Recent news about China selling U.S. debt stoked fear in some parts of the internet, with rising worries about an organized flight from the dollar by the countries in the BRICS group. As I explained on Tuesday, the Chinese sell-off was nowhere near enough to cause any disturbances in the U.S. debt market, nor was it intended to do that.
Nevertheless, it is a fact that the dollar is slowly dwindling as a central bank reserve currency. It is also a fact that the BRICS group, which is a growing formation of dollar-skeptic nations, is developing a new framework for trade that is independent of the dollar. Therefore, we can safely predict that, at some point in the future, there will be turmoil in the market for U.S. government debt.
Today, there are no signs of such turmoil, but the market continues to send subtle signals that its confidence in the U.S. government is wearing thin. These signals are embedded in the inverted…
