What happens if the dollar loses reserve currency status? – Bitcoin Magazine
This is a transcribed excerpt of the “Bitcoin Magazine Podcast”, hosted by P and Q. In this episode, they are joined by Julian Liniger to talk about Bitcoin basics and why bitcoin is gaining massive adoption in Europe even during the bear market.
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Julian Liniger: With developments in Russia, China and so on, there are initiatives that are trying to weaken the US dollar as a reserve currency. Do you feel that people are afraid of that in the US, that this could happen in the near future, that the USD will lose its dominant reserve currency status? What role does Bitcoin play in that scenario (if it is a scenario)?
Q: Absolutely. I think you have to separate the response into different groups of people. I’ll say there are three just for simplicity, knowing that they’re closer to 500. I’d say the first group is the Bitcoiners, who very much buy that narrative, who see the writing on the wall and see how the US government’s move does, and the moves that foreign governments are making, are in a direct path to eventually the US dollar no longer being the global reserve currency.
I think it is a feeling, and I will mainly speak for myself that if more countries were to be given the opportunity to price oil in their own currency. It does not need to be formally announced. There doesn’t have to be a declaration from OPEC or from the European Union or anywhere else that says, “Hey, the dollar just isn’t the global reserve currency.” For me, whatever the global standard for pricing oil will be the global reserve currency in the medium term.
That is the secondary problem with the impending collapse of the European bond market. We have seen this happen in several developing countries. We are seeing the collapse of the Japanese Yen. There’s now a different class of people that I think, in the shorter term, the strength of the dollar will continue to increase, but it’s just inevitable that with that increase comes added pressure, and ultimately I always come back to: Why would we believe that the people who made the decisions to put us in this situation we find ourselves in now, why should they also be the same people who would be able to get us out of the position they put us in? So I will explain the two in the Bitcoin community.
And then there is, in my opinion, a large majority of people in America who have no understanding or real understanding of what it means to have the global reserve currency to be our original currency and to be the currency that our country and government is able to press. to no end? For the vast majority of these people, they can be told all these things and still just want to say it, but it doesn’t matter. “The US dollar has been around all its life and it will continue.” And there is a lot of denial, I think. I have it among close friends of mine that I’ll have these kinds of conversations with, and their response will just be like, “Yeah, but like the government will figure it out. Like the US dollar isn’t going to go away.” I think there will be a lot of pain in that class of people, I think many of them will be shocked when the inevitable happens.
So the last group of people I think are, or are the decision makers, the people in government who may see some, but not all, of what the class of Bitcoiners see as the inevitability of the end of the dollar. They believe that if they just do one or two things right from here on out, things will go back to normal and everything will be fine. And the US dollar and the US will remain in power.
I truly believe that it is the combination of both of these ideas that fuels our policy makers in this country. Whether they are right or wrong (I think they are wrong). I’ve been saying for a while now that the best example of this is Jerome Powell coming out in 2021 and saying, “Inflation will be temporary. Don’t worry about it. It’s not a problem.” Only then in April or May go under oath in a hearing in front of Congress and say, “Yes, we made a mistake. We didn’t know as much as we thought we did. And that’s where we find ourselves here.”
I have no reason to believe that from that moment to this day he has learned so much that his decisions will right the ship. But I think I’m in the minority.
