For decades, the US dollar (#usd ) holding its status as the global reserve currency has always been seen as a "cutthroat privilege" – a tremendous advantage for the US economy. However, a recent analysis offers a completely different perspective: could this "privilege" actually be a "cutthroat curse" that is gradually weakening America?
Shopping with paper money, in exchange for real assets
To maintain its role as the reserve currency, the US is forced to print money and export it abroad to purchase goods and services. This inevitably leads to a prolonged trade deficit, weakening domestic production. This money then returns in the form of investments, allowing other countries, notably China, to acquire real assets of the US, from companies, real estate to production assets.
While the US sinks into debt and deficits, trade surplus countries are becoming wealthier by owning valuable assets. In the long run, the US risks being left with only "paper money", while other countries own real assets, creating a severe imbalance. #America
Benefits obscure potential risks
The article also points out that the superficial benefits of the USD's status, such as low borrowing costs or the ability to influence the global financial system, are not sustainable. The US economy is gradually becoming "hollow" due to prolonged deficits, and true strength cannot come from printing money forever. Maintaining this position has allowed the US to live in luxury, but this is a strategy that cannot last and may become the long-term cause of this economy's decline.
Will there come a day when the position of the USD is shaken, and America will face the consequences of this "curse"? This question is becoming increasingly urgent in the context of the current volatile global economy. #anhbacong
