The US Dollar Reserve Status is in Jeopardy? Oh really!

Winston Churchill once quipped, "It has been said that democracy is the worst form of government except all the others that have been tried." Granted, it would be a stretch to say the current global monetary regime is better than any that have been tried. But given the state of the global economy and dearth of global cooperation on matters large and small it seems a system that will be with us for quite a while...likely too long.

Many analysts wax nostalgic for the days of a gold-based monetary standard. Lamenting that if we had such a system today, all else good would follow. Granted, in its heyday, the gold standard served the globe quite well. But whether gold or wooden shoes or Coconut trees are used as a standard, the reason it succeeded was because central banks at the time, led by the Bank of England, took their jobs seriously. 

Currency Currents 6 February 2013