I.M.F. Makes China’s Renminbi One of World’s Select Currencies • Hacker News Board

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#21

Post by mikeash » Mon, Nov 30, 2015, 6:54 PM UTC

AC__ wrote: post #18

AC__ wrote: post #13

While you present a compelling argument, I must respectfully disagree. I may catch some flack for saying it, and many people refuse to believe it, but the U.S. is insolvent. The value of the U.S. dollar is artificially propped-up. How long do you truly believe the Russias and Chinas of the world are going to keep using greenbacks? They will feign WWIII, Israel will expand to encompass 'Greater Israel' and U.N. will f…

Downvote, but in a year or two remember atodaso lol https://www.pinterest.com/pin/264164334368722823/

Just for the record, I downvoted because of the "U.N. will formally install global government" nonsense, not anything related to the US dollar.

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#22

Post by adventured » Mon, Nov 30, 2015, 6:55 PM UTC

AC__ wrote: post #13

While you present a compelling argument, I must respectfully disagree. I may catch some flack for saying it, and many people refuse to believe it, but the U.S. is insolvent. The value of the U.S. dollar is artificially propped-up. How long do you truly believe the Russias and Chinas of the world are going to keep using greenbacks? They will feign WWIII, Israel will expand to encompass 'Greater Israel' and U.N. will f…

Insolvent you say? The US owns 45% of all global wealth (per Allianz's global wealth studies, it was ~50% pre great recession, fell to about ~39% in 2010 as the US suffered heavy asset declines, and has rebounded back to around ~45% with the recovery in the US economy, that gap is mostly the arrival of China's wealth). The US is massively solvent in fact. Furthering this point, the US is now growing as fast as China in real terms (given pretty much every credible study indicates China is at least lying about half of their growth); the US is also gaining substantially against most of Europe, as its economy continues to grow faster than Europe even with a stronger dollar. South America and most emerging markets have been thrown into near-depression status, due to the stronger dollar. The US economy is likely to enjoy a very nice 10 or 20 year run in fact.

Russia's economy is now - as of the latest 2015 numbers - 1/12th the size of the US economy. It no longer matters as a global economic power (it still matters as a global commodity player). Its economy is smaller than Canada's now.

China will continue to use greenbacks because they will never have any other choice, the same as they'll continue using Euros. The US is back to being China's biggest trade customer (with the dollar having gained so much value): that trade is mostly done in dollars and that will continue.

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#23

Post by chimeracoder » Mon, Nov 30, 2015, 6:56 PM UTC

mikeash wrote: post #20

chimeracoder wrote: post #10

Earlier quoted context omitted.

I'm more than a bit skeptical of anything pre-1750 in that graph, because the "world's" reserve currency means something very different in today's global economy than what that graph appears to be using to define them. Those might pass for European reserve currencies in a pre-Industrial Era, but they certainly do not reflect the world economy of the time period by any means. In addition to all of that, the USD is the…

Wouldn't the gold standard render the entire notion of a "reserve currency" meaningless, too? If you're holding a gold-backed currency then you're effectively just holding gold. Holding a currency as a "reserve currency" probably meant actually holding a bunch of gold in a vault. It hardly matters whose face was on it.

> Wouldn't the gold standard render the entire notion of a "reserve currency" meaningless, too?

Yeah, it does. The more I think about it, the less sense that graph makes.

It's not entirely meaningless because there are still benefits to being the reserve currency in a gold-backed world (e.g. cheaper cross-border transactions from not having to do any forex). But the biggest impact of being the reserve currency today is on monetary policy, which only makes sense in the context of fiat money.

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#24

Post by AC__ » Mon, Nov 30, 2015, 6:56 PM UTC

mikeash wrote: post #21

AC__ wrote: post #18

Earlier quoted context omitted.

Downvote, but in a year or two remember atodaso lol https://www.pinterest.com/pin/264164334368722823/

Just for the record, I downvoted because of the "U.N. will formally install global government" nonsense, not anything related to the US dollar.

Downvote the comment, not the Ricky meme, that shit is pure gold hahaha.

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#25

Post by AC__ » Mon, Nov 30, 2015, 6:59 PM UTC

adventured wrote: post #22

AC__ wrote: post #13

While you present a compelling argument, I must respectfully disagree. I may catch some flack for saying it, and many people refuse to believe it, but the U.S. is insolvent. The value of the U.S. dollar is artificially propped-up. How long do you truly believe the Russias and Chinas of the world are going to keep using greenbacks? They will feign WWIII, Israel will expand to encompass 'Greater Israel' and U.N. will f…

Insolvent you say? The US owns 45% of all global wealth (per Allianz's global wealth studies, it was ~50% pre great recession, fell to about ~39% in 2010 as the US suffered heavy asset declines, and has rebounded back to around ~45% with the recovery in the US economy, that gap is mostly the arrival of China's wealth). The US is massively solvent in fact. Furthering this point, the US is now growing as fast as China…

AF http://www.usdebtclock.org/

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#26

Post by thescriptkiddie » Mon, Nov 30, 2015, 7:00 PM UTC

acd wrote: post #6

This is how the worlds reserve currencies has looked historically. My personal guess is that the Yuan will be the next bar in the graph. http://azizonomics.com/2012/01/04/a-history-of-reserve-curre...

For anyone else confused by this comment, China no longer has a dual-currency system. Yuan is just a synonym for Renminbi.

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#27

Post by justincormack » Mon, Nov 30, 2015, 7:02 PM UTC

mikeash wrote: post #20

chimeracoder wrote: post #10

Earlier quoted context omitted.

I'm more than a bit skeptical of anything pre-1750 in that graph, because the "world's" reserve currency means something very different in today's global economy than what that graph appears to be using to define them. Those might pass for European reserve currencies in a pre-Industrial Era, but they certainly do not reflect the world economy of the time period by any means. In addition to all of that, the USD is the…

Wouldn't the gold standard render the entire notion of a "reserve currency" meaningless, too? If you're holding a gold-backed currency then you're effectively just holding gold. Holding a currency as a "reserve currency" probably meant actually holding a bunch of gold in a vault. It hardly matters whose face was on it.

No, there was still credit creation under the gold standard, and debt markets and so on.

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#28

Post by tootie » Mon, Nov 30, 2015, 7:02 PM UTC

AC__ wrote: post #13

While you present a compelling argument, I must respectfully disagree. I may catch some flack for saying it, and many people refuse to believe it, but the U.S. is insolvent. The value of the U.S. dollar is artificially propped-up. How long do you truly believe the Russias and Chinas of the world are going to keep using greenbacks? They will feign WWIII, Israel will expand to encompass 'Greater Israel' and U.N. will f…

Every currency's value is 100% artificial, yet they are miraculously effective.

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#29

Post by adventured » Mon, Nov 30, 2015, 7:08 PM UTC

AC__ wrote: post #25

adventured wrote: post #22

Earlier quoted context omitted.

Insolvent you say? The US owns 45% of all global wealth (per Allianz's global wealth studies, it was ~50% pre great recession, fell to about ~39% in 2010 as the US suffered heavy asset declines, and has rebounded back to around ~45% with the recovery in the US economy, that gap is mostly the arrival of China's wealth). The US is massively solvent in fact. Furthering this point, the US is now growing as fast as China…

AF http://www.usdebtclock.org/

That's a terrible argument.

You're talking about public debt, which is a small fraction of all US wealth holdings (household + corporate + government), and can be trivially managed. Further, unlike a lot of countries, the US has significant spare taxing capability (it rests in the middle tier globally on taxation). The US could easily raise $200 billion in new annual income taxes on the top 25% and not miss a beat - that single move alone would handle any potential issues from the public debt cost. Or better yet: the US can constrain its spending growth (as it has been), allowing income and assets to continue to outrun the problem.

And of course the US owns the global reserve currency, which enables it to export inflation to the rest of the world as a means to reduce the domestic hit of things like QE (which is why the Eurozone's QE hasn't been as effective). When the US uses the dollar to improve its fiscal circumstances, the rest of the world foots a big part of the bill. While that's sort of like cheating, it's an advantage the US possesses that nobody else does.

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#30

Post by jtc331 » Mon, Nov 30, 2015, 7:08 PM UTC

mikeash wrote: post #20

chimeracoder wrote: post #10

Earlier quoted context omitted.

I'm more than a bit skeptical of anything pre-1750 in that graph, because the "world's" reserve currency means something very different in today's global economy than what that graph appears to be using to define them. Those might pass for European reserve currencies in a pre-Industrial Era, but they certainly do not reflect the world economy of the time period by any means. In addition to all of that, the USD is the…

Wouldn't the gold standard render the entire notion of a "reserve currency" meaningless, too? If you're holding a gold-backed currency then you're effectively just holding gold. Holding a currency as a "reserve currency" probably meant actually holding a bunch of gold in a vault. It hardly matters whose face was on it.

If "gold standard" had one narrow definition (something like each printed currency unit is back by a specific amount of gold and that amount doesn't float), then yes, it would render it meaningless.

But if the amount of currency issued can float relative to the gold reserves held, then the values of currencies relative to each other could still flow significantly.

Put another way, it's an issue of trust. If currency X and currency Y are both theoretically backed by gold, but it's far easier or more reliable to convert X into gold than Y, then X as a reserve would be more valuable than Y.