Gents, I am looking for qualified insight regarding the USD losing it's status as the World's primary reserve currency. What will be the ramifications should this occur? Lastly, how should one position themselves in front of this? Looking forward to some good posts here, thanks in advance. Rennick Soros out
1) If it occurs, everybody loses. United we stand, united everybody will fall. :eek: 2) People can still be unsure of the "soundness" of the euro, swiss franc, yen, pound and the Chinese currency. 3) When sentiment becomes too extreme, fade it.
I think too much thought and time is effort is given to the notion that the USD is the world's primary reserve currency. My understanding is (and please correct me if I am wrong) that the notion of a reserve currency is only a theoretical / abstract concept with no formal / official implications. As such, if you are looking to trade based on the idea of the USD no longer being the reserve currency, you would be better off to study the relative merits of the USD versus other currencies, including gold. My view is that currencies are one giant "ugly contest". I'd rather own gold as my currency of choice. In the coming years it should continue to appreciate against all fiat currencies.
as of now, the only thing usd is losing a status is GOLD replacing usd. Who wants to hold on to euro when EURO is in crisis. Who wants to hold on to yen when japan has a huge debt. who wants to hold on to pound. At the present time, GOLD has the potential to replace usd. If gold continues to go up, opec can switch from petro dollar to petro gold. If that happen, DOOMSDAY
Read this: The Destiny of the Dollar, by Paul Einzig. Written in 1971 or 1972 right at the time that Nixon closed the gold window. Good read on the implications of the dollar losing its reserve status that still holds true today.
First your are about 15 year too late. Then, Cry me a river!! Being apocalyptic is fashionable these days. Try having your dollars in Singapore or in Malta already or how about in Luxembourg tied to the Euro. Drive that make believe Winnebago to Asia/Europe/Caribbean and set up a numbered account already. Not as though you could, of course.
Exorbitant Privilege: http://en.wikipedia.org/wiki/Exorbitant_privilege Triffin Dilemma: http://en.wikipedia.org/wiki/Triffin_dilemma The days of one nation hosting the world reserve currency, and enjoying the privileges of that, are numbered. The world economy is larger and more diverse now, there is no longer an iron curtain or an isolated third world, and everyone wants to have the exorbitant privilege, and no one wants anyone else to have it either. Yet, no one nation can have the world reserve currency forever, as they need to consistently run a trade deficit - which in itself, is unsustainable. When the US loses reserve status, it can no longer export inflation, or be the world's largest consumer. Expect a significant reduction in living standards.
From history we know that the loss of reserve currency status usually takes decades. This year i have travelled to Nepal and Turkey, both countries are still accepting USD in common circulation even above their own national currencies. If you are 40++ and older, forget about it. You will be dead before the USA loses its status to China.
China is already negotiating bilateral trade agreements to be denominated in anything but the US Dollar. The largest such agreement is between China and Russia. It's a process that is occurring right now.