Elon Musk has become something of a watchdog over the actions of the U.S. government on the international stage.
The tech mogul gained influence in geopolitics by providing Starlink to Ukraine in the war with Russia. Starlink is an independent satellite internet service, developed by Musk's rocket company SpaceX. This service allows the Ukrainian Armed Forces to maintain secure communications on the front lines and Ukrainian civilians to stay in touch with the world.
This invaluable assistance to a country struggling for its independence has made the CEO of Tesla (TSLA) - one of the most powerful voices around the world on pressing issues facing the planet.
In recent weeks, the tech mogul has turned into a real headache for the Biden administration, which has reiterated its support for Ukraine in the war against Russia. This conflict, which has entered its second year, has still no end in sight. Musk advocates a peace solution that involves making concessions to Russia, which Ukraine and its allies categorically refuse.
Is the Dollar Losing Its Reserve Currency Status?
Washington and its European allies have thus tightened the sanctions against Russia. But the absence of an exit strategy from the Russian war has launched the debate about the American support for Ukraine via NATO. Critics blame the Biden administration for its tough line on Kremlin.
This debate is fueled by Musk and his friends who believe that the absence of a peaceful solution to end the Russia-Ukraine war has dealt a huge blow to American diplomacy and to the United States' place in the world.
They say that evidence of this is the rapprochement between China and Russia, two of the main enemies of the United States. They argue that adopting a hard line toward Russia has undermined America's international and geopolitical standing and prestige.
Musk considers, for example, that U.S. diplomats have become warmongers, which has brought America's enemies closer together. One of the victims of this rapprochement could be the dollar, symbol of the economic power of the United States.
He has just issued an alert to warn that the dollar could lose its role as the world's reserve currency. The warning was issued in a thread on Twitter.
"The US dollar is losing its reserve currency status," Genevieve Roch-Decter, CFA, a former small cap money manager, wrote on Twitter on Mar. 29, adding in another tweet that the U.S. 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 shares these concerns.
"Serious issue," the billionaire warned. "US policy has been too heavy-handed, making countries want to ditch the dollar."
In addition to foreign policy, Musk also attributes the weakening of the dollar to the federal government's fiscal policy.
"Combined with excess government spending, which forces other countries to absorb a significant part of our inflation," he added.
Russia and Saudi Arabia
The dollar is considered the reserve currency of central banks. This means that various national central banks, which hold reserves in foreign currencies, do so mainly in U.S. dollars.
This allows the United States not to have to hold foreign exchange reserves in currencies of other countries, and especially helps to finance the deficit of its balance of payments. This status of the dollar dates back to the end of the Second World War and symbolizes the power of the US on the global stage.
Central banks around the world hold approximately 60 percent of their foreign exchange reserves in U.S. dollars. Nearly half of international trade, loans and global debt securities are transacted in dollars. But the sanctions imposed on Russia, as a result of the war with Ukraine, have helped to encourage efforts to "de-dollarize" global trade, some experts say.
Russia is looking at the yuan to replace the dollar, and Saudi Arabia may follow, Fox News has reported.
For Musk, if we get there, it is because American diplomacy lost its standing during the Russia-Ukraine war.
