Like a script out of a Rocky movie, the Dollar is still the undisputed heavyweight champion of the world’s currency. After being knocked down by the Yen ad the Rubble some time ago, the Dollar has come back and regained its supremacy. A reversal of fortunes as the tables have turned with Russia’s economic troubles piling up along with the current conditions in Japan and China and the rest of the world under the Covid-19 thumb, have given the Dollar one last championship belt.
When production is more than need, the value of a product decreases as we know, but the Dollar under the safe harbor of the U.S. treasury bills and bonds continues its strong run in the global market as the U.S. shows the way to the other pandemic ravaged country on how to revive the economy. U.S. companies are, in effect, being encouraged to fire employees so those employees can receive extended unemployment benefits (although companies are also being rewarded if they promise to bring those people back afterward.) Then those ex-employees need to find health insurance (or go on to COBRA where they have to shoulder their entire insurance bill, which in many cases their companies were taking care of part of before).
America has an exorbitant privilege, which means that global business transactions are done in U.S. dollars. One of the key factors that are not being reported is the fact gold reserves have been decreasing here in the United States while Russia, China, and Japan have been accumulating large quantities of Gold Bullion.
All this in hopes of restoring the credibility of their currency and break away from the chokehold over their economic troubles. In reality to the reported news of the strength and resurgence of the Dollar is the fact Asia’s and Europe’s financial difficulties, as well as the power brokers of International Banking for the present moment, have ordained that the Dollar’s reign remains.
Its status as the dominant world currency was cemented by the perception of international investors, our own Federal Reserve, and many major foreign central banks that the U.S. financial markets are a safe haven. That perception has ostensibly driven by a significant portion of U.S. capital inflows, which have surged in the past two decades. The beneficiaries of all this capital flow are, the 1%.