a 'reserve' currency is little more than the winner of a recent popularity contest. to listen to the scare mongering being promulgated by people completely ignorant about currencies, you think there was some sort of legal process to go through. there isn't. i've spoken about this years ago. if we lose reserve status it won't be as bad as most people think (that is unless the currency itself is breaking down). the pound lost reserve status years ago and it continued to behave as a normal fiat currency. really nothing happened.
i've said before that it actually might be a benefit to shed reserve status. why? because many fewer countries would be trying to counterfeit it. they'd be trying to counterfeit the new reserve currency instead. no, what hurts a fiat currency is abusive practices like high government spending and high taxation. not losing reserve status. keeping our economy strong is the most important thing. bidenomics has hurt our economy badly and price inflation will be the result. it going to get worse unless we return to free market practices and maintaining property rights.
here's what Investopedia says:
"Countries don't fill out an application to have their currencies become reserve currencies, and there is no international organization that confers this status. To get a seat at the grownups' table, it helps to be a developed country with a big economy with relatively free capital flows, to have a banking system able to handle being a creditor, and to have export clout. These requirements make reserve currency status a rich world club, much to the chagrin of many developing countries. The currencies of China (the world's second largest economy), Brazil (sixth), Russia (ninth) and India (10th) - the BRIC countries - are not considered reserve, which is why these countries have been more vocal proponents of the creation of a reserve country unattached to any one country." (in other words, they don't know what they're doing either.) i promise you, none of them know how a fiat currency works.
so we have people out there that are ignorant of the way a currency works trying to tell the world what losing reserve status would mean. the only thing they're doing is exposing their ignorance.
what we need to fear is our own abuse of the dollar. it is that abuse that will hurt the dollar, not losing reserve status.
it's nice and convenient to have reserve status, but it isn't at all necessary for a currency to survive. the loud know it alls actually know little. |
