From J.P. Morgan:
Or, as I wrote last year:
Safer assets like the US dollar? Sure, that’s what the textbooks tell you has been the safest asset in the post-war era. But are they really safe assets? On dollars, interest rates are next to zero. This means that any inflation results in negative real rates, killing purchasing power. Let’s have a look at the yields on those “super-safe” 30-year bonds:
At 2.87%, and with inflation sitting above 3.5% these are experiencing a net loss in purchasing power, too. Yes, it’s better than losing (at least) half your purchasing power on Greek sovereign debt, or watching as equities dip. But with the virtual guarantee that stagnant stock markets will usher in a new tsunami of QE cash, expect even more inflation, and even lower interest rates.
The Emperor is wearing no clothes.
Like with most things in life, the end of a global reserve currency is a matter of when, not if.