Paper reserves in central banks

Reserves have exploded because there was no need to “settle” trade imbalances. Since the world accepted Nixon’s decision not to settle with gold, but to accept dollars in supposed “payment” of Trade Deficits, a complete disorder set in. So-called “Reserves” are huge - $7.2 Trillion – and yet nothing goes right. All these “Reserves” are debts owed, principally by the US.

Up to 2007, this was a wonderful period for the US: it was able to behave like an adolescent come into a vast fortune: dollars in huge quantities, manufactured at will by the US Fed and Treasury, were spent buying up everything under the Sun for the enjoyment of the US consumer. Unlimited credit expansion!