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The fraying of the U.S. global currency reserve system

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Re: The fraying of the U.S. global currency reserve system

#181

Post by AnthonyMouse »

omgwtfbyobbq wrote: post #149
AnthonyMouse wrote: post #111

Earlier quoted context omitted.

The argument against his covid response was in not using more aggressive lockdowns. Which is the thing that increases unemployment. You seem to be arguing that more lockdowns, which increase unemployment in the short term, would have reduced unemployment in the short term (i.e. the period measured in that data).

More aggressive lockdowns initially could have limited the initial spread, and from there reasonable precautions could have been effective. Disparaging mask use is also generally considered to be harmful. Cutting funding to certain CDC programs may also have been detrimental. https://fortune.com/2020/02/26/coronavirus-covid-19-cdc-budg...

> More aggressive lockdowns initially could have limited the initial spread, and from there reasonable precautions could have been effective.

This is what Australia did. Except that some of the measures they used may have been unconstitutional in the US, and Australia is an island. The US has 4500 miles of porous borders with other countries.

And covid spreads asymptomatically, so the only way to get to where Australia is now is to get the number of cases down to basically zero. Which you can't do if you get 40 more from Mexico every week.

Notice that Australia is basically the only country that has managed to succeed with this; western Europe is doing little better than the US.

> Cutting funding to certain CDC programs may also have been detrimental.

This is fake news. The budget cuts were proposed (as a starting point for budget negotiations with Congress) but never actually enacted:

https://www.factcheck.org/2020/03/democrats-misleading-coron...

> Disparaging mask use is also generally considered to be harmful.

For that you can thank CNN. They were writing a national story every time Trump would appear on camera without a mask, even if he was giving a speech to a camera with no audience or was in a room with entirely people being covid tested every day. This predictably led to Trump supporters defending him and it becoming a partisan issue.

It also didn't help that the CDC was disparaging mask use early on, ostensibly in order to preserve PPE for medical professionals, which gave everybody plenty of ammunition to fight about it once CNN had made it partisan for no good reason.

Re: The fraying of the U.S. global currency reserve system

#182

Post by ilaksh »

jboydyhacker wrote: post #31

Economists writing about the end of the dollar as a reserve currency is not a new thing. With the Fed printing money tho at record rates this would be the time for a shift to happen. The problem is there is no alternative. The Euro has it's own structural issues and as we saw in March when folks got scared they sold alternatives like Bitcoin down hard. In short, there is no alternative without international cooperati…

I personally dream that Ethereum 2.0 will be used as the basis for an alternative which is built on and readily exchanged with all the new major sovereign digital currencies. Or maybe somehow it will be based on carbon or energy although that is a long-shot.

Re: The fraying of the U.S. global currency reserve system

#183

Post by jaredtn »

birdsbirdsbirds wrote: post #123
jaredtn wrote: post #34

Earlier quoted context omitted.

There are two concepts here: medium of exchange and store of value. Currently the US dollar (and Treasury bonds) do both. It's unlikely that the US dollar disappears as a medium of exchange, though there are steps being taken here, such as China + Russia pricing their oil trade in yuan rather than dollars. Yet with M2 money supply increasing 25% in the last year and the DXY crashing by 10%, the US dollar is no longer…

Gold is not priced as a commodity and if everybody is starting to buy oil to store their value, it will stop being a commodity, too. The oil price would go up for a short moment, investments into renewable energies would increase and oil would actually drop in value after it had sucked up the value to be stored. Can't the increased M2 money supply be interpreted as a move to stabilize the value of the dollar? Maybe t…

It was certainly a move to stabilize the stock market and Treasury market. However, having a reserve asset that steadily, stably climbs lower is not a store of value by any definition.

Re: The fraying of the U.S. global currency reserve system

#184

Post by ilaksh »

Luckily none of this has any military implications.

All the people who have dollars or bonds will be happy to see their money evaporate. And no one will be concerned if the US defaults, because they have nothing of value anyway worth liquidating or foreclosing.

And we could never have another global war. We are completely passed that now of course. All of the recent wars have been totally isolated incidents, mainly caused by evil dictators.

/s

Re: The fraying of the U.S. global currency reserve system

#185

Post by GcVmvNhBsU »

AnthonyMouse wrote: post #144
jfim wrote: post #121

Earlier quoted context omitted.

> It's hard to argue that tariffs on goods from China don't make it less attractive to buy goods from China. It's true that tariffs will make buying goods from China less appealing, but if you look at the outcome, it's not really a win. Consumers are paying more for the same goods, companies are scrambling to move their production to India and Malaysia, and there's not a significant increase in US manufacturing. A pr…

> It's true that tariffs will make buying goods from China less appealing, but if you look at the outcome, it's not really a win. Consumers are paying more for the same goods, companies are scrambling to move their production to India and Malaysia, and there's not a significant increase in US manufacturing. If you look at the actual outcome, it was that China devalued their currency or otherwise lowered prices to eat…

Tariffs don’t really seem to help anyone. Appliances are much more expensive than the last time I bought them in 2015. If we continue to raise tariffs, China will just stop buying corn, soybeans, and pork, and suddenly all of the revenue raised from tariffs are going to bail out farmers in Iowa.

Re: The fraying of the U.S. global currency reserve system

#186

Post by toast0 »

rmah wrote: post #20
est31 wrote: post #7

Which country would benefit from a weaker dollar? Germany wants to sell their cars. China their phones. If Americans can't afford them any more, then a big market would disappear.

US manufacturers and service providers would benefit from a weaker USD. It would mean our exports are, relatively speaking, cheaper for others to buy with USD. US consumers would be hurt as it would mean imports are more expensive for US consumers.

If we have a weaker USD, doesn't that make US manufacturers' costs increase (measured in USD), and their finished goods prices increase (measured in USD), resulting in global prices staying about the same (measured in whatever foreign currency).

I mean, labor prices won't move quickly, and existing capital equipment was purchased with stronger dollars, but eventually new equipment will be needed at higher cost, and people will demand higher wages to meet their previous spending power, and anyway, american manufacturing tries to reduce labor as far as possible.

Re: The fraying of the U.S. global currency reserve system

#187

Post by GcVmvNhBsU »

jtbayly wrote: post #168
mbesto wrote: post #39

Earlier quoted context omitted.

> the last LCD panel manufacturer in the US closed around then and we could no longer manufacture LCD for our military vehicles And funny enough our gov't (I'll let you guess which political party) struck a deal with Foxconn to produce LCDs in Wisconsin. It has failed miserably: https://www.theverge.com/2020/4/12/21217060/foxconn-wisconsi...

So an attempt was made to bring back manufacturing, and that’s so terrible? Let’s all roll our eyes at the Republicans.

It’s fair to eye roll at ineffective agreements that don’t pan out. Racing to the bottom with tax incentives is not the only way to bring back manufacturing and hasn’t seemed to work when it’s tried.

Re: The fraying of the U.S. global currency reserve system

#188

Post by cloudinshape »

momokoko wrote: post #180
cloudinshape wrote: post #174

Earlier quoted context omitted.

The reason foreign real estate investment is so high is because the dollar is the reserve currency of the world, and since those countries produce so much they have a huge excess of dollars but the US produces so little they have nothing to buy with those dollars. The only thing the US can realistically offer is land, if you ban it it will only accelerate the collapse.

Banning foreign investment in real estate forces foreign investors into more productive investments while simultaneously lowering the cost of living for workers and cost of business for companies. Moving inflation to 6% will create millions of working class jobs in the US due to both a weaker dollar and cheaper money supply for value creation. The losers in all of this are wealthy Americans. They will see their asset…

Banning foreign investment will force them to dump dollars and treasury bonds and will accelerate the development of an alternative to it for international trade.

But I guess since what you want is inflation that is one way to get it, tho it will not be 6% but closer to 30%.

Yield curve control has not worked for anyone, it is a death spiral that results in zombie economies, at best.

Re: The fraying of the U.S. global currency reserve system

#189

Post by CuriouslyC »

steffan wrote: post #134
CuriouslyC wrote: post #87

Earlier quoted context omitted.

The beauty of inflation is that it hurts you in direct proportion to how well off you are, and it can't be dodged (i.e. it's like a wealth tax, only actually achievable). We could drive inflation while also ameliorating a lot of the pain it would cause by implementing UBI (in fact, I'm pretty sure big deficit spending is the only way UBI will ever happen). Defaulting would screw a lot of institutional pension investo…

> The beauty of inflation is that it hurts you in direct proportion to how well off you are This seems opposite of reality. During inflation, prices of assets rise, as the currency with which to procure them becomes devalued; those who possess assets are in a much safer position than those who exchange their labor for currency, since inflation will happen far more rapidly to the necessities of life (food, shelter, et…

Rent and wages are both negotiated prices, there's no reason one should rise faster than the other besides workers not asking for what they're worth, assuming there isn't a shortage of housing and a glut of workers.

Stocks will rise in response to inflation, but that will result in additional taxation since the initial investment is uninflated.

Re: The fraying of the U.S. global currency reserve system

#190

Post by bawolff »

This was a fascinating look at the history of a subject i must admit i know very little about.

However the author lost me a bit when he started talking about bitcoin. I get why bitcoin might be appealing to a country like Iran with cheap energy and sanctions preventing them from participating in the world economy. I also get why it would be appealing to individuals in developing countries with unstable local currencies, and perhaps limited access to harder assets. I don't get what the benefit would be to national reserve banks and finance between countries in the general case, where special circumstances (like Iran) don't apply.

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