11th March 2022 > > USD Hegemony.

tl;dr

The end of USD Hegemony, apparently as posited by a crypto critic.

Market Snap (at time of writing)

Market Wrap

I am not sure why treasuries moved so much on inflation data out of the US was bang on expectations, and all other risk assets are unmoved. Any suggestions, anyone?

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Curious Cryptos’ Commentary – the end of Dollar hegemony, apparently

Jim Rogers co-founded the Quantum Fund with George Soros, the man who famously nearly broke the Bank of England on 16th September 1992, now known to some as Black Wednesday but arguably a better title is White Wednesday given the economic stimulus provided by the events of that day.

Jim has been musing on USD and its place in the global financial system. I don’t agree with much of what he says, but it is an interesting point of view, and the CCC will always be a broad church.

To be clear, Jim has always been a supporter of USD:

“I own U.S. dollars partly because when turmoil comes, people look for a safe haven. They think the U.S. dollar is a safe haven for historic reasons”.

However, he has become concerned by the response of the US authorities to Russia’s murderous intent towards Ukrainian citizens:

“But what is happening with the U.S. dollar now is the end of the U.S. dollar because an international currency is supposed to be neutral but in Washington, they are now changing the rules.”

He goes on to explain:

“Now if Washington does not like you, they put sanctions on you and you cannot use U.S. dollars”.

I think he is on shaky moral ground there.

I’m not sure many people oppose the confiscation of the assets of drug dealers when caught. Taking Chelsea F.C. away from Abramovich is orders of magnitude higher, but the principle is the same.

This pales into insignificance when compared to China’s holding of US treasuries, which totals over $1 TRILLION. Given the huge trade flows in and out of China largely priced in USD, I am not sure it is even possible to contemplate sanctioning China if their intent towards Taiwan is like that of Putin’s towards Ukraine.

…

The topic then turns to cryptos where Jim is scathing towards government:

“I do not like it but that is the way governments are, and I just suspect that they will either tax it or regulate it or outlaw it or something because they do not want to lose control.”

He says he regrets not investing in cryptos (hindsight is a wonderful thing) but he remains convinced that BTC will be “banned”, which just goes to show that despite his undoubted financial acumen, the gaps in his crypto knowledge remain scarily huge.