Sunday , 2 October 2022

U.S. Dollar Losing Its World Dominance (+4K Views)

The U.S. dollar has been the world’s dominant currency since the end of World War II…[with] roughly half of international trade, international loans, and global debt securities being denominated in USD as illustrated in the graphic below.

How Dominant Is the U.S. Dollar?

U.S. Dollar Dominance

How Long Will The U.S. Dollar Reign?

@$Today’s shifting geopolitical and economic landscape presents challenges to the U.S. dollar’s global status. Russia and China have been working towards a closer financial alliance. As of Q1 2020, just 45% of trade between the two nations was denominated in USD, down from 90% in late 2015. @HELP

Another threat to the USD’s dominance is the use of financial sanctions, which limit foreign access to the U.S. financial system. While these sanctions may be effective from a foreign policy perspective, they can also undermine the global role of the USD. The following chart illustrates how Russia has circumvented the U.S. dollar in the face of American sanctions.

Russian Exports Currency Composition

What About Inflation?

…In some respects, higher inflation can be a positive. The U.S. debt to GDP ratio is currently over 100%, and by 2050, it’s expected to reach 195%. With so much debt being issued, sustained inflation can gradually undermine the real value of these liabilities. The tradeoff, of course, is a further weakening of the U.S. dollar.

Editor’s Note:

The above version of the original article by Marcus Lu (visualcapitalist.com) was slightly edited for a faster and easier read.

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3 comments

  1. About the US Dollar. That’s not true. Have you seen the US Dollar chart. It is in breakout mode and is at 97 on the Dollar Index. It’s heading to 150. The Euro is collapsing and money is flowing into the dollar from around the world.

    • Sure Uncle Sam, you can print trillions of Dollars to infinity, run a yearly massive budget deficits and your currency will become stronger. Tell that to Germany of the 1920’s, Venezuela or Zimbabwe. The house that I bought 30 years ago for $54,500 sells at today’s fiat dollars for $600,000, the house that I bought for $411,000 20 years ago, just sold for $1,360,000. What is going to be the value of these properties in US fiat paper money in 10 years?