Friday, September 19, 2003

The Coming Dollar Crisis

I just keep finding these great articles that represent my view almost to a tee. Since Richard can write much better than I, here's the excellent information, charts, and tables in his eloquent words: - The One-Stop Shop for the Bear Case - Richard Duncan:

Asia, its reserves and the coming dollar crisis

Richard Duncan a former Salomon banker, and World Bank staffer and author of The Dollar Crisis: Causes, Consequences, Cures (John Wiley & Sons, 2003).

During the 30 years since the breakdown of the Bretton Woods International Monetary System, the global economy has been flooded with dollar liquidity. International reserves are one of the best measures of that liquidity. During the quasi-gold standard Bretton Woods era, international reserves expanded only slowly. For example, total international reserves increased by only 55% during the 20 years between 1949 and 1969, the year Bretton Woods began to come under strain. Since 1969, total international reserves have surged by more than 2000%. This explosion of reserve assets has been one of the most significant economic events of the last 50 years.

Today, Asian central banks hold approximately $1.5 trillion in US dollar-denominated reserve assets. Most of the world's international reserves come into existence as a result of the United States current account deficit. That deficit is now $1 million a minute. Last year, it amounted to $503 billion or roughly 2% of global GDP.Full Article - Richard Duncan:

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