Black Swan author Nassim Nicholas Taleb, who wrote the best-selling book about unpredictable events, revealed that he’s worried about the US dollar’s de facto position as the world’s reserve currency. The worry stems from the de-dollarization agenda kicked off by Russia, China, and other developing countries. The first step to the decline of the US dollar began right there, he exclaimed.
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While the US dollar is undoubtedly the most used currency for trade, the scale of transactions is on a steady decline. As of 2024, only 58% of all cross-border transactions are settled in the USD, compared to 71% in 2000. The sanctions on Russia in 2022 sparked the de-dollarization agenda, and emerging economies are ditching the USD. This made developing countries rush to alternatives, only to find hope in their native currencies.
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US Dollar on Path To Enter ‘Black Swan’ Territory, Says Author
The development will only hurt the American economy if the US dollar fails to get global takers. The USD will experience a deficit that could send the markets tanking while the economy leads toward inflation. “So I’m really afraid of a progressive loss of the role of the US dollar,” Taleb said. He added that “people nominally conduct transactions in dollars, but they don’t store it in dollars, and that is what the problem is.”
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He explained that if the situation continues, a financial Black Swan could enter the American markets. “That’s when you enter black swan territory,” he told Bloomberg TV. “Black swans always lurk, but now we’re in their territory,” he said.
Taleb stressed that the Biden administration made a colossal mistake by pressing sanctions on Russia. “I’m afraid of what the current administration has done in 2022 when they confiscated assets. It doesn’t encourage people to invest in your currency. That is harming the United States enormously,” he said.