Here, I explore some of the implications of the dollar reserve standard. What do I really mean by ‘dollar reserve standard’? I mean that a significant proportion of minor central banks own dollars and dollar-denominated assets. In short, the renminbi, the taiwan dollar, the korean won, etc. are all ‘good for’ dollars. Meaning; these currencies are liabilities of their respective central banks, that – in turn – own dollars (and dollar-denominated assets).

 

I seek to briefly answer the questions: what does this mean for the world? What does this mean for prices? How can a contrarian investor wield this understanding to his/her advantage?

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An update of the daily treasury statement charts:

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Here is the update of the Fed’s Balance Sheet (proportions) chart.

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I have decided to post the daily treasury statement charts on a daily basis. For some opinions on them, see here and here. The releases by the US Treasury are at 4:00 PM ET daily. I’ll always try to get the charts up soon after.

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