We just got a glimpse of the “End of America” over the weekend… from the place you’d least expect: Iceland.
Iceland might seem the least likely place to signal just about anything in the global financial system… When it comes to international finance, Iceland is barely a flea on an elephant. (Its economy is 1/5000th of the world’s economy.)
But I see something Iceland is doing as a warning sign about the future of the U.S. dollar and the end of the “dollar standard” – what my colleague Porter Stansberry calls the “End of America.”[ad#Google Adsense 336×280-IA]Icelanders don’t even have a real currency anymore.
Starting in 2008, these folks faced an epic banking crisis, which led to a massive currency devaluation – to the point where Iceland’s currency hardly exists today. (It doesn’t trade in world markets anymore.)
But according to recent reports, Icelanders don’t want U.S. dollars.
For my adult lifetime, U.S. dollars have been “good” almost everywhere.
In many countries, you haven’t needed to change money when you travel. (Heck, in most Latin American countries, the people preferred to receive U.S. dollars instead of their local currency.)
So what’s going on today?
Over the weekend, Iceland’s Prime Minister said the currency situation in Iceland “can’t remain unchanged,” according to a Bloomberg article. The article’s headline was: “Iceland Will Adopt Euro or Other Currency, Prime Minister Says.”
Interestingly, the Prime Minister did NOT mention potentially linking its currency to the U.S. dollar – even though Iceland sits midway between North America and Europe.
If the U.S. dollar was really still the world’s great currency, don’t you think it would at least be in the discussion? Iceland is a small country that’s not that far away from us, actually (about the distance from New York to Los Angeles). You’d think that the euro and the dollar would be the competing candidates.
But in short, the people of Iceland don’t want the U.S. dollar…
According to a poll (reported by Canada’s Globe & Mail newspaper) Icelanders prefer linking Iceland’s currency to the Canadian dollar. They prefer the Canadian dollar over other currencies… including the euro, Norway’s currency, and the U.S. dollar.
Does this sound strange to you?
Why is there no interest in the U.S. dollar in Iceland? And why is there any interest at all in the Canadian dollar?
It’s because Icelanders know what it’s like to face a debt crisis and a currency collapse… and they see those risks down the road in both the U.S. dollar and the euro. So Icelanders are looking for an alternative.
The Globe & Mail wrote: “There’s a compelling economic case why Iceland would want to adopt the Canadian dollar. It offers the tantalizing prospect of a stable, liquid currency that roughly tracks global commodity prices, nicely matching Iceland’s own economy, which is dependent on fish and aluminum exports, and in the future, energy.”
Iceland’s largest think tank agrees: “The average person [in Iceland] looks at it this way: Canada is a younger version of the U.S., Canada has more natural resources than the U.S., it’s less developed, has more land, lots of water… And Canada thinks about the Arctic.”
My point today isn’t about Iceland or Canada, though… I’m not making a case for Iceland adopting Canada’s dollar. My point today is about the U.S. dollar losing its status as “king.”
Icelanders are educated. And they just experienced a horrible crisis. They see the debts, deficits, and the money-printing in the U.S. and Europe, and they don’t want to be a part of that.
Nobody has officially given up on King Dollar – yet.
But the total lack of interest in using U.S. dollars in Iceland is an interesting sign the U.S. dollar is no longer King.
Source: Daily Wealth