The dollars dominance and Americas control of the financial system is overThe thing about the doomsayers is that they’re usually correct. At any given moment, I could site a dozen statistics that show ‘this is all bullshit, and can’t possibly work’. Math and all that.
The thing about money is that it’s a modern religion – it is fundamentally faith based. The system continues to work as long as the majority of participants believe it works. And the participants – from Jeff Bezos on down to Jeff Nobody - are substantially motivated by self-interest to continue to believe.
That’s where money crosses into things like geo-politics and one of the big reasons why the US military is so closely tied to the petro-dollar and the US hegemony. You cannot have a ‘global reserve currency’ without a ‘globally dominant’ military and a 'globially dominant financial system'. The three tools of governance – popularity, force, and money.
Just to put things in perspective, the global ‘bitcoin’ market is between 1-2 trillion dollars equivalent. The global ‘gold’ market, is about 10 trillion dollars total (5x bigger). The global ‘equities’ market – stocks – is around 51 trillion dollars (5x bigger again). The ‘shadow banking system’ is estimated at roughly the size of the equities market - $50 billion. The ‘official’ global debt market is about $290 trillion dollars – 6x more than the equities market. Hence, when I die, I want to come back as something powerful.. like the bond market.
There’s about 300 trillion reasons to NOT believe the doomsayers - regardless of if they’re speaking the absolute scientific truth with perfect mathematical certainty. Money is either force or faith. And we’ve collectively decided that the ‘force’ version is right out so we’re left with the Church of the Mighty Dollar and the high priest is Jerome Powell. But just like Boehner said, "A leader without followers is a man on a walk" - so Powell has to try and serve his many masters. That's why the fed fund rate tends to follow the 2-year treasury but is in competion with the 10 year. Its the balance of power between the short term and the long term that he's trying to placate.
the dollar is no longer a safe asset
this will have serious financial consequences for any debtor
Analysis: As sanctions 'weaponize' U.S. dollar, some Treasury buyers could fall back
U.S. sanctions against Russia should hasten a move by some countries to reduce their reliance on the U.S. dollar, which could also soften demand for Treasuries just as the Federal Reserve, the largest holder of U.S. debt, looks to cut its bond holdings.