Image Credits: peasap, Flickr
At present, US dollar accounts for roughly 61% of the world’s foreign exchange reserves.
It’s still a safe bet for most, not because the currency is actually strong, but because so many others are already so reliant on it.
Between those with reserves in and pegs to the US dollar, many countries have given their allegiance, and now have a vested interest in the health of the currency.
Due to this common interest, a sort of unofficial, involuntary alliance has been formed between them all.
Together, they’re all playing along, pretending that everything is fine. If the dollar collapses, they’re all screwed, so they’ve got to get each other’s backs.
From the throne of the world’s reserve currency, the Federal Reserve, with the power to print the US dollar, feels dangerously omnipotent.
They can get away with just about anything. For now.
The central bankers get to print dollars and spend them at current prices, before the stuff hits the wider market and diminishes its overall value.