You may have noticed that complaints have been mounting lately from foreign investors, and especially governments, about all the unfair advantages the U.S. economy supposedly reaps from the dollar’s status as the world’s key currency — and about all the costs they pay and risks they run due to their consequent reliance on the dollar for raising capital and buying imports. Countries like France and China have been especially outspoken, and some big third world countries have even started their own development bank avowedly aimed at reducing their dependence on the dollar for financing their growth.
So you’d think that foreign dollar holders, and especially governments, would be starting to get rid of their dollars, or at least are no longer buying them so avidly — and that a new global monetary order might finally be emerging. Yet as shown in my newest column for Marketwatch.com, if you did, you’d be wrong. I actually looked at the latest Treasury Department data on the stockpiles of dollars maintained by foreign investors and how they’ve changed month to month. They make clear that that nearly all of the dollar’s official critics have either continued purchasing the greenback on net, or maintained their holdings at record or near-record levels.
The upshot couldn’t be clearer: As long as foreign dollar holders avoid putting their money where their mouths are, their dollar kvetching will keep sounding awfully hollow.