“Currently there is no currency that is worthy enough to replace it, but that does not mean that one cannot rise to the necessary standard.”
The Chinese are trying:
http://www.freerepublic.com/focus/f-news/3078394/posts
They’re not doing this because they think gold is pretty. They’re looking to be the next reserve currency complete with significant gold reserves to back it.
Indeed they are, in numerous ways. Resources and technology, they have about cornered the world's supply of rare earth elements, excluding Russia, and would delight in issuing the world currency of exchange for petroleum, commodities and fungibles.
The Middle Kingdom, run by Communist Oligarchs. ........Think about that sentence.
It will never happen. For a lot of reasons. They can’t even float their currency now and it’s hard to get ahold of any yuan denominated bonds. No one trusts that government with a significant amount of money, most especially their own elite. They remain relatively poor, a per capita of like $11,000 with a generous PPP. Their working age population has peaked and is in decline.
Also, there isn’t enough gold out there. Most gold is paper IOU’s. The gold market is tiny compared to the US bond market.
China is screwed and they now it. Because if the dollar crashed their central bank, holders of 2 trillion plus in dollars, is bankrupt. And they are blocked from significant purchases in the West, unless you count housing in Palo Alto.
Where are you going to put your money ? If the U.S. goes, the entire world goes. There is nothing to replace it and there won’t be for as long as the horizon.
To be honest, if there was default on short term treasuries, people would probably just move into 10 year and we would see an inverted curve.