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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

#61

Post by seg_lol »

kergonath wrote: post #59
_blk wrote: post #19

Earlier quoted context omitted.

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.

In the process of burning down democracy, Trump has brought about changes that progressives have wanted for decades, namely a vast reduction in US hegemony. He has also caused massive suffering, inflation and will lead to the deaths of millions of people.

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

#62

Post by oblio »

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…

What about US debt? If nobody buys USD anymore, suddenly there will be a lot of excess USD.

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

#63

Post by gigatexal »

detourdog wrote: post #43
jeffbee wrote: post #8

Earlier quoted context omitted.

Panics about how oil is being traded in non-USD terms are as old as the internet and, in all likelihood, even older than that. You can find usenet slop from 20-30 years ago about the petro-euro and the "tehran oil bourse". Here's an old site that is/was daily panics about the fall of the dollar, from 15-25 years ago. http://www.engdahl.oilgeopolitics.net/

Nobody is panicking. BRICS has gotten steadily larger and is gaining as an alternative banking system. This is competition. This just requires more thoughtful strategies.

The steady building up of alternatives will happen until one day the reserve currency status will change hands all of a sudden.

I think the Fed could stem the whole thing by just issuing a stable coin itself pegged to the dollar and re-assert itself as the dominant currency/arbiter... but who knows. Maybe then it'd have insight into every transaction and be able to stem things with even more power than it can now.

Nobody stays king forever. Maybe it's time the US is forced to balance its books and stop riding on cheap credit. Losing the power of the reserve currency and the power that that gives to SWIFT and things will take a lot of soft power away from the US. Without allies the US couldn't stop a united China, Russia, insert-other-would-be-ally-of-theirs in a world conflict.

As another commenter said there's no leadership at teh top just chaos. People, countries, banks don't invest in chaos.

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

#64

Post by throw0101c »

symbogra wrote: post #53
delfinom wrote: post #39

Earlier quoted context omitted.

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

Beltalowda unite!

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

#65

Post by throw0101c »

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…

> What could replace it?

It doesn't necessarily have to be one thing. We've had multi-currency regimes in the past (before one generally took over). See How global currencies work past, present, and future by Barry Eichengreen, Arnaud Mehl, and Livia Chitu:

* https://press.princeton.edu/books/hardcover/9780691177007/ho...

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

#66

Post by tmn »

quickthrowman wrote: post #48
tmn wrote: post #20

Earlier quoted context omitted.

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

There is a fixed supply of gold that does not correlate with economic output. It makes zero sense to tie the value of paper money to gold.

Read ‘float’

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

#67

Post by cjbgkagh »

vkou wrote: post #38
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.

There were, of course, no economic disasters back when the world operated on gold-backed currencies. The goldbugs won't be red in the face, though, because they are never wrong and are constitutionally incapable of feeling any shame.

I’m pretty sure no-one has argued that a gold standard would prevent economic disasters. That sounds like a straw man. My understanding is that there would be more of them but the individual and cumulative impact would be far less. You can still have fractional reserve banking with the gold standard so the gold standard alone is not sufficient to prevent that.

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

#68

Post by llmslave2 »

daedrdev wrote: post #34
somenameforme wrote: post #11

Earlier quoted context omitted.

This is more of a go out with a whimper rather than a bang type thing. Being the world reserve currency (as well as the largest consumer market in the world) previously enabled the US to do things like relatively easily export inflation in spite of relatively reckless monetary policy. Now that inflation is sticking around far more persistently, even long term bonds have gone from 1-2% to 4%+, and so on. Stagflation i…

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

I know you mean it as in governments won't return to a system that doesn't let them inflate the money supply, but that doesn't mean it's a bad thing...

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

#69

Post by llmslave2 »

AnthonyMouse wrote: post #26
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…

> get the bloody USD printing machine under control The amount the US government spends on debt service is already unreasonable. If the US dollar lost reserve status, the first thing that would happen is that the Fed would have to buy the debt with newly created money to prevent bond rates from causing interest payments to explode. Meanwhile the act of other countries unloading US dollar reserves would cause signific…

> as long as wages stay consistent with the value of the dollar.

Which the won't, so it will end in disaster for the average American.

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

#70

Post by llmslave2 »

827a wrote: post #45
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…

Lot of emotion in this comment; not a lot of substance. I think you're misunderstanding how some of these systems work. > This change will also force the US to finally get fiscally responsible and get the bloody USD printing machine under control, something they never had to do because of the USD reserve currency status. It is not the case that the US didn't "need" to get the USD printing machine under control becaus…

This might be the most unhinged defense of money printing and inflation I've ever read haha. "We can't stop the printers, or millions will die!!!"
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