Elon Musk Sounds Alarm About US Dollar: ‘Serious Issue’

Elon Musk Sounds Alarm About US Dollar: ‘Serious Issue’
Tesla CEO Elon Musk in a file photo in 2019. (Aly Song/Reuters)
Jack Phillips

Telsa and Twitter owner Elon Musk this week sounded the alarm about the primacy of the U.S. dollar as the world’s reserve currency following a deal between the Chinese regime and Brazil to trade in their own currencies.

“The US dollar is losing its reserve currency status,” Genevieve Roch-Decter, a former small-cap money manager, wrote on Twitter this week, adding that the dollar has been “the backbone of the global economy for decades. Several countries even use the US Dollar as an official currency, like El Salvador, Panama, and Ecuador.”

Musk indicated that he shares her concerns, writing: “Serious issue. US policy has been too heavy-handed, making countries want to ditch the dollar.”

“Combined with excess government spending, which forces other countries to absorb a significant part of our inflation,” he also wrote.

In a statement this week from Brazil’s new left-wing government, China and Brazil came to a deal to trade in their own currencies and will not use the U.S. dollar as an intermediary. The two countries will now exchange the Chinese yuan with Brazilian reais rather than converting to the dollar beforehand.
Brazil’s Investment Promotion Agency, or ApexBrasil, told news outlets that the new arrangement is expected to “reduce costs” and “promote even greater bilateral trade and facilitate investment.”

Some analysts have said the move portends a bad omen for the United States. China has similar agreements with other countries, including with Russia and Pakistan, and some have said that the Chinese regime’s latest moves are attempts to depose the U.S. dollar as the world’s reserve currency.

A number of countries have their currency pegged to the dollar and many central banks hold the dollar as part of their foreign exchange reserves. Global commodities, including oil, also trade in dollars.

The Brazil deal comes right after the Chinese regime settled its first purchase of liquefied natural gas via the yuan, according to Reuters. That transaction contained approximately 65,000 tons of LNG and was sourced from the United Arab Emirates after the China National Offshore Oil Corp. negotiated a shipment with France’s TotalEnergies through the Shanghai Petroleum and Natural Gas Exchange.

“China will continue to import large quantities of crude oil from GCC countries, expand imports of liquefied natural gas, strengthen cooperation in upstream oil and gas development, engineering services, storage, transportation and refining, and make full use of the Shanghai Petroleum and National Gas Exchange as a platform to carry out yuan settlement of oil and gas trade,” Chinese leader Xi Jinping said last year while he visited Saudi Arabia.

At the same time, Russian President Vladimir Putin recently announced his government would work to make payments in yuan while trading with African, Latin American, and Asian countries. “We support the use of Chinese yuan in payments between Russia and countries of Asia, Africa, and Latin America,” Putin said.

Too Soon?

But Sergei Perfiliev, a financial training instructor and a former Goldman Sachs strategist, wrote in a recent Twitter post that the “world runs on dollars” and that “it’s not going away anytime soon.”

The U.S. dollar, he wrote, is backed by the world’s No. 1 economy, but is also backed by the American economic system that, according to him, is known for open and free markets.

“Dollar is backed by a free and open market within a democracy. U.S. private property and assets are protected by law and have a low risk of being seized, frozen, or confiscated. There’s also a low risk of international sanctions or penalties,” he wrote on March 30.

While listing other reasons, Perfiliev concluded: “It took decades to establish this dominant position. Just because China or Russia are diversifying from US holdings, doesn’t mean dollar demise is near. It would take more than that. Of course, dollar is not without problems, but it’s not going away anytime soon.”

Jack Phillips is a breaking news reporter with 15 years experience who started as a local New York City reporter. Having joined The Epoch Times' news team in 2009, Jack was born and raised near Modesto in California's Central Valley. Follow him on X: https://twitter.com/jackphillips5
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