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US no longer the reserve currency?

Hello @cullen-roche,

I wondered what would happen to the US reserve if it no longer was the reserve currency?

I was recently listening to a podcast, the guest being Luke Gromen. He said if the US was no longer the reserve currency and we moved to SDR, there would be a big devaluation of the dollar because foreign holders of dollars and US asset will no longer want it. And this will cause inflation of 10-20%.

This seems quite extreme to me, I wondered what your thoughts were?

Kind regards,

Jon

Hi @jon,

Luke is smart, but I think he has a tendency to lean a little too much in the "dollar will crash" side of things. He basically thinks the USA is bankrupt already and that the Fed is the only thing keeping the party going. I find that a little extreme.

You might enjoy these two pieces on reserve currency status. In short, it isn't something you "lose". It's more of a relative thing so the USA's dominance might decline, but it will be a reserve currency for a very long time.

How Much Longer Will the Dollar Remain the Reserve Currency of the World?

Reserve Currency Status Must be Earned

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