Has the Dollar Hegemony's Tiping Point Been Passed?

According to the Financial times the Euro accounts for 26.4% of foreign reserve holdings, up 2% from 24.4% just six months ago. However there are now more Euros in physical circulation than Dollars and most tellingly more international bonds are issed in Euros than Dollars. As a special kick in the pants there's this: "But the Commission report cited empirical studies highlighting the increasing “gravitational pull” of the euro on foreign exchange markets, which was becoming “more important for certain emerging market currencies, notably in South America". When South America, of all places, is moving off the dollar, you've got problems. This is America's Monroe Doctrine imperial backwater.

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The US Dollar: The Long Farewell?

It's just straws in the wind so far. India's Ministry of Culture announces that foreign tourists can no longer pay in dollars when visiting the Taj Mahal and other heritage sites; they have to pay in good, hard rupees. Iran and Venezuela call for a joint OPEC statement on the weak U.S. dollar, and Saudi Arabian Foreign Affairs Minister Saud Al-Faisal warns that any public reference to the U.S. dollar's problems could cause the troubled currency to "collapse". Rap star Jay-Z's latest video shows our hero flashing a wad of euros, not dollars. Only straws in the wind, but all in the past couple of weeks. For the majority of Americans who do not travel abroad, the only visible effect so far of the dollar's steep fall has been higher fuel prices at the pump. The Chinese imports that fill the big-box stores still cost the same, because the Chinese yuan is still pegged to the American dollar. But that may be about to change, along with many other things.

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