For decades, the U.S. economy was so dominant compared to the rest of the world that nobody really even challenged the status of the U.S. dollar as the reserve currency of the world. But now that U.S. government debt has been downgraded, the U.S. dollar is showing significant weakness and the U.S. economy continues to crumble, the rest of the world is questioning whether the U.S. dollar should be allowed to continue to have such a privileged position in the global marketplace. Politicians all over the world are now openly calling for a new global currency to replace the U.S. dollar in international trade. In fact, we are already seeing a shift away from the dollar in many areas of the globe. A decade ago, the U.S. dollar made up approximately 70% of all foreign exchange reserves around the world. Today, that figure is down to about 60%, and it continues to fall. As the debt problems of the U.S. government get even deeper, and as the U.S. dollar loses even more strength, the calls for a truly global currency are going to grow even louder.
Right now, the global financial system is still based on the U.S. dollar to a very large degree. But dissatisfaction with the status quo is growing around the world. Many are blaming the United States for the massive financial problems that we have had in recent years.