HSBC believes that if the United States attempts to “reclaim” control over the dollar, meaning the Federal Reserve is no longer willing or able to continue acting as the world’s “lender of last resort,” and global capital markets lose dollar swap lines, the risk will be a massive shift in the market towards gold, which has completely inelastic supply, leading to severe liquidity shortages. While gold prices continue to soar, this could trigger financial turmoil similar to that of the 1930s or 1970s
from Long Port App
According to news from the Wind Trading Platform, on May 8, HSBC’s senior economic advisor Stephen King released a report that examines the rise and fall of reserve currencies from a historical perspective, delving into the status of the US dollar as the world’s reserve currency, and studying and analyzing the Trump administration’s attitude towards the dollar’s reserve status and its potential impacts.
The report shows that history indicates that “destroying a reserve currency is easier than creating one,” and the collapse of the reserve currency system is often accompanied by significant economic turmoil and sharp fluctuations in asset prices, rather than a smooth transition to a new system.
King pointed out that certain members of the Trump administration are concerned about the burden that the dollar’s current reserve currency status places on the US economy and are attempting to weaken the dollar’s international standing through various measures.