What is the dollar anchored to now?
In fact, while everyone is paying attention to the US economic data recently, the traditional financial circle is also discussing another proposition about the US dollar - what is the current anchor of the US dollar?
The original US dollar gained global consensus because it was anchored to gold under the Bretton Woods system in 1944, but in 1973, after only 29 years, Americans found that the Bretton Woods system was a bit of a bouncy rhythm, and then the US dollar changed its anchor.
In order to continue to strengthen the dollar's dominance in the world, the United States supported the OPEC oil organization and directed and acted in 1974 to make OPEC and the US dollar reach a settlement agreement. Since then, the US dollar has once again anchored to "black gold" oil.
In fact, from a macro perspective, the stability of the current anchoring of the US dollar has deteriorated. It has been 50 years since the US dollar was anchored to crude oil. With the development of the times and the changes in the world pattern, crude oil is no longer simply controlled by the United States. Then the dominance of the US dollar anchoring crude oil has declined, the diversification of settlement methods, and the emergence of digital currencies are all weakening the dominance of the US dollar.
Now, when a voice gradually emerges in the global consensus, the US dollar is de-anchored from crude oil, then who will the US dollar anchor next? Although the US dollar is not explicitly anchored to crude oil in essence, it was completed through OPEC in the middle, which also gave the US dollar more variable opportunities.
Through the recent actions of the United States, under the state of continued high interest rates, it is not difficult to find that the US dollar has a tendency to anchor its own national debt. The US dollar and US debt are mutually beneficial, so the US dollar anchoring US debt will create a simple stability in the internal cycle.
However, the premise is that this anchoring is actually consuming its own global credibility. Once the US dollar anchors US debt, it means that US debt is not limited to issuance, so the US dollar can also. More US debts need to be paid by the US allies, and more liquid US dollars are also paying for the world. After all, most of the mainstream financial markets and risk markets currently use the US dollar as the main liquidity, which is what I said before. The US dollar liquidity reservoir.
Therefore, the United States currently needs to convince the world that its U.S. debt is the first choice for combating risks, and let more people believe that the U.S. dollar is the currency with the most stable exchange rate, and then let the world pay for it. To put it bluntly, rather than saying that the dollar is anchored to U.S. debt, it is better to say that the United States has kidnapped the world as its own anchoring basis.
The premise of doing so must be that there must be no voice in the world that can compete with the United States. Otherwise, once there are loopholes in this system and a closed loop cannot be formed, the collapse of the US dollar system may be the worst case scenario, and the best case scenario is that the US dollar will be de-anchored and slowly move to the second line or even out of the mainstream monetary system. However, from the perspective of the latter, the time cycle may be very long.
The above is a discussion, please do not exaggerate.