Why The U.S. Dollar’s Reserve Currency Status Is Safe
<p>The net effect is that demand for USD and USD denominated assets are significantly boosted by reserve currency status — if the reserve currency is the world’s de facto store of value then sovereign bonds issued by the owner of that reserve currency become the world’s de facto risk free asset. This allows for a lot more dollars to be printed before being hit with significant inflation as well as a lot more USD debt (a.k.a. U.S. Treasuries) to be issued before being hit with higher yields. A major reason that our economy is still looking good after a decade plus of super easy monetary policy and significant money printing is precisely because of the U.S. dollar’s reserve currency status.</p>
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