The current monetary system is based on the US dollar as the global reserve currency. No one really disputes this although many believe there are a variety of threats out there to the US dollar maintaining this status.
Below are excerpts from recent articles that talk about some of these potential threats to the US dollar. We care about this because if the US dollar did lose its status as global reserve currency, it would be the kind of major sea change we watch for here and something else would (of course) have to take over that role.
Hugo Salinas Price - Argues Trump's Proposed Policies Could Trigger End for the US Dollar
"The president elect of the US, Mr. Trump, does not know what he is doing when he proposes protectionist measures to encourage the reindustrialization of the US and bring home again, the American industry that emigrated to foreign lands.
The US lost their industry as a result of the Bretton Woods Agreements, which were signed (under pressure) by representatives of the allied countries and of the countries conquered by the US in World War II. Those Agreements established the world's monetary system for the post-war world, after the victory of the Allies, which was already in sight in 1944."
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"In 1960, the economist Robert Triffin detected the central problem residing in the Bretton Woods Agreements. I detected the same problem without having any knowledge of "Triffin's Paradox", as it has come to be known. Many years ago, sitting in my office smoking my cigar and contemplating the world's financial situation, I came to the same conclusion as Triffin.
In a few words, it turns out that in order for the international monetary system established at BrettonWoods to function, the US is forced to run a permanent trade deficit with the rest of the world. Year after year, the US must purchase more from the rest of the world, than what the US sells to the rest of the world, thus creating a permanent flow of dollars to the rest of the world. This flow makes possible the creation of Monetary Reserves in the Central Banks of the rest of the world.
Without this constant flow of dollars from the US to the International Reserves of the Central Banks of the world, the currencies issued by those Central Banks would cease to exist. If Banco de México, the Mexican Central Bank, does not have dollars in its Reserves, then Mexicans do not have money: without dollar Reserves, the Mexican peso would not be worth peanuts - at least, in international terms."
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"If Mr. Trump should attempt to eliminate or reduce the US trade deficit and protect and encourage US reindustrialization by means of tariffs on imports, what he would achieve would be to choke the economies of the rest of the world with a scarcity of dollars obtained - how else? - by exports to the US.
Choking on dollar scarcity, because exports to the US decline or are eliminated, the world will not remain in paralysis. Another alternative to the dollar as the world's currency will be sought, simply because finding an alternative becomes a matter of life or death.
What can take the place of the dollar? . . . . "
"Now is the time to keep your eyes on the monetary endgame. Not the daily mark-to-market in paper gold. This endgame is an all-out attack on the status of the US dollar as the benchmark global reserve currency. Numerous players have an interest in ending the dollar’s role for reasons ranging from climate change (global problems require global money solutions) to geopolitics (Russia and China both have regional hegemonic ambitions in Eastern Europe and East Asia respectively)."
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