Squandering The Reserve Currency Status

This past month, a milestone was passed that went largely un-noticed. China exported more goods in Remnimbi then in US dollars for the first time in modern history. This means that more and more countries are willing to do business with China. 

When you consider what it means to be financially responsible, a few things come to mind. 

1. You pay your bills
2. You follow a set of well established rules
3. You earn more than you spend

Countries that don’t follow these principles get punished internationally. You see their currencies fall in value. Countries that can’t be trusted don’t have the privilege of borrowing in the own currency. They must borrow against a financial standard that is going to be predictable. 

But when you are the world’s reserve currency, you can get away with breaking a bunch of these rules without much consequence. The international community will give you a pass. 

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Host: Victor Menasce

email: podcast@victorjm.com