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The Dollar Is Dead

mathmeetsmoney.substack.com

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Re: The Dollar Is Dead

#281

Post by jules »

DrScientist wrote: post #267
nostromo wrote: post #101

Earlier quoted context omitted.

Europe has repeatedly tried to soak the rich, and the results are always the same: the rich move their wealth somewhere else and you end up breaking even or even reducing your tax revenue. France: https://www.theguardian.com/world/2014/dec/31/france-drops-7... UK: https://obr.uk/box/effect-of-the-additional-rate-of-income-t... Sweden: https://eml.berkeley.edu/~saez/course/seimAEJ17wealth.pdf It's interesting to note…

Explain to me the benefit of attracting the wealthy if they don't pay tax? Come to our country - have our police and courts and soldiers protect you wealth - all for free. Oh - and because you are not paying tax - can I borrow some of that wealth please so I can pay for the stuff I'm providing for you free - I'll give you a healthy return. The rich benefit the most from civilisation - and it costs - you can't just ke…

Look at Singapore to understand the benefits of attracting wealth.

Re: The Dollar Is Dead

#282

Post by originalvichy »

dustingetz wrote: post #5

i would like to see deeper analysis of similar forces playing out in other countries. A weakening dollar implies a strengthening world, but European policy is even more messed up than American, there is still widespread talent export e.g. european programmers working for american companies, indian asian and russian programmers immigrating to Europe or working remote abroad, and China seems to face financial crises ju…

The dollar is weakening because the US institutions are weakening. The EU might not be wealthy compared to the US, but at this moment in time it is more rational and future-proof than the volatile US business environment.

The main reason the US is a hub for well-paid programmers, is that there is a giant pool of VCs that subsidise growth for companies that can potentially find money all over the world thanks to the way the US still is a cultural hegemon to western liberal nations with strong English language skills. As long as a US based tech company leverages cultural hegemony (in a positive way) and deep VC pockets, they can succeed in Europe and the world.

The biggest tech company failing at using cultural hegemony in a positive way is Tesla. European consumers have largely abandoned Tesla thanks to E.M. He single handedly ruined the company's position of strength by thinking that US news and politics do not reach us. He did not understand the hegemonic aspect (or was too high to care).

Re: The Dollar Is Dead

#283

Post by originalvichy »

sparrish wrote: post #122
bix6 wrote: post #46

“The Dollar is Dead. Long live whatever comes next.” So what will come next? It can’t be gold because we already tried that. I don’t see the West letting BRICS have it. Crypto seems too polarizing.

Why can't it be gold again? It was working pretty well for thousands of years.

It did not scale.

Re: The Dollar Is Dead

#284

Post by Bombthecat »

DrScientist wrote: post #267
nostromo wrote: post #101

Earlier quoted context omitted.

Europe has repeatedly tried to soak the rich, and the results are always the same: the rich move their wealth somewhere else and you end up breaking even or even reducing your tax revenue. France: https://www.theguardian.com/world/2014/dec/31/france-drops-7... UK: https://obr.uk/box/effect-of-the-additional-rate-of-income-t... Sweden: https://eml.berkeley.edu/~saez/course/seimAEJ17wealth.pdf It's interesting to note…

Explain to me the benefit of attracting the wealthy if they don't pay tax? Come to our country - have our police and courts and soldiers protect you wealth - all for free. Oh - and because you are not paying tax - can I borrow some of that wealth please so I can pay for the stuff I'm providing for you free - I'll give you a healthy return. The rich benefit the most from civilisation - and it costs - you can't just ke…

They still pay vat at least and employe cleaners etc.

Better then nothing

Re: The Dollar Is Dead

#285

Post by greyface- »

Workaccount2 wrote: post #29

The country is getting forced by markets into realizing pain for overspending, and only congress can manage this pain. Manage the pain, not remove it is key here. Manage it. Conrgess is totally inept and ridiculously politicized, so it's unlikely they will do anything except make the problem worse. That leaves only the natural fall out of refusing to acknowledge a financial injury before going out on the field to pla…

> (non-treasury!) assets

What about TIPS and I bonds?

Re: The Dollar Is Dead

#286

Post by bombcar »

tim333 wrote: post #204

I don't buy the dollar being dead. His main arguments are the politics are messy and there's a lot of debt. Such things have been true in the past over its 200 year plus history and yet it goes on. The US remains the world superpower and the center for its most valuable companies and the leader in new tech like AI. Things will go on. The British Pound has existed since about the year 600, we had 250% debt to GDP afte…

One minor problem is that we do weird things with “debt” that weren’t done before (like the SSA holding billions (trillions?) in debt, along with pensions, etc). It’s actually hard to make comparisons to 100 years ago in other countries because so many things are now monetized that weren’t before.

Re: The Dollar Is Dead

#287

Post by bombcar »

phillipcarter wrote: post #109

I feel like there was a lot of analysis of signals in this blog, but at the end is the only thing that matters: The dollar has power if and only if belief in the vast US institutions holds. I would extend that to go beyond our government, as the US private sector and cultural outputs are also incredibly powerful in this world.

Isn’t that true of all (fiat) currencies? Maybe even gold and silver somewhat, too? There’s a faith that the value tomorrow will be somewhat similar today; otherwise trade becomes much more difficult.

Re: The Dollar Is Dead

#288

Post by Havoc »

ofalkaed wrote: post #9

Is there any other country with both the court system and wealth required to back up being the global reserve currency? I don't think there is and I don't see a viable contender showing up in the near future.

There is no viable alternative

But that doesn’t mean confidence in the dollar can’t die anyway before an alternative is found. Straight up chaos and collapse is a hopefully remote but real possibility.

Remember how the 2008 crisis was stopped? Strong messages from reserve banks that they’ll backstop and people believing them. That trick doesn’t work in the world author it’s describing.

Re: The Dollar Is Dead

#289

Post by Havoc »

nostromo wrote: post #81
toomuchtodo wrote: post #56

Earlier quoted context omitted.

I’m somewhat confident in the Euro until India or Africa grows to be a potential competitor. Whether they can achieve a similar risk profile remains to be seen of course. Russia is a non starter, and China is unlikely to make the political change necessary to be a reserve currency.

If you think the US has a debt problem, the Eurozone is much worse. At least America has economic growth along with debt growth. The EU has slightly less debt but zero economic growth and almost zero population growth (and negative organic population growth). Africa's GDP is tiny and will not a serious contender for any sort of reserve currency status for many decades. I can't imagine a wave of automation will do any…

> If you think the US has a debt problem, the Eurozone is much worse.

Not sure I’d agree. Eurozone debt to gdp is around 90 while us is above 120

Specific countries are in trouble (France and Greece mainly) but overall position is somewhat respectable

Re: The Dollar Is Dead

#290

Post by tim333 »

bombcar wrote: post #286
tim333 wrote: post #204

I don't buy the dollar being dead. His main arguments are the politics are messy and there's a lot of debt. Such things have been true in the past over its 200 year plus history and yet it goes on. The US remains the world superpower and the center for its most valuable companies and the leader in new tech like AI. Things will go on. The British Pound has existed since about the year 600, we had 250% debt to GDP afte…

One minor problem is that we do weird things with “debt” that weren’t done before (like the SSA holding billions (trillions?) in debt, along with pensions, etc). It’s actually hard to make comparisons to 100 years ago in other countries because so many things are now monetized that weren’t before.

It wouldn't surprise me if the debt causes a financial crash a bit like 2006. Crashes happen pretty regularly and things are quite lined up for one of those - all it would likely take would be an AI plateau for example. Currencies dying are rare though. They can decline in importance like the pound, but generally plow on.
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