Morning Market Download from Invincible Money

Personal finance + economics + markets

Staying on top of the markets, economics and the global issues that affect your money takes a lot of time and effort. We distill it down to a quick 5 minute read to help you make better money decisions.

Fed Balance Sheet Increasing2/3 of the QE (quantitative easing) that's been done in the past year has been reversed in the past 2 weeks, not by actual QE, which is when the Fed buys bonds, but by giving loans to failing banks. The expansion of the Fed's balance sheet is stimulative, which will lead to inflation unless there is credit contraction from the banks, which isn't happening yet (although it's slowing).

The End of the DollarIt used to be unthinkable, but now people are talking more about the dollar losing its reserver currency status sooner, rather than later. It is inevitable, as it's happened to every currency in history. How soon is the question and the recent bank failures and reaction by the Fed has brought this questions into focus.

In the past year we've seen Russia be cut off from using the dollar and instead accepting payment for their oil in Yuan, Rupee and last week the Saudi Riyal. Lula of Brazil and Fernandez of Argentina talked about moving away from the dollar.

So what would it mean if it lost its status?

If the U.S. dollar were to lose its reserve currency status, there would be significant consequences for both the United States and the global economy. Here are some potential impacts:

1. Reduced demand for the U.S. dollar: One of the main benefits of being the world's reserve currency is that other countries need to hold U.S. dollars in reserve to conduct international transactions. If the dollar were no longer the reserve currency, demand for dollars would decrease, which could lead to a devaluation of the currency.

2. Higher borrowing costs: As the reserve currency, the U.S. has been able to borrow at relatively low interest rates. If the dollar were to lose its status, the U.S. would likely face higher borrowing costs, which would increase the government's deficit and could lead to higher inflation.

3. Shift in global power: The dollar's reserve status has given the U.S. significant economic and political influence around the world. If another currency were to take its place, that power would shift, potentially weakening the U.S.'s position on the global stage.

4. Trade imbalances: The U.S. benefits from the dollar's reserve currency status because it allows the country to run trade deficits without suffering the same consequences as other countries. If the dollar were to lose its status, the U.S. would likely have to adjust its trade policies and reduce its reliance on imports.

5. Increased volatility: A shift away from the dollar could lead to increased volatility in financial markets as investors adjust to a new currency landscape. This could potentially lead to financial crises in some countries.

Overall, losing the reserve currency status would have significant consequences for the U.S. and the global economy. However, it's worth noting that the dollar's position as the reserve currency is very strong and unlikely to change in the near future...or is it?

Pro Tip: When you get your paycheck, pay yourself first by having savings and investments take out and automatically transferred to your 401k, IRA, HSA and brokerage account.

Want to setup your kids for life and teach them about money?

1. Open an UGMA/UTMA

2. Make yourself the custodian

3. Invest $100/mo per kid

4. At 18 it transfers to the kid and is worth around $50,000

(You can pay yourself back the principle)

5. Use if for school, more it to an IRA (pay taxes and penalty) or let it grow.

6. Let it grow and continue the $100/mo contribution and it'll be worth about $4 M when your kid turns 60.

Have you done something like this? Reply to this email if you'd like more strategies like this.

Be a Better Investor

Take ActionConsider how you can not only fund your kids' education but their retirement using an UGMA and/or IRA. Open an account for them and start putting in a little bit each month.

Legal StuffNothing in this newsletter is financial advice. Always do your own research and think for yourself.