Reserve Currency

[Kris]

Hello-- I was wondering if there were any economists in the house-- is America really in danger of losing its reserve currency status for our dollar?  I see a lot of goldbugs saying this.   One is Jim Richards-- is he a nut job?  He talks about globalism and SDRs leading to global currency, etc.   

 

if we do lose reserve currency status, would this destroy the US economy, or can we work through this change?  

[Vigile]

I sincerely hope the US does lose it. It will severely cut into its ability to storm the globe and will force it to shut down much, if not most of its 900 odd foreign military bases, etc...

 

US foreign policy has forced countries like China and Russia to work together to create alternatives. So far, there has only been a trickle of countries who are eschewing the dollar. Venezuela and a couple of others (note that Libya did it right before they were destroyed. Many seem to think this was motivation for the US attack. I'm not sure myself. It was probably a factor). Russia has changed the currency at its ports to the ruble, but not really sure what this means in practical terms. 

 

The gold bugs tend to sensationalize things. 

What it will mean to the US economy? Hard to tell. Depends on who is calling the shots. If it's still an oligarchy in charge, then expect what happened to Puerto Rico and Detroit to happen to the more privileged parts of the country too as the banks try and get what they can. If the people can finally wrestle control, then they can make good sound decisions that will ease the country into the future in a more sustainable course. Either way, you can protect yourself by not going into debt and by getting out of the debt you are already in. Those who owe are going to get hurt the worst IMO as things evolve.