Posts Tagged ‘trade’

US$ declining as a reserve currency

Tuesday, May 6th, 2008

Financial Cryptography? reports that use of the US$ as a medium of international exchange and as an international sttore of value has declined to about two thirds of what it was four years ago.

Changes in the way people use money are extremely slow. Because money is a store of value, people are profoundly reluctant to change. Such a change is cataclysmically rapid compared to the normally glacial rate of monetary change.

In my own personal experience, US banks and US financial institutions have suffered a cataclysmic decline in competence, honesty, reliability, and efficiency over the past decade or so, particularly in international transactions. Over the past several years I have been repeatedly astonished and disbelieving at basic failures of integrity and inability to perform the ordinary duties of a bank, such as simply making sure that money does indeed get from where it is, to where it is supposed to go, or to make reasonable and realistic assessments of credit worthiness and financial worth. The propensity of the Bush administration to print money, and the fact that the Iraq war is taking longer and costing more than expected is also having a severe impact. I have no idea which of these several causes is the more serious.