The dollar, the Dollar, The Dollar

Popular opinion suggests the US dollar will soon cease to be the world's reserve currency. I don’t see it for now. Perhaps in the future, but for the time being, the dollar still remains the go to currency of the world. The fluctuations in its value do not signal a global rejection of the dollar. Nothing suggests that this is the case.

There are already pessimistic people out there declaring the dollar obsolete. They point at the example of China encouraging its trading partners to use the yuan. But looking at the numbers, you will realize that most of the transactions are conducted using US dollars. It is still the most commonly used currency, with around fifty percent of international transactions conducted in dollars which I doubt is even close to true.

There's something more that is changing which nobody seems to see closely. The underlying trend indicates that the US currency is still widely accepted, but it is losing its still desirability as a reserve asset. Large families of funds, banks and investors are gradually relocating their capital which shows a clear trend towards reducing dollar exposure. It does not mean the dollar is abandoned, only that they will not be adopting the currency with the same enthusiasm that they once did.

And why do you think that is the case? I will say Trump but anyone that likes him will come for me so I'll say nothing about it. But the reality is that the US has been doing strange things with their money policies. Spending a lot, printing too much and bailing out anything and everything. It is as if money was supposed to mean something but somehow, somewhere, the US has completely forgotten about it. Other countries let banks fail and went through considerably painful rework and fixed their systems. But in the US, everything is plastered, covered up with excessive monetery by disguising through more money.

They really shocked a lot of countries when the US froze Russia’s assets. That is another reason why they are trying to spread out the US dollar. Nobody would want to have their life savings blocked like how they did with Russia’s assets. Not that I agreed with what Russia did with Ukraine by the way.

Looking at the silver lining, the US dollar might be dominating on top of all the currencies right now but the game has certainly changed. People are smater than before and are actively looking around for opportunities. If the investors plan continue to think it is still 2010, they will end up losing everything.

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