On outrunning the bear…

Two campers are walking through the forest when they suddenly encounter a grizzly bear. The bear rears up on his hind legs and lets out a terrifying roar.

Both campers are frozen in their tracks.

The first camper whispers, “I’m sure glad I wore my running shoes today.”

“It doesn’t matter what kind of shoes you’re wearing, you’re not gonna outrun that bear,” replies the second.

“I don’t have to outrun the bear, I just have to outrun YOU,” he answers.

Does that same logic apply here?

The dollar is getting stronger compared to other world currencies, according to the Wall Street Journal. It was not so very long ago that the chattering classes were prophesying the end of the dollar’s role as the global reserve currency. In the FT, an economist worried, “The US will unavoidably account for a declining fraction of global gross domestic product, limiting its ability to supply safe and liquid assets on the scale required.” The WSJ published a piece entitled “Why the Dollar’s Reign Is Near an End.”

But those eulogizing America’s currency spoke too soon. Caught up in their narrative of decline, our lose-lipped commentariat made the mistake of speaking with certainty about something as unpredictable as global financial markets. As the global economic crisis recedes everywhere except snake bitten Europe, the battered greenback is looking relatively good.

We may be slow and decrepit with a debauched currency but we don’t have to outrun the bear. We only need outrun the weaker, slower and even more debauched Euro, Yen, etc.

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2 Responses to On outrunning the bear…

  1. RJ says:

    Could be but I read yesterday that Iran is gonna start selling oil in other currency come mid March. If that Happens who knows what will happen. Reuters reported end of Jan that Iran oil exports are higher than ever since sanctions, tankers are keeping their oil flowing to china, india, and japan.

    I suspect that the desired removal of USD as reserve currency for oil sales/purchases is well on track and may very well be the beginning of the end game.

  2. notamobster says:

    Short run, we can sacrifice our “friends” to the bear, but long term, the bear is more like Jason Voorhies. It doesn’t matter how far or fast you run. He will always catch up. The piper will be paid.

    Add to that, the unholy alliance of BRICS nations who are actively working to undermine the USD’s status and the future doesn’t look so bright. This author is taking the short bus view of the long road. He needs to look a bit further, toward the horizon.