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Is the US Dollar Under Threat?

Nov 28, 2010
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The dollar is pretty strong and is likely to get stronger as rates go up. Bu tthat's not the longer term concern.

"The share of global foreign exchange reserves held in dollars has declined from 72 percent to 59 percent over the past two decades."

And both allies and foes are talking about replacing or weakening the US dollar as the primary trading reserve.

Opinion : Biden’s sanctions against Russia are a double-edged sword​


By Fareed Zakaria

The Biden administration deserves huge credit for the tough economic sanctions it has been able to impose on Russia in response to its invasion of Ukraine. As Gary Clyde Hufbauer and Megan Hogan note in a March essay, they “are the most comprehensive imposed against a major power since the Second World War.” On a “punishment scale of 1 to 10” — the two authors give the sanctions a ranking of at least an 8.

But the unprecedented nature of these measures is producing concerns around the world that the United States has “weaponized” its financial power and could lead, over time, to the decline of the dollar’s dominance, which is what gives America its financial superpowers in the first place.

I’ve been hearing about this firsthand from three sources I trust. The first, in New Delhi, recently told me about a conversation that took place at the highest levels of India’s government. The topic: how to make sure that the United States could never do to India what it has just done to Russia. The second, from Brussels, where staff at the European Commission has been tasked — even while working with Washington on the sanctions — with finding ways to reduce the role of the dollar in its energy imports. The third, an Asian observer of China, speculated that the overly severe lockdowns in Shanghai — which involved the rationing of food and basic supplies — might be part of an effort by Beijing to experiment with a scenario in which it faced economic sanctions from Washington (perhaps after an invasion of Taiwan).

A debate is raging around the world about whether the dollar’s total dominance of the international financial system is waning. Even Goldman Sachs and the IMF have warned that that might well happen. I tend toward the opposite view: Namely, that you can only beat the dollar if you have an effective alternative, which so far does not exist.

But it’s clear that many countries — from hostile powers such as China and Russia to friendly nations such as India and Brazil — are working hard on ways to reduce their vulnerability to Washington’s whims. None of these efforts has so far gained much traction, though it is worth noting that the share of global foreign exchange reserves held in dollars has declined from 72 percent to 59 percent over the past two decades.

 
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Reactions: Titus Andronicus
Cant wait for my nano wallet with my UBI direct deposit every week. Gonna be a tough choice between the lab grown fish fillet or soy burger.
 
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