The Impending Decline of U.S. Dollar Dominance

Episode #319 | July 17, 2023

Episode #319 | July 17, 2023

The Impending Decline of U.S. Dollar Dominance

In This Episode

On this week's Stansberry Investor Hour, Dan and Corey welcome frequent guest Marko Papic back to the show. Marko is a partner and chief strategist for asset-management platform Clocktower. Together, they tackle the shifting landscape of globalization, the dominance of the U.S. dollar, and investment opportunities in emerging markets.

Dan and Corey kick off the podcast by discussing the perplexing issue of the U.S. government "losing money while making money." The conversation revolves around the production of nickels and pennies, which have been costing more to mint than their face value since 2006. Dan and Corey explore the implications of this inefficiency and its connection to the broader topics of inflation, recent Consumer Price Index data, and the Federal Reserve's monetary policies. Corey comments...

Inflation will always be around... and people won't notice it, to the point where it takes 10 cents to make a nickel.

Then, Marko joins the conversation to share his thoughts on the apex of globalization. According to Marko, globalization thrives when a dominant superpower establishes a "clear set of rules and norms of behavior that every country follows." While globalization may no longer be at its peak, it continues to exist in a modified form. As Marko explains...

Don't expect globalization to just collapse. Think of it as a continuum from zero to 10. We might be at a six or a seven, but we're not going down to one or a two.

The discussion then shifts to multipolarity, or the distribution of power among several countries. Despite the rise of emerging markets and the global shift toward multipolarity, the U.S. dollar remains the predominant currency worldwide. Marko believes "the dollar will continue to have stickiness as a predominant currency," but he predicts a steep decline within the next year...

I have zero doubts that the United States dollar as used for reserves in central bank vaults will decline, precipitously, in the next 12 months.

However, he clarifies that this decrease will be more closely linked to domestic U.S. monetary policies than geopolitical strategies...

Usually when you speak about geopolitics, people use geopolitics to be short the dollar. And I really caution that.

Marko concludes by highlighting that investors can still profit by adopting a longer-term perspective that considers geopolitical and macroeconomic trends. He advises against overtrading... and encourages diversification to include exposure to non-U.S. currencies and assets. In particular, he suggests keeping an eye on economies with favorable prospects. To hear the specific countries he's watching today and his reasoning behind each one, listen to the podcast now.