Great power conflict puts the dollar’s exorbitant privilege under threat

Financial Times/Zoltan Pozsar/1-20-2023

photograph of many $100,000 stacks of $100 bills“In finance, everything is about marginal flows. These matter the most for the largest marginal borrower — the US Treasury. If less trade is invoiced in US dollars and there is a dwindling recycling of dollar surpluses into traditional reserve assets such as Treasuries, the “exorbitant privilege” that the dollar holds as the international reserve currency could be under assault.”

USAGOLD note: Zoltan Pozsar, the head of short-term rate strategy at Credit Suisse, believes that China’s deepening ties with OPEC+ and BRICs+ will alter the “existing world order” and “eventually lead to ‘one world, two [monetary] systems.’” Investors, he says, will have to discount new risks. If he is correct that the dollar’s exorbitant privilege could be undermined, it will carry important implications for gold.

This entry was posted in Today's top gold news and opinion. Bookmark the permalink.