The Further Decline in International Reserves

The world entered a credit-expansion binge in 1971. The US, as the world's central banker (liberated from the restriction of redeeming dollars for gold) entered upon a long credit expansion that fed dollars to the world in exchange for the world's products. The world responded to the incoming flow of dollars to its central banks, with a corresponding credit expansion which fostered a credit-based prosperity around the world.

The graph elaborated on the basis of Bloomberg data is telling us that the world reached the point where a general liquidation had to set in, in August 2014.

The Further Decline in International Reserves