Fun With Numbers

I found this table in an article on Yahoo Finance, that is a good read, with all sorts of other related data.

These are the top five Central Bank reserve holdings, although I would note that Russia is now above $400 billion.

The article also has information on how money is allocated within these reserve funds. The current numbers are less important than what happens with future additions to these treasuries. I have been writing for a couple of years about the visibility for the US receiving less of this flow than it has in the past. We have seen several small countries reallocate away from the dollar. A small country can do so without moving the market but the countries listed in the above table would have a hard time doing any meaningful dollar selling without hurting their own interests but they can buy few dollars going forward.

Many people do not believe this will happen or think it won't matter. I would rather plan on it mattering and be wrong than the other way around. My take on the consequence of this is and has been that rates in the US will be a little higher, nothing like the early 1980s though, and there will be a little drag on the economy which could include a normal recession.

Something will cause the next recession and it could be the domino effect from this.