Topic: How To Invest

What would be the ramifications of a change from the U.S. dollar as the global reserve currency? I am a long-term investor and follower of your advice and would appreciate your comments.

Article Excerpt

China has recently raised the question of an alternative reserve currency. That’s because it now holds $1.9 trillion in U.S. dollars, and it’s worried that a falling U.S. dollar will erode the value of this holding. At times, China has threatened to sell some of its U.S. dollars. However, dumping even a fraction of its holding would undermine the value of the remainder. More important, China needs to maintain U.S. goodwill because it needs U.S. consumers to continue buying its low-priced manufactured goods, and it wants to avoid the risk of U.S. trade barriers. But the main reason that China will continue to be a big holder of U.S. dollars is that there are no real alternatives. Currently, U.S. dollar-denominated assets account for 64% of the world’s official foreign reserves. The euro is next, at 27%. The British pound accounts for just 4.1% and the Japanese yen makes up only 3.3%. If you look at global foreign-exchange trading, the U.S. dollar is…