Will Dollar Assets Be Caught In The Undertow?
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The Russians and Chinese are also keen on a “de-dollarization” of the global economy, and intend to move towards trade between themselves in rubles and yuan. Their good buddy Iran has stepped away from oil trades denominated in dollars. If the petroleum market shifts away from our currency, it will remove an important prop for not just the dollar, but for the US government’s debt. (Although US oil imports have diminished with the success of fracking, oil exporting nations receive dollars from whomever they export to, and those dollars must be recycled.) As the US’s global military commitment shrinks, so too will the world’s appetite for dollars and dollar-denominated assets, which implies an “adjustment” in US financial asset prices that could prove quite painful.
The Russians and Chinese are also keen on a “de-dollarization” of the global economy, and intend to move towards trade between themselves in rubles and yuan. Their good buddy Iran has stepped away from oil trades denominated in dollars. If the petroleum market shifts away from our currency, it will remove an important prop for not just the dollar, but for the US government’s debt. (Although US oil imports have diminished with the success of fracking, oil exporting nations receive dollars from whomever they export to, and those dollars must be recycled.) As the US’s global military commitment shrinks, so too will the world’s appetite for dollars and dollar-denominated assets, which implies an “adjustment” in US financial asset prices that could prove quite painful.
