Economist Warns of ‘Catastrophic’ Drop in US Living Standards – Elon Musk Weighs in on De-Dollarization, US Dollar Weapons – Finance Bitcoin News

Economist Peter St Onge has warned that weaponizing the US dollar will lead to “increasing inflation, a catastrophic decline in American living standards and a US falling off the world stage”. Commenting on the economist’s warnings, Tesla and Twitter CEO Elon Musk weighed in on de-dollarization.

De-dollarization is happening faster than people realize, says economist

Economist Peter St Onge warned of the dire consequences of weaponizing the US dollar in a video he posted on Twitter on Monday. St Onge is a Fellow and the Mark A. Kolokotrones Fellow in Economic Freedom at the Heritage Foundation. Before joining the Heritage Foundation, he was a fellow at the Mises Institute, a senior fellow at the Montreal Economic Institute, and an assistant professor of international trade and marketing at Taiwan’s Feng Chia University.

Quoting a former Morgan Stanley analyst, Stephen Jen, who stated that the US dollar has already suffered a “spectacular collapse” and is losing its reserve currency status at an “alarming pace,” St Onge stressed:

De-dollarization is happening faster than people realize.

“The dollar share went from 73% in 2001 to 55% in 2021, and then it fell off a cliff and lost market share 10 times faster,” the economist detailed. “The dollar plunged 8 percentage points in share in a single year to just 47%, so we lost about double the entire share of the Chinese yuan. And at that rate, the US dollar would be eclipsed in about 6 years.”

He added: “Separate data from central banks around the world confirm that the landscape is changing after decades of complacency.”

Effects of sanctions on USD

St Onge went on to explain that what seriously affected the USD in 2022 was sanctions. He noted that last year the United States froze approximately $300 billion in Russian central bank assets.

“This was Russia’s sovereign dollar. They and everyone else in the world thought of them as gold. This was something we hadn’t even done during the Cold War – during the height of the Cold War with heated proxy wars around the world – because we were run by adults. Why did Biden do it? The aim was to cause a banking panic and crash the Russian economy – perhaps to set off mass unemployment and civil unrest. Of course it backfired, instead of sending countries around the world into panic flight from the dollar… and then overnight the US dollar went from the world’s rock solid store of value to a political football held hostage to whichever lobbyist or activist caught Joe Biden’s eye this week,” he thought.

The economist concluded:

If the US dollar continues on this path, we will see skyrocketing inflation, a catastrophic decline in American living standards, and a US falling off the world stage – not by choice, but by necessity – all 100% by ourselves. .

Numerous individuals have expressed similar warnings. A growing number of countries are also stepping up efforts to shift away from using the US dollar in trade settlements. The Syrian foreign minister said last week that the US is imposing sanctions to steal the assets of targeted nations and keep them under its hegemony.

Commenting on St Onge’s video, Tesla and Twitter CEO Elon Musk tweeted:

If you weaponize currency enough times, other countries will stop using it.

Do you agree with Peter St Onge and Elon Musk about the consequences of weaponizing the US dollar? Let us know in the comments section below.

Kevin Helms

A student of Austrian economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the intersection of finance and cryptography.