Over the last several years, gurus and pundits have been predicting that the U.S. dollar will collapse. Many of these “experts” believe that the greenback will soon be replaced by the Chinese yuan as the world’s leading reserve currency.

And instead of admitting that they were just plain wrong, they keep beating the drum of pessimism and despair.

Meanwhile, I’ve been a consistent dollar bull and China skeptic, and I believe the yuan has no chance of replacing the dollar.

The Dollar Still Reigns Supreme

As you can see from the chart below from KKR & Co. L.P., the dollar rally that began in 2011 is 43 months old and the last extended bull market for the greenback lasted almost twice as long.

The currency game is a relative game.

America certainly has significant financial challenges that need to be dealt with, but it offers many attributes that make the dollar the premier reserve currency of the world.

Attributes such as political stability, deep and broad liquidity, vibrant capital markets, openness, and free convertibility and acceptance of the U.S. dollar worldwide more than offset our debt issue.

China Falls Short

For my friends at the IMF who are considering adding the Chinese yuan to the SDR basket, thereby indirectly recognizing it as a reserve currency: Don’t do it.

On the issue of liquidity, the Chinese yuan is a long way from being convertible across the board.

Chinese exporters who receive U.S. dollars are forced to turn them over to the central bank (this is how China built its $4 trillion in reserves). Citizens can’t take it out of the country. And it isn’t accepted as legal tender anywhere outside of China.

And it’s going to be a long time before China allows its currency to freely float, because the whole system is built on tightly controlling the yuan’s value. If the yuan strengthened 15% in six months, millions of exporters – already on razor-thin margins – would go bust.