There's a lot of talk of de-dollarization, as more countries around the world can't and don't want to trade in U.S. dollars.
But which currency will replace the U.S. dollar?
Now, some people are asking, could even China's currency make a serious dent on the U.S. dollar?
My answer to this question for years has been no one currency will replace the U.S. dollar.
It will be a number of currencies as we have increasing multi-polarity.
That's true with currencies. It's true with geopolitics.
It's true when you ask, where's the next place where successful people are going to want to move?
The answer is there are more options than ever.
Some people are going to move to Dubai. Some are going to move to Singapore.
Some are going to move to Belgrade, Serbia. Some are going to move to somewhere really far flung.
There are so many options out there.
What we're seeing is the breakdown of these great powers.
But China wants to capture a slice of those U.S. dollars.
And I recently came across an article in Hong Kong's South China Morning Post.
They asked, can China's yuan, now a familiar face around the world, become a must-have currency?
And one of the numbers in this article is truly shocking.
They say China's yuan has become more acceptable to foreign countries,
but authorities still maintain tight control of fund flows under its capital account.
That is true.
So the story goes that when China's homegrown ARJ-21 regional jet was delivered to Indonesian airline Transnusa this past May,
the leasing deal was carried out not in dollars, not in euros through one of the Irish subsidiaries that leases aircraft.
But using the yuan, with an arrangement that held us a milestone in the internationalization of the Chinese currency.
So you have a number of countries, a number of companies getting into the aircraft game in a bigger way.
Partially at the back of Boeing having a lot of problems.
And partially at the back of these countries want to be bigger players in important industries.
The article quotes the Shanghai government, who says that this pioneering transaction highlights the high level of openness in the Lingang special area,
promoting yuan internationalization and strengthening international cooperation.
The aircraft was exported through the Lingang region, a free trade zone in southeast Shanghai that was set up in 2019,
promoting foreign investment and financial opening up.
China's growing economic influence in trade with the rest of the world has made the yuan more acceptable to foreign countries
compared to 20 years ago when Beijing first began to experiment easing its capital controls.
Now what have we said was also happening about 20 years ago at the turn of the century?
About one quarter as many countries in the world were sanctioned by the U.S. government.
It's been the century of sanctions.
And what have we also told you in the last 20 or so years?
Places you never would have lived in, never would have invested in, never would have thought of have now become,
if not household names, serious contenders.
Who took Dubai seriously at the turn of the century?
And before you know it, people are moving there and a lot of things are happening.
And there's a lot of places that don't get nearly the press that Dubai gets.
Those are the places that we talk about, those are the places that we share with our clients.
If you're looking for a place to diversify your assets, lower your taxes, protect your freedom, have a plan B,
go to nomadcapitalist.com.
We have more options than anybody.
I was just next to the CKO, our chief knowledge officer in a flight pops up,
oh, we got an alert about the corporate tax rate increasing in Eswatini.
We keep our eye on more places that I think anybody else in the industry.
And this is why we realize there's more options out there.
And so the bottom line is there are so many different players in the game now compared to what I was born.
There were a few geopolitically and financially important countries in the world
and the rest were just kind of struggling to make it.
That is a dramatically different situation today.
That can benefit you if you choose to get your residences and citizenships
and diversify your money and banks and choose to set up your offshore trust
and just choose to take advantage of all the world has to offer.
That's what we help our clients do.
But China is playing the same game.
In the first half of 2024, the yuan made up 52% of China's cross-border payments and receipts
compared with 43% for the US dollar.
So just this year, 52% of cross-border payments
are in Chinese, and maybe in the yuan, only 42% of the US dollar.
That's a 9% delta.
This is what the article calls the yuan share in China's cross-border payment
climbing significantly.
Here's why.
10 years ago, not 20 years ago, not turn of the century.
10 years ago, the figures stood at 23 and 67% respectively.
That's according to Bank ANZ.
So from 23 to 52%, that's a game changer.
They didn't just flip.
They flipped and blew the delta wide open.
So what you're seeing is countries around the world increasingly
willing to accept the yuan in trade.
What does that tell you?
Well, what it tells you is, you know, I grew up in the United States.
If you're sitting in the US, if you're sitting in Canada,
if you're sitting in Australia, the UK, some Western country,
and you're watching Western TV and you have Western friends,
and your world is pretty much in the West.
You would think, who wants this Chinese thing?
The world tells us China's terrible.
Who wants to deal with them?
They're the worst.
Well, the so-called entire global south, these emerging countries
that are pretty much non-aligned.
Africa, increasingly South America, very much increasingly Asia.
We just saw numbers recently.
Malaysia, 75% of Malaysians, some of the nicest people,
they said, if we had to choose between the US and China,
75% would choose China.
Now, do you think they're all voting against their best interest?
Or do you think maybe they know something
or they think something about China that the West does not?
And so whether you agree with them or not,
they're going to be more likely as China offers them better deals.
And we've seen that.
It's been a big theme from African countries.
China gives us a better deal.
I keep seeing story after story after story,
not just from the South China Morning Post in Hong Kong,
but from papers all around the world.
I follow a lot of news in Africa, the Middle East.
And hey, China's bringing us a better deal.
It's not just about the geopolitics.
It's about the trade.
So you can like it.
You can not like it.
You can say, oh, they're making a mistake.
Well, this is what's happening.
From 23% to 52% more than double,
dramatically flipped it and, you know,
opened that, you know, closed the delta.
Article continues in mid-China's pursuit of building
the world's second largest economy into a financial power.
A strong currency and infrastructure are key.
That's one of the things that China didn't have.
Ah, they get this currency.
It's controlled.
Who wants it?
Well, the countries that have been shut out by the US.
And again, let's go back to when I was born.
Turn 40 this year.
Go back to when I was born,
before the Berlin Wall fell.
Very different world in just 40 years.
The US figured, hey, whomever we don't like,
we'll use our might and we'll just shut them out.
And they'll be eating bugs because what's the competition?
Soviet Union was on its last leg, collapsed.
I remember being a kid.
I told it.
Watching stuff in elementary school.
Oh, here's the Chinese.
They're riding bicycles to work.
They ain't riding bicycles anymore.
The world has changed.
And so all those countries that the US used to say,
we don't like you.
Maybe we tried to invade your country or topple your regime
And we couldn't do it.
So we don't like you.
You're going in the naughty list and you're just going
To be written off into the ash heap of history.
Well, number one, those countries have grown a lot faster
In the West.
They've gotten together.
They've gotten more confident.
And they've said, okay, what's our solution?
We're not going to do the US.
We're not going to involve the US.
What's the US answer?
Well, there's a symbiotic relationship between the government
That people elect and the attitude they take
And the actual people themselves.
I'll tell you what we see, even right here on this channel
Is arrogant people who say, well, if they don't want to do
Things that way, we don't need them.
We're better.
We don't need these hellhole countries.
Okay, well, what happens all the quote unquote hellhole
Countries get together and they are more than half
Of the world's population.
Look at bricks.
It's a big chunk of the population.
You got, you know, 1.3 billion, 1.4 billion.
There's a couple of new countries, you know, added 6, 7,
You know, 100 million in each country.
If something like 3.5 billion countries out of the 10
That are now in what they call bricks plus.
You think they don't want to make more money?
You think they don't see everything with the internet
And, you know, people are getting wealthier
And more people are getting to the middle class.
You think that they just want to stay where they're at?
Whether you like it or not, you agree with them or not.
They're going to be there.
That's a big force to be reckoned with.
And they're saying it's our time to shine.
This is the, you know, listen, the internet and global
Connectivity and global trade wasn't always going to
Just benefit the U.S. and Germany.
It was going to benefit everybody.
But those people, those countries have remained shut out.
Not all of them have.
Indonesia is not necessarily shut out.
But they're saying, hey, let's just be greater friends
With this party in our region and let's develop more ties
And let's not involve the drama that comes with the U.S.
I left the U.S. for a number of reasons.
Many were personal.
Well, from a business side, lower regulation, less paperwork,
Got to save some money and taxes.
Those are all reasons people go where they're treated best.
Those are the five magic words.
Go where you're treated best.
And it works for countries, too.
It works for businesses. It works for people.
If there's a better deal over here, less hassle, less risk,
Less potential blowback, yeah, we're going to go over here.
We'll pay for our jet. We'll lease our jet in the Yuan.
Enough a dollar, not the Euro.
And when that happens long enough, you're going to see
The final gasps of a certain level of power
From the high-tax Western legacy-brained countries.
She-a-lay, chief economist for Asia at BBVA Bank Research
That has strong currency means everyone would like to hold it.
It also means it could be used in financing like the U.S. dollar.
It's a currency that could be used in multiple venues.
In July 2024, the Yuan retained its position as the fourth most active currency
For global payments by value.
You probably wouldn't think that.
You know, if you're watching Western media,
Because they want to tell you, China, they're falling apart.
Look at the housing crisis. Look at that.
Listen, I'm not here advocating for China, right?
I don't-China is irrelevant to me.
What is relevant to me is you.
You live in a high-tax, legacy-brained Western country.
Many of you do.
And you think that things are going to go on the way they always have.
Now, you realize that's changing.
The fault lines, the cracks are showing.
People like each other's throats in countries like the U.S.
But you may think, hey, we have more time.
You may think, I don't have to divorce by my business.
I don't have to divorce by my money.
What happens when this big flip gets even bigger
And happens in more countries?
And a greater percentage of world trade shifts to the so-called global stuff?
Well, I'll tell you what happens.
You see Western powers becoming less and less and less geopolitically relevant.
That geopolitical relevance always fed into the financial relevance.
Petrodollar, many other things.
The hegemony goes down. Relevance goes down.
Now, forget the ego impact of that because I think a lot of people somehow
Think that being from a big Western country that's important
And people know about it is something to be proud of.
I banish that from your mind.
You should be proud of yourself and what you've accomplished
And your impact on the world.
Not the fact that I'm an American and everybody wants our dollar.
Who cares?
But your government is going to have to find more ways
To not only bring in money but keep its relevance.
Do you think the kid who had all the toys wants to see other kids
Taking some of the toys? Do they want to start sharing?
No. So what do they do? They throw a temper tantrum.
Like a caged tiger. Like an animal you backed into a corner.
They come out swinging. They're going to come out swinging financially.
They're going to raise your taxes. Look at the UK.
Every day I wake up, I get more headlines.
They want a new tax. They want this new tax.
And I'm telling you, I've never seen politicians in all my life
Doing it with such a smile and with such imperiousness.
This new labor party in the UK, they hate the successful.
They're looking at every possible way to screw you.
And every time it's like, oh, you added sales tax
And their public school tuition. Yeah, they're jerks.
How dare they not send their kids to our government schools.
It was like literally what one guy said.
They are coming out with great pleasure to take all the money that they can.
They're going to raise your taxes higher than you've ever seen.
And it's not just in the UK. It's going to happen in other countries too.
The playbook will be a little bit different, but it will basically be the same.
People who had a monopoly on power. People who had a monopoly on a wealth.
Or alas. Not happy that now they have to share.
Not happy that now they don't get to call the shots.
They don't have the heft. You are going to pay the price.
So what I've told folks in the UK is better years too early than a day too late.
They're going to roll out all these new taxes.
You want to find a place to be before that happens if you value your money.
But it's not just the actual taxes themselves.
It's the attitude that comes with it.
And who knows in what other way that manifests itself.
That all comes from this.
It all comes from other countries decide to cut out the country you live in.
The currency you use. And as that becomes less and less relevant.
I'm not saying it becomes irrelevant. The dollar is not going to toilet paper.
Now we can look at the last 100-year chart.
It's effectively toilet paper over 100 years, but it's not toilet paper tomorrow.
It won't be irrelevant. It will always have a role.
But it will be sharing the stage with many other players.
It will be a much smaller player.
What we know is changes happen at the margins.
I've told you before I think the U.S. home ownership rate
pre-global financial crisis was 69%. I think at the trough it was 63%.
Even in the Great Depression unemployment peaked at 26%.
It's not like nobody had a job. Three out of four people had a job.
It's those marginal changes. Look at unemployment when it goes from 4% to 6%.
Bad stuff happens. Home ownership goes in a few points.
Foreign direct investment comes out.
Any of these things. Marginal declines have big impacts.
We've shared the numbers of how the U.S. dollar has gone from
the 70s to in the 50s in terms of world reserve currency.
This is going to keep pushing that in the wrong direction.
And I think it's a big part of what's happened because the changes
that you've seen this century. People have more acutely seen them.
Obviously due to the pandemic, but in the last five and ten years,
I started Nomad Capitalist in 2012. People thought I was nuts.
Who would want to leave the West? Why would you want a second passport
in a Caribbean country if you're an American or Canadian?
And people now are realizing it. Yeah, I want to move to a country
no one's heard of. I want a second passport from a smaller country
because we realize this stuff right here is driving the big
governments that have the power and lose it to get angry.
Get a citizenship of a country that never had the power.
There's no anger to have. Move your assets to a place where
their business is managing assets. They're not going to be
imperious to you like Kier Starmer is or Justin Trudeau is
or what's his name? Tony Albania, Australia.
Go somewhere where you are treated best. That's what
Nomad Capitalist helps our clients do. You can go to
nomadcapitalist.com. We help seven, eight and nine figure
entrepreneurs and investors to do that. We also help people
remove the ego of saying that somehow being an American is
an advantage. It's not. It's going to be a disadvantage.
It already is in terms of global business and banking and
all those things. It's going to be a bigger disadvantage.
If not even for yourself, for your kids, have dual
nationality. Don't be tied to the past.
Don't be tied to legacy brand countries gasping for air as
they lose power. Have a second passport, have second
residence permits, have some money somewhere else when they
want to come for you. That may sound extreme.
They've done it time after time after time.
You want to have a backup plan. And this is why.