Boy, there has been a lot of fear about the US dollar losing its Reserve currency status and there are many reasons for this. But today, we're gonna break down a Wells Fargo piece on exactly what's to come for the US dollar and what's left in terms of the strength of the US dollar. After all, we're hearing rumors that Russia at least at some point in the past has been in talks with Brazil and India and China about creating a Brics currency although that was probably a revived rumor since before the Ukraine Invasion, so it's probably meaningless. We've talked about China negotiating deals between Iran and Saudi Arabia once Arch Enemies: We've talked about the US's botched withdrawal from Afghanistan leading to much fewer Uh trust and Reliance in the American government.

Given the power vacuum they've left in the Middle East and also potentially the United States is failure to actually approach appropriately appropriate Aid in the Middle East and Africa for example, why did Egypt just consider sending rockets and missiles made potentially with U.S Dollars: Given that we've given them over two and a half billion dollars over the last four years to Russia, Why was that even a consideration? Now we've gone a a civil war essentially in the Uh North, uh, East country in Africa of Sudan Uh, the Darfur regions fighting again and once again countries are calling the United States. But what's the United States doing? Pretty much nothing. Now, this isn't to say that the United States should be the World police, but it is to say that the less countries can rely on the United States the more they start doing things like trading natural gas in Chinese Yuan instead of dollars. and that's exactly what Saudi Arabia just did.

They started settling some natural gas contracts in Yuan Renminbi in China instead of the US dollar and it's leading a lot of folks to wonder at the same time as the US dollar is falling. Oh crap, What if the dollar loses its status as the world's Reserve currency? Well, what's first worth understanding is why the dollar is falling. The dollar. First of all, it has fallen when we look at a six-month chart.

pretty pretty nicely here. Okay, we're down from about 112 on the Dixie down to about 101. go out about a year and uh, you could see this peak of the dollar somewhere around October where we were somewhere around 112 and so we've been on this disinflation path if you will, uh, for the dollar. Now why potentially is the dollar falling at the same time as all of these International concerns are propping up, we'll explain exactly why the dollar is falling.

But first I Want to look at is the dollar going to go away as other countries start talking about getting rid of the dollar and the reality is well outlined by Wells Fargo And if we understand Wells Fargo and then we explain why the dollar is falling. All of a sudden, there's a real chance your fears around the US dollar imploding and going away will also implode and go away. That is your fears will go away. So let's talk about what the Wells Fargo has to say about the US dollar status as its Reserve as a reserve currency of the world.

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You get course member live streams on building your wealth and perspectives from going to zero to millionaire in real estate stocks or otherwise. So what do we have over here? Wells Fargo In recent weeks, the US dollar status as the world's Global Reserve currency has come under intense scrutiny, with some analysts predicting the demise of the Greenback's Reign. Such speculation has occurred in the context of China and Brazil announcing clearing Arrangements and other information that we've just uh, sorry, I almost had a sneeze there because all this fear is there we go. Okay, so how does Wells Fargo counter some of this? Let's look at these charts.

First of all, Wells Fargo suggests here's foreign exchange turnover by currency and you could see that Us Uh dollars make up 88.4 of all of the US or all of the international turnovers that occurred. Now keep in mind this is out of 200 percent because there are two sides to each uh uh equation, right? So you have to think about it as uh, when you add all this up, you're going to get 200 because you have two sides. but the point is, you've got almost 50 Essentially when you look at it that way of All Foreign Exchange turnover conducted in U.S dollars. Part of the reason for that is US Dollars don't have convertibility issues.

You don't have government risk, and even though it's Fiat it's the most trusted Fiat that exists I Know a lot of people, especially those in the crypto Community don't like Fiat and they'd love to see the dollar die and a lot of people are suggesting what Bitcoins going up because of the weakness of the US dollar for the weakness of the US dollar we could have seen coming from a mile away. This reason I had started to short the dollar and again, I'll explain that reason in just a moment. But what do we see when we look at these charts: FX Turnover by currency The US dollar Reigns substantially Supreme The second closest currency by for Global Payments is the Euro, not the Uh British pound. the Japanese Yen the Chinese Yuan.

These don't even hold a candle to foreign transactions. That's just one of the facts. Beyond that, what do we have here: Reserve Managers continue to choose the dollar. The US dollar still represents the majority of global Reserve assets.

That is, when people or countries want to maintain a currency or bonds, they prefer the dollar. Now, why would they prefer the dollar? Well, one of the reasons they prefer the dollar. In fact, we've got a breakdown right here. One of the reasons they prefer the dollar over the Japanese Yen is because Japan is distorting their bond market thanks to yield curve controls and they're freaking out markets so that's an unstable Bond Europe is concerned about fragmentation between the value of bonds between uh, basically France Germany Italy Spain which is basically saying you've got the really strong economies in Europe potentially fragmenting the yields on their bonds versus the poor countries in Europe like Italy and Spain versus France and Germany.

Then in China, you've got too many capital controls creating disincentives for Reserve managers to actually allocate to Chinese bonds. Now, even though the Chinese Yuan is paid to the US dollar, it's still not desirable. because now, if you use the Chinese Yuan, you're having to deal with the Chinese government instead of the US government. And look, I'm not here to show the US government just saying it's the least bad out of all of the other options.

And so there's no surprise when we look at the US dollar. It is super supreme in the International Community. But beyond that, you have to understand people keep talking about the Petro dollar going away. The Petro dollar is basically oil traded in.

uh, in dollars. The Petro dollar market sits at around four trillion dollars. That's pretty big, right? but there's some. The The foreign use of American dollars sits closer to 12 trillion dollars in total.

So outside just oil dollars. So really, even just the Petro dollar alone, if a hundred percent of it went away, it just represents a third of international use of dollars or Holdings of US dollars. And what's wild about this though? Is it probably in my opinion, going to take 30 years for the US dollar to no longer be used in oil settlements? And guess what? we probably won't be trading in 30 years oil, or at least not as much as as we do today is. hopefully our world wakes up to the beauty of nuclear clean energy.

Uh, over, you know, some of the solar and wind. Although solar and wind is probably strong enough to help I'd much prefer It heavily relies on Battery Technology I'd Heavily prefer investing more in nuclear power, but that's going to take a while. It's been a little unpopular thanks to Fukushima, but that's really a topic for a different video. So if the dollar is so strong, then why is the dollar falling? Kevin I mean we just explained why the dollar is so fantastic and so wonderful? Then why is the dollar falling in value? It's very simple.

There's one very simple explanation for why the dollar is falling. It's super easy and it all has to do with inflation expectations. As inflation expectations go down and the United States doesn't suffer from Runaway inflation. What ends up happening? Well, you end up seeing yields on treasuries fall when you see yields on treasuries.

Fall as they have been over the last, uh, six months. What you end up getting is less demand for U.S dollars. Because think about it. the 10-year treasury in October November was trading for somewhere as high as 4.25 percent.

Look at this six month chart right here on CNBC. This is a six-month chart of 10-year treasuries. The downtrend is super clear, and the downtrend actually corresponds directly to the downtrend in the US dollar. So you look at the peak of the US dollar right there in October right over here, right peak of the US dollar.

Holy moly, you got a peek over here. Let's just go to year one year on both of them. Go to one year on both of them. and what do you see? Peak Treasury yields right here.

basically aligning with Peak Dala. Everybody wants the dollar when the 10-year treasury is offering you 4.2 percent. But as inflation concerns have started to become transitory, transitory is obviously a very offensive word. Uh, you know the Federal Reserve made plenty of mistakes still printing money while inflation was too high.

There's no defending the Federal Reserve on that, but inflation will very likely end up proving to be transitory over a span of two three years, which is a lot longer than the Federal Reserve expected. But the point is, as inflation continues to prove that we're actually trending towards disinflation, maybe even deflation. Well, then treasure yields fall. Now, treasury yields did go into a little bit more of a hole here because of the banking crisis, but the trend is clearly down from 4.2 to 4.6 percent.

Uh, just like the trend is down on the U.S dollar. So now what's really easy to do though, and this is where you have to understand politics. Ready for this? This is. This is my favorite thing to mention.

Let's get serious about this one. My favorite thing to mention is that you have a democratically controlled White House. And what do Republicans hate? A democratically controlled White House Republicans Also dislike the United States's performance in many different regards to the presidency. specifically in regards to the Middle East.

And so what is a beautiful thing that you can do If you're a Republican or your Fox News, You could basically say oh my God the dollar is plummeting. The dollars lost 15 percent of its value from Peak. At the same time, China's starting to negotiate natural gas currency transactions or natural gas transactions in Renminbi instead of US Dollars. That's it.

We're losing our clout. It's all because of Joe Biden's withdrawal from Afghanistan and our weakness in the Middle East. And yeah, don't get me wrong, I Personally think the Middle East is a show, and we've made some really big mistakes in the Middle East and some big mistakes with our foreign policy. I'm not arguing that at all.

I'm simply saying it's awfully convenient that as inflation is going down, the dollar is falling and it's easy to ignore the inflation side of the equation and just say dollar falling Biden sucks. Hell yeah. let's pop a beer, but not a Bud Light. So anyway, look, this whole dollar D dollarization stuff is a bunch of hogwash.

If I could short the idea that the dollar is going to lose its Global Reserve currency I'd probably put a million bucks on it because it's complete nonsense. It's not happening anytime soon, even if the petrol dollar went away, it doesn't matter and the rest of it is just politics. That's what it is, and that's what you should be considering it As so when it comes to Dollar dollarization, don't worry about it, check out the courses instead. Thank you.