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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

#291

Post by immibis »

bdangubic wrote: post #263
immibis wrote: post #235

Earlier quoted context omitted.

This is also the case with real bubbles.

100% - that is the case. except this current "bubble" has been "bubbling" for years now (just look at HN commenters since say 2023-ish). the funny thing is something at some point will happen and there will be a pullback in the market (it's been on a run for waaaaaay to long) and everyone will be like "hey hey hey, see, told ya so, this was bubble all along" except most people that say we are in a "bubble" cannot eve…

Real bubbles also bubble for years. You have done nothing to disprove a real bubble.

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

#292

Post by BobbyJo »

JumpCrisscross wrote: post #206
BobbyJo wrote: post #118

Earlier quoted context omitted.

Long bond rates have somewhat decoupled from short term rates set by the fed. For instance, they just slashed short term rates 25bps, but long bond rates (10+ years) have actually gone up a few basis points since the cut. This is exactly what we'd expect if demand for treasuries wasn't keeping pace with US debt issuance. I mean, if you look at the debt, and the USD's current position, there really is no way out for t…

> For instance, they just slashed short term rates 25bps, but long bond rates (10+ years) have actually gone up a few basis points since the cut Could you point to the date range you’re referencing? > if you look at the debt, and the USD's current position, there really is no way out for the US government other than inflating the currency and cashing in that reserve status for a reset Of course there is. Loads of opt…

> Could you point to the date range you’re referencing?

The last two months. There was a rate cut in October and again in December, but since late October long bond yields have been rising.

> Of course there is. Loads of options.

For instance?

The US debt is currently rolling over into higher rates bringing the average yield of our debt up. The only way around that, if long bond yields don't come down, is to roll the debt into short term treasuries where the rate is tied more to fed funds rate. That would be inflationary.

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

#293

Post by bdangubic »

immibis wrote: post #291
bdangubic wrote: post #263

Earlier quoted context omitted.

100% - that is the case. except this current "bubble" has been "bubbling" for years now (just look at HN commenters since say 2023-ish). the funny thing is something at some point will happen and there will be a pullback in the market (it's been on a run for waaaaaay to long) and everyone will be like "hey hey hey, see, told ya so, this was bubble all along" except most people that say we are in a "bubble" cannot eve…

Real bubbles also bubble for years. You have done nothing to disprove a real bubble.

so we were in a farm-it-by-hand bubble until we invented tractors? :)

I am not trying to disprove the bubble because that is as impossible, you can’t disprove something which doesn’t exist other than in people’s figments of imagination. and whatever happens in the future the bubble people will find a way to justify that it was a bubble all along and non-bubble people will say it is a normal market correction after yeeeears of bull market. makes the entire bubble discussion meaningless

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

#294

Post by RealityVoid »

carlosjobim wrote: post #222
freeone3000 wrote: post #148

Earlier quoted context omitted.

The literal idea of value.

Gold have existed and thrived long before there were any ideas, and will continue to do so long after the last idea is dead.

Hah. This is merely your lack of imagination speaking. It could be that reality plays out that you are right, but what a sad, constrained world of ideas that would be.

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

#295

Post by machomaster »

grim_io wrote: post #209
machomaster wrote: post #167

Earlier quoted context omitted.

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)…

Luckily Russia wasted all their Soviet era stockpiles in Ukraine, and those are never coming back. Russia is still dangerous and annoying, but not the threat it was before the full scale invasion of Ukraine.

It still has enough equipment and manpower to easily get through Baltics and defeat Germany and others. Fortunately for the latter, Poland is in the way and can perhaps put enough of a fight.

The thing that you are missing is the huge development in drone technology. Ukraine and Russia are the top2 countries that know how to use this technology as part of the military action, and Western countries would have a rude awakening as nails. More technologically advanced "tanks" would not matter much.

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

#296

Post by machomaster »

mahirsaid wrote: post #270
grim_io wrote: post #210

Earlier quoted context omitted.

Russia and China rely heavily on their manipulated currencies to stay functional. There could never be a common currency between them that they can't directly control.

This article is literally about the decline of american dollar dominance. i'm not sure with in denial is still at play here. There is a clear panic alarm in the US, look at the policies and attitude of the US. things are changing.

You have to put stuff in perspective. Despite the recent decline (which is still way above the 50% and much higher than the lowest it has ever historically been), the percentage USD has is still several times larger than the EUR in second place.

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

#297

Post by scythe »

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…

The main issue with the euro has been the stinginess of the ECB. The Fed always makes plenty of dollars available but during the Great Recession this was not the case in Europe. This is a problem for euro-denominated debt. (It is also a problem for the yuan.) The unusual political structure of the EU — not a single country — is also potentially concerning, as is its apparent dependence on the United States for defense.

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

#298

Post by nutjob2 »

MisterMower wrote: post #204
nutjob2 wrote: post #54

Earlier quoted context omitted.

Only the fact that it would be an idiotic policy that would destroy the economy. Why would you let your monetary policy be run by gold miners in China, Russia and Australia? They could cause inflation or deflation simply by increasing or decreasing gold production. Conversely how is the Fed supposed to manage inflation if it runs out of gold? Gold is an industrial metal, also used in jewelry, not a financial panacea.

Now you know why so many countries want to leave the dollar system. There are no meaningful constraints on the supply of dollars. Gold at least places real constraints on the growth of the money supply. Imperfect as it is, it’s better than a financial cabal in one country creating money to suit their needs irrespective of any other objective.

Right, that's why exactly one country, Zimbabwe, has a currency that is gold convertible.

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

#299

Post by BobbyJo »

doctorpangloss wrote: post #198
BobbyJo wrote: post #193

Earlier quoted context omitted.

You made a claim (budgeting wasn't good, they were just lucky) and backed it up with a strange hypothetical (if GLP1 drugs were released it would have driven the deficit higher). Your connection between the two is that new drugs are a primary driver of the federal deficit, which just isn't supported by the the reality of where the US government spends money. I don't know what interesting conversation you expect from…

Sure, here is a great and very influential article about technological innovation explaining faster than GDP growth of govt health spending: https://www.aeaweb.org/articles?id=10.1257/jep.6.3.3 It was written contemporaneous to Clinton. You are welcome to read about the budgetary process of the Clinton years, healthcare was THE primary issue. Like why am I talking about this stuff, and why was everyone talking about…

You're glossing over the leap between "is a driver of spending increases" and "is a primary driver of spending increases". IIRC healthcare costs rising has far more to do with an aging population than new drugs, so, again, I'm not seeing a strong link between new drugs and the government deficit.

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

#300

Post by throwaway2037 »

ProjectArcturis wrote: post #169
JumpCrisscross wrote: post #97

Earlier quoted context omitted.

> 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?

By rate, do you mean coupon or yield? I will assume that you mean yield.

Restated:

    > The 10-year Treasury [yield] has more than doubled since 2001.
No, it has not. See chart from the US Fed: https://fred.stlouisfed.org/series/DGS10

Extend range to "Max". Yields in 2001 -- looks like the peaked at about 5.4%. Yields today are about 4.13%.

What am I missing?

Also, this phrase... is a strange one.

    > If you have to pay people twice as much to take your debt, is there more or less demand for it?
If your economy is running red hot (with relatively low inflation rate), then the central bank normally raises interest rates. Yields on central gov't debt will closely follow these rises. Controversially, I will say within a "reasonable" yield range (maybe 1% to 8%), the yield itself says very little about demand for it. Before COVID-19, Germany's 10 year gov't debt yield was frequently zero or slightly negative. Again: What does this say about demand for it? Not much.
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