Nuclear weapons will be used within our lifetime.
The Dollar Is Dead
71–80 of 367 posts
Re: The Dollar Is Dead
#72I think that people and countries not wanting to purchase 30 year long term debt in a zero interest rate environment is perfectly natural. There is far more potential downside than upside and not evidence of demise. Reality is that there is little motivation to invest in long term debt under 3%, normal motivation to invest in debt between 5-10% and huge appetite for debt above 10%. Debt with a sub 2% interest rate ca…
I think the US is particularly crazy about it because ultra-low interest rates allowed the country to temporarily paper over the realities of the nationwide housing shortage and resulting housing prices, and now everybody's getting slapped in the face with more realistic mortgage terms again.
Re: The Dollar Is Dead
#73The 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.
India is not going to happen for atleast a few decades and Africa isn’t even on the remotest horizon.
Re: The Dollar Is Dead
#74Re: The Dollar Is Dead
#75USD strength comes from military. Just as it was the case with all other currencies in the past. Do you see anyone challenging the US in a conflict? China won’t even invade Taiwan because they are afraid. ‘Nuff said.
What, if I (a European) decide not to buy American treasuries, a squad of Marines is going to bust my front door?
What will you buy instead? The point is that the dollar is strong not purely because the American economy has been (and continues to be) the largest on the planet, but also because it is not currently possible to topple the US since its global activities are tied strongly to its military.
The only realistic options that exist at the moment are going back to the gold standard (not viable for most countries) or shifting to the yen (which is tied to the dollar as Japan is the largest holder of treasuries).
Re: The Dollar Is Dead
#76Earlier quoted context omitted.
>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
The relative rate of change is important, not the absolute change.
Politically, asset prices will be inflated quicker than labor prices. You can use SP500 as an easy guage.
This is not sustainable forever, of course, but I would bet there are a few more decades it will work.
Re: The Dollar Is Dead
#77USD strength comes from military. Just as it was the case with all other currencies in the past. Do you see anyone challenging the US in a conflict? China won’t even invade Taiwan because they are afraid. ‘Nuff said.
What, if I (a European) decide not to buy American treasuries, a squad of Marines is going to bust my front door?
If you decided to trade oil in euros then a squad of aircraft carriers parks off your coast
Re: The Dollar Is Dead
#78The 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…
There is no "overspending." There is only undertaxing. The debt is literally just the accumulated difference between spending and taxation.
If extreme wealth was taxed, the debt would be zero. The point isn't even to "pay for spending" but to enforce a functional social contract, and to limit the political and democratic distortions created by extreme inequality.
"Markets" should not have a veto on policy in a democracy.
Making it non-zero is a policy choice. Inflating away this debt is also a policy choice. There is nothing accidental about this.
What will not be inflated away is personal debt. That will remain linked to inflation even after the currency is revalued, and will be captured from personal assets wherever possible.
Re: The Dollar Is Dead
#79Is 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.
It need not be a single country. Organizations like BRICS could float it's own currency, and with significant size of the economy of the members, it could pull it off. This is why Trump has been explicitly warning against that.
Re: The Dollar Is Dead
#80Earlier quoted context omitted.
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.
> I’m somewhat confident in the Euro out of curiosity, why do you believe that?
Stable governance and a business friendly enough environment (SAP is the most valuable company in Europe currently, for example; business can be done there). Even with populism and right wing extremes popping up there, I’m more confident in Europe staying on the rails vs the US (as it relates to currency stability).