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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

#161

Post by [deleted] »

thisislife2 wrote: post #140
MagnumOpus wrote: post #24

Earlier quoted context omitted.

No, this is an artifact of Russian reserves getting frozen in 2022 and autocracies the world round getting more careful about having all their eggs in that basket. The PRC’s SAFE is selling dollars and buying gold in a very covert but absolutely massive fashion, and most likely, so are many other countries in a smaller way.

India has also been quietly bringing back its gold reserves stored abroad. NATO west made a very bad call by freezing, and then publicising their threat to also seize , Russia's foreign reserves in their country.

[deleted]

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

#162

Post by tonfa »

foxrider wrote: post #71
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…

Ok, let's see - yuan isn't a freely traded currency, it's heavily regulated by China. From that alone it can not be used a reserve currency by anyone - unless they want to hand over all control over their assets to CCP. The rupee is better, but there's not a lot of trust in Indian institutions globally, so black swan events are more likely. I can see it becoming a better proposition as India further matures and taps…

> That alone makes it far removed from being politically suspect in my book, unless there's some blatant case against the euro that I'm missing.

Lack of integration/solidarity. A common currency is a pretty bad idea if economies are allowed to diverge (see previous sovereign debt crisis, there's no reason why eg France can't be the next trigger).

You need a common tax base, and solidarity across member (much more than the current state) to have an effective monetary policy.

The in-between status quo for EU really isn't great (either you need to keep building EU institutions/start having proper eu taxes and budget -- something that is not really popular at the moment--, or euro should be reconsidered). (From what I understand it's not really a controversial opinion in economic circles).

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

#163

Post by scrubs »

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 wish I was more sophisticated in these areas. But I'm not. My fear isn't so much reduction in USD is our American stupidity in current account deficits, and debt which is to precisely point fingers at our insipid Congress. The last gasp --- which proved to be all air --- was Paul Ryan who was gonna try to fix things. Since that time it's a combination of we didn't, and we can't, plus reactionary moves. In so doing we're just wasting our soft power here. The other head wind is trade deficits. But unlike that, our budget and it's knock on effects is more directly in control.

I once ran into Tom Keene of Bloomberg news around 2014. In discussing this his view of Washington's view was we can print whatever we want. I was surprised he didn't criticize that ... but it's stuck we me ever since.

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

#164

Post by BobbyJo »

doctorpangloss wrote: post #119
BobbyJo wrote: post #112

Earlier quoted context omitted.

I mean, luck is always a part of it, but you need responsible policy too. The US was lucky from 2010 to 2020, with the the economy growing basically that whole stretch, and we still ran a massively growing deficit the entire time because we decided to try and reform the middle east while lowering taxes.

would his policy have been to pay for GLP1s? Yes. And is that a little more than a hypothetical? yes. People who don't know US budgets don't know what drives faster-than-GDP growth in expenses (it's real estate, biotech and college).

> People who don't know US budgets don't know what drives faster-than-GDP growth in expenses (it's real estate, biotech and college).

That's just wrong. Social Security, Medicare, debt interest, and the military eclipse everything else. Discretionary spending outside the military is only like 15% of the budget.

Also, why are you even connecting GLP1 drugs and the 90s federal budget surplus? The drugs didn't exist back then, and the government isn't paying for everyone to take them now, so I have no idea why you'd even draw a connection there.

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

#165

Post by machomaster »

mahirsaid wrote: post #136
mvkel wrote: post #21

Whenever I see headlines like this, I ask: what happened in 1994? It was post-Cold War and central banks were trimming USD reserves to test alternatives. Then, crises hit (tequila, Asian, Russian, dot com) and the world reconsolidated around USD, thanks to the immense strength of the Federal Reserve and IMF. Similarly now, reserve share is falling as countries hedge sanctions and geopolitics, yet dollar usage in trad…

Something like the brics can challenge that. Having a safe currency vehicle that can sustain itself much like the dollar that the world will trust is all the momentum you need. Much like why the dollar is. You have a big player now like China backed by other large populated countries etc brazil.

Brics is nothing but a meeting, conversation and PR arena. It is not an Union of any kind, not military, not scientific, not political, not trade, not cultural.

BRICS having it own separate currency and a central bank is as far from reality as the samw thing happening to the qualifying countries in Mundial.

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

#166

Post by mgh95 »

marcosdumay wrote: post #144
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].

> but even that has serious issues for Europe's export oriented economies Hum... There are no reliable numbers out there, but I don't think the dollar devaluation has been keeping up with the US inflation. And if so, no, Europe's exports are becoming more competitive, not less.

> Hum... There are no reliable numbers out there, but I don't think the dollar devaluation has been keeping up with the US inflation.

There isn't anything like "dollar devaluation has been keeping up with the US inflation". You are interested in what is called the import/export price index [1] and for imports that has been relatively flat for the past ~24 months(import +.3%, export +3.8% for TTM). So in a sense, imports for a fixed good are relatively unchanged in constant-currency terms.

It's more along the lines of "if the EUR goes to 1.5, what does this do to eurozone economies?" and the answer to that isn't pretty for europe. This would greatly impair the economy of Germany and other large eurozone economies pretty substantially(see this article for why [2]).

And finally, remember: the US actually exports inflation [3]. Most economies cannot simply say no to this effect.

[1]https://www.bls.gov/mxp/ [2]https://www.bloomberg.com/opinion/articles/2025-10-06/europe... [3] https://www.bloomberg.com/news/articles/2022-07-18/strong-us...

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

#167

Post by machomaster »

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…

Unfortunately the skeleton analogy is not correct, because it assumes that the foundation is fine, and you just need more beef/muscle/money to scale it up.

With the exception of few European countries that did maintain a functional army (Finland, France), other countries' military skeletons suffer from terminally low levels of bone density due to decades of under- and malnutrition. The whole bodies (incl. skeletons) have to quickly be build anew.

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

#168

Post by throw0101c »

cjbgkagh wrote: post #67
vkou wrote: post #38

Earlier quoted context omitted.

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.

> 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.

Contrary to popular opinion, the historical record shows that gold does not actually bring price stability; see "Why the Gold Standard Is the World's Worst Economic Idea, in 2 Charts":

* http://archive.is/https://www.theatlantic.com/business/archi...

Most of the claimed benefits of gold-backed currencies are myths:

* https://archive.is/https://www.vox.com/2014/7/16/5900297/cas...

Before what we call "The Great Depression" (of the 1930s), that label was applied to another years-long economic malaise, which was in part caused by using gold-backed currency (as was the 1930s Great Depression):

* https://en.wikipedia.org/wiki/Long_Depression

You'll find that US economic downturns became less frequent as the US went off the gold standard, and the Fed gained more and more independence:

* https://en.wikipedia.org/wiki/File:GDP_growth_1923-2009.jpg

* https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...

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

#169

Post by ProjectArcturis »

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…

The 10-year Treasury rate has more than doubled since 2001. I skipped Econ 101 - If you have to pay people twice as much to take your debt, is there more or less demand for it?

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

#170

Post by ogogmad »

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

Isn't a more modest opinion that gold admits a guaranteed minimum on its price because of scarcity and demand from industrial applications? That guaranteed minimum on its price is what enables it to be used as a hedge against a possible hyperinflation event of the USD. By comparison, the USD, like all other fiat currencies, might not have any guaranteed minimum price.

I'm out of my depth, so apologies.

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