Are The De-Dollarization Rumors True?


The possibility of the United States government announcing a shift away from the dollar (de-dollarization) has been a topic of discussion among financial experts.

However, it is important to consider the ripple effects that such a decision would have on global markets.

In a recent interview, Brent Johnson of Santiago Capital pointed out that such a move would require citizens and business leaders to adjust their financial infrastructure and demand restaurants, mortgage-holders, and other entities to revise their invoicing and payment systems.

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Johnson believes that people are likely to resist such a dramatic change, much as citizens do in response to their leaders' decisions.

Additionally, Johnson discusses the history of the Eurodollar system, which arose due to the US's status as the fastest-growing nation and its role in the Marshall Plan's reconstruction of Europe.

Private actors around the world began extending credit and invoicing in dollars, leading to the creation of a parallel Eurodollar system.

Johnson notes that while the US set up the Bretton Woods agreement with itself at the center, the private market took the lead in building this parallel system, with the official denomination of the dollar making it an easy sell.

As a result, cross-border transactions, invoices, and payment systems have all been done in dollars, and any change would require significant adjustments.

While Johnson acknowledges that the US may use its military to maintain its status as a global reserve currency, he also emphasizes that the Eurodollar system arose organically, not through top-down mandates.

Any significant shift away from the dollar would require adjustments from people and organizations around the world.