We’d like to find an analyst, economist, or public intellectual that isn’t predicting the end of dollar dominance. Because right now they’re all saying the same thing. And it’s not that they may not be right, it’s just that there isn’t much diversity in their thinking.
The latest is Nobel Laureate Joe Stiglitz.
Bloomberg: “There is a need for a global reserve system,” Stiglitz, a Columbia University economics professor, said at a conference in Bangkok today. Support from countries like China should ensure orderly discussions on a new reserve system, he added.
The dollar has lost 12 per cent since March 5 against an index comprising the euro, yen and four other major currencies. China, the world’s largest holder of foreign-currency reserves, and Russia have both called for a new global currency to replace the dollar as the dominant place to store reserves.
“The current reserve system is in the process of fraying,” Stiglitz said. “The dollar is not a good store of value. Right now, the dollar is yielding almost no return and yet anybody looking at the dollar has to say there’s a high degree of risk.”
Note that Bloomberg’s line about the 12% decline since March 5 is meaningless and misleading. That has nothing to do with comments from China and Russia, but rather the fact that that was right around the worst of the stock market panic, when everyone was fleeing to the safety of the dollar. So in fact it makes just the opposite point. When everyone panics, they wants Greenbacks.
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