E.D. Hart

Here's Why Asia Must Eventually Ditch the Dollar

Except that they think incrementally, and 50 to 100 years out. They already are de-emphasizing the dollar as reserve currency. It took well over 3 decades for the sun to set on the British Empire (read: the Pound Sterling), and we may be looking at two or three decades to replace the dollar as the worlds primary trade currency. Its already happening.


On Oct 26 02:43 PM Mad Hedge Fund Trader wrote:

> bdc Will people pleeease stop incessantly talking about the possibility
> of China dropping the dollar as a reserve currency? What else are
> they going to use? Monopoly money? Taiwanese dollars? Collectable
> postage stamps? At nearly $2 trillion, the Middle Kingdom’s reserves
> are so enormous that no other currency in the world could accommodate
> the switch, and no other security offers the necessary depth and
> liquidity but Treasury bills. Chinese attempts to buy anything in
> size causes its price to immediately skyrocket, such as we saw in
> the relatively Lilliputian commodity markets last year. And really,
> how like is it that China embarks on policies that quickly halve
> the earnings of the country’s exporters, as well as its 30 year
> hoard of accumulated savings? The demise of the dollar has been predicted
> more often than the ditching of Microsoft’s Windows as the global
> PC operating system, and is just as likely. Hate the greenback as
> much as you like, but there just isn’t any other alternative. I have
> been hearing these arguments ever since the US went off the gold
> standard in 1973. First there was a perennial Arab threat to price
> crude in a basket of currencies. Gee, they never seem to complain
> when the buck is going up. Then there was the speculated emergence
> of the “Yen Block”, in the eighties, back when Japan was dominating
> international trade and the yen was bumping up against ¥80 to the
> dollar. Remember the book “Japan as Number One? Ha! Double Ha! Then
> we got all that European whining after the launch of the euro when
> the weak dollar was everyone’s one way trade. Let’s face it, Europeans
> hate using someone else’s currency as the primary reserve instrument.
> Before the dollar, sterling was in widespread use and was equally
> despised. So rather than waste time discussing this issue anymore,
> let’s talk about something more important, like which of those two
> flies over there will jump off the wall first.