It is time the world opens its eyes to the supremacy of the USD

In Latin America, remittance payments (in other words, those who emigrated for work, send money, that was earned in the US or other countries, back home to their families in Latin American countries) account for nearly 20 – 25% of GDP.

If there is one thing that most Latin American countries have in common, it is their reliance on the USD. This trend also exists in those Latin American countries who have their own national currencies. The problem is that these countries have absolutely no control over their own monetary policy. Even if they take hawkish or bullish stances on their own national currencies, it is always undermined by the influence and supremacy of the USD in their country.

In turn, all of these “beneficiary” countries have to be extremely careful when entering into agreements with the United States, as stepping out of line can result in harsh sanctions and substantial financial burdens, none of which are easy to overcome. As we have learnt from past experiences, the ones who suffer the most are the people living in these countries who are almost always undermined by their governments and the direct influence of the United States in their country.

The USD is perpetuating poverty and poor economic conditions around the world

The supremacy of the USD in many Latin American countries is one of the main reasons most of these countries will forever have increasing levels of poverty.

The COVID-19 pandemic should open the eyes of the countries who heavily rely on the USD as the FED has undergone monetary stimulus as never witnessed before. This will inevitably cause inflation to increase over time and in turn further weaken the economies of these countries. They will be helpless bystanders in the near future if this course of action continues unchanged.

Large institutional organizations such as the IMF and the World Bank are leveraging the USD to restrain countries who have USD as legal tender in their country from moving to more inclusive ecosystems by threatening them with harsh sanctions. This just shows us how the 1% of the world are benefitting from the current Fiat system that we have in this world.

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Caveat Capital MGMT (Pty) Ltd is a CATII – Authorized Financial Services Provider (FSP no. 24777) registered at the South African Financial Services Conduct Authority (FSCA).