Friday, January 19, 2018

First Shots Fired In The Currency Wars - 3


Fig 1  Trends In Sync
Since 2009 this series, in addition to discussing the history of the "petrodollar," has also considered the future of the U.S. version of the petrodollar (First Shots Fired In The Currency Wars - 2).

It is not surprising that the world's petrodollar, historically, has been the U.S. Dollar ... primarily or in significant part because of the reputation of the U.S.A. in the world community.

A Gallup poll, then, is an indicator that the petrodollar situation is in flux:
"One year into Donald Trump's presidency, the image of U.S. leadership is weaker worldwide than it was under his two predecessors. Median approval
Fig. 2 Trends in Sync
of U.S. leadership across 134 countries and areas stands at a new low of 30%, according to a new Gallup report.

The most recent approval rating, based on Gallup World Poll surveys conducted between March and November last year, is down 18 percentage points from the 48% approval rating in the last year of President Barack Obama's administration, and is four points lower than the previous low of 34% in the last year of President George W. Bush's administration."
(World's Approval of U.S. Leadership Drops to New Low). As goes the reputation so goes the dollar's reputation, and vice versa:
"Just days after China's (denied) threat to slow/stop buying US Treasuries, and just days before the launch of China's petro-yuan futures contract, Germany's central bank confirmed it would include China's Renminbi in its reserves."
(As Petro-Yuan Looms, Bundesbank Adds Renminbi To Currency Reserves). "Make America great again" means something else it would seem.

Incidentally, three petrodollar adversaries ranked top notch in that Gallop Poll, indicating that Trumpism is not working:
"Germany has replaced the U.S. as the top-rated global power in the world. The U.S. is now on nearly even footing with China (31%) and barely more popular than Russia (27%) ..."
(ibid, Gallup Poll). These are sad times for the U.S.A. (whether the 62 some odd million voters who made it so know it or not).

The next post in this series is here, the previous post in this series is here.



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