Another attack on the dollar from the People’s Bank of China. The PBC has repeated its call for the world to cut its reliance on a small set of reserve currencies(Read: the dollar).
In its annual financial stability report, the PBC said it saw serious defects in one currency dominating the global monetary system.
If this mumbling ever turns into a panic rush out of the dollar, the price inflation that would hit the U.S. would be dramatic.
Of course, the maintenance of the US dollar as the world reserve currency doesn't eliminate the inflation problem, it merely exports it to the world.
ReplyDeleteIf the US dollar loses it's reserve status, the US government would no longer be able to have the rest of the world pick up the tab for their policies.
Keeping the inflation at home would hopefully put some domestic political pressure on the US pro-inflation lobby. It's hard to see how serious economic reform in the US could come about by any other method.