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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

#151

Post by JumpCrisscross »

detourdog wrote: post #116
JumpCrisscross wrote: post #104

Earlier quoted context omitted.

> 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.

I wish you would elaborate how being a net exporter relates to it being a myth. I don't see the connection. My point is that global trade of which oil is a major component needs to settle the books nightly. If the books aren't reconciled in an efficient manner trade has to slow down.

> how being a net exporter relates to it being a myth. I don't see the connection

Petrodollar a U.S. policy comes from the 1970s, when the U.S. guaranteed the House of Saud’s security in exchange for them selling their oil in dollars. The reason wasn’t to do some currency scheme, but to ensure the U.S. could always buy Saudi oil in a currency we controlled. Saudi Arabia then invested its profits in Treasuries, which closed the loop on Wall Street [1].

When America imported oil, keeping oil exporters close was strategically vital. Petrodollar recycling helped with that. Now that we don’t, it doesn’t.

> global trade of which oil is a major component

Like 4% [2][3].

[1] https://en.wikipedia.org/wiki/Petrodollar_recycling

[2] https://oilprice.com/Energy/Crude-Oil/Oil-Dominates-the-5-Tr... ~$1.5tn in 2021

[3] https://unctad.org/publication/global-trade-update-december-... 35tn in 2025

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

#152

Post by alphazard »

thfuran wrote: post #101
alphazard wrote: post #93

Earlier quoted context omitted.

> 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?

It depends. Positive real interest rates do not necessarily mean deflation, and deflation isn't necessarily a bad thing.

As an example, you could give a loan for $1 to someone for 5% interest. In a year they pay you back, so now you have $1.05. That dollar could get you exactly the same amount (of real goods or services that you personally want) as last year, or it could get you more, or it could get you less. Inflation and deflation typically refer to the price of a basket of intrinsically valuable goods and services. That is separate from the interest rate which is just what you, the creditor, and the debtor shake hands over. If the dollar gets you the same basket as last year, then you are net better off because now you can buy the basket and you have $0.05 for lending to someone who was able to pay you back.

The missing variable here is the productivity of the rest of the economy, if the economy is growing, then you can see a decrease in dollars per basket (deflation), but that's not necessarily a bad thing. The interest rate is sort of like a best guess for the productivity of the debtor.

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

#153

Post by oldpersonintx2 »

cjs_ac wrote: post #139
indubioprorubik wrote: post #27

Earlier quoted context omitted.

No, each pushed alternative is just worser. The euro could take over, but europe just revealed itself as a "lawful" player with no plan and no pants (security-wise) - so the euro is just defacto tied to the dollar value wise. For without the us guarding europe, the euro is just loaded with invisible gigantic security and pension debts. BRICs is dealing in store credits and raw-materials. Every other empire and kingdo…

Everyone knows what’s going on. Europe is slowly reacquiring pants (too slowly for my taste). The US has this ridiculous belief that Europe has no military ability. The truth is that Europe is far too skilled at war, and collectively disarmed after the Second World War and let the US make the decisions and pay for it all because that was the only way to achieve a lasting peace. European armed forces aren’t ready for…

[dead]

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

#154

Post by oldpersonintx2 »

messe wrote: post #91
brianwawok wrote: post #87

Earlier quoted context omitted.

That’s great, I’d love a strong European military. Can you help Ukraine enough so it can win? If not you can’t defend your own countries alone.

Ah yes, because the US has been sooooo fucking supportive recently. Give me a fucking break. Your GDP is bigger than ours, and you claim to give more aid to Ukraine, but you haven't even remotely matched it. The sheer fucking arrogance of you. > Can you help Ukraine enough so it can win? Can you (the American executive) stop collaborating with Russia[1]? > If not you can’t defend your own countries alone. Are we talk…

[dead]

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

#155

Post by nutjob2 »

827a wrote: post #55
nutjob2 wrote: post #51

Earlier quoted context omitted.

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.

> 7 of the past twenty years

A lot of shit went down over that period.

But you seem upset by QE in general. It seems to upset a lot of people, possibly because the Fed created a lot of money, but that's what central banks do, they create and destroy money. It's really not that much of a big deal. People lose sight of the fact that money is an abstraction and not something concrete.

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

#156

Post by Workaccount2 »

roenxi wrote: post #137
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…

It isn't cetiris paribus, the Fed rate tells us nothing about demand because they purposefully devalue the dollar. The entire world could be refusing to accept US debt except Broke Boris and they could technically negotiate a 4% rate with just him. Assessing demand for US debt has to be linked to real goods/services/assets somewhere along the line or there just isn't anything to say. The BRICS arguably make up around…

The dollar sucks but everything else sucks more.

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

#157

Post by detourdog »

marcosdumay wrote: post #146
detourdog wrote: post #72

Earlier quoted context omitted.

Early 90’s during the Clinton administration (and the dot com boom) appeared to be the best run US budgeting process I have ever seen.

Yes, but global reserves are the domestic total foreign debit, and the government does not control that one. (I mean, it can weight in how it grows, but it's not the one that makes it.)

I think what you are saying is the sum total of global economic activity from the US point of view is foreign debt. The US has no direct control over this debt other than control of printing treasuries.

Is that fair interpretation.

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

#158

Post by detourdog »

JumpCrisscross wrote: post #151
detourdog wrote: post #116

Earlier quoted context omitted.

I wish you would elaborate how being a net exporter relates to it being a myth. I don't see the connection. My point is that global trade of which oil is a major component needs to settle the books nightly. If the books aren't reconciled in an efficient manner trade has to slow down.

> how being a net exporter relates to it being a myth. I don't see the connection Petrodollar a U.S. policy comes from the 1970s, when the U.S. guaranteed the House of Saud’s security in exchange for them selling their oil in dollars. The reason wasn’t to do some currency scheme, but to ensure the U.S. could always buy Saudi oil in a currency we controlled. Saudi Arabia then invested its profits in Treasuries, which…

I see that as a side show to the overall banking system. I trying to express that this was a reactionary response to an immediate problem rather than a key part of banking.

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

#159

Post by blibble »

ajross wrote: post #40
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…

> The replacement will probably be a multinational currency with strictly controlled quantity tied to [...] probably [...] gold. This is econolibertarian fan fiction. Literally no one wants that except people already involved in speculating[1] on gold. Are there bad externalities to relying on a unlitaterally controlled reserve currency? Yes. Are they made better by handing financial control over to a bunch of fuckin…

> This is econolibertarian fan fiction.

I guess you never heard of the XDR? it was tied to gold

https://en.wikipedia.org/wiki/Special_drawing_rights#Alterna...

... and could be again, if the US regime continues its incontinence

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

#160

Post by detourdog »

JumpCrisscross wrote: post #145
detourdog wrote: post #117

Earlier quoted context omitted.

I agree that the next wave may not be dominated by a single currency. I also think that is a superior system. I think the BRICS system is based on honoring multiple currencies rather than using a single currency for settlement.

> that is a superior system It’s more robust and less efficient. Transaction costs—and opportunities for middlemen—will increase. But the chances that your country’s economy is entirely shut down on the whim of one man in Washington is reduced. > the BRICS system is based on honoring multiple currencies The BRICS system is nonsense, as evidenced by basically nobody using it beyond a totem amount. Both the PBoC and RB…

I agree that it has been unused but disagree that it will always go unused. I think that China is using the US current global antagonism to encourage others to participate.

https://www.gisreportsonline.com/r/brics-payment-system/

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