Good luck dislodging King Dollar from its throne

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Relax about USD reserve status. For me, the important point about this is the scale of shock needed to shift the system. We would need to see China with the largest or most imposing military presence and production worldwide. It would need to run huge current account deficits. And we’d need to see the epi-center of global financial markets shift to an opaque and sovereign risk-laden China. Tectonic hardly covers it.

Meyrick Chapman is the principal of Hedge Analytics and a former portfolio manager at Elliott Management and bond strategist at UBS. At FTAlphaville.

A famous Simpsons episode shows Homer selling his soul for a doughnut. Thinking he can outwit the Devil if he doesn’t quite finish it, Homer gleefully chants “I’m smarter than the Devil”. You can guess how it ends.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.