The United States’ Control of the Seas Maintains Dollar’s Reserve Currency Status
Mike Novogratz, the CEO of Galaxy Digital, believes that the United States’ control of the seas is what enables it to maintain the status of the U.S. dollar as the world’s reserve currency. He claims that this privilege comes at a cost of approximately $1 trillion, equivalent to 4% of the country’s GDP.
Impact of Attacks on Commercial Ships Passing Through the Red Sea
Novogratz made these comments following the missile strikes launched by the U.S. and the U.K. against regions in Yemen controlled by the Houthis. These attacks were a response to the increased number of attacks on commercial ships passing through the Red Sea.
As a result of the growing attacks, some shipping companies have been forced to suspend or avoid using the Red Sea altogether. This has led to higher transportation costs and shortages of raw materials and finished products.
Cost of Borrowing
Novogratz implies that the strikes are necessary in order to ensure that U.S. residents can continue borrowing at low interest rates. He explains that being in control of the seas grants the U.S. the privilege of borrowing endlessly at favorable rates.
While some of Novogratz’s followers on social media were shocked by his endorsement of the bombings, others expressed concerns over the declining dominance of the U.S. dollar. However, one user pointed out that countries like Germany and Japan have lower interest rates despite not being involved in the Yemen bombing campaign.
It remains to be seen how the situation in Yemen and the Red Sea will unfold and what impact it will have on global trade and currency dynamics.
By
By
By
By