When Will the US Dollar Lose its World Hegemony? Former CIA Adviser Makes Prediction

International

Jakarta, CNBC Indonesia – Former CIA adviser and investment banker James Rickards provides an estimate of when the United States (US) dollar will lose its position in world hegemony.

He wrote this in an opinion column in The Daily Reckoning which was published by Al Mayadeen, Wednesday (7/6/2023).

In his piece, Rickards predicts that August 22 will be the day the US dollar’s status as a global medium of exchange will officially collapse. There are many factors to consider, including the dollar arsenal of the Russian economy amid the conflict in Ukraine and the US$31 trillion US national debt alone.

In addition, recent talks by the BRICS+ group to create an alternative trading and reserve currency that would rival the dollar could also threaten the Green’s position.

“On August 22, approximately two and a half months from today, the most significant development in international finance since 1971 will be unveiled,” Rickards wrote in reference to the upcoming BRICS+ Leaders Summit.

Rickards also points to an interesting fact regarding August 22, which is 1971, the same date being the day the US dropped the gold standard.

“This involves the launch of a new major currency that could weaken the dollar’s role in global payments and eventually replace the US dollar as the primary payment and reserve currency.”

Rickards said the push for new currencies spearheaded by the BRICS+ group will affect world trade, foreign direct investment and investors’ portfolios in dramatic and unexpected ways. it can also cause geopolitical upheaval.

“The BRICS+ expansion plan is the most important development of the BRICS system. Eight countries have so far applied for membership, along with twelve others expressing interest in joining the bloc, including Saudi Arabia, which is assisting the US in propelling the dollar currency to world hegemon status through establishment of the petrodollar system,” he concluded.

“This list does more than increase headcount at the upcoming BRICS meeting. If Saudi Arabia and Russia are both members, you have two of the three largest energy producers under one hood.”

For the record, BRICS countries make up 30% of the world economy. This alliance of Brazil, Russia, India, China and South Africa is also 50% of the world’s wheat and rice production, and 15% of the planet’s gold reserves.

Meanwhile, the proposal regarding de-dollarization in the BRICS emerged after this was proposed by Russia. This proposal was initiated by Moscow because of the political maneuvers of the US and its allies to impose economic sanctions on Russia due to the war in Ukraine.

The phenomenon of de-dollarization or throwing away dollars has begun to be carried out by many countries in the world. India has issued a new policy to further increase the use of rupees in their trade since April 2023. One of them is with Malaysia and the United Arab Emirates (UAE).

Not inferior to India, Indonesia has reduced its dependence on the dollar since 2018. Bank Indonesia (BI) is intensifying the use of local currency through settlement currency or local currency settlement (LCS) in Indonesia’s bilateral trade transactions with partner countries since 2018.

(luc/luc)