So what do we actually mean when we say the dollar? Well, it isn't one thing, it's a bundle of at least four separate jobs.
Job one, it prices the world's commodities.
Job two, it settles trade between two strangers who don't trust each other's currencies.
Job three, it's the reserve assets central banks park their savings in.
And job four, it's the collateral the entire global financial system is built on.
It's a bit like a household with a mortgage, a current account, a savings pot and a credit card all at the same bank.
Moving your savings elsewhere is easy.
You do that in an afternoon.
Moving the mortgage is a different story entirely because that's the piece that legally binds you to them for 25 years.
And the dollar works exactly the same way.
Each of those four jobs has its own exit door and those doors are extremely different.
So then who's actually taking the dollar's place? Well, Nobody.
So what do we actually mean when we say the dollar? Well, it isn't one thing, it's a bundle of at least four separate jobs.
Job one, it prices the world's commodities.
Job two, it settles trade between two strangers who don't trust each other's currencies.
Job three, it's the reserve assets central banks park their savings in.
And job four, it's the collateral the entire global financial system is built on.
It's a bit like a household with a mortgage, a current account, a savings pot and a credit card all at the same bank.
Moving your savings elsewhere is easy.
You do that in an afternoon.
Moving the mortgage is a different story entirely because that's the piece that legally binds you to them for 25 years.
And the dollar works exactly the same way.
Each of those four jobs has its own exit door and those doors are extremely different.
So then who's actually taking the dollar's place? Well, Nobody.
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