Current uncertainty and worries are clearly reflected in the financial markets. Investors are fleeing into assets that are deemed safe, such as gold, U.S. Treasuries and the dollar. They still flock to the U.S. on a massive scale, whereas a lot of the current insecurity derives directly from the White House. At the same time, we are seeing more and more commentaries around the question of whether a shift is taking place, slowly but surely, from the dollar toward other currencies.
JPMorgan recently wrote, “We believe the dollar could lose its status as the world’s dominant currency (which could see it depreciate over the medium term) due to structural reasons as well as cyclical impediments.” And this month, Bank of England Gov. Mark Carney claimed that the dollar’s status as a hegemon is putting the global economy under increasing strain and needs to end.
That the dominance of the dollar is being questioned is not surprising at the present juncture.
Current and future U.S. policies look vague or nonexistent. Allies as well as enemies feel out of control as they have to wait and see what storms are brewing in the U.S. president’s Twitter feed, about to be unleashed.
Countries such as China and Russia are taking an increasingly assertive stance.
The relative supremacy of the U.S. has been waning, and there are mounting doubts about whether the country will continue to support and shore up the international system that it has largely built up and shaped itself.
The power of the United States may be lessening in a relative sense, but the country has its tentacles in projects and countries virtually all over the world.
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