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The Dollar Is Dead

mathmeetsmoney.substack.com

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Re: The Dollar Is Dead

#51

Post by vkou »

Ekaros wrote: post #18
kccqzy wrote: post #10

Earlier quoted context omitted.

I agree with you. I don't even think in the near future there will be a single global reserve currency. There will be multiple ones, all of which weaker in terms of power and influence than the dollar.

Do you even need singular global currency in modern world? Where every transaction can be in essence instant if there was desire. And everything is digital. Overall it is rather different world and things can be done different than before.

> Do you even need singular global currency in modern world?

The world doesn't need it, but unless Americans want to see their purchasing power destroyed, they do.

Re: The Dollar Is Dead

#53

Post by nostromo »

Workaccount2 wrote: post #29

The country is getting forced by markets into realizing pain for overspending, and only congress can manage this pain. Manage the pain, not remove it is key here. Manage it. Conrgess is totally inept and ridiculously politicized, so it's unlikely they will do anything except make the problem worse. That leaves only the natural fall out of refusing to acknowledge a financial injury before going out on the field to pla…

The issue is that all governments are in roughly the same situation, so there is no alternative other than maybe gold. The US doesn't need to be great or even good, it just needs to be better than the alternatives.

The issues facing China and the EU make America's spending problem look mild. (And I agree by the way: America has a massive spending problem.)

Re: The Dollar Is Dead

#54

Post by stego-tech »

One thing I desperately wish the markets would finally recognize is that the call is coming from inside the house: by letting private enterprise capture government, they are destroying the very currency that gives them power through unnecessary subsidies, preferential tax policies, socialization of losses and privatization of profits. Through corporate mass media manipulating voters and outright corruption in donations or associations with politicians, they did this to themselves.

Until markets begin penalizing companies receiving government funding (or whose workers disproportionately rely on welfare due to low wages) with shitty share prices and recognize which sectors should be private while which others should be public, this nonsense will continue unabated.

This is why I loathe believers in the mythos of “the invisible hand of the free market”: if said hand existed, it’s been firing shots into its mouth for decades and everyone in finance has seemed okay with that continuing.

Re: The Dollar Is Dead

#55

Post by 827a »

treetalker wrote: post #15
ofalkaed wrote: post #9

Is there any other country with both the court system and wealth required to back up being the global reserve currency? I don't think there is and I don't see a viable contender showing up in the near future.

As a counterpoint, confidence in US courts (particularly the federal courts) is rapidly declining — both among the public and among those who operate within the court systems.

That depends on what kind of media you consume. Feeling isn't really a good indication of reality.

Re: The Dollar Is Dead

#56

Post by toomuchtodo »

declan_roberts wrote: post #48

The idea that a basket of foreign currencies or "BRIC+" will replace the dollar is absolutely not going to happen. If the dollar goes down it takes the entire world with it. Nobody is insulated from the risk of a dedollarization.

I’m somewhat confident in the Euro until India or Africa grows to be a potential competitor. Whether they can achieve a similar risk profile remains to be seen of course.

Russia is a non starter, and China is unlikely to make the political change necessary to be a reserve currency.

Re: The Dollar Is Dead

#57

Post by simonh »

earnestinger wrote: post #22
ofalkaed wrote: post #9

Is there any other country with both the court system and wealth required to back up being the global reserve currency? I don't think there is and I don't see a viable contender showing up in the near future.

Why court system is relevant for the currency? I assume British courts can enforce contracts that deal in dollars.

The court system is relevant for confidence in investing in an economy, and currencies are largely supported by and dependent on investment into the economy of the country. Even government debt instruments are a form of investment in the economy of the country.

Re: The Dollar Is Dead

#58

Post by hdgvhicv »

lotsofpulp wrote: post #38
Workaccount2 wrote: post #29

The country is getting forced by markets into realizing pain for overspending, and only congress can manage this pain. Manage the pain, not remove it is key here. Manage it. Conrgess is totally inept and ridiculously politicized, so it's unlikely they will do anything except make the problem worse. That leaves only the natural fall out of refusing to acknowledge a financial injury before going out on the field to pla…

>Which means that people who cannot bury their wealth in (non-treasury!) assets will pay off the debt. I.e. people who need to work, which means it disproportionately affects the young. This is what has to happen in a democratic society with a flattened and eventual top heavy population pyramid that will not vote to reduce old people benefits.

Workers will see higher wages as there is more work and fewer people to do the work

Everyone will see higher prices as the costs of work increase

Interest rates will be low as there’s no other option

Re: The Dollar Is Dead

#59

Post by nostromo »

jleyank wrote: post #50

Don't forget, the US is the lowest-taxed Western country, so they have lots of room (and lots of inherent wealth) to tax. Whether they have the political will to do this, or the political will to reduce Defence Spending is an open question. But it's not inevitable. Hell, they can always do what other countries have done and abrogate debt or pay it down pennies or quarters to the dollar. Would work once. Or, the count…

Defense spending, moderate taxation, and a respect for private property is what makes the dollar a reserve currency to begin with.

Taxing wealth agressively and cutting defense would immediately kill the goose that lays the golden eggs.

Re: The Dollar Is Dead

#60

Post by herval »

bix6 wrote: post #46

“The Dollar is Dead. Long live whatever comes next.” So what will come next? It can’t be gold because we already tried that. I don’t see the West letting BRICS have it. Crypto seems too polarizing.

Why does it have to be a single currency? The single-currency reserve is an artifact from the era where settlements required actual wads of cash shipped around. It’s also from an era where most other countries’ currencies were in flux and the dollar was the only non-risky option. This hasn’t been an issue for a few decades now, with euro, yen, pound, franc, etc proving they’re quite stable

With systems like Brazil’s Pix in place (which is supposedly gonna operate across latam countries soon), you can easily settle cross-bank instantly. Countries will then be able to build spot reserves on whatever currencies they need for trade directly, instead of an intermediate “stable” currency

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