Nobody likes meltdowns, especially not a kid with an ice cream cone on a warm summer’s day. But nobody likes it especially when it has a lot to do with the world’s monetary system melting down into nothingness. This is the endgame right here for the dollar. It seems to be that the US dollar will not be the reserve currency of choice for the world much longer. But the most surprising bit is that a large slice of investors. Policy makers are largely unaware of what the dollar losing its reserve status means for the world and for them.
As a round of quantitative easing looms large and as questions abound as to how the long dollar will last as a reserve currency. That, coupled with the fact that the US is aggressively pursuing options of easing the burden on. Its creaking economic machinery means that the US dollar is perhaps in a more. Precarious position than it has ever been at any point during its lifetime. It doesn’t matter whether this is a long-drawn-out challenge or whether it is a sudden occurrence that has exploded into life.
That is a moot point; what matters is the transition to a steady monetary system for the world to use. This is possible only when the deficiencies of the current circumstances become absolutely unbearable. This transition and transfer of power are by its very nature, nonlinear and so carping on. Extrapolating historical performance of wise-sounding rhetoric is of as much use as a fork in a gun-fight. Yes, I went there.
It is absolutely incredible to see that there is no intelligent exchange taking place amongst policy leaders on this delicate and incredibly important subject of the rot that has beset the monetary system. It has several implications for the economic and political landscape as we know it to be. And until there is a fundamental change in the way we use our monetary system internationally. Any and all economic forecasts are worth as much as used toilet paper if I’m being blunt. My, I’m on fire today; the analogies, they are coming thick and fast.
There are so many telltale signs of trouble that need to be spotted. Just a few months ago, Ben Bernanke and several other high powered officials were talking about exists strategies from the bloated balance sheet of the central bank in addition to the financial system’s excess liquidity that in unforeseen and unprecedented. Now, there is the talk of money being injected into the system from out of nowhere. And they’re not the only ones to make this suggestion either. It was six months ago that the IMF’s chief economist, Olivier Blanchard, made the suggestion of hiking inflation targets to a double of what it currently is.
Think of how these words sound to India, China, and Russia, holders of non-yielding Treasury debt. This will not be music to their ears. They have essentially taken on return-free risks when the sensible investor would have sought risk-free returns. And all of this bickering over currency and trade manipulation only muddies the water even more. Shattering the peace and dispelling any confidence that had to do with an era of sustained economic growth and a spread of prosperity. We are at the point of no return, and the monetary system and policies. We know it might well be in free fall.
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