By Gijsbert Groenewegen – Re-Blogged From http://www.Gold-Eagle.com
Conclusion why the US dollar’s reserve status is at risk
What is at stake is the reserve status of US dollar following:
- Loss of dependency on Saudi oil because of the US becoming an oil net exporter as early as 2019 making the Petro-Dollar contract less of importance.
- The introduction of the Petro-Yuan-Gold contract planned for March 26.
- Trade tariffs that will reduce the flow of US dollars into foreign central banks and as such the recycling of US dollars into financing US deficits.
- The increasing budget and trade deficits that need financing from foreign investors (good for 48% of treasuries ownership), because Americans don’t save with a savings quote of 2.7%, and demanding higher interest rates. Also because the increasing US dollar hedging costs.
- The blowing out of the Libor-OIS spread, the global yardstick for cost of credit and uncertainty, risk in the global credit markets.
- Accelerating inflation, looming higher interest rates and the exhaustion/tapering of the QE measures that will not miss their impact on the tightening credit conditions resulting in the debasement of the currencies and especially the reserve currency.