World Reserve Currency to replace the US Dollar is not practical

World Reserve Currency to replace the US Dollar is not practical

Ask any of the international derivative brokers and they will tell you that to hit the US Bond markets with a billion US dollars is no big deal.

Consider this Reuters report
“CHICAGO, April 1, 2008 /PRNewswire-FirstCall/ — CME Group, the world’s
largest and most diverse derivatives exchange, today announced first-quarter 2008 volume averaged a record 13.7 million contracts per day, up 32 percent from first-quarter 2007. Total electronic volume increased 41 percent versus the first quarter in 2007 to average a record 11.1 million contracts per day.“

Let’s take the Arabian oil producers for example. People around the world pay the Arabs billions upon billions, and if they were paid in Special Drawing Rights, (the proposed new world reserve currency), where should they park it? How would they convert it efficiently and freely?

With US Dollars, you can do that, park and convert it efficiently and freely at the US markets.

You might say that it has to start sometime. When it starts is not important for it will take at least a hundred years to develop the market for it. In the meantime, the US Dollar will continue to grow from strength to strength.

Unless the US government supports it and it might take less time for the idea to become practical. That is most unlikely to happen; the US government is most unlikely to support it.

The whole world is holding US dollars and when the US prints more US dollars, it is only fair that the newly printed US Dollars be distributed worldwide.

At the moment, the newly printed US dollars go to the US only and not to anyone else. Why would the US give up such a big advantage? It is impossible. Who in the world can force it to? It is the sole super power of the world.

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