I need to watch the first 20 min of the video again. I understand the oil is bought with dollars and other countries need to buy dollars before they can buy some commodities. But, I am not sure I fully understand how this would become catostrophic immediately. I understand that there would be inflation and I am not denying that it could happen. Like I said, I just want to better understand it. If anyone can break it down for me, that would be great.
Start by thinking of dollars as an investment commodity, just like you buy gold, silver, whatever. You're trading a currency for a commodity, in this case that commodity just happens to be a currency.
Now that we understand the dollar as a commodity, think about this... what happens to a commodity when there's a high demand for it? Answer: the value rises. When the U.S. dollar is in high demand, that means our dollar buys more goods on the world market.
When the opposite happens, meaning when demand for the dollar drops, the dollar becomes weaker and loses value. Now the weaker dollar cannot buy as much in the world market.
That's the simplest explanation I have for it.
Now, on to the thread discussion. The dollar has been the de-facto world currency for a long time. So why now is it in danger of having competing currencies? It's not some conspiracy, it's not because our nation is becoming weak... none of that. It's because of technology. People can trade instantly via electronic transfer, and it's easier to do it in any currency, rather than having to purchase U.S. dollars first and then buying your goods.
Will it affect us? That remains to be seen. Reality is, the dollar will still be used for quite a while longer as the standard pricing model, and standard currency. What will happen is the dollar will lose it's overwhelming majority usage, and instead share a large chuck with other strong world currencies, such as the euro. When that does happen, it will be at a gradual rate, not overnight... so the actual impact to the U.S. economy will probably be only minor, not some major catastrophe.
Last I checked, I believe the dollar is currently used for 89% of global purchases.