With the U.S. economy still reeling from the COVID-19 pandemic and record unemployment， real estate prices continue to skyrocket， pricing thousands of house hunters out of the market in the U.S. and Canada. This may seem counterintuitive for an economy that is still recovering from recession， is yet to reach 2019 GDP levels and saw unemployment peak at just over 14 percent in April， 2020. The last time U.S. home prices raised this quickly， it led to an ensuing crash that brought down the global economy.
　　This asset bubble is not restricted to the U.S. but is crossing borders and going global， making housing or even renting unaffordable for many—especially those worst affected by the global pandemic. In fact the rate of price increases has alarmed policy makers in both the U.S. and Canada. “The dream of homeownership is out of reach for so many working people，” Senate Banking Chair Sherrod Brown told U.S. news outlet Politico recently. “Rising home prices and flat wages mean that many families， especially families of color， may never be able to afford their first home.”
　　According to World Population Review， the typical value of U.S. homes was$269，039 as of January， a 9.1-percent increase from January 2020. Between 1999 and 2021， the median price has more than doubled.
　　Canadian Prime Minister Justin Trudeau has also weighed into the topic recently in a statement saying that the cost of owning a home is too far out of reach for too many people in Canada’s largest cities， noting it can take 280 months for an average family to save for a down payment in a place like Toronto or Vancouver.
　　Yet real estate is not the only asset class that is being inflated； both the NASDAQ and S&P 500 have increased by nearly 40 percent in the last 12 months despite unemployment near record highs in the U.S. The NASDAQ increased by 39.51 percent in the last 12 months while the S&P 500 rose 38.46 percent over the same period.

The source of the bubble

　　The source of this asset bubble inflation is the Federal Reserve’s（Fed） policy of quantitative easing（QE）—a term economists use to describe printing money and using it to buy back domestic treasury bonds from banks and other financial institutions. This， in theory， is designed to reduce the interest rate and encourage lenders to lend to industry or individuals to stimulate the real or productive economy.
　　In reality， much of this “free money，” as Michael Hudson， financial analyst and President of the Institute for the Study of Long-Term Economic Trends， contends， is instead used to speculate on assets both domestic and international—particularly in emerging markets where the biggest and quickest gains can be made. In essence， QE disproportionately benefits those closest to the Fed. These asset bubbles show no sign of abating as the U.S. is expected to approve an addition $2 trillion in stimulus this year and the Fed has said it won’t take its foot off the pedal when it comes to pumping liquidity into the market. 　　Money supply from the Fed doubled during the financial crisis of 2008. From then on the economy continued to be buoyed up with periodic bouts of money printing before rocketing during the COVID-19 pandemic.
　　With many of these dollars being spent abroad， the central banks of the receiving countries keep them and pay the receiver in local currency. But what can central banks around the world do with all these dollars？
　　As Congress often blocks attempts to purchase U.S. companies and assets under the guise of national security—as with the Chinese oil company CNOOC’s $18.5 billion bid for Unocal in 2005—there is only really one option left： to purchase U.S. treasury bonds to further underwrite U.S. debt. All of this is made possible because of the U.S. dollar’s unique status as the world’s reserve currency.
　　Aside from printing money ad infinitum， this special status as global reserve currency gives the U.S. another ability： namely， to sanction countries or individuals that do not align with U.S. foreign policy objectives. Potentially， it gives the U.S. the ability to essentially turn off the economies of countries that don’t follow U.S. hegemony for whatever reason. But it is this threat and the increasingly liberal use of unilateral sanctions that are leading some economies to attempt to de-dollarize their economies and insulate them from economic bullying.

De-dollarization

　　One such country is Russia. On June 3， the Kremlin announced its policy outline for dedollarization. The plan to abandon the U.S. dollar was developed by the government in response to tougher U.S. sanctions. Finance Minister Anton Siluanov announced plans to reduce the share of the dollar in the Russian National Wealth Fund to zero.
　　“I can only say that the de-dollarization process is constant，” Siluanov said， expressing doubts about the reliability of the main reserve currency， at a press conference at the St. Petersburg International Economic Forum. According to him， this process is taking place not only in Russia， but also in many countries. “We made a decision to withdraw from dollar assets completely， replacing them with an increase in euros， gold， and other currencies，” the minister said.

　　According to him， as the share of the dollar is reduced to zero， the share of the euro will be 40 percent， the yuan 30 percent， gold 20 percent， pounds and yen 5 percent each. Siluanov noted the replacement will take place “rather quickly， perhaps within a month.” Even before the Ministry of Finance announcement， the Bank of Russia carried out a large-scale restructuring of its gold and foreign exchange reserves， shifting about$100 billion in 2018 into euros， yuan and yen. 　　Added to this， at the end of 2019， several European countries set up a new transaction channel designed to facilitate companies continuing to trade with Iran despite U.S. sanctions after then President Donald Trump unilaterally withdrew from the nuclear agreement or the Joint Comprehensive Plan of Action.
　　Set up by Germany， France and the UK， the Instrument in Support of Trade Exchanges gives European companies the capacity to bypass the U.S.-controlled SWIFT banking system—a network that enables financial institutions worldwide to send and receive information about financial transactions and one of the main tools of U.S. sanctions.
　　“We’re making clear that we didn’t just talk about keeping the nuclear deal with Iran alive， but now we’re creating a possibility to conduct business transactions，” German Foreign Minister Heiko Maas told reporters at the time.
　　In addition， China launched its CrossBorder Interbank Payment System （CIPS） in 2015. CIPS is a payment system which offers clearing and settlement services for participants in cross-border yuan payments and trade.
　　At the start of the 21st century， the idea of de-dollarizing global trade seemed insurmountable. But now it seems as if the COVID-19 pandemic and America’s response may be accelerating the process faster than many imagined possible. BR