Despite the Doubters, It’s Still Top Dollar

Those skeptical about the U.S. dollar remaining the preeminent international reserve currency in the years to come are certainly right to point to the prospect of U.S. budget deficits in excess of $1 trillion a year for as far as the eye can see. They are also right to point to Congressional Budget Office estimates, which suggest that the Obama administration’s budget proposal will lead to a doubling in the U.S. public debt from 41 percent of GDP in 2008 to 82 percent of GDP in 2019. However, in supposing that the dollar will be eclipsed by the Chinese renminbi rather than by the euro, they are very likely to be picking the wrong horse.

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