Loading ...My Last Dollar Chart For Now
The definition of a bear market, at it’s simplest – lower highs and lower lows. In other words – an ongoing down trend. Since the 1970’s that’s exactly what we’ve had from the Dollar. Every reserve currency decays and loses it’s reserve status. The dollar is no different.
A Very Convincing Chart Northstar !
So was your ‘boink’ 😉
I still cannot figure out what replaces the dollar as a reserve currency. In the foreign exchange market, the dollar rules. Ninety percent of forex trading involves the U.S. dollar. Euros are a distant second at 31%. Yen is 21%. China, the world’s 2nd largest economy, (maybe 1st) is at 4%. As of the third quarter of 2018, the dollar makes up nearly 62 percent of all known central bank foreign exchange reserves. Around $580 billion in U.S. bills are used outside the country. That’s 65 percent of all paper dollars. That includes 75 percent of $100 bills, 55 percent of $50 bills, and 60 percent of $20 bills.
Please explain what replaces the dollar in the near future, less than 5 years.
In my universe, nothing.
It’s not really ‘dollar bills’ it’s digits in a database, but that doesn’t matter much. I’m not sure if you read the link in my earlier post, but here’s an excerpt…
China: As part of its ambitious Belt and Road Initiative, China is planning to introduce swap facilities in participating countries to promote the use of the yuan. Moreover, the country is actively pushing for a free-trade agreement called the Regional Comprehensive Economic Partnership (RCEP), which will include the countries of Southeast Asia. The trade pact could easily replace the Trans-Pacific Partnership (TPP), the proposed multi-national trade deal which was torn up by US President Donald Trump shortly after he took office. RCEP includes 16 country signatories and the potential pact is expected to form a union of nearly 3.4 billion people based on a combined $49.5 trillion economy, which accounts for nearly 40 percent of the world’s GDP.
India: Ranked the world’s sixth-largest economy, India is one of the biggest merchandise importers. It’s not surprising that the country is directly affected by most global geopolitical conflicts and is significantly impacted by sanctions applied to its trading partners.
Earlier this year, Delhi switched to ruble payments on supplies of Russian S-400 air-defense systems as a result of US economic penalties introduced against Moscow. The country also had to switch to the rupee in purchases of Iranian crude after Washington reinstituted sanctions against Tehran. In December, India and the United Arab Emirates sealed a currency-swap agreement to boost trade and investment without the involvement of a third currency.
Taking into account that India is the third-largest country by purchasing power parity, steps of this kind could considerably diminish the role of the greenback in global trading.
Russia: President Vladimir Putin said the US is “making a colossal strategic mistake” by “undermining confidence in the dollar.”Putin has never called for restricting dollar transactions or banning the use of US currency. However, Russian Finance Minister Anton Siluanov said earlier this year that the country had to dump its holdings of US Treasuries in favor of more secure assets, such as the ruble, the euro, and precious metals.
The country has already taken several steps towards de-dollarizing the economy due to the constantly growing burden of sanctions that have been introduced since 2014 over a number of issues. Russia has developed a national payment system as an alternative to SWIFT, Visa and Mastercard after the US threatened tougher new sanctions that would target Russia’s financial system.
So far, Moscow has managed to partially phase out the greenback from its exports, signing currency-swap agreements with a number of countries including China, India and Iran. Russia has recently proposed using the euro instead of the US dollar in trade with the European Union.
Once a top-10 holder of US sovereign debt, Russia has all but eliminated its holdings of US Treasuries. Moscow has used the money to boost the nation’s foreign reserves and to build up its gold stockpile to stabilize the ruble.
Lets be clear, this isn’t going to happen overnight. I’m not calling for a dollar collapse, just a continued erosion of its global significance. That is EXACTLY what the chart above is showing. Lower highs and lower lows. The dollar is in a decaying downtrend unless it breaks above 120 in this cycle (which is heading to its cyclical low in 2024).
Interesting points, thx for sharing Northstar. I think the dollars demise will continue to come slowly, but it will occur. The question we all care about is when. I think there are many pieces to the puzzle all around us … detailing its progression … we just need to remain patient.
I think the Dollar is here to stay (certainly for our lifetimes), but the decreasing wavelength of those cycles means only one thing from a scientific standpoint – decreasing energy. That is explained by the Dollars reducing use in global trade. Other currencies are remaining stronger vis a vis the Dollar at each cyclical peak. If that weren’t the case, we’d be seeing cyclical peaks making new highs not new lows. It really is that simple.