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Biden's Tariffs: Another Blow to the Dollar
00:03:22
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| Hello everybody and thank you for tuning in to the weekly report. | |
| Biden's tariffs are another nail in the dollar's coffin. | |
| President Biden recently raised taxes on American consumers and businesses and they have hastened the end of the dollar's reserve currency status. | |
| President Biden did this by increasing tariffs on Chinese imports. | |
| Specifically, President Biden raised tariffs on products including Chinese-produced steel and aluminum and many components imported from China for use in manufacturing electric vehicle batteries. | |
| Tariffs on Chinese-made semiconductors are rising from 25 to 50% while tariffs on Chinese-made electronic vehicles are rising from 25% to an astounding 100%. | |
| Of course, the cost of these tariffs will be borne by Americans wishing to purchase electric cars and American electric car manufacturers that use materials imported from China. | |
| These new tariffs thus undercut Biden's goal of getting more Americans to drive electric cars. | |
| The tariffs on Chinese goods give China even greater incentive to challenge the dollar's World Reserve currency status. | |
| The same week Biden imposed these tariffs, China's President Xi and Russian President Putin announced they were strengthening their alliance in order to better challenge U.S. military and economic hegemony. | |
| This is a reaction to U.S. foreign policy of the post-Cold War era, which has reversed the Richard Nixon-Henry Kissinger strategy of pursuing good relations with China. | |
| A part of the announcement recognized use of the Chinese won and the Russian ruble for over 90% of the trade between the two countries. | |
| This is only the latest challenge to the dollar's World Reserve currency status. | |
| China's share of the global economy has more than doubled in the last 20 years from 8.9% to 18.5% while the U.S. share of the global economy has fallen from 20% to 15%. | |
| China's rise is one reason why the U.S. currency held by foreign central banks has dropped from over 70% in the early 2000s to under 60% today. | |
| Last year, China and Saudi Arabia agreed to expand their use of their own currencies in trade between the two countries. | |
| This is the first time the Saudis have agreed to use a currency other than the dollar for the oil trade since Henry Kissinger negotiated a deal where the Saudis would trade exclusively in dollars in return for U.S. support for the Saudi regime. | |
| The petrodollar is a major reason why the dollar retained the World Reserve currency status after President Nixon severed the last link between the dollar and gold. | |
| If the dollar loses its World Reserve currency status, the U.S. government would lose the ability to weaponize the dollar. | |
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End of the Welfare State
00:01:08
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| Other countries would then have less incentive to abide by U.S. demands, including related to regime changes. | |
| It would also reduce other countries' interest in purchasing U.S. debt instruments. | |
| This would increase pressure on the Federal Reserve to monetize the debt, creating more price inflation and leading to a major economic crisis. | |
| This will not just end the U.S. military and financial empire abroad. | |
| It will also end the welfare state at home. | |
| Since both major presidential candidates and most Congress members are not serious about making the changes in foreign, domestic, and monetary policy necessary to avoid the crisis, America will likely face hard times in the near future. | |
| However, the end result may be a return to limited constitutional government and a political class that realizes that Ronald Reagan was correct when he told me that no nation has ever abandoned gold and remained great. | |