The day the dollar stops being the world reserve currency is the day the current deficit gravy train collapses. Our debt IMMEDIATLY becomes toilet paper.
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Correct. But that possibility is no longer on the table.
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Because why?
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because the dollar is not going down the toilet but rather holding its value—as it has for the last five years. All the talk lately is that for various reasons —not limited to large increases in US oil production—that the dollars next secular move is up. that means that all the central banks in the world—including China and Japan— with huge dollar reserves are incentivized to hold onto their dollar deposits and even increase them...and stop buying gold
In order for the dollar to stop being the world’s reserve currency—it has to stop being the store of value in the world. That’s a possibility if the dollar goes into a death spiral —as was feared 3-4 years ago. That’s not in the cards today.
I hope you’re right and it’s that simple. I don’t think it is. Not with the way we are larding up debt.