When a reporter once asked Mark Twain about the rumor of his death, or if Twain was on his deathbed, Twain famously responded “the report of my death has been greatly exaggerated.” Well, the same can be said about Uncle Sam’s U.S. dollar.
Just when the last shovel of dirt was to be thrown on the greenback’s grave, a hand is raised and a few faint sounds are heard that say “not so fast.”
In 2009, the Head of the Central Bank of China called for the U.S. dollar to be replaced. Just think about it for a moment, the head of the bank facilitating the growth of the economic engine which would lead the world into the 21st century must know something.
It sounded like the currency of a new world order.
Yet, a short time later, those supposedly in the know at CNBC and Bloomberg dismissed the one-world currency with the simple concept of the replacement of the dollar by the euro.
After all, the stability of Europe and the success engendered by the euro was, of course, indisputable.
Indeed, if you’re on CNBC or Bloomberg you must be in the know, and even the gold bugs which strangely enough I happen to be one of, were predicting the demise of the dollar (which I disagreed with.)
But arguably, the purchasing power of the dollar has been dramatically eroded ever since that fateful day in 1913. (I’ll leave it to you to discover what actually happened.) Surely, with all this drama, the death of the dollar was, or is, imminent.
However, let it be known that George Washington, Andrew Jackson, and Ben Franklin aren’t going quietly into the night. Also consider that Zimbabwe, which is famous for their million, billion, and trillion dollar bills, has a black market underground economy which is driven by the demand for U.S. dollars.
In addition, the devaluation of the Venezuelan bolívar has reverberated across the sea to Egypt, where the Muslim Brotherhood chaos is taking its toll on the Egyptian pound. If they devalue in Venezuela, they can also devalue in Egypt or so the thinking goes.
Therefore, the rush is definitely on to convert pounds into dollars and preserve wealth. Unfortunately, the Egyptians are discovering that U.S. dollars are in very short supply. And now, in 2013, the Chinese tune has changed.
Their current mantra: “the dollar will remain the world’s dominant reserve currency and might even strengthen over time.”
Yes, the gold bugs are still the gold bugs but perhaps most important, the drug dealers and cartels of the world prefer the crisp, new $100 Ben Franklins.
Normal demand for U.S. dollars is increasing each and every day, much to the chagrin of Ben Bernanke.
In my book, that makes Mark Twain’s 1896 comment very appropriate today: “The report of the death of the U.S. dollar has been greatly exaggerated.”