With the dollar gaining strength over the last few months, this article appears weak. As the global economy struggles, people rush to the safety of the US dollar.
Moreover, although China and Russia and other countries may make bilateral currency deals and gain greater use as a trade currency, they shun reserve currency status because it would be an impediment to setting their currency values to maximize their national economic output. If the renminbi were a reserve currency, China would no longer be able to use its cheap currency to boost exports and domestic employment, which are critical elements of the regime's survival strategy. Similarly, if the ruble were a reserve currency, Russia would be unable to calibrate its currency to reflect oil price fluctuations and protect its domestic economy.
The dollar will endure as the world's reserve currency, backed by international institutions, US military power, and the US willingness to backstop allied currencies and economies with dollar lending as needed. Other currencies will emerge as more or less useful as trade currencies and sometimes as stores of value, but SDRs will prove useless as hedges against general inflation or deflation.
The dollar is only rising in comparison to other currencies. I wouldn’t exactly call our dollar safe. Trillions of dollars in debt and Obama getting us more in debt spending on illegals, obamacare, etc. Most of the new jobs here is flipping burgers; not a lot of tax revenue there, unless of course they mandate the pay to $15 per hour. Other good sources of gov’t income is cap and trade and so many regulations that everyone has to pay fines for something.
That’s a lot of faith in Obama’s ability to maintain the dollar’s status when it’s been steadily declining under him.