Most Americans have no idea what a tremendous advantage the United States possesses by having the primary reserve currency of the world, and most Americans also have no idea how close the U.S. dollar is to losing that status. For the past 40 years, the vast majority of all global trade (including the buying and selling of oil) has been done in U.S. dollars.
That is still the case today, but things are starting to shift. All over the globe, international agreements are being made to move away from the U.S. dollar and to use other currencies in global trade. The second largest economy in the world, China, has been particularly aggressive in seeking to change the existing financial order. As you will see below, China has been running all over the planet making agreements with other nations to start conducting an increasing amount of trade in currencies other than the U.S. dollar. And of course the Chinese are heavily promoting their own currency – the renminbi.
So why is this happening? Well, for one thing, the truth is that the United States is not the only superpower in the world anymore. The Chinese economy is actually projected to become larger than the U.S. economy by 2016, and by some measurements the Chinese economy is already larger. So Chinese leaders have been very open about the fact that they believe that it just doesn’t make sense that the vast majority of all global trade should continue to be conducted in U.S. dollars, especially considering the reckless money printing that the Federal Reserve has been doing. At a time when the status of the U.S. dollar is already slipping, QE3 is deeply undermining confidence in U.S. currency.
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