It’s the biggest challenge to the dollar-based global monetary system since the Nixon shock a half-century ago.

And if this threat becomes reality, it could devalue every dollar in your bank account.

The threat comes from a bloc of countries called the BRICS – Brazil, Russia, India, China, and South Africa.

On August 22, the BRICS held their 15th annual summit in Johannesburg. It’s similar to the G8 meeting headed by Western powers like the United States, Great Britain, and Germany.

During the BRICS summit, Russian President Vladimir Putin took aim at the U.S. dollar system.

He hates that countries are essentially forced to hold dollars in reserve to facilitate global trade.

That makes the U.S. dollar stronger and gives America control over the world financial system.

In a teleconference address at the meeting, Putin said, “The process of de-dollarization is gaining space and is irreversible.”

De-dollarization is when countries move away from the U.S. dollar-based global trade system. This system has made the U.S. the dominant power in the world.

The last time the U.S. saw a challenge like this was the Nixon shock in 1971.

That’s when France demanded its paper bills be converted to gold. After years of deficit spending to fund domestic programs as well as the Vietnam War, the U.S. didn’t have enough gold reserves to back all the new dollars.

So Nixon had no choice but to take the dollar off the gold standard. This was a key contributor to the vast inflation the country experienced in the 1970s.

Here’s why this is so important…

Combined, the BRIC countries have a population of 3.3 billion people and make up more than 25% of global gross domestic product (GDP).

They’re chafing under the dollar regime and want to replace it with something new.

However, the U.S. won’t let dollar hegemony end without a fight. And it’s coming up with a counteroffensive against de-dollarization.

And this counteroffensive could reset, replace, and potentially freeze the dollars in your bank account.

The Weaponization of the U.S. Dollar

Ever since the Bretton Woods Agreement in 1944, the world has used the dollar as its reserve currency.

In the nearly 80 years since, the dollar has been the premier currency for international trade and for countries to hold in their foreign reserves.

This gave America what French President Valery Giscard d’Estaing called an “exorbitant privilege.”

Being the reserve currency has allowed the U.S. government to run consistent deficits for decades. That has kept the U.S. standard of living high.

But in the past few years, the U.S. has also begun to weaponize the dollar.

For example, the U.S. has imposed economic sanctions on Iran to bring it to the negotiating table on its uranium enrichment program.

It did this by not allowing financial institutions to have accounts or facilitate transfers for Iranian companies and citizens.

And the U.S. also sanctioned Russia when it invaded Ukraine.

It froze an estimated $300 billion dollars of Russian central bank assets. And it likely froze an even greater amount of assets belonging to Russian companies and oligarchs.

This has left other countries, specifically China, wondering if they’re next. So you can see why the BRICS want to end dollar hegemony.

In March, the 10 countries that make up the Association of Southeast Asian Nations (ASEAN) agreed to abandon the use of the dollar for trade amongst themselves.

Indonesian President Joko Widodo said that moving away from the Western payment systems is necessary to protect from “possible geopolitical repercussions.”

If the U.S. can sanction a major nuclear power like Russia, then Southeast Asian countries could be next if they run afoul of Western rules.

To combat the weaponization of the dollar, the BRICS are working on creating their own global settlement currency. This will allow them to circumvent the U.S.-dominated financial system and make them resilient against any Western sanctions.

Now, this currency will only be digital. There won’t be paper bills that countries exchange with each other.

And you won’t be able to use this digital currency to buy coffee. It will be used as a global settlement currency for international trades.

There is no doubt if this happens, and over a quarter of trade moves away from the dollar, it will weaken our currency. And have repercussions for every American.

The U.S. Response Will Reset the Dollar

The U.S. won’t take a threat to dollar hegemony lying down. The Federal Reserve will do everything in its power to protect it.

And who came blame them. Would you give up control of the global financial system?

One way to do that is through a digital dollar, specifically a central bank digital currency (CBDC).

Even the chairman of the Federal Reserve, Jerome Powell, knows this is the best way. In June, he said, “A U.S. CBDC could… help maintain the dollar’s international standing.”

While a digital dollar could counteract a challenge from a BRICS currency… It will pose a threat to your financial privacy.

My guess is this will start with a CBDC just to facilitate international trade. This will make trade go smoother with features like instant settlement.

Increased ease of trade using the world’s most trusted currency will be the defense against new currencies trying to challenge the supremacy of the dollar. It will be widely used by Western nations.

But this will give the U.S. and its allies the ability to see exactly who each country is trading with and the flow of goods resulting from the trade.

Spurred on by that success, the Treasury, with the blessing of Congress, will institute a CBDC to replace the dollars in all our bank accounts.

The government will be able to see every transaction you make. There will be no safe haven to buying anything the government deems unacceptable.

If it decides that red meat is causing climate change, it could limit the amount of steak you buy.

And it will have the ability to freeze and confiscate anyone’s account. With no way out of the system, it will leave those people at the mercy of the government.

Look, I don’t know how this will play out. But we’re at the dawn of the CBDC age, and you need to protect yourself.

Fortunately, Daily editor Teeka Tiwari has given us two ways to opt out of the financial system. Those are through gold and bitcoin. (You can learn more about our favorite ways to buy gold and bitcoin right here.)

The beauty of both these assets is that you can self-custody them yourself.

You can store your gold in a vault in your house. And bitcoin on a digital wallet. (For directions on how to do this, paid-up Palm Beach Letter subscribers can access this report. If you’re not a subscriber, click here to learn more.)

In a recent video update for his Palm Beach Letter subscribers, Teeka predicted the rise of digital solutions to protect your financial privacy:

There will also be privacy protocols where if we want to donate to a political campaign or we want to donate to a particular cause we believe in without being punished by our government – let’s say that the government doesn’t agree with that approach – there will be viable ways for us to do that.

Vladimir Putin, Chinese President Xi Jinping, and the leaders of other countries are taking steps to challenge the dollar’s supremacy. That will weaken the dollar.

And as the dollar weakens, the value of bitcoin and gold increase in dollar terms.

These investments have the additional benefit of protecting ourselves when a digital dollar goes live. Get in now before the rest of the world figures this out and piles into these assets.


Nick Rokke
Analyst, Palm Beach Daily