What would be the impact if the US lost reserve currency status?

Discussion in 'Economics' started by noob_trad3r, Mar 5, 2013.

  1. Lets say the world decides to not use the US currency as a reserve status and instead develop an "ETF" like currency composed of a basket of currencies.

    how would the US economy react?
     
  2. 1) It ought to be very bearish for the dollar and the US, as long as the other currencies in the basket inflate/print more slowly than the dollar. :cool:
    2) The countries whose currencies are in the "basket" risk military confrontation with the US also. :eek:
     
  3. Historically losing reserve status has been a symptom not a cause and a lagging indicator that the power is gone or at least ebbing at a terrifying rate. When (not if) the day comes it will probably result in a great deal of chaos as an artifice like a manufactured basket of currencies will probably suffer greatly from the political deal that puts the basket together.
     
  4. A gigantic inflationary depression. Like 20-25% GDP contraction.
     
  5. piezoe

    piezoe

    Basket, or artificial basket equivalent, is what Keynes wanted at Bretton Woods. But our guy, Dexter White, had more clout and held out for the dollar. Keynes foresaw the downside to using the dollar as reserve. I think it is just another example of where Keynes will eventually be shown to have been right all along. I wonder how the reality of a world of fiat currencies might have changed his perspective.
     
  6. The world's leading power as a resrve currency may well be the natural order of things -- Keynes opinion not withstanding. The only reason for a basket is that there may be times when their is no single dominant power.

     
  7. Bob111

    Bob111

    world can't decide s** as of today(in case you didn't notice) .:)
     
  8. It will not happen.

    Any attempt to do so will be crushed and any nation(Uk, Germany, Euroland) that is a major contributor to this basket will be literally smashed to smithereens by the US army.