The latest foreign policy issue confronting the U.S. has nothing to do with terrorism, land or military action...but it could be just as urgent. There is a move afoot courtesy of China and Russia to undermine the American dollar by encouraging more nations to use their own currencies in international trading. This directly threatens the dollar's status as the world's top reserve currency. The governor of the Russian Central Bank is set to visit Beijing next week to discuss a deal involving a swap of their native currencies. Likewise, China and South Korea recently announced plans to begin direct trading in their national currencies.
America's fragile economy and growing national debt have been big contributors to the anti-dollar movement overseas. "Given the fact the U.S. debt has hit record highs, Russia and China have called on the world to move toward a super-sovereign reserve currency, or move away from trade in U.S. dollars," says ElizabethMacDonald, analyst with Fox Business Network. She tells KTRH that the effects of this move are already apparent. "The U.S. dollar has drifted in terms of currency trading to a 15-year low," says MacDonald. "And what that tells me is that more countries are willing to use other currencies to transact business."
What the downfall of the dollar would mean here at home is massive inflation and possibly worse, according to MacDonald. "If the dollar loses its status as the world's most reliable currency, the U.S. will lose the right to print money to pay its debt--and it will be forced to pay that debt," she says. That current U.S. debt is over $17.5 trillion and growing by the second. That is why MacDonald thinks people should be paying more attention to this situation. "This has kind of been on the back burner, but it should be on the front burner," she says. "Whether or not the U.S. is dying out, and the U.S. currency is in danger of losing its preeminent status in the world."