As I wrote this article, these lyrics from “For The Love of Money,” a 1974 song by The O’Jays, popped into my head:

For a small piece of paper it carries a lot of weight…Call it lean, mean, mean green…Almighty dollar!

The almighty dollar is my topic for today. The strong U.S. dollar is getting a lot of attention in the financial media. The greenback also is the subject of ominous theories, such as how China’s national currency the renminbi (aka, yuan) will soon dethrone the dollar, as Red China continues its inexorable march to world dominance.

Let’s step back from the daily ups and downs of the stock market, to debunk a few myths about the U.S. dollar. To make the right investment decisions, you need to deal with reality, not ideological fever dreams.

Fearmongers warn that “the currency wars” will trigger a crisis in America. These purveyors of doom argue that the U.S. is becoming a third-world country. They predict that the U.S. dollar will crash, causing bank runs, an economic depression, and a dystopian hellscape of poverty and crime.

I’ve heard these same views repeated over and over again, year after year, ever since I started in publishing forty years ago. The historian Richard J. Hofstadter famously called it “The Paranoid Style in American Politics.” In the Internet age, paranoid theories spread even faster and wider. A disaffected, low-information audience is susceptible to these ideas (and they’re gullible enough to buy the survivalist gear and dietary supplements that the doomsters sell on the side).

Read This Story: Why a “Strong” U.S. Dollar Is Both a Blessing and a Curse

In a previous article, I discussed the pros and cons for investors and businesses in the United States of a strong dollar.

The U.S. dollar has risen to 20-year highs, as geopolitical turmoil strengthens the greenback’s safe haven appeal.

Another reason for the dollar’s rise is the U.S. Federal Reserve’s hawkish monetary policy, as the central bank hikes interest rates more aggressively than most of its global counterparts. As rates rise, so do U.S. Treasury yields, attracting investors who seek high yields.

Bromance of the autocrats…

Russian President Vladimir Putin and Chinese President Xi Jinping met this week to discuss their mutual interests, which include reining in what they regard as American “imperialism.” (Cold War rhetoric just won’t die.)

Notably, Putin and Jinping are taking steps to dethrone the U.S. dollar in global oil markets. The Russian and Chinese fossil fuel behemoths, Gazprom and China National Petroleum Corporation, have agreed to switch payments for gas supplies to rubles and renminbi instead of dollars.

China has long regarded the position of its renminbi within the international roster of currencies as a reflection of its own geopolitical and economic clout on the world stage.

China has expressed its desire for a new global reserve currency to replace the U.S. dollar. A popular theory among the podcast pundits is that the People’s Bank of China is hoarding gold as part of its nefarious plan to convert the yuan to the gold standard and supplant the dollar.

As the largest annual gross crude oil importer in the world, China recognizes that it’s tangentially vulnerable to the pressures of U.S. foreign policy through the oil pricing mechanism of the greenback.

Russia also perceives the U.S. dollar as a geopolitical weapon, especially since the U.S. government excluded the country from the use of the dollar to sanction Russia for its invasion of Ukraine.

The dollar is the default denominator in world trade and the prime repository for the foreign reserves of the world’s central banks. This reserve status is based on the size and strength of the U.S. economy and the dominance of America’s financial markets.

The world’s most valuable commodity, crude oil, is quoted in U.S. dollars. Countries that import oil pay for it with dollars; those that export the oil receive payment in dollars.

For decades, the “America-is-in-decline” school of thought has been wringing its hands over the supposed demise of the U.S. dollar as the world’s reserve currency. But overthrowing the dollar won’t be easy, and as the following chart shows, its value has skyrocketed:

The DXY shows investors the strength of the USD against a basket of other major currencies. The Russia-Ukraine war and concomitant energy woes in the European Union have particularly depressed the value of the euro.

The dollar has retained its status as the globe’s reserve currency because, despite China’s threats to the contrary, no viable alternative has arisen. Nor is an alternative on the horizon. China earlier this year launched its central bank digital currency, the digital yuan, de facto backed by gold. But there still isn’t much day-to-day usage of the currency.

A state-owned cryptocurrency is an inherent contradiction. The appeal of crypto and gold is their avoidance of government or central bank monopolies of money. For any currency to be a global reserve of value, and a pervasive method of exchange and unit of measure, it requires transparency and stability.

However, China is one of the world’s most tightly controlled economies. The country’s financial system also lacks transparency, as evidenced by the recent de-listing of major Chinese companies from the New York Stock Exchange because of their resistance to tougher auditing.

What’s more, China’s economic slowdown, massive debt burden, crony capitalism, and worsening property crisis make it hard to believe that the country will soon take over the world. Just ask the angry customers and vendors who got stiffed by China Evergrande Group (OTC: EGRNF).

The dollar is the most traded currency in the world. About 40% of international trade transactions in goods are invoiced in dollars, whereas the figure is 3.2% for the yuan. America’s currency and capital markets are transparent and open; legal and investor security are strong.

The U.S. dollar should remain “king” into the foreseeable future. Regardless, don’t get distracted by its fluctuations, nor by theories about its supposed decline. Stick to your investment plan; that’s the best way to increase the dollars in your brokerage account.

PS: In this bear market, where can you still find solid growth opportunities? I can sum it up with a single word: takeovers. You might have heard them referred to as buyouts, mergers, or acquisitions. But no matter what you call them, when a takeover is triggered, the profits that spill out have life-changing potential.

In this era of war, inflation and pandemic, corporate consolidation is the name of the game. Even the whisper of a “mega-merger” can hand investors enormous returns. My colleague Nathan Slaughter, chief investment strategist of Takeover Trader, just pinpointed a potential takeover deal that could dwarf them all. Want to get in on Nathan’s next big trade? Click here for details.

John Persinos is the editorial director of Investing Daily.

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