The value of the dollar has taken a hit as rumors spread that oil producers are exploring a scheme to price oil in a basket of currencies instead of the U.S. dollar. (The Wall Street Journal subsequently reported that Gulf officials “strongly denied” the rumors.)
This week’s news follows a year in which more and more banks and foreign governments have voiced concern that the U.S. dollar will weaken in the coming years. This has been discussed most openly in Asia, where China and Japan’s massive foreign exchange reserves are at risk.
But should demand for the dollar fall significantly, it is the United States that would suffer most. The U.S. could face a crippling debt crisis unlike any previous economic crisis we have faced in the last two centuries.
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