The US dollar’s status as the reserve currency and as a safe haven will end.

The Bottom Line –
Can US dominate global financial system forever?

_{( Discussion of the US dollar begins @ 8:30 mark)} https://www.youtube.com/watch?v=SMHQaxd5N-Q

– Flash Points –

1 – With the relatively robust US economy, the US$ remains strong.
2 – It will remain strong, owing primarily to its “exorbitant privilege.”
3 – Any bankruptcy process begins slowly, but ends suddenly.
4 – The entire global financial system is fragile.
5 – Fear is replacing trust.

– Synopsis –

On a recent episode of The Bottom Line, Steve Clemons hosted a panel discussion on whether or not the US can continue to dominate the global financial system. They also touched on the question of US dollar hegemony.

Their pertinent thoughts on the latter subject are as follows:

Edward Luce  

– “The dollar is the tallest dwarf.” 

– “It’s not the wolf at the door. It’s the termites in the foundation.” 

– “How did you go bankrupt? Gradually, then suddenly.”  

– “Any number of black swan events could cause this foundation to collapse. … The dollar is the least bad option.”    _{(Image source)}

Sandra Navidi  

– “The dollar will remain strong only because it’s the best house in the neighborhood.”  

– “The exorbitant privilege, the fact that the US can print dollars, is also still considered a safe haven.”

– “The whole system has become more fragile.”   _{(Image source)}

Douglas Rediker  

– “The dollar continues to appreciate,”  owing to the relative strength of the US economy. 

– “The dollar has been stronger than the president would like. … It will continue to be resilient.”

– For “the rest of the world, there is no alternative”  to holding the dollar.  

– Eventually, an alternative to the dollar will arise, but “eventually is a long time.”    _{(Image source)}

Steve Clemons  

– “Fear is replacing trust in the world.”   

– That will probably result in “a less mighty dollar.”   _{(Image source)}

– Insight from Outside –

The panel tries to put a positive spin on the status of the US and its dollar. But they are pretty much unanimous in their pessimistic outlook.    

They understand that US hegemony will end … albeit eventually. They also realize that the US dollar’s status as the reserve currency and as a safe haven will also end. 

No Alternatives … Except Gold, Silver, and Bitcoin 

The panel members assert that the US dollar is “the least bad option”  and “the only alternative.”

That may be true in terms of national currencies, but those are not the only choices. We have the option of holding gold or silver, the most resilient money for the past 3,000 years. Moreover, we now have cryptocurrencies such as Bitcoin, the most rapidly appreciating money for the past 10 years.    _{(Image source)}

The only reason that other countries hold the US dollar is because they have to. The only reason they tolerate it is because they have no other choice. Not yet. anyway.

However, that will change – eventually or maybe soon.   

The question remains of how the US will go bankrupt, and the answer comes from Ernest Hemingway (as quoted by Edward Luce). The US is now going bankrupt gradually. Eventually, it will go bankrupt “suddenly.”

Posted via Steemleo