I understand the want to replace the dollar, but I don't see anything going on to make me think it will happen. Creating a world reserve currency doesn't mean much. People and governments have to have faith in it. If you had to park a dollar somewhere where would you park it to optimize safety? What if it were 1 billion dollars, 1 trillion? The US dollar is still the safest bet. The UN dollar, the global dollar? Would you have faith in those?
The UN/IMF/World Bank can come up with another structure pretty quickly. I assume it would be based on those SDR's that they keep talking about. I would have to go back and review the subject to explain it correctly but off the top of my head I interpreted it as the major economic powers get together and agree to an exchange rate of a certain amount to acquire these Special Drawing Rights from the UN. They keep some sort of a basket of national currencies in the bank (mix of dollars/euro/yen/yuan, etc.) at this global cental bank and work within that system to process balance payments or manage a currency crisis. Probably a pretty flawed description but you get the idea.
Well, they can create the money overnight, theoretically. All they have to do is say that governments must accept it as payment. They came up with the euro and nobody rejected it. The people that tackle these kinds of projects aren't the same ones that came up with the idea of New Coke. I think the global elite get what they want....the question is only what is it they really are trying to create.
You are describing what some are proposing, but even if they come up with it wwhy would a central bank want it? If you could reserve in the dollar or a basket that includes the dollar and some other currencies why would you ever choose the basket. You are not hedging anything. The Euro and Yen are in terrible shape and Yuan can't be considered because of the way China controls it. I just don't see SDR's gaining the faith of governments unless everyone decides they want to hurt the US.
Why? Because the dollar as reserve currency allows US government to much immunity relative to other countries regarding trade policy, fiscal policy and currency manipulation/conflict. What will replace it? SDRs or the yuan would be my guess. The euro would be a good bet if Brussels can ever get control of tax policy. What evidence do you have? All the countries resisting the Anglo-Saxon domination of the world at the moment are working to bring a change to the current regime of dollar dominance. Eventually they will be able to do it, it is just a matter of when not if. No empires last forever, neither will this one.
Obviously I think that the other powers in the world want to bring an end to American hegemony. Hegemons are not generally well liked. Everybody tries to protect their own interests and the other countries like China, Russia, Brazil or Europe would all prefer more control over there economic well-being, not less. Letting the dollar remain as the reserve currency leaves the initiative in Washington. The other will bring that to an end when they feel they can and pay minimal price for doing so. I don't really blame them. I would do the same.
The bolded part brings the rub. The rest of the world has a lot to lose by moving away from the dollar. And they have alot of ground to make up before these minimal loses will exist. Like I said before the basket currency does not reduce risk. It creates more by introducing currencies in as bad or worse shape than the dollar. China can't be considered because they don't let their currency adjust. Europe and Russia are in shambles. Japan is the same. Britain isn't strong enough or voluminous enough. It has to be the dollar for now. It may not always be that way, but I don't see anything changing in 5 or 10 years to change it. Every alternative seemingly has as bad or worse problems than we do here.
You list wannbees like China, Russia, and France that are trying to make their currencies seem like an alternative. The international market isn't buying it. Not so far.
I agree it has to be the dollar for now. The point is that there are other parties involved who have interests that clash with ours in certain areas. I am arguing that the US's economic position in the world is weakening because of trade imbalances, deficits, steady erosion in the purchasing power of the dollar, imperial overreach, demographic stress from the retirement of the baby boomers, etc. These are some serious issues and they are not going away based on the two party system we currently are working under where one party refuses to cut spending and the other party refuses to raise taxes. It will end in a currency crises of some form or another and the US dollar will be the loser. I am just guessing when I say in 5-10 years. It could be in 20 years but either way it will affect me and most everyone who posts on this board.
Not at the moment no...but it could change in a hurry. The euro almost broke up this year because of Greece. Before this year everyone was talking about the euro usurping the dollar. That changed with one downgrade of Greek debt. What happens when the US debt is downgraded?
