Dollar’s Reserve Currency Status May Be In Jeopardy (And How To Protect Yourself)
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The Situation
Rumors are floating around that the dollar is in danger of losing its reserve currency status. This is certainly a real possibility and it wouldn’t be the first time a currency has fallen from grace.
The loss could be sudden and traumatic, or insidious and stealthy, but in either case it would certainly have repercussions on every holder of dollars. Among these are ordinary citizens, the international trade sector, and many of the world’s central banks whose reserves are composed about 60 percent of US dollars and Treasury bonds.
Reserve currency status has its advantages, but these same advantages are also its drawbacks. Essentially, reserve currency status permits (obligates) the reserve-currency country to “devalue” its currency by issuing large quantities of its currency and expanding its national debt in order to accommodate that role.
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