974. These arrangements involved military aid in exchange for Saudi Arabia recycling oil proceeds into U.S. Treasuries.

While some sources claim the petrodollar system is a myth, the underlying truth remains that the dominance of the petrodollar is waning. This shift is attributed to America’s reluctance to maintain the implicit oil backing of the dollar, a critical factor in its global preeminence over the past half-century.

Financial analyst Luke Gromen suggests that America’s inability and unwillingness to uphold this system are gradually undermining its foundation. This erosion signals a significant change in the global economic order.

Our Take

The decline of the U.S. dollar’s dominance is a cause for concern. The policies under Bidenomics, combined with global shifts toward de-dollarization, have created an unstable economic environment. If these trends continue, the U.S. could face severe economic challenges. It is crucial for policymakers to address these issues promptly to prevent further deterioration of the dollar’s value and maintain global economic stability.

Trending Stories:

Our Sponsors: