It is difficult for those who don't follow the international financial markets in minute detail to really understand the immense value of enjoying a reserve currency status as does the United States Dollar.
This status is predicated on the military might of the US Armerd forces (as contract enforcement of last resort), the depth of the US financial markets (that which makes the contracts denominated in dollars most desirable) and the stability of the US political and legal systems (that which makes enforcement of contracts most likely).
It is very difficult to say which of these is most important, but it is safe to say that all three support systems are paramount.
There are currently two very sophisticated and well informed financial points of view on this.
One points out that the euro-dollar market at four times the US domestic dollar market is so vast that no matter what happens the US dollar reserve position is impregnable.
The other points out that despite the enormous dollar pool formed over the last 50 years, most of that is in dollar denominated debt and it is no longer clear what happens when that debt defaults. Going forwards much of the commodity contracts being forged between China, Russia, Saudi Arabia, and other commodity producers in South America and Africa snd Asia are already cutting the dollar out because they see the dollar as an increasingly unstable currency that has been weaponized by an unstable US political system.
This issue of what happens to the dollar is certainly the most important factor in what happens to global financial markets going fowards. And the most important factor in determing what happens to the stability of the wealth of any and every investor.
What is happening right now in the US with the debt ceiling is a case in point. The idea that defaulting on the US debt is now a viable political tactic shows how inecredibly vulnerable the US dollar has become as the US politcal system implodes. No matter how this resolves, the entire financial world is on notice the the US is unstable.
What that means over time is that paper assets denominated in US dollars will become increasingly unstable and Hard Assets that are denominated across the world in every conceivbale currency because they have Intrinsic Value will become commensurately valuable.
And if there is a default, the fact that it is likely to be resolved after a brief period of chaos will in no way detract from the argument of those who are currently working hard to undermine the dollar dominance.
Take that into account. Protect yourself.
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