Will Oil Price War & COVID-19 Dethrone The Dollar? Think again.

[Marek Piotr Skoczylas 0]

Dear Alex Kimani,

Your article: "The Oil Price War Won’t Dethrone The Dollar" is very good and written in quality analysis. However, as you said it yourself: "Dollar strength is based on US Economy & US Taxpayer spending (~70% of the GDP)". Unfortunately even before COVID-19 hit, the USA has been borrowing against the future (annual budget deficit) every year for more than a decade 1 trillion dollar a year. I wrote article on Facebook on February 6th 2020 about it "Facts & Response to State of the Union":

https://www.facebook.com/marekpiotr.skoczylas/posts/3216796508344807

I have recently posted on March 21^st on LinkedIn another article about "Cost of Trump Negligence to USA Economy" in article: 

“How Benjamin Franklin then Warren Buffett got it all wrong ?!”

https://www.linkedin.com/pulse/how-benjamin-franklin-warren-buffett-got-all-wrong-marek-skoczylas/

What does it all mean in a nutshell?

USA National Debt before COVID-19 has already exceeded 100% of GDP (as per my Facebook post) now with GDP (Revenue hit) & Stimulus/Recovery Package(s) (additional Cost) that National Debt to GDP ratio can soon get closer to 200%.

You can read on a Dollar Bill: “In God We Trust” but International Community Faith is expressed: “In Dollar We Trust” and now with ~3.3 Million US Unemployed (just in one week, just a beginning), US Consumer will not spend on Travel (Airlines, Cruise ships, Hotels, Theme parks, etc, etc), for at least 2 years until COVID-19 vaccine is deployed and successful, that US Consumer spending will be greatly dampened and focused on bare necessities. Therefore that Trust in US Dollar may be undermined. Countries like China & South Korea being much more Proactive with addressing COVID-19 impact than USA, will gain International Respect & Recognition.

Petrodollar may get also more challenge from another angle. While Donald Trump insults all USA Allies and Embraces Regimes with questionable track records for Human Rights & respect of International Laws, preaches “America First” while executing “Profit First (for few)” while China preaches “United World in fighting COVID-19”, “Inclusiveness”, “Help for those in need” etc, etc.

That existing World Order may soon get reshuffled.

“The Signs are Everywhere” – e.g. President of Turkey, Member of NATO, buying new weapons from both USA & Russia.

Best regards

Marek Piotr Skoczylas

The Author of the Book published in 2009:

“Wisdom of the Sages and ordinary folks from around the world”

[Marcin2 + 724]

The recipe is always the same and proved in EU and US and Japan.

Negative Real or even Nominal interest rates and the debt is just inflated out.

With 2.5% inflation, 0% interest rate on debt with 200% GDP debt level 40 trillion US dollars, just 1 trillion dollars gets nixed every year.

Financial perpetum mobile, NOT.

But to destroy from within such a vibrant economy like US, even with Chinese competition you need another 20 years.

What I think would be world divided into 2 or 3 spheres: dollar, euro and yuan.

China/Russia support euro a lot,

best strategy to counter dollar domination.

Further weaponization of US dollar could make the trend faster.

Until China closes technology gap and reaches self sufficiency in crucial areas like material science and semiconductors the dollar is King.

Later China could and would de-dollarize, even overnight, they could administratively ban usage of US dollars in foreign trade and instead use Euro or yuan.

But now US has the most leverage.