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USD share as global reserve currency drops to lowest since 1994

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Re: USD share as global reserve currency drops to lowest since 1994

#51

Post by nutjob2 »

827a wrote: post #23
duttish wrote: post #4

I'm not an economist so someone please correct me / expand on this; I'm guessing this is kind of a "It's not a problem until it's a crisis" situation? So far other central banks haven't begun selling treasuries, they've just stopped buying them. But once one starts selling it could become self reinforcing? What could replace it? There doesn't seem to be any new hegemonic power on the same level. Could we enter a worl…

In some ways, this effect can have a positive impact on US citizens; demand for the US dollar requires supply to satisfy the demand. Where does that supply come from? Oftentimes: Printing. The US generally does not make a habit of telling US dollar buyers "no, we don't have any US dollars to sell you", so less demand on the dollar for reserve holdings can have a deflationary impact on its value. This can be combined…

The Fed most commonly uses Open Market Operations to modify the money supply, with "money printing" or Quantitative Easing used in more emergency situations.

But more broadly your comment doesn't really represent reality, whatever happens in the markets and economy the Fed manages inflation (or deflation) and it's much more complicated than a single relationship like you describe.

More interesting is trade, where the US consumes so much and pays out so many dollars for goods that places like China which run huge surpluses have few choices other than lend it back to the US.

Re: USD share as global reserve currency drops to lowest since 1994

#52

Post by phil21 »

ur-whale wrote: post #10

Highly unpopular opinion here and I'm going to get downvoted into the ground (who cares), but ... this has been a very long time coming and has very much been a self-inflicted change. My bet is that it will end up being a very good thing for the world at large. China has recently started to buy Arabian oil and paying with yuan. Major countries (India, China) are starting to buy Russian raw materials and paying direct…

> My bet is that it will end up being a very good thing for the world at large.

I generally agree with pretty much all your points other than this one.

While it will be good for other countries to regain sovereignty - and the weaponization of the US dollar for trivial reasons will be the biggest self-own perhaps in history - I do not think the world is going to be a better more peaceful place in 50 years.

It might be more free in a certain sense though, which may or may not end up long-term (over multiple generations) being better overall for humanity. Time will tell.

Certainly though, the average quality of life in the US is about to plummet.

Re: USD share as global reserve currency drops to lowest since 1994

#53

Post by symbogra »

delfinom wrote: post #39
GenerocUsername wrote: post #31

Earlier quoted context omitted.

Imagine how red 100 years of economists faces will be when the world ends up back on a gold backed currency. Probably only takes 2 years before they start inventing abstractions on top of it and this kicking off the eventually next economic disaster.

Works until we have someone mining asteroids for gold. Then the gold backed currency collapses overnight.

No that's a good thing actually, because then we get asteroid mining spaceships

Re: USD share as global reserve currency drops to lowest since 1994

#54

Post by nutjob2 »

tmn wrote: post #20
duttish wrote: post #4

I'm not an economist so someone please correct me / expand on this; I'm guessing this is kind of a "It's not a problem until it's a crisis" situation? So far other central banks haven't begun selling treasuries, they've just stopped buying them. But once one starts selling it could become self reinforcing? What could replace it? There doesn't seem to be any new hegemonic power on the same level. Could we enter a worl…

There’s nothing fundamentally stopping all currencies from floating against gold and gold being the base asset

Only the fact that it would be an idiotic policy that would destroy the economy.

Why would you let your monetary policy be run by gold miners in China, Russia and Australia? They could cause inflation or deflation simply by increasing or decreasing gold production.

Conversely how is the Fed supposed to manage inflation if it runs out of gold?

Gold is an industrial metal, also used in jewelry, not a financial panacea.

Re: USD share as global reserve currency drops to lowest since 1994

#55

Post by 827a »

nutjob2 wrote: post #51
827a wrote: post #23

Earlier quoted context omitted.

In some ways, this effect can have a positive impact on US citizens; demand for the US dollar requires supply to satisfy the demand. Where does that supply come from? Oftentimes: Printing. The US generally does not make a habit of telling US dollar buyers "no, we don't have any US dollars to sell you", so less demand on the dollar for reserve holdings can have a deflationary impact on its value. This can be combined…

The Fed most commonly uses Open Market Operations to modify the money supply, with "money printing" or Quantitative Easing used in more emergency situations. But more broadly your comment doesn't really represent reality, whatever happens in the markets and economy the Fed manages inflation (or deflation) and it's much more complicated than a single relationship like you describe. More interesting is trade, where the…

Sure; and I'm referring directly to those "emergency situations", which aren't much of an "emergency" as most people would understand the word given that they've engaged in QE for ~7 of the past twenty years.

Re: USD share as global reserve currency drops to lowest since 1994

#56

Post by OutOfHere »

tmn wrote: post #20
duttish wrote: post #4

I'm not an economist so someone please correct me / expand on this; I'm guessing this is kind of a "It's not a problem until it's a crisis" situation? So far other central banks haven't begun selling treasuries, they've just stopped buying them. But once one starts selling it could become self reinforcing? What could replace it? There doesn't seem to be any new hegemonic power on the same level. Could we enter a worl…

There’s nothing fundamentally stopping all currencies from floating against gold and gold being the base asset

All the arguments against gold are completely bogus because there is nothing stopping the price of gold from climbing to meet the economic need. The price of gold was suppressed for a long time by institutions, but this active suppression is increasingly difficult to continue.

As for verification and transfer, that's what electronic shares are for, distributed across a few key physical asset holders.

Re: USD share as global reserve currency drops to lowest since 1994

#57

Post by AnimalMuppet »

duttish wrote: post #4

I'm not an economist so someone please correct me / expand on this; I'm guessing this is kind of a "It's not a problem until it's a crisis" situation? So far other central banks haven't begun selling treasuries, they've just stopped buying them. But once one starts selling it could become self reinforcing? What could replace it? There doesn't seem to be any new hegemonic power on the same level. Could we enter a worl…

If they stop buying treasuries, that's still a big problem, because the US continues to run a deficit, and therefore continues to need to sell treasuries.

Re: USD share as global reserve currency drops to lowest since 1994

#58

Post by AnimalMuppet »

quicklime wrote: post #44
scythe wrote: post #18

Earlier quoted context omitted.

The British pound was displaced by the US dollar. Currently, the US dollar just doesn't have a proper rival. The euro, yuan and rupee are considered politically suspect (each for its own unique reasons); the pound and yen have too small a base. Without further transformation of the global financial system, the only alternative is for banks to hold a basket of currencies, and in such a basket the dollar would likely s…

Who considers them politically suspect? I’m guessing the people who live in the countries that use them don’t, and on the contrary would increasingly be seeing the USD as politically suspect.

The people who live in the countries that use them aren't relevant, because we are talking about them as reserve currencies. What matters is whether other countries see them as politically suspect.

Re: USD share as global reserve currency drops to lowest since 1994

#59

Post by kergonath »

_blk wrote: post #19
seg_lol wrote: post #12

Earlier quoted context omitted.

[flagged]

Ooooh that must've struck a nerve. Seems we can't post that here without massive loss of reputation. Progressivism != liberalism. That stuff just doesn't fare well, even as sarcasm.

He is neither progressive nor liberal. It’s not sarcasm, it’s bullshit.

Re: USD share as global reserve currency drops to lowest since 1994

#60

Post by chhxdjsj »

827a wrote: post #50
daedrdev wrote: post #34

Earlier quoted context omitted.

No, physically backed currencies will not return because physical goods do not correlate with the size of an economy, especially the amount of gold

Gold-backed currencies, and even Bitcoin, are really good if you want your economy to be only this big, and never grow bigger. Eventually, a crisis will happen, and you'll say "actually, its now 1.3 yuan to the gram, because we need to build tanks", or "actually, did we say we had 8,000 tons of gold in reserve? we meant 9,000. Yeah we just counted, no you can't look at it, we have 9,000, here take the yuan and go bui…

"actually, did we say we had 8,000 tons of gold in reserve? we meant 9,000. Yeah we just counted, no you can't look at it, we have 9,000, here take the yuan and go build vaccines"

You cant do that with bitcoin

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