Almighty Dollar

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Posts tagged deficit contagion

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True state of the world’s de facto reserve currency

By David Galland 10/18/11

Given the role the US dollar plays as the world’s de facto reserve currency — with all major commodities priced in dollars, and dollars forming the bulk of reserves held by foreign central banks — the dismal shape of the US monetary system spells trouble for the global monetary system.

Making matters worse, following the lead of the United States, governments around the world long ago adopted similar fiat monetary systems. You can see the deficit contagion in this next chart. It is worth noting that the dire condition of the United States now leaves it in the same muddy wallow as Europe’s desperate PIIGS.

General Government Gross Debt

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Filed under economy economics politics news US dollar US debt fiat monetary systems reserve currency world's reserve currency global monetary system PIIGS Europe euroozone crisis deficit contagion