The dollar’s 70-year dominance is coming to an end

Within a decade, greenback’s could be replaced as the world’s reserve currency
End of the dollar
By Liam Halligan 19 Jul 2014
The dollar’s hegemony continues to be cemented, by the operations of the International Monetary Fund and World Bank. Founded at Bretton Woods, they’re both Washington based, of course, and controlled by America, despite some Francophone window-dressing.

The advantages this system bestows on the US are enormous. “Reserve currency status” generates huge demand for dollars from governments and companies around the world, as they’re needed for reserves and trade. This has allowed successive American administrations to spend far more, year-in year-out, than is raised in tax and export revenue.
So America doesn’t worry about balance of payments crises, as it can pay for imports in dollars the Federal Reserve can just print. And Washington keeps spending willy-nilly, as the world buys ever more Treasuries on the strength of regulatory imperative and the vast liquidity and size of the market for US sovereign debt.

It is this “exorbitant privilege” – as French statesman Valéry Giscard d’Estaing once sourly observed – that has been the bedrock of America’s post-war hegemony. It is the status of the dollar, above all, that’s allowed Washington to get its way, putting the financial squeeze on recalcitrant countries via the IMF while funding foreign wars. To understand politics and power it pays to follow the money. And for the past 70 years, the dollar has ruled the roost.

I also believe central banks may include cyber-currencies (such as bitcoin) in their reserves. If you think that’s mad, consider that mankind has long sought scarcity – be it with shells, stones or metallic elements – to store wealth. Now the money-printing taboo has been broken by yet another generation, it makes sense to use complex computer algorithms to ensure that only a certain amount of a particular currency unit can ever exist.

The dollar’s status is a big question.
the establishment of this BRIC Development bank, timed to coincide with the anniversary of Bretton Woods, is an audacious and significant move. The world’s emerging giants now have thumbscrews on the West.

Read full report:

I had not thought about the 70th Anniversary of Bretton Woods; interesting relationship with Christine Lagarde’s Magic 7 Speech.


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8 comments on “The dollar’s 70-year dominance is coming to an end
  1. RonMamita says:

    The Day Before 9/11

    Rumsfeld’s War…
    Pentagon’s Bureaucracy or hidden black budget?

    Many people have wished for a “reset”, some of them call it a “currency reset” or a “gold backed currency”, but regardless of what you call it, policy makers will attempt to force the change upon you and require it to be accepted by all. This usually means military intervention, or “State of Emergency” and martial law will be mandated by institutions.
    Be prepared. ~Ron



  2. Reblogged this on Spartan of Truth and commented:
    A decade is a larger window than I would give it.


    • RonMamita says:

      Martin Armstrong pushes it out to 2032, or there-abouts, in his chart of cycles…
      His predictions may be more nuanced than that, and I expect him to share more details in coming months.

      If Christine Lagarde’s magic-7 speech was a hint then perhaps in the next 7 years…


      • Countries have already stopped using the USD for transactions and more are making plans to follow suit. Do you think it will take even 5 years to happen?


        • RonMamita says:

          yes, the period required to install alternatives to the swift regulatory/transaction computers and clearing banks in New York, bypassing New York could be years out…

          PS: I am not aware of any country that stopped using the dollar.
          Several nations have new “bi-lateral” trade agreements but they all still use the international reserve currency (dollar). Even the BRICS are capitalizing their development bank in dollars (at least for now, at this startup phase), and the Russian federation are still using the dollar…

          The transition is slower than one would want perhaps; a gradual weening themselves off the dollar by acquiring less dollars and getting them out of circulation. I think the popular phrase “dumping the dollar” is an over-simplification of what is happening.
          Perhaps it helps to think of this as the nations are moving rapidly toward a multicurrency international reserves system. The US dollar is less dominant, and there are many other currencies in the mix—including, increasingly, non-traditional minor reserve currencies.
          I recall a chart of the US dollar’s value share of foreign exchange reserves had declined from 71% to 62%; I would like to see the most recent value.
          If you find it please share it with me.


          • RonMamita says:

            This maybe high on the federal reserve’s resort meeting coming up in August 21, 2014
            Who knows, they are too secretive in their private discussions.


          • RonMamita says:

            PSS: LOL, I keep pondering this dollar decline issue and after re-reading the full report above:

            I think the author, Liam Halligan, was referring to the same (or similar) chart(s) I was vaguely talking about from years ago. Liam stated:
            “Although the dollar’s reserve status won’t end overnight, the global payments system is now moving inexorably towards that outcome. The US currency accounted for just 33 percent of all foreign exchange holdings in 2013, on IMF numbers, down from 55 percent in 2001.”
            I am not sure if those declining percentages are referencing the same “aggregate currency composition of foreign exchange reserve holdings” that I recall seeing but they do sound the alarm bells, never the less.

            With so much distrust and fraudulent “official” numbers we may not get a heads-up warning until the interest rate on the 30 year treasuries climb or nations suddenly refused to accept U.S. Dollars. (I do not see that happening unless military intervention is used, or until the satellite infrastructure becomes operational)
            The issues that I remember as foremost import were the banking infrastructure reliability.
            The satellite systems and underwater fiber-optics cables the bankers control in the U.S., UK, and EU are cartel-ish; and China, Russia, Brazil, et al have a ways to go to compete with that.
            Perhaps that is why Russia and Brazil are racing to start a alternate internet with additional satellites above us…
            A dramatic shift is expected to come, but predicting when is problematic even for the skilled researchers in monetary policies and currency trading.
            The monetary policy and currency trade is something I remain curious about.
            Please keep me posted on new developments.


        • RonMamita says:

          Have you heard about this “New York Fed” prediction?

          I do not purchase the half past human reports, thus I do not know how accurate this discussion about it is [jump to the 9:36 que]:

          Posted 28 July 2014
          Clif High with his “Webot” reports is predicting Germany and other officials will deliver a message to the New York Fed that their dollar is no longer accepted unless the Fed return their gold…
          Military weapons and armored vehicles escorting agents delivering the message that the U.S. dollar is no longer exchanged? hmm… that is a vivid picture to imagine, and the clueless patriotic citizens who will be clueless as to why this is happening and what to do, how to board this flight, how to eat, and what to do with this now worthless “federal reserve note”?

          I commented earlier that military action would be required to enforce any decision to not accept the U.S. dollars in exchange, and voila!
          Here we are with a prediction that has governments acting exactly like that.


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