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Mad Hedge Fund Trader

Mad Hedge Fund Trader

John Thomas, The Mad Hedge Fund Trader is one of today's most successful Hedge Fund Managers and a 40 year veteran of the financial markets.…

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World Bank Predicts the Demise of the US Dollar by 2025

This week, the World Bank published a report predicting the demise of the US dollar as the major reserve currency by 2025. The transition will be driven by emerging market growth rates of 4.7% a year, compared to only 2.3% for developed countries. Six countries, Brazil, China, India, Indonesia, Russia, and South Korea, will account for half of the world economy by then.

The greenback will be replaced by a multi-currency system made up of the dollar, the euro, and the Chinese renminbi. The evolution will be driven by a sharp rise in third party international trade, direct investment, and mergers and acquisitions. Global multinationals based in the developed world will play a diminishing role on the world stage.

While I agree with the report’s growth assumptions, its conclusions are a mile off. It assumes that Chinese growth continues at its blistering, double digit rates. It won’t. I see Chinese growth peaking out in five years, when its population pyramid starts to invert as a result of the “one child” policy. It also assumes that the Chinese float the renminbi, which they have been so far been loath to do. The rudiments of a domestic Chinese bond market have yet to develop.

As for the Euro, it would not exactly be my first choice for a reserve currency these days. It might not even exist in 15 years, at least in its current form.

Reports like this have been spewing forth from international agencies for at least the last four decades, and I immediately file them in the wastebasket where they belong. By the time the dollar really loses its reserve status, my main concerns in life will be what flavor the Ensure is that day, and whether my Depend’s are getting changed on time.

By. Mad Hedge Fund Trader




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Leave a comment
  • Anonymous on May 26 2011 said:
    Would end of dollar bring a world currency controlled by world bank? What about the endless printing power of Federal Reserve Bank? How will FED manuplate this over next 10 to 15 years. It is a blessing as said in a chinese curse "May you live in interesting times."
  • Anonymous on May 26 2011 said:
    "World Bank Predicts the Demise of the US Dollar by 2025"--- I wouldn't exactly call that statement "going out on a limb". We'll be lucky if the buck makes it another year...without WWIII
  • Anonymous on May 27 2011 said:
    I believe the dollar could last another 14 years, but it may very well last only 14 more days. Who know? It's all a matter of confidence in its store of wealth and that can change on a dime. The Fed and their constant manipulations ensure that the dollar will go the way every fiat currency in history has gone.
  • Anonymous on May 28 2011 said:
    if the dollar changes to the euro in regards to oil prices, that will be a sure fire way that the dollar will tank.at the previous G8 the french leader Nicolas Sarkozy stated almost at the start of it, that the euro should be the currency that leads the oil prices.we have more foreign travelers now to the u.s. in the last few years because the exchange rate is so good.for years china has been buying up bonds and land in this country. our debt is getting out of control and we are not making hard choices which will keep getting us in financial troubles. heck the whole world practically runs on debt.it may not just be the dollar that get's hit hard in the coming years.interesting times indeed.:)
  • Anonymous on May 28 2011 said:
    If you want to know how long the dollar will last, ask Donald Trump. I don't know why I keep referring to that guy, but about certain things he definitely is on the right track.The problem with the dollar is that we now live in a world where large numbers of people no longer trust or respect the United States.You can thank George W. Bush for that, and Mr while Mr Obama is better, he is NOT the man WE AMERICANS need. By that I mean we need somebody who can add and subtract.

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