If it’s true that paper never refused ink, what can be said for modern society, assailed as it is by social media, the Dark Web and Twitter – sorry, X?
In the deepest, darkest recesses of the internet and the offshore world, you can hear all manner of rumours.
Most of the conspiracy theories are ludicrously fake – what are the chances Hitler and Stalin are running an intergalactic real estate monopoly from the dark side of the moon?
But who needs truth when you can mix up a few rumours with real-world events like recessions and natural disasters, add a pinch of a pandemic, and trumpet them as facts across social media?
Our industry is beset by rumours of varying degrees of accuracy. But a few teeter long enough on the precipice of disbelief to warrant a closer look. One of the most popular whispers making the rounds right now is the idea of a coming Global Currency Reset.
The theory behind the Global Currency Reset is that the US Dollar could lose its position as the world’s reserve currency. This would involve a significant and deliberate re-evaluation of the US currency and the global financial system.
Such a financial and political nightmare scenario could happen, the theory goes, because the United States is over-leveraged and becoming less competitive compared to resource-rich emerging economies.
Coming at a time when the Middle East has again exploded into conflict, war has returned to Europe and the global political and social system is in turmoil, it’s easy to see why people get nervous about the stability of their finances and lives.
In this comprehensive analysis, we take a look at the credibility of these rumours, explore the concept of a Global Currency Reset and run the rule over whether these concerns are valid or just another pointless exercise in doomsaying and fearmongering.
After all, just because someone says a storm is coming doesn’t mean you should run. It doesn’t mean you should lose your ability to think and act rationally. That’s a surefire way to make poor decisions that will threaten you and your family’s futures.
At Nomad Capitalist, we like to look before we leap. That means we don’t mess around with unfounded conspiracy theories and fearmongers.
We do, however, believe in going where you’re treated best. That’s why we help our clients build an international fortress to protect their wealth and freedom by diversifying their assets, obtaining multiple residences and dual citizenship. Contact us here.
Is a Global Currency Reset Coming Any Time Soon?
So, while the Global Currency Reset might be a conspiracy theory, it’s worth addressing because misunderstanding market signals can tempt you down the wrong path.
After all, the value of a currency is a barometer of people’s trust in the government and its ability to repay debts. If there is no trust, then you don’t have a currency – all you’ve got is a portrait collection of long-dead US presidential dudes.
If a Global Currency Rest were to occur, it would unbalance a system that has been in place for over a century.
But… the US works hard to protect the dollar which gained ascendency because of its former gold standard and involvement in seismic global, political and economic events such as its drive to pick up the pieces after both world wars.
In recent times, the US also retained its currency’s value by ensuring that a good portion of world financial contracts are denominated in the United States dollar, including OPEC’s oil production.
That drive to protect its currency hasn’t waned. So, put bluntly, we don’t see any reason why there might be a Global Currency Reset coming any time soon.
Especially because it’s not just the US that has high levels of debt but almost every major modern economy out there. For example, the Japanese government has a much higher debt relative to its GDP than the US. The performance of the US dollar almost always impacts many currency values.
It’s also important to note the US is in a unique position: it issues its debt in the US dollar, a currency over which it has exclusive control.
It has, if you like, a monopoly to print at its own discretion. That’s an enviable financial position: a monopoly is normally a bad thing – unless you’re the one with it.
It means the US has greater flexibility in debt management than emerging market economies, which face the challenge of repaying dollar-denominated debts but have limited access to the currency.
Credit is the lifeblood of modern economies. Quite simply, with it, a country enjoys economic growth and political stability; without it, instability looms.
Thus, a threat to the United States dollar is a global threat. Should confidence in it wane significantly, triggering a massive sell-off of dollar-denominated assets, it could destabilise major economies due to USD’s pivotal role in global finance. Unstable economies mean unstable societies.
Yikes, that’s not good. So, it’s time to bulk buy baked beans and shotgun cartridges and head for the bunker, right?
Taking a Pragmatic Approach
Hold on there, cowpoke.
The belief that the US economy is on the verge of catastrophe is not new.
In the past, you may have seen people turning their money into silver or buying Iraqi dinars, assuming that a US collapse was imminent.
The funny thing is that the same types of people have been saying the same kind of thing for the last 50 years: ‘Doomed. Doomed. We’re all doomed.’
Guess what? We’re still here.
Moreover, that ultimate collapse doesn’t seem any closer now than it was, say, during the ‘Oil Shock’ crisis of the ‘70s when the price of oil and energy skyrocketed.
Back then, things got so bad in the West that the US discouraged electric Christmas decorations and imposed a 55mph speed limit on highways. Meanwhile, Europe introduced Daylight Saving Time in an attempt to delay people from switching on their lights.
Crises and recessions will always be with us. They’re an uncomfortable fact of life.
But, by and large, boom times far outnumber the bad times and economic bumps in the road reflect the ebb and flow of business. They should be feared about as much as the changing of the seasons.
In some months, a euro might get you more dollars than in the past, and in others, less. This alone doesn’t mean anything without knowing the background against which this fluctuation is occurring.
Extraordinary claims require extraordinary facts, and we just don’t see the evidence at the time of writing. Doom and gloom analysis is often misguided at best and deliberate at worst.
And that’s a problem for entrepreneurs, investors and businesspeople because you need to be pragmatic and make good decisions to be successful in business. You can’t do that if you don’t have the facts at your fingertips.
Wild Investment Schemes While Pinching Pennies
In terms of investment strategy, Nomad Capitalist founder, Andrew Henderson, is highly sceptical of those who may seek short-term gain from a Global Currency Reset.
‘Purchasing speculative assets on the off-chance of a “Global Currency Reset” – as in, believing the current world superpower is going to keel over – is unrealistic and quite silly. Especially if you’re doing it with your life’s savings,’ says Andrew.
‘What distresses me at times is to see folks who don’t have a lot of money to their name buy speculative assets on the off chance that they’ll appreciate. Then they come to me, without having made a cent, and ask me to design an offshore plan for them.
‘Needless to say, this goes against how I think things should be done. If you’re a multi-millionaire and you want to arrange your latest and greatest business, by all means, knock on my door and we’ll help you organise everything beforehand.
‘But I would like to caution against people taking their last US$10,000, gambling it on low-probability investment opportunities and wanting to go offshore with that potential business venture,’ Andrew warns.
So the End Probably Isn’t Nigh
People have been predicting the apocalypse for decades and the USD reset is the latest edition of a long tradition of fortune tellers preaching that the end is nigh. But warnings like this are usually nothing more than a giant conspiracy theory.
One day, someone will eventually guess correctly, but do we think it will happen any time soon? A resounding ‘no’.
In the meantime, keep a weather eye out for the ‘snake oil salesmen’ who peddle their wares in the wake of these doom and gloom merchants.
If something sounds too good to be true, it generally is. That’s where we come in. We’ll give you objective advice based on our hard-won, boot-on-the-ground experience to help you protect your future by creating your own or simply going where you’re treated best.
We’re not blind to the problems the US has – far from it. We’ve been pointing out for years how the US has some real issues which will cause problems down the line – for starters, it’s in debt up to its eyeballs and this is unsustainable.
But the idea of instant collapse is unfounded – there have been depressions, recessions, two world wars, the threat of nuclear annihilation, terrorist attacks and pandemics and not once have we come close to a total collapse happening.
And it’s not happening now.
If we do come close to such a cataclysm, you’ll be among the first to see the early warning signs – all you’ll have to do is look out your window.
What You Can Learn from the Doomsayers
It’s essential to keep an open mind – regardless of whether they’re right or not, everyone has a lesson to teach.
It makes perfect sense to want to diversify your portfolio and thereby offset any risk of a single geographic location. This is precisely the underlying ethos of Nomad Capitalist.
We can help you develop an offshore banking strategy that will help hedge you from any systemic danger in a specific country. Even if you don’t trust the US dollar, you can go with any other safe currency like Swiss francs, Singapore dollars, Hong Kong dollars and Canadian dollars.
Moreover, if you have the risk tolerance for it, ‘exotic currencies’ can play a small and controlled role in any good portfolio – there’s nothing wrong with getting paid 10% to hold Armenian drams. And you can further protect yourself from volatile markets by holding gold and silver.
‘Plus ca change, plus la meme chose,’ the French say – the more things change, the more they stay the same.
They’re right. We foresee a gradual shift as more countries get tired of the US hegemony – but this won’t happen overnight and might not fully happen within our lifetimes.
In the meantime, educate yourself about how to protect yourself. This is precisely what Nomad Capitalist is here for. But evidence and reason should guide our investment decisions, not fear and delusions.
If you need help diversifying your portfolio, get in touch here.
And, no, a Global Currency Reset is not likely.
