(\u0392)<\/strong> The impossibility of substituting the American market. The USA has been the global consumer of last resort since the post-war era of the Marshall Plan. Consumer spending in the U.S. increased to $16,321.10 billion in the first quarter of 2025 from $16,273.20 billion in the fourth quarter of 2024. Consumer spending in the U.S. averaged $6,662.57 billion from 1947 to 2025, reaching a record high of $16,321.10 billion in the first quarter of 2025 and a record low of $1,351.40 billion in the first quarter of 1947, according to the Treasury Department’s Bureau of Economic Analysis.<\/p>\r\n\r\n\r\n\r\n (C)<\/strong> The weakening of Europe’s geopolitical role, as demonstrated by the Ukrainian crisis, provides no guarantee for its emergence as a center of economic power and provides no incentive for investors to replace the dollar with the euro.<\/p>\r\n\r\n\r\n\r\n (D)<\/strong> Countries with low competitiveness and high debt, such as Greece, where exports account for 1\/3 of imports (the major problem in the current account balance was never addressed) will be led to a deadlock with a rapid deterioration of their fiscal position, while the ability to service the debt will be put into question.<\/p>\r\n\r\n\r\n\r\n Even in highly competitive economies that will be able to sell their expensive products to the US, the consequences in terms of social cohesion will be severe as the insurance systems will be subjected to further pressures in addition to increasing defense spending.<\/p>\r\n\r\n\r\n\r\n The Hard Euro Story<\/strong><\/p>\r\n\r\n\r\n\r\n A window of opportunity for the euro could be opened by the decline in confidence in the dollar, as European officials are openly stating amid the turmoil that Donald Trump’s measures have caused in American assets.<\/p>\r\n\r\n\r\n\r\n The dollar is the world’s largest reserve currency, representing about 60% of all foreign exchange reserves, and plays an important role in trade, while it is also used to stabilize the exchange rate of other currencies, such as the Hong Kong dollar and the Saudi Arabian riyal.<\/p>\r\n\r\n\r\n\r\n n second place, by a wide margin, is the euro, which accounts for about 20% of foreign currency reserves.<\/p>\r\n\r\n\r\n\r\n The dollar index \u2013 which tracks the exchange rate against a \u201cbasket\u201d of major currencies \u2013 has fallen more than 8% in 2025.<\/p>\r\n\r\n\r\n\r\n ECB President Christine Lagarde recently said that the changing geopolitical landscape that is causing these moves offers European officials an opportunity to boost the status of the euro.<\/p>\r\n\r\n\r\n\r\n \u201cMultilateral cooperation is being replaced by a zero-sum logic and bilateral power games,\u201d she stressed. \u201cThere is uncertainty even about the cornerstone of the system: the dominant role of the US dollar,\u201d she added.<\/p>\r\n\r\n\r\n\r\n According to her, this could \u201copen the window for the euro to play a greater international role.\u201d Of course, she admitted, there is no guarantee that this gap can be closed, but in any case, the European currency has the potential to gain greater influence internationally, provided the right policies are adopted.<\/p>\r\n\r\n\r\n\r\n If the euro were to gain a larger share of global reserves, the benefits for Europe would be significant. According to Lagarde, borrowing costs for governments would be reduced, monetary policy could be decoupled from international developments, and Europe would be shielded from tariffs and other such measures. \u201cIn short, it would allow Europe to better control its own destiny,\u201d Lagarde said.<\/p>\r\n\r\n\r\n <\/p>\r\n\r\n\r\n <\/p>\r\n\r\n\r\n\r\n Confidence in the US is declining<\/strong><\/p>\r\n\r\n\r\n\r\n Isabel Schnabel, a member of the ECB executive board, also said that the Eurozone could become a preferred safe haven for international investors as long as Trump\u2019s policies are implemented, offering the region \u201ca historic opportunity to promote the international role of the euro.\u201d<\/p>\r\n\r\n\r\n\r\n The reluctance of investors to place funds in US federal bonds is a particularly critical element. This has a catalytic effect on the international financial system, as US bonds, as global benchmarks, form the basis for the valuation of stocks and bonds internationally.<\/p>\r\n\r\n\r\n\r\n The reality\u2026<\/strong><\/p>\r\n\r\n\r\n\r\n The dominance of the dollar remains insurmountable. The euro, despite being supported by the significant economic weight of the EU, faces significant challenges. Political fragmentation among member states and reliance on the US security framework limit its global influence. While rising US debt and shifting global alliances warrant doubts, the euro lacks the necessary coherence and reach to challenge the dollar\u2019s \u200b\u200bsupremacy in the near future.<\/p>\r\n\r\n\r\n\r\n The rise of gold as a global reserve asset (rather than the euro)<\/strong><\/p>\r\n\r\n\r\n\r\n In support of this, gold has overtaken the euro as the world\u2019s second most important reserve asset for central banks, due to record purchases and rising prices, according to the European Central Bank.<\/p>\r\n\r\n\r\n\r\n Gold accounted for 20% of global official reserves last year, surpassing the euro\u2019s 16% and second only to the U.S. dollar at 46%, according to data from an ECB report published on Wednesday, June 11, 2025. Central banks continued to accumulate gold at a record pace, the ECB wrote, adding that central banks acquired more than 1,000 tons of gold for the third consecutive year in 2024, a fifth of total global annual production and double the annual amount in the 2010s.<\/p>\r\n\r\n\r\n\r\n The stock of gold held by central banks worldwide is approaching the historic highs of the post-war Bretton Woods era. Until 1971, global exchange rates were fixed to the dollar, which in turn could be converted into gold at a fixed exchange rate (this is the gold standard). Central bank gold reserves, which peaked at 38,000 tons in the mid-1960s, rose again to 36,000 tons in 2024, according to the latest ECB data.<\/p>\r\n\r\n\r\n <\/p>\r\n\r\n\r\n\r\n Central banks around the world now hold almost as much gold as they did in 1965, the ECB report said. Big buyers last year included India, China, Turkey and Poland, according to the World Gold Council.<\/p>\r\n\r\n\r\n\r\n A 30% rise in the price of gold last year was one factor behind the rise in gold\u2019s share of global foreign exchange reserves. Since the start of the year, the price of gold has risen by 27%, reaching a record high of $3,500 an ounce.<\/p>\r\n\r\n\r\n\r\n \u201cThis stock, together with high prices, made gold the second-largest global reserve asset at market prices in 2024 \u2013 after the US dollar,\u201d the ECB said.<\/p>\r\n\r\n\r\n\r\n While gold does not bear interest and is expensive to store, it is considered by investors worldwide as the ultimate safe haven asset with high liquidity and is exposed to neither counterparty risk nor sanctions.<\/p>\r\n\r\n\r\n\r\n Central bank yellow fever<\/strong><\/p>\r\n\r\n\r\n\r\n In recent years, central banks have also been trying to diversify away from the US dollar amid concerns about geopolitical instability and US debt levels. The dedollarization trend accelerated, particularly among developing countries, after the Russian invasion of Ukraine, when the US targeted Russia\u2019s access to financial markets.<\/p>\r\n\r\n\r\n\r\n \u201cDemand for gold for monetary reserves increased sharply after Russia\u2019s full-scale invasion of Ukraine in 2022 and remained high,\u201d the ECB report said, adding that gold purchases appear to be seen as a hedge against sanctions, such as the freezing of financial assets. \u201cIn five of the 10 largest annual increases in the share of gold in foreign exchange reserves since 1999, the countries involved faced sanctions in the same year or the previous year,\u201d the central bank\u2019s analysis showed, adding that \u201ccountries geopolitically close to China and Russia\u201d accumulated more gold than others over the past three years.<\/p>\r\n\r\n\r\n\r\n A survey of 57 central banks that held gold last year also found that concerns about sanctions, expected changes in the global monetary system and a desire to reduce reliance on the U.S. dollar were the driving forces in emerging markets and developing countries.<\/p>\r\n\r\n\r\n\r\n Furthermore, while gold has historically become cheaper when real returns on other assets have increased, this long-standing correlation has broken down since early 2022, with investors turning to gold as a hedge against political risk rather than as a hedge against inflation.<\/p>\r\n\r\n\r\n\r\n The ECB noted that gold supply in recent decades has increased during periods of high prices: \u201cIf history is any guide, further increases in official demand for gold reserves may also support further increases in global gold supply.\u201d<\/p>\r\n\r\n\r\n <\/p>\r\n\r\n\r\n\r\n While the US is moving forward through the tariff war and the weak dollar to restructure its production model, Europe is being driven into economic suicide with the risks being distributed unevenly among the weakest members of the eurozone, such as Greece.<\/p>\r\n","protected":false},"excerpt":{"rendered":" The European elite has recently been expressing the arrogant ambition that the euro will benefit from the decline in the dollar’s power as a reserve currency. They are selling this fairy tale, of course, to impose their suicidal geopolitical orientation against Russia, the incredible austerity that the program for the rearmament of Europe will bring, … <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[482,303,83,55,752,620,709,42,82],"class_list":["post-2885","post","type-post","status-publish","format-standard","hentry","category-economics","tag-budget-deficits","tag-debt","tag-dollar","tag-ecb","tag-euro","tag-foreign-exchange-reserves","tag-france","tag-germany","tag-gold"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts\/2885","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/comments?post=2885"}],"version-history":[{"count":2,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts\/2885\/revisions"}],"predecessor-version":[{"id":2890,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts\/2885\/revisions\/2890"}],"wp:attachment":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/media?parent=2885"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/categories?post=2885"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/tags?post=2885"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/www.liberalglobe.com\/wp-content\/uploads\/2025\/06\/image-63.png\")
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