The fraying of the U.S. global currency reserve system
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Re: The fraying of the U.S. global currency reserve system
#2Re: The fraying of the U.S. global currency reserve system
#3You've been on HN for 13 years, and this is your first post in 7.
Welcome back!
Can you provide any context regarding why this article made the cut, when nothing did for 7 years?
Sorry if it's a bit off topic; it's just an interesting circumstance, and I'm curious.
Re: The fraying of the U.S. global currency reserve system
#4How much debt can we accumulate before entities stop buying our bonds and treasuries?
Re: The fraying of the U.S. global currency reserve system
#5Lyn Alden has become my favorite macroeconomist through the Covid crisis. I bought a bunch of puts in February 2020, they went way up in March till the Fed stepped in and then went down. I went looking for answers on how to understand macroeconomics and Alden has had a lot of interesting takes on it.
Re: The fraying of the U.S. global currency reserve system
#6> More troublesome, the inherent flaw of having the global reserve currency, in a theme that goes back to economist Robert Triffin from over half a century ago, is that in order to maintain the global reserve currency, the country must supply the world with its currency via structural deficits in one form or another.
That "structural deficit" means allowing manufacturing to move overseas.
The trade war is a distraction. Trade imbalances with the rest of the world could be solved very quickly by making it clear the the dollar is going down in flames and that policies will be put in place to make that happen:
1. massive federal budget deficit spending
2. purchase of all the debt by the Federal Reserve (yield curve control)
Holders of bonds would be absolutely wrecked. That's a lot of institutions and wealthy individuals.
The only question is whether the political will to do this can be mustered. So far it hasn't.
Re: The fraying of the U.S. global currency reserve system
#7Which country would benefit from a weaker dollar? Germany wants to sell their cars. China their phones. If Americans can't afford them any more, then a big market would disappear.
Re: The fraying of the U.S. global currency reserve system
#8> More troublesome, the inherent flaw of having the global reserve currency, in a theme that goes back to economist Robert Triffin from over half a century ago, is that in order to maintain the global reserve currency, the country must supply the world with its currency via structural deficits in one form or another. That "structural deficit" means allowing manufacturing to move overseas. The trade war is a distracti…
Isn’t this happening now to a significant degree?
Re: The fraying of the U.S. global currency reserve system
#9> More troublesome, the inherent flaw of having the global reserve currency, in a theme that goes back to economist Robert Triffin from over half a century ago, is that in order to maintain the global reserve currency, the country must supply the world with its currency via structural deficits in one form or another. That "structural deficit" means allowing manufacturing to move overseas. The trade war is a distracti…
I’ve seen fretting for years about the collapse of the dollar as the global reserve. Lately I have started wondering if this might not be good in the long run, and if maintaining the dollar as a global reserve is actually a very costly and economically distorting thing.
Re: The fraying of the U.S. global currency reserve system
#10How much debt can we accumulate before entities stop buying our bonds and treasuries?
Everyone else is accumulating debt too. To escape a bear, you just need to run faster than everyone else not faster than the bear.