There’s no doubt that the American dollar remains the most desired major currency on the planet. And, over the past year, the dollar has actually strengthened substantially despite predictions to the contrary. Yet, current strength is no excuse for complacency. In fact, the forces arrayed against the dollar have been increasing as have the tactics being implemented to end dollar dominance.
It is hard to imagine that another currency could upend the Greenback at this moment. As many economic problems as we have, other nations seem to have more. The Euro is struggling and an exit by Greece would only add to the weakness. Russia is in dire straights albeit surviving on grit. China has a serious debt problem and is internally far weaker than most can imagine. The Middle East has to deal with lower oil prices, threatening the social spending that has supported stability. While growth is anemic in America, at least there is growth. So, on the surface, the expectation is for the dollar to remain strong and perhaps strengthen further.
Beneath the surface, however, there is a great deal of activity that is troubling. The reason is that dollar hegemony is built on a few simple foundational supports.
First, the dollar works because the world wants it to work. It has been useful for global stability over the past few decades. The major nations of the world needed a common currency for global trade. At least since World War II and even before, that currency has been the U.S. dollar.
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