Is that the beginning of the end of dollar hegemony? Could the year 2011 be a watershed marking the beginning of the end of the dollar-based, Western-centric monetary system? These are the most repeated headlines among the financial dailies these days. What’s up? Read on…
In the past, the world’s largest economy would just print whatever money it needed to pay the bills. Until now, this strategy has worked out pretty well for Uncle Sam. In the past, as most European countries were falling apart, the Us dollar firmed up, and safe-haven money was continuing to flow into America and fill its coffer. But it is no longer the case as there are indications that suggest the reverse countdown for dollar’s hegemont might have begun. To begin with, in 2010, the US could not borrow enough money to pay the bills indicates that the laws of paper money no longer applied to the mighty dollar. On the other hand, Messers Ben Bernanke & Co. declared that they would start by conjuring $900 billion—75% of America’s borrowing needs—out of thin air.
Courtesy - www.forex-quebec.com
The series of US financial conglomerates’ demise and susequent consequences, the value of the US currency has fallen sharply since the financial crisis. Currency experts say that the era of dollar dominance is now coming to an end. According to them, it is not hard to see the motivation for oil exporters to move away from the dollar. Amidst the growing fears of spiraling US government deficit, a further depreciation is likely. This is the reason why traders do not want to sell their goods in return for a currency with an uncertain future. If this trend continues further, the Dollar will soon be gone as the dominant currency in the global trade.
Is Uncle Sam listening?
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