Re <<I still have a problem with what will replace the dollar as the world reserve currency?>>
We all a problem figuring out that puzzle. When in doubt, might help to go to ‘fundamentals’.
Why is there a ‘reserve currency’? For trading. Full stop.
The reserve status is ordained by size of economy, degree of international linkages, by trade and investment which generates more trade.
No one would hold the currency of any nation that is bankrupting, withdrawing from family of nations, harming international electorates of the reserve-status currency, spending beyond means on projects without merit.
Presumably, as one reserve currency experiences decline in use, and is extinguished as a reserve currency by abdication, at first, at the time of get-set-go, nothing needs to replace the abdicated reserve currency. What replaces the abdicated reserve currency can easily be that the bilateral trade between any two parties be cleared by mutually agreed pieces of paper, or shells, cigarettes, nylons, chocolate, or whatever, and easiest, even the currency of of of the two bilateral parties, or a mix of both parties’ currency.
As some of the trading nations trades increase, a new set of go-to currencies get recognition by universal thumbs-up.
SDR is by universal acclaim can work, easily, as it would include many important trading-nation currencies.
Gold can work, singly, at some exorbitant unit fiat per troy oz, or as part of a greater scheme such as SDR.
Euro is working but may stop working.
JPY is sort of working but domestic economy declining relative to global total.
Etc etc etc.
In the absence of multi-parties agreed unit of exchange, gold becomes the default, until bilateral and multilateral work out details.
USD is not the only reserve currency now. Once the details of replacements for SWIFT and such are worked out, and they are being done, what comes after comes naturally, one would guess.
Should there be an actual cold / cardiac break, between what was and what shall be, that which we might term the Darkest Interregnum, gold is the porting mechanism, between was and shall-be.
Worked before, all times past.
Gold weaponisation / politicization is inevitable, multi-domestically, and internationally, between those who have, those who want, and those who need.
Some folks believe the USD is a reserve currency because Team USA has many aircraft carriers. Should such be the case, the USD shall not be able to maintain reserve status. The USA is a large economy, trades plenty, and imported much energy. Voila - reserve currency born.
Green energy, kaboom of carbon energy, spending on fruitless wars, wasting on internationally pointless domestic welfare, unfathomable deficits, unserviceable debt ... bell-ring ... reserve status go poof.
How it shall go in minute detail, like watching a whodunit, but likely no different than the credit-worthiness of individuals, just fractal scaled-up.
Timing? Who can know? I am guessing at some juncture around 2032. If so, lots of gains in gold still to be, in USD terms, and if we are more right than wrong, in all currencies’ term. Else we should instead gravitate towards the ‘next’ reserve currency starting now.
Some folks think Team China wishes to replace the RMB for the USD as primary reserve currency. I do not believe so. I believe Team China merely wants trades with counter-parties to be done in something one can count on, whatever it is, and if there is nothing, singly or in basket, then RMB.
Reserve-status is a consequence, not an objective, I reckon.
Gold is the evergreen reserve, at individual and nation-state and civilization and planetary levels. Nothing else is such, except silver, a second, but not really, although close-enough.
Some relevant cartoons from Jack Sr, circa 1961-63
 |
