It Started: China Just Dumped The US Dollar (Ray Dalio’s Final Warning)

From Graham Stephan.

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Let’s discuss China Tariffs, the US Dollar Dominance, and the impact that Ray Dalio says will happen across the United States Economy – Enjoy! Add me on Instagram: GPStephan

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RAY DALIO WARNING:
For the last 80 years, the US dollar has become the most powerful currency in the world, because it’s known as: The Reserve Currency. However, the US dollar now under threat of losing ‘reserve currency’ status, as other options are starting to take away marketshare.

CHANGING ORDER:
Throughout history, Ray Dalio explains that there’s a constantly changing “Order” between “The Leading Economy” and, “The Rising Economy” – over time – one will fall, to make way for something new.

In terms of what causes this, Ray Dalio summarized these into three segments: The Rise, The Top, and The Decline.

During The Rise, there’s a period of peace and prosperity, while people begin to bet and borrow on that system continuing. This is typically marked with strong education, critical thinking, character building, and work ethic – this allows for innovation, new technologies, and other resources for a continual rise in productivity. 

At The Top, while people earn more, the more expensive their time becomes, relative to other countries who are willing to do the same work, for less. On top of that, other countries have the ability to take blueprints from the latest innovation – and then replicate the same thing for a fraction of the cost, reducing the leading power’s competitiveness. 

During The Decline, throughout an economic downturn, if a country can’t sustain its own debts – it needs to chose between defaulting, or printing more money. That devalues the currency, raises inflation, and – since the 1990s, the US has already seen 3 occurrences where the Central Bank stepped in to finance an industry collapse: from the dot com bubble, mortgage crisis, and 2020 shutdown, giving way for other currencies to take their place.

THE BOND / TREASURY MARKET SELLOFF

For the first time in decades, investors not only pulled their money out from the markets, but they also pulled their money out of the United States. This trend, according to him, is “the most concerning piece of data since the tariffs began…It’s showing a deterioration in confidence in the U.S.’s place in the world.”

There’s also the rumor that China was purposely selling off their US Treasury Holdings as a way to force up interest rates and hurt our economy, especially now that they’ve increased their gold stockpile for the 5th straight month. However, I think it’s important to reiterate that this isn’t 100% confirmed and, you’ll need to take this with some slight skepticism, especially since there’s no way to prove it was them – and it would take a LOT of money to make a small short term difference.

Shortly after this, the Federal Reserve stepped in to say that “They’re prepared to Intervene in Financial Markets if Liquidity Issues Arise” – basically assuring everyone that, if interest rates spike up to high, they’ll artificially drive them back down to bail out the economy – reaffirming exactly what Ray Dalio suggested would happen, as countries continue to print themselves into more and more debt, that just becomes harder to pay back.

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