{"id":56281,"date":"2021-01-02T09:22:19","date_gmt":"2021-01-02T14:22:19","guid":{"rendered":"https:\/\/olduvai.ca\/?p=56281"},"modified":"2021-01-02T09:29:31","modified_gmt":"2021-01-02T14:29:31","slug":"us-dollar-as-global-reserve-currency-amid-feds-qe-and-us-government-deficits-dollar-hegemony-in-decline","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=56281","title":{"rendered":"US Dollar as \u201cGlobal Reserve Currency\u201d amid Fed\u2019s QE and US Government Deficits: Dollar Hegemony in Decline"},"content":{"rendered":"
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US Dollar as \u201cGlobal Reserve Currency\u201d amid Fed\u2019s QE and US Government Deficits: Dollar Hegemony in Decline<\/a><\/h3>\n<\/header>\n
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Other options also shaky. Central banks leery of Chinese RMB, its share still irrelevant. \u00a0Euro\u2019s share is stuck. But the yen\u2019s share has been rising.<\/strong><\/p>\n

The US dollar\u2019s position as the dominant global reserve currency is an immensely important factor in supporting the\u00a0ballooning US government debt<\/a>, the\u00a0Fed\u2019s drunken money-printing<\/a>, and Corporate America\u2019s ambition to offshore production to cheap countries, thereby creating\u00a0huge and ever-growing trade deficits<\/a>. They all have become dependent on the willingness of other central banks to hold large amounts of dollar-denominated paper. But from the looks of things, those central banks might be getting a little nervous.<\/p>\n

The global share of US-dollar-denominated exchange reserves \u2013 US Treasury securities, US corporate bonds, US mortgage-backed securities, etc. held by foreign central banks \u2013 fell to 60.5% in the third quarter, according to the IMF\u2019s COFER data release. This is the lowest since 1995. Over the past six years, the dollar\u2019s share has been dropping at a rate of about 1 percentage point per year:<\/p>\n

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The dollar\u2019s 20-year decline<\/strong>.<\/p>\n

Dollar-denominated global foreign exchange reserves do not include the Fed\u2019s own holdings of dollar-denominated assets that it bought as part of its QE, such as its\u00a0$4.6 trillion in US Treasury securities and $2.1 trillion in US mortgage-backed securities<\/a>.<\/p>\n

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The decline in the dollar\u2019s share began 20 years ago when the euro assumed the place of the predecessor currencies, including the Deutsche mark, that used to be in the basket of foreign exchange reserves. But that 20-year 10-percentage-point decline pales compared to the near 40-point plunge in the dollar\u2019s share from 1977 (85%) to 1991 (46%), which was followed by the 25-point surge till 2000.<\/p>\n

For now, the motto among these central banks, jointly, seems to be: easy does it. No one wants to trigger a sudden crisis (2020 = Q3):<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

US Dollar as \u201cGlobal Reserve Currency\u201d amid Fed\u2019s QE and US Government Deficits: Dollar Hegemony in Decline Other options also shaky. Central banks leery of Chinese RMB, its share still irrelevant. \u00a0Euro\u2019s share is stuck. But the yen\u2019s share has been rising. The US dollar\u2019s position as the dominant global reserve currency is an immensely […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[124,679,839,6278,4254,4255],"class_list":["post-56281","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-reserve-currency","tag-us-dollar","tag-us-dollar-hegemony","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/56281","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=56281"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/56281\/revisions"}],"predecessor-version":[{"id":56282,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/56281\/revisions\/56282"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=56281"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=56281"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=56281"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}