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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

#101

Post by thfuran »

alphazard wrote: post #93
mgh95 wrote: post #89

Earlier quoted context omitted.

> But no one wants to hold them because they devalue and will continue to do so at an accelerating rate. Devalue against what is the main question though, isn't it? The real longer term issue is that the USD is devaluing against the Euro, but even that has serious issues for Europe's export oriented economies [1].

> Devalue against what is the main question though, isn't it? The real longer term issue is that the USD is devaluing against the Euro... I don't think that FOREX rates are the best way to think about this, but if you work in that world or otherwise have an intuition for it, then go ahead. Most of us only handle 1 currency, and reasoning in terms of 2 isn't exactly an intuition pump. Instead think about: 1. The dolla…

>The dollar valued against itself a year earlier, and a year in the future. That is the interest rate or yield of the asset if held. It should go up, but right now it goes down.

You’re saying there should be deflation?

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

#102

Post by JumpCrisscross »

maxglute wrote: post #49

Dollar dominance erosion shifting towards dollar inertia. Post RU sanctions dollar lost much of it's leverage (as geopolitical weapon), i.e. actual useful dominance function (transaction panopticon, sanctions)while still retaining most of the liability (Triffin etc). Dollar going to remain popular by volume because plumbing in place, but parallel payment systems last few years = systematic blindspots where US treasur…

> countries (emerging markets / BRI recipients) who would have borrowed USD from FED (or US influenced IMF/WB) now borrow from USD from PRC -> reduce US treasuries demand

This makes no sense. If the PRC is lending U.S. dollars, that doesn’t reduce Treasury demand. It increases demand for dollar-denominated assets, goods and service providers. The borrowing country has to spend those lent dollars after all.

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

#103

Post by pandaman »

JumpCrisscross wrote: post #98
pandaman wrote: post #94

Earlier quoted context omitted.

Treasuries are not some kind of artifacts that can be stored indefinitely, they are bonds with maturity dates. As they mature they turn into cash automatically and that cash used to come from selling new treasuries. As the demand dwindles the US has to sell its bonds cheaper thus borrowing at higher interest and that interest will have to be paid by selling even more treasuries at even higher interest so it's already…

> As the demand dwindles the US has to sell its bonds cheaper To be clear, we see no indication of this. (The Fed reduced its balance sheet in the last 3 years on the order of the GDP of Spain or Brazil [1][2].) [1] https://www.federalreserve.gov/monetarypolicy/policy-normali... [2] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...

Not sure what your links are supposed to prove but here is the link[1] to the actual yield on the 10 year bond, higher yield means the bond is sold at higher discount i.e. cheaper.

1. https://fred.stlouisfed.org/series/DGS10/

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

#104

Post by JumpCrisscross »

detourdog wrote: post #3
gigatexal wrote: post #2

Insane this administration wants pimp the US out to the highest bidder and let the crypto weirdos run the world. If we ever lost the reserve currency peg treasury bills will spike and it’ll be impossible to fund the government. We spend 7T every year and take in 5T in taxes. This admin is gutting the IRS and banking on tarrifs which are just taxes. So … without the ability to keep interest rates very low because ever…

My understanding is that it has happened. The oil market was tied to the USD. The BRICS have now implemented a payment system as robust as SWIFT system. Oil is now being paid for using that system.

> Oil is now being paid for using that system

The petrodollar hypothesis has been a myth since the 1990s. With America a net oil exporter, it’s an entirely stupid model to keep running.

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

#105

Post by JumpCrisscross »

gigatexal wrote: post #63
detourdog wrote: post #43

Earlier quoted context omitted.

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. No…

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

This is not how it has ever happened. Instead, we’ll see a gradual erosion as the world switches to multi-polarity and spheres of influence. (And, with decreasing international trade, every country’s reserve mix will vary.)

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

#106

Post by JumpCrisscross »

pandaman wrote: post #103
JumpCrisscross wrote: post #98

Earlier quoted context omitted.

> As the demand dwindles the US has to sell its bonds cheaper To be clear, we see no indication of this. (The Fed reduced its balance sheet in the last 3 years on the order of the GDP of Spain or Brazil [1][2].) [1] https://www.federalreserve.gov/monetarypolicy/policy-normali... [2] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...

Not sure what your links are supposed to prove but here is the link[1] to the actual yield on the 10 year bond, higher yield means the bond is sold at higher discount i.e. cheaper. 1. https://fred.stlouisfed.org/series/DGS10/

> higher yield means the bond is sold at higher discount i.e. cheaper

Yes. The Fed set a policy of higher rates. It did that by selling bonds and driving the price up.

Then it set a policy of reducing rates, and was able to do that by just selling fewer bonds. Not buying them. That implies strong demand for these assets. (You can’t use price as a proxy for demand in Treasuries since it’s an explicitly manipulated price by its issuer.)

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

#107

Post by deadbabe »

JumpCrisscross wrote: post #97
alphazard wrote: post #96

Earlier quoted context omitted.

This seems a little pedantic, but sure, no one wants to be owed debt denominated in dollars.

> no one wants debt denominated in dollars Source? Every indication is that dollar-denominated financial assets are tremendously in demand. (What metric are you looking at?) The Fed has been reducing rates while selling assets, all while U.S. public debt explodes. The Treasury is selling more debt. The Fed is selling debt. Rates went up, and then they went down. That means there is, ceteris paribus , more demand outs…

I think you’ve destroyed his whole argument.

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

#108

Post by OutOfHere »

fspeech wrote: post #82
OutOfHere wrote: post #56

Earlier quoted context omitted.

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.

Price of a commodity metal can do whatever they want without causing a big problem. It is just a resource allocation signal. However if you base your currency value on it suddenly you are forcing debtors into bankruptcies if the value shoots up. Credit relationships aka investments are what make an economy run and grow, not some arbitrary commodity price.

You're just so used to a debt fueled economy that you can't think of it being any other way. That is the problem though in that 99 times out of 100, debt goes rogue in a runaway sense and blows up the system. It is a time bom.

In essence, debt doesn't need saving from the system; it's the system that needs saving from debt.

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

#109

Post by JumpCrisscross »

deadbabe wrote: post #107
JumpCrisscross wrote: post #97

Earlier quoted context omitted.

> no one wants debt denominated in dollars Source? Every indication is that dollar-denominated financial assets are tremendously in demand. (What metric are you looking at?) The Fed has been reducing rates while selling assets, all while U.S. public debt explodes. The Treasury is selling more debt. The Fed is selling debt. Rates went up, and then they went down. That means there is, ceteris paribus , more demand outs…

I think you’ve destroyed his whole argument.

It’s ridiculous enough that I’m curious for the source.

Like, we’re in a potential AI investment bubble. Bubbles don’t happen when you can’t sell your paper, they’re an indication of the opposite problem.

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

#110

Post by dyauspitr »

thekingshorses wrote: post #73
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…

Just so you know India buys USD equivalent middle eastern currency to pay for Russian oil.

Which one?
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