In the Market: How the US is daring the world to find a dollar alternative

- The United States is merrily chipping away at the pillars that hold up the dollar as the world's reserve currency, with the latest blows coming from some powerful Americans questioning the rule of law following the conviction of Donald Trump.

The country has radically increased the use of sanctions as a punitive foreign policy tool. And it is adding on an immense amount of debt, leaving hapless foreigners who seek the safety and depth of its markets to fund its excesses. In Asia, for example, people are asking with increasing urgency what's their 'America plus 1', as they search for ways to reduce their U.S. exposure and boost non-dollar trade flows.

"Perhaps ironically, the U.S. dollar's strength is, in part, due to its near-unchallenged safe-haven status," said Steve H. Hanke, a professor of applied economics at Johns Hopkins University, who served on former President Ronald Reagan's Council of Economic Advisers."That said, most investors don't understand geopolitics and the dangers that lurk below the surface – until it's too late.

A major investor based in Asia said potential threats to U.S. institutions were also worrying. Any debasing of the Federal Reserve's authority -- as Trump allies are reportedly contemplating -- would affect the dollar’s credibility, the investor said, adding that such a development could see a double-digit depreciation of the currency.A senior New York-based financial services executive who was traveling in Asia said he is hearing from clients who think the U.S.

If no proof is publicly offered, then it would"feel that the checks and balance, the independence of the legal system, may not be there -- at least in this case," the investor said.

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