It really isn't that big of a deal - as one of those articles state, " "The largest reserve holders are not in the Middle East but in Asia and account, together with Russia, for over 63% of total reserve holdings." If Russia and China abandoned their hordes of US dollars, then shit would hit the fan. The fact that Russia, most of Asia, and the U.S. rely heavily on each other in the world of economics ensures a safety net of sorts for the American dollar.
The act of trading oil for American dollars boosts the dollars value somewhat artificially because countries would need to make sure they had a supply of American dollars to buy oil from countries trading in it. The fact that Russia and Saudi Arabia (the two largest exporters of oil) still use the American dollar as their preferred method of payment for their oil exports is indicative of not only their reliance on the American dollar, but also of their reserved bullish attitudes concerning the American dollar.
The idea that the Fed is cutting interest rates (reducing the returns earned per dollar) is more indicative of a belief in saving the mortgage industry from a major government bailout than a conclusion that the dominance of the American dollar is gone in my opinion. I would say it is more a force in driving down our domestic economy than international economy. I believe a proper course for a stronger internal economy would be to slowly remove the fiat money system, and make it illegal for the government to spend more money than it makes.
Last edited by KEN-JENNINGS (2007-12-08 19:30:31)
