Like the mythic warrior Achilles, America once seemed invincible. Our military is second to none and seems destined to remain that way. Based on estimated figures, U.S. military spending is greater than the total of the nearest ten competitors combined. Our technological capabilities continue to advance with smarter and more lethal weaponry than ever before.
On the home front, the Dow Jones Industrial Average closed 2013 above 16,500, up an astonishing 10,000 points from the low in March 2009, less than five years ago. The housing and auto industries both enjoyed great years, rebounding from the brink of disaster after the economic crisis of 2008.
Yet, despite these signs of strength, America is perhaps the most vulnerable it has been in the modern era. A coordinated attack on the U.S. dollar, for example, has the potential to destroy our way of life. It really is our Achilles’ heel. The worst part is that such an attack is being plotted at this moment, and our leadership seems oblivious.
It was perhaps shocking for Americans to read Drudge Report headlines stating that most of the world sees us as more villain than hero—viewed by global citizens as the “greatest risk to world peace.” Three times as many polled chose the United States as the greatest threat than chose second-place Pakistan. Four times as many chose the U.S. as the key threat than third-place China. Afghanistan, Iran, Israel, North Korea, and Russia all came further down the list. Other nations have seemingly lost confidence in American leadership based on the NSA spying revelations, our burgeoning debt, and an arrogant albeit inept foreign policy approach.
As a result, China state media recently called for a de-Americanized world, and the proposed means to achieve that objective would be the removal of the dollar from global currency use. The Chinese are not alone: Vladimir Putin has also pushed for the dollar to be replaced in global transactions and has garnered the support of the other BRICS countries including Brazil, India, and South Africa. A bill was even introduced in Russia to ban the use or possession of American dollars. Even the International Monetary Fund has urged a replacement for the dollar as the global reserve currency. In many cases, the desire to see a dollar-free world is driven by a self-preservation instinct. In other cases, however, efforts to terminate the dollar are intended to bring down America. Regardless, if the dollar were to collapse, our nation would falter.
Kevin D. Freeman, CFA, is the author of Game Plan: How to Protect Yourself from the Coming Cyber-Economic Attack. Personally selected by Sir John Templeton to help build the Templeton Private Client Group, he has more than thirty years of experience in financial markets.