The US dollar is the world’s currency. The American economy benefits from this dominance in ways large and small. China’s biggest wet dream is dislodging the dollar from its pedestal.
We fund our government with tax revenue and the sale of US bonds (Treasury debt), as well as other less substantial revenue streams. The US has a fiat currency. In other words, its value in the world is based on people’s faith it will remain a stable currency. That’s it, nothing else. Simply a faith that the US will continue operating as a successful state.
If anyone has been watching the Russian bond market like I have, it’s clear that Putin’s disastrous governance has flushed his bond market down the toilet. In Russia’s case, this is a big part of its plunge into economic darkness. The US is not Russia, but Putin’s bond market turmoil is still valuable as a cautionary tale.
For years, China, Japan, Europe, Saudi…
