U.S dollar, the world’s primary reserve currency is in danger!

Bad inflation seems to be more and more likely.

That does not however have to mean runaway inflation or social collapse. This is a fairly stable society and the US is still the dominant military power in the world. It seems more likely to me that we will see a return to the 1970’s with high but not catastrophic inflation. In such an environment longer term bonds (except TIPS) will be very bad investments; cash will be a mediocre holding if it can be invested in short term instruments yielding at least the rate of inflation; stocks will face headwinds but might rise above current levels even in real terms; and precious metals, some other commodities, and some real estate should do well. The government will use the inflation to partially repudiate its debt. That seems to me where we might be headed.

A reserve currency (or anchor currency) is a currency which is held in significant quantities by many governments and institutions as part of their foreign exchange reserves. It also tends to be the international pricing currency for products traded on a global market, such as oil, gold, etc.

This permits the issuing country to purchase the commodities at a marginally cheaper rate than other nations, which must exchange their currency with each purchase and pay a transaction cost.

(For major currencies, this transaction cost is negligible with respect to the price of the commodity.) It also permits the government issuing the currency to borrow money at a better rate, as there will always be a larger market for that currency than others.

U.S dollar in value looks will decrease sharply in every U.S economic downturn. 2008-2010 could be a disaster for U.S dollar:

Warning : Avoid The Dollar!!!