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The Dollar Is Dead

mathmeetsmoney.substack.com

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Re: The Dollar Is Dead

#81

Post by nostromo »

toomuchtodo wrote: post #56
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.

If you think the US has a debt problem, the Eurozone is much worse. At least America has economic growth along with debt growth. The EU has slightly less debt but zero economic growth and almost zero population growth (and negative organic population growth).

Africa's GDP is tiny and will not a serious contender for any sort of reserve currency status for many decades. I can't imagine a wave of automation will do anything positive for most of Africa.

Re: The Dollar Is Dead

#82

Post by herval »

lisbbb wrote: post #61

[flagged]

You’re probably reading it in reverse. The jobs number is showing what economists predicted when this whole tariff wack-a-mole started: that companies would stop hiring and start raising prices, to accommodate for the instability being created.

Neither the FED nor anyone else had actual numbers 3 months ago, since they are always a pre-read. This clearly wasn’t as bad in months prior to the tariff scare, so this fabricated narrative that the FED is somehow responsible for this sudden slowdown doesn’t add up

Re: The Dollar Is Dead

#83

Post by kleiba »

water9 wrote: post #23
lawlessone wrote: post #8

People blamed covid to much for the global economic turmoil. But we don't have covid this time. We do have the same guy in the White House again though...

[flagged]

Right! Like Trump himself said about his handling of COVID: "The only thing we haven’t done well is get good press."

Re: The Dollar Is Dead

#84

Post by etempleton »

The only thing saving the dollar is a lack of suitable replacement. Trust in the PRC is lower than even the current highly politicized United States, so the Yuan is out. The replacement could be an index of currents tied to G7 or BRICS countries, but that likely gets complicated.

Re: The Dollar Is Dead

#85

Post by tobias3 »

TheOtherHobbes wrote: post #78
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…

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 democr…

Yeah, but for taxation you need state capacity to enforce it which was chainsawed/DOGED away.

Re: The Dollar Is Dead

#86

Post by toomuchtodo »

nostromo wrote: post #81
toomuchtodo wrote: post #56

Earlier 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.

If you think the US has a debt problem, the Eurozone is much worse. At least America has economic growth along with debt growth. The EU has slightly less debt but zero economic growth and almost zero population growth (and negative organic population growth). Africa's GDP is tiny and will not a serious contender for any sort of reserve currency status for many decades. I can't imagine a wave of automation will do any…

Growth is over globally except India and Africa due to demographics [1]. Developed countries and unions will compete for the last of the world’s young, prime age workers over the next century. Financial stability will be a function of who manages this situation to the best of their circumstances. Can you attract and retain these workers and leverage that for economic success? If so, that’s where investment will flow and capital will remain invested. My thesis is Europe is best positioned to succeed in the near term, based on the above.

Sibling comment mentions Europe needs the US for energy; Canada has known fossil gas reserves of ~200 years and LNG export capabilities, and Europe is scheduled to end Russian fossil gas consumption in 2027 [2]. The world is deploying 1GW of solar every 15 hours; like the rest of the world, everyone will arrive at energy independence/sovereignty eventually through cheap renewables (solar primarily, but also wind) and battery storage (LFP and sodium most likely, as of this comment) exported by China to the world. China is also selling inexpensive EVs to as many global consumers as they can find (while internal sales of battery electric and hybrids is already at ~50% this year). This leads me to believe the future of US oil and gas is an internal petrostate similar to Russia, not an energy exporter of relevance far into the future.

[1] https://www.sas.upenn.edu/~jesusfv/Slides_London.pdf

[2] https://news.ycombinator.com/item?id=43506589

(not investing advice)

Re: The Dollar Is Dead

#87

Post by mensetmanusman »

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.

Hopefully a basket of currencies, no need for one thing.

Re: The Dollar Is Dead

#88

Post by alphazard »

dlcarrier wrote: post #31

I used to think that the dominance of the US dollar in world trade would fade as technologies like crytocurrencies rise, but the dominance of stablecoins pegged to the US dollar has shown that without, or even despite, policies and practices of the US government, society is adamant that USD be the reserve currency.

The timing of a migration away from dollars will depend mostly on US fiscal and monetary policy. Better financial infrastructure on-chain isn't going to do it alone.

The stablecoins will absolutely accelerate the transition, so that when it does happen, it happens more quickly. Anyone with a stablecoin can transact on-chain for something else. And anyone holding stablecoins will be using an app that has familiarized them with the idea of alternate currencies and currency exchanges.

This is probably a good thing. A realistic not terrible scenario is a few year period where you have to pay attention to exchange rates, but your net-worth is mostly unaffected and at the end of it you're paying for groceries with something that's not USD.

Re: The Dollar Is Dead

#89

Post by treetalker »

827a wrote: post #55
treetalker wrote: post #15

Earlier quoted context omitted.

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.

I'd be interested to look at any studies (or even opinion pieces) that indicate either that confidence in the courts is remaining unchanged (compared either to recent or historical levels) or that it's increasing.

Re: The Dollar Is Dead

#90

Post by p_ing »

abeppu wrote: post #62

Nit: Is anyone else annoyed by the trend of people using block quote formatting to emphasize their own topic sentences rather than to quote from another source? In addition to being visually annoying, to me it highlights that the author habitually doesn't interact with whatever literature exists (i.e. if they sometimes needed to quote a paragraph from another author, they wouldn't use block quote formatting in this w…

You see it on reddit quite a bit. I wonder where the author learned that style of writing from; certainly no institution that could teach one to properly write to an established literary style.

It's super annoying. There's no reason to bold the chosen text, or any text in this post. I mean, it's on substack ffs.

Worse is when authors use emojis in titles or text. Maybe we can blame tiktok brain rot or just gen-z in general. There's gotta be someone we can toss under the bus and I bet they don't know what cursive handwriting is!

(And technically this violates the HN rules)

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