When - not if - the dollar loses this special privilege, countries holding dollars in reserve will flood the market with them, buying up other currencies, gold, real estate, oil, and other tangible assets. It's basic economic law: mega surplus in supply added to plummeting demand equals a worthless product. So when prices go up, it won't be because of any conscious choice by manufacturers and shopkeepers, et al. It will be a fundamental weakening of the currency used to procure the resources needed to produce their products, forcing them to raise prices for the consumer just to be able to turn a profit.
Government will do what government always does, being utterly worthless and destructively incompetent: it will attack the symptom of inflation, the direct result of their monetary policies - rising prices - not the disease - the surplus in supply. Since only government and its cronies benefit from inflation, they fear deflation as the vampire fears the sun. It bankrupts the powerful and empowers the people. Regardless, when the dollar loses reserve currency status, the gates of hell will be thrown open for those still dependent on it. Your only hedge against this inevitable outcome is to reorder your life so that you don't need cash to survive.
- CNBC -
The man who leads one of China’s top rating agencies says the greenback’s status as the world’s reserve currency is set to wane as the world’s most powerful policy makers convene to examine the implication of S&P’s decision to strip the United States of its triple “A” rating.
In comments emailed to CNBC, Guan Jianzhong, chairman of Dagong Global Credit Rating, said the currency is “gradually discarded by the world,” and the “process will be irreversible.”
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