Former Assistant Secretary for Public Affairs for the U.S. Department of the Treasury, Monica Crowley, has warned of a catastrophic outcome if the U.S dollar loses its status as the world’s reserve currency. Speaking to Fox News, Crowley expressed that the consequences of the abandonment of the U.S dollar as the world’s reserve currency will be severe, leading to a complete implosion of the global economic system. The statement was in response to the inclination of emerging economies to move away from the USD towards the Chinese yuan.
Crowley noted that since the post World War II era, the U.S. dollar has been considered a safe haven. Initially, the dollar was backed by gold; however, after President Nixon took the U.S. off the gold standard, there has been no hard asset backing the dollar for more than 50 years. Instead, the dollar has been supported by the strength and economic power of the U.S. Furthermore, oil has always been traded in dollars, which is another key factor in the global economy.
If this trend continues, the U.S. dollar may lose its privilege as being the world’s reserve currency. Crowley expressed that this was a privilege that was recklessly abused by the U.S. government through faulty monetary and fiscal policy over the last two years, becoming one of the primary reasons behind the devaluation of the dollar.
On top of that, with President Biden’s current weak war on American domestic energy production and the Ukraine war, America’s enemies, led by China, are now forming a new economic bloc. At this pivotal moment, all it would take is for Saudi Arabia, which has indicated its openness to alternative currencies to trade oil, to abandon the U.S. dollar, leading to a complete implosion of the global economic system, particularly the American economic system.
Crowley believes that if this were to happen, it would result in sky-high inflation raging, similar to the Weimar Republic, and lead to the loss of U.S economic dominance and superpower status. It is worth noting that the U.S dollar’s next challenger, the digital yuan, could cause a significant shift in the global economy’s balance of power, giving China the upper hand in this regard.
If the U.S dollar loses its world’s reserve currency status, it will have catastrophic consequences not just for the U.S, but for the entire global economic system, prompting immediate instability and uncertainty. That said, the future remains unpredictable, and while other emerging currencies have shown promise, the road to replacing the U.S dollar as the world’s reserve currency remains arduous.
In conclusion, given the importance of the U.S dollar as the world’s reserve currency, the global economic system is undoubtedly at risk of catastrophic collapse if it loses its dominance. Therefore, it’s imperative that the U.S government takes all necessary actions to restore the public’s faith in the U.S dollar and safeguard its reserve currency status. In today’s volatile economic climate, stability and certainty remain vital for global economic growth and financial well-being.