It’s one thing when fringe analysts or even heterodox economists suggest the dollar’s role as the global reserve currency may be in jeopardy. It’s another thing entirely when the entity suggesting a global monetary reset is JPMorgan. But that’s exactly what this article does.
Written by a top research analyst in JPMorgan’s commodity and foreign-exchange trading division, the article offers a thoughtful history of the rise and fall of global reserve currencies over the past 100 years. It also points out that U.K. pounds sterling were in steady decline as a reserve currency long before the Bretton Woods agreement of 1944 enshrined the U.S. dollar as the dominant form of reserve (along with gold).
The suggestion is that the dollar may already be in terminal decline; it’s just that we don’t know the year because these transitions can take years to play out and the early signs are not always obvious.
We have just passed the 105th anniversary of the creation of the Federal Reserve and the 75th anniversary of the original Bretton Woods agreement. Those are fairly long runs in the history of reserve currencies.
The article issues its warning about the dollar and then suggests alternatives such as other strong reserve currencies (such as the euro) and, of course, gold.
Diversification is a good idea for any portfolio at any time. It may be an especially valuable strategy as the reign of one reserve currency nears an end and the replacement is not yet on the horizon.
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