But the BRICS (Brazil, Russia, India, China and South Africa) have noticed and are doing something about it now. See the article: http://www.cnbc.com/id/42584565
Yes, I read about that but I've posted so much on this issue I'm just worn out. Thanks for taking up the banner here, and fantastic post
by the way -- actually breaking down the numbers. I don't know why more people on this forum aren't interested.
About the BRICS.. it used to be the BRIC but South Africa just joined. I read that's because of their gold, but not sure if that's just a goldbug talking point. Makes sense though, why else let South Africa join up with the world's premier emerging economies if not because of gold?
So yes, they "have noticed and are doing something about it" BUT it will take time. Ten, twenty years maybe to transition away from the dollar. That's assuming they can get along. Anyhow, getting away from the dollar as global reserve / trade currency is a massive task. From Wikipedia:
The U.S. dollar is the world's foremost reserve currency.
In addition to holdings by central banks and other institutions, there are many private holdings, which are believed[by whom?] to be mostly in one-hundred-dollar banknotes (indeed, most American banknotes actually are held outside the United States
All holdings of U.S.-dollar bank deposits held by non-residents of the United States are known as "eurodollars" (not to be confused with the euro), regardless of the location of the bank holding the deposit (which may be inside or outside the U.S.).
Economist Paul Samuelson and others (including, at his death, Milton Friedman) have maintained that the overseas demand for dollars allows the United States to maintain persistent trade deficits without causing the value of the currency to depreciate or the flow of trade to readjust. But Samuelson stated in 2005 that at some uncertain future period these pressures would precipitate a run against the U.S. dollar with serious global financial consequences
So far the BRICS have agreed to exchange their own currencies in deals with each other. But that's a far cry from becoming a global reserve currency -- to the contrary, so far they're acting like an exclusive club. Europe, the US, and Japan will all have to crash and burn before the BRIC could set its basket of currencies up as a global reserve.
The US allied bloc is weakened and withering, but not dead yet. Rather than BRICS currency as global reserve, what's more likely is that they'll keep pressuring to expand use of something like the IMF special drawing rights. But that will require approval from the US allied bloc.
The more I read the less I know on this stuff.. every time something looks bad for the US, things look grimmer in Europe. Finland just voted against bailing out Portugal or some such. So with the future of the Euro uncertain, nobody is going to abandon the dollar. I guess it all comes down to a waiting game.. the BRICS are the future, but for now they are still emerging and not the dominant power bloc quite yet.
One thing is for sure.. precisely because there are SO MANY dollars held overseas, when the dollar does collapse it's going to be brutal on Americans.