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The American dollar has long reigned as easily the largest percentage of the global currency supply.
But its current percentage lead of 62 percent has been shrinking. Other currencies like the Japanese yen, the Swiss franc and the Chinese yuan have been making gains. One credible authority predicted that the dollar's defrocking may occur in five to ten years.
The American budget deficit ($1 trillion plus annually over recent years) makes for dire consequences if the United States loses its premier standing in world currency reserves. Dick Bove, vice president of equity research at Rafferty Capital Markets, firmly warned, "If the dollar loses status as the world's most reliable currency the United States will lose the right to print money to pay its debt. It will be forced to pay this debt" (quoted in "Is the Dollar Dying? Why US Currency Is in Danger," CNBC.com, Feb. 14).
Bove went on to say that the U.S. Congress and the president "are demonstrating a total lack of fiscal credibility."
Other voices are also sounding the alarm, but hopes for a continuous American economic recovery and recent stock market highs have muted these warnings somewhat. Yet in the long term, other countries are seeking ways to diversify away from dependence on the U.S. dollar. Fairly recent quantitative easing (or money printing) to the tune of $3 trillion foments worry.
Michael Pento, president of Pento Portfolio Strategies, strongly stated: "It's a thousand times more important than a nuclear bomb being tested by North Korea . . . that we keep the dollar as the world's reserve currency, and yet we are doing everything to abuse that status" (ibid.).
Still one might counter: The American housing market looks much more encouraging, consumer spending is up and unemployment is gradually dropping. Yet Liam Halligan's column in The Telegraph peers deeper into analyzing U.S. data, stating:
"America's nominal GDP grew $140bn during the first three months of 2013. Over the same period, the US Treasury issued $340bn of new [sovereign] debt. Had that not happened, America's national income would have shrunk $200bn over the first quarter" ("Lack of Genuine Reform Is Sowing Seeds of Next Crisis," June 1).
The shocking potential of U.S. financial woes are but one symptom of America's national decline. To understand much more, read the online Bible study aid The United States and Britain in Bible Prophecy . (Sources: CNBC.com, The Telegraph [London].)
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Keywords: dollar national debt U.S. economy deficit spending global currency printing money
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