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USD share as global reserve currency drops to lowest since 1994

wolfstreet.com

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

#171

Post by bethekidyouwant »

OutOfHere wrote: post #108
fspeech wrote: post #82

Earlier quoted context omitted.

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.

An economy that can be debt based is going to out perform yours nine years out of 10

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

#172

Post by ProjectArcturis »

mgh95 wrote: post #89
alphazard wrote: post #88

Earlier quoted context omitted.

Dollars are currently only in demand for short-term use in transactions. Most of the world still relies on dollars for transactions, because that is what all the banking and payment infrastructure uses. But no one wants to hold them because they devalue and will continue to do so at an accelerating rate. It's a game of hot potato where everyone is forced to hold equities, commodities or other assets by default in ord…

> 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].

Assets, not other currencies. Equities, commodities, consumer goods.

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

#173

Post by immibis »

oblio wrote: post #62
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…

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

https://en.wikipedia.org/wiki/Hyperinflation

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

#174

Post by rvnx »

marcosdumay wrote: post #141
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…

The article answers your question: > The dollar’s share had already been below 50% before, in 1990 and 1991, after a long plunge from the peak in 1977 (share of 85.5%). This plunge accompanied a deep crisis in the US with sky-high inflation and interest rates, and four recessions over those years, including the nasty double-dip recession. Or, in other words, at 1991 the US started recovering from the Oil Crisis and t…

"Stable". If any time in history where planets align so perfectly for wars it is right now.

It could play out nicely for USD, if the US stays out of direct conflicts but keeps selling weapons.

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

#175

Post by nrhrjrjrjtntbt »

samsk wrote: post #5

Who would tell. Economy runs on 'trust' - not on 'by tomorrow we apply this random tax rate to this pinguin island and everone else'.

Trend has been negative since 1999 so as much as I like to poke the tango doll, this can not be the reason or only reason.

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

#176

Post by bdangubic »

JumpCrisscross wrote: post #95
alphazard wrote: post #88

Earlier quoted context omitted.

Dollars are currently only in demand for short-term use in transactions. Most of the world still relies on dollars for transactions, because that is what all the banking and payment infrastructure uses. But no one wants to hold them because they devalue and will continue to do so at an accelerating rate. It's a game of hot potato where everyone is forced to hold equities, commodities or other assets by default in ord…

> Dollars are currently only in demand for short-term use in transactions This is all currencies. You store value in debt. You spend in the hot currency. > no one wants to hold them because they devalue and will continue to do so at an accelerating rate Literally what Treasuries are for. > everyone should think of their checking account as something that they pay negative real interest on for the privilege of being a…

> One, you shouldn’t be storing wealth in cash-like instruments, that’s literally using currency wrong (and has been across human history). Cash is for transacting.

Talk to Mr. Buffet and see what he thinks about this with his mountain of cash… Cash being just transacting might be the most insane thing I’ve read here this year, well done

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

#177

Post by ajross »

blibble wrote: post #159
ajross wrote: post #40

Earlier quoted context omitted.

> 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

SDR valuations were tied to gold when the USD was still gold-based. Needless to say Bretton Woods didn't survive that transition at all. Again, it was a failed (!) experiment, not a recipe to try again. Believing otherwise is fan fiction.

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

#178

Post by cjbgkagh »

throw0101c wrote: post #168
cjbgkagh wrote: post #67

Earlier quoted context omitted.

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": *…

Many things work just fine right until they stop working, our current strategy of blowing ever bigger economic bubbles has worked for a long time and I expect it will continue for long time. It has the very stable property of enriching the already wealthy.

But it will not last forever and I do expect to see the end of it within my lifetime. It is this calamity that I'm interested in diminishing and it is on this basis that I think a weaker federal reserve would be less damaging. Since the federal reserve obscures the true state of the economy uncovering the true state will coincide with a weakling of the federal reserve and will appear causal.

I'm not a gold bug, I don't own any of it, I do own some bitcoin but my main asset is my software company.

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

#179

Post by toomuchtodo »

bdangubic wrote: post #176
JumpCrisscross wrote: post #95

Earlier quoted context omitted.

> Dollars are currently only in demand for short-term use in transactions This is all currencies. You store value in debt. You spend in the hot currency. > no one wants to hold them because they devalue and will continue to do so at an accelerating rate Literally what Treasuries are for. > everyone should think of their checking account as something that they pay negative real interest on for the privilege of being a…

> One, you shouldn’t be storing wealth in cash-like instruments, that’s literally using currency wrong (and has been across human history). Cash is for transacting. Talk to Mr. Buffet and see what he thinks about this with his mountain of cash… Cash being just transacting might be the most insane thing I’ve read here this year, well done

I think it speaks volumes that Buffet has nowhere else to put that ~$382B in cash; that speaks more about current asset valuations ("everything bubble" [1]) more than that US cash is trash. If assets classes are inflated, US treasuries are no longer a safe haven, gold and other precious metals are overbought, where do you go? There is no immediate answer, imho, but only a slow burn as the world reconfigures around the US not being a superpower, the dollar not being a reserve currency, etc. As Workaccount2 comments downthread, "The dollar sucks but everything else sucks more. [2]"

[1] Look around: Bubbles are everywhere. - https://news.ycombinator.com/item?id=46303596 - December 2025

[2] https://news.ycombinator.com/item?id=46407032

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

#180

Post by unmole »

alphazard wrote: post #88
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…

Dollars are currently only in demand for short-term use in transactions. Most of the world still relies on dollars for transactions, because that is what all the banking and payment infrastructure uses. But no one wants to hold them because they devalue and will continue to do so at an accelerating rate. It's a game of hot potato where everyone is forced to hold equities, commodities or other assets by default in ord…

> But no one wants to hold them because they devalue and will continue to do so at an accelerating rate.

Talk is cheap. Show me the stats.

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