Relentless, Systematic Tear-Down Of The Dollar Hegemony

Wolf Richter www.testosteronepit.com  www.amazon.com/author/wolfrichter

China’s rapidly aging 1.3 billion folks are all trying to make it in the modern world, and they’ll see to it that their country will have major economic and political heft in the future. So in practically no time, China has become the second largest economy in the world. OK, its credit bubble of strenuously obfuscated magnitude will require a miracle, or else the noise of hot air hissing out of it will be deafening.

One of the long-term goals of consecutive Chinese governments has been to make China number one in just about everything. Including its currency. Displacing the dollar as the world’s reserve currency would be nice, and that’s certainly on the list, but first the yuan must become the most used payment currency. How long would that take, barring the accidental annihilation of the dollar as the Fed yanks on yet another experimental lever with unknown consequences?

Not that other currencies haven’t already tried to trounce the dollar, most notably – don’t laugh – the euro. At the time of its invention, the thinking went that it would be the common currency of the entire European Union, a concept anchored in the treaties that each member state signed. There are 28 of them, now that Croatia has joined the ever expanding group. The next candidates have been cooling their heels for years, namely Iceland, Macedonia, Montenegro, Serbia, and Turkey. OK, Turkey, whose membership has been hung up in discord since 2004, has hit some big speed bumps recently. But hey. A slick regime change, and off we go.

But to the greatest chagrin of the Eurocrats, and quite inexplicably, only 18 of the 28 member states have adopted the sacrosanct currency, and a third of them quickly became casualties of the euro debt crisis and had to be bailed out to keep the Eurozone together.

During the early years of the euro, when euro-exuberance was still drowning out clear thinking in the business community, there was a whiff of certainty that the euro would become the world reserve currency and the number-one payment currency. Oil would soon be priced in euros. The petrodollar hegemony would be dismantled. It would make the eurozone burst with economic advantages and breathtaking growth. The dream turned into a nightmare in 2008. Meanwhile, the ECB’s promise to do “whatever it takes” in an “unlimited” manner has become the duct tape and bailing wire that keeps the Eurozone together. It’s going to be a while before the euro trounces the dollar as payment currency.

So we stop grinning from ear to ear about the demise of the euro and take a closer look at the numbers provided by SWIFT, the NSA-infiltrated, member-owned cooperative that connects over 10,000 banks, securities institutions, corporate customers, and intelligence agencies in 212 countries and territories. If you’ve ever made an international wire transfer, you’ve dealt indirectly with SWIFT, which forwarded copies of your information to the NSA.

And SWIFT tells us that the euro’s share of world payments in January was 33.5%, just below the dollar, undisputed number one, with a share of 38.7%. Alas, undisputed only occasionally. In other months, the euro was number one, for example in January 2013, when 40.1% of world payments were in euros. The dollar was ignominiously in the second place with a share of 33.5%; or in January 2012, when the euro had a share of 44.0%, and the dollar a lowly 29.7%!

Read more at http://investmentwatchblog.com/the-relentless-systematic-tear-down-of-the-dollar-hegemony/#c6qYRmoIr8f8VVDJ.99