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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

#301

Post by throwaway2037 »

cma wrote: post #214
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…

A checking account that pays around inflation in interest doesn't net out to that unless you don't pay any tax on the interest.

Try that same argument with a zero coupon bond. It works fine because you don't have any coupon payments, thus no income tax until the principal is repaid at maturity.

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

#302

Post by throwaway2037 »

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].

    > the USD is devaluing against the Euro
The EUR/USD FX rate has been pretty stable for about 10 years. I think (sadly, didn't check notes before I wrote this), the trade balance between US and EU is well-balanced. As a result, the FX rate should also be well balanced.

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

#303

Post by immibis »

bdangubic wrote: post #293
immibis wrote: post #291

Earlier quoted context omitted.

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 ye…

"you can't disprove something that doesn't exist" - Great, so you believe in God then. And Russell's teapot. And a natural number called fentanum, whose successor is itself.

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

#304

Post by bdangubic »

immibis wrote: post #303
bdangubic wrote: post #293

Earlier quoted context omitted.

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 ye…

"you can't disprove something that doesn't exist" - Great, so you believe in God then. And Russell's teapot. And a natural number called fentanum, whose successor is itself.

I do not believe in God but I cannot disprove that it exists, there is a slight difference between the two...

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

#305

Post by daedrdev »

somenameforme wrote: post #249
immibis wrote: post #236

Earlier quoted context omitted.

If you want to see how much a deflationary currency fails as a currency, just look at bitcoin. The wild value swings are caused by more people hoarding it than using it as a currency, which is caused by it being deflationary. Now look at monero, which is inflationary, is largely used for day to day purchases (of mostly illegal items) and has a much more stable value, which is one of the key attributes of a good curre…

The USD was metal based, in one way or another, from 1792-1971, with two brief interludes after the Civil War and Great Depression. That's a really good pedigree. So our current inflationary system only really kicked off in 1971 and is already looking somewhat clearly unsustainable. But what makes this particularly relevant is that 1971 was also right when major breakthroughs in computing were about to unlock a huge…

for much of that time you could not actually receive any metal from the US, notably after the great depression domestically. The entire issue is that the US economy grew far faster than the supply of gold so could not physically purchase the required amount of gold as it did not exist.

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

#306

Post by throw0101c »

cjbgkagh wrote: post #271
throw0101c wrote: post #251

Earlier quoted context omitted.

> 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. The enriching of the already-wealthy is happening because of non-progressive policies (taxes, and others). Plenty of countries have fiat currencies and independe…

The US is a completely different country compared to what it was 100 years ago, or even 50 years ago, and economic policy is not the only thing that has changed. It appears that you see ‘progressive solutions’ as an answer which I would expect to arrive in the form of tax normalization which alongside monetary inflation constitutes the much coveted wealth tax. I am in disagreement with progressives that this would re…

> I am in disagreement with progressives that this would result in a decrease of inequality, for one the state will be completely reliant on the wealth of the wealthy increasing, as opposed to the income of the middle class increasing.

Funnelling more money from the top tax brackets to social programs like childcare, better teacher salaries (to attract better talent), lower tuition for (community) colleges and (public/state) universities would be helpful to the lower deciles of the population IMHO.

> I see inflation as a regressive tax, the poor will pay a higher percentage in tax but a lower in relative terms due to the increase in inequality caused.

Look at the history of the gold standard and deflation (which often happens under gold regimes): it was poorer folks that were mostly against it. Inflation helps those with debt (like mortgages, student/car loans), which I would think is more helpful to lower income folks. Deflation helps creditors.

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

#307

Post by immibis »

bdangubic wrote: post #304
immibis wrote: post #303

Earlier quoted context omitted.

"you can't disprove something that doesn't exist" - Great, so you believe in God then. And Russell's teapot. And a natural number called fentanum, whose successor is itself.

I do not believe in God but I cannot disprove that it exists, there is a slight difference between the two...

You can't prove there isn't a boogie monster under your bed

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

#308

Post by somenameforme »

daedrdev wrote: post #305
somenameforme wrote: post #249

Earlier quoted context omitted.

The USD was metal based, in one way or another, from 1792-1971, with two brief interludes after the Civil War and Great Depression. That's a really good pedigree. So our current inflationary system only really kicked off in 1971 and is already looking somewhat clearly unsustainable. But what makes this particularly relevant is that 1971 was also right when major breakthroughs in computing were about to unlock a huge…

for much of that time you could not actually receive any metal from the US, notably after the great depression domestically. The entire issue is that the US economy grew far faster than the supply of gold so could not physically purchase the required amount of gold as it did not exist.

There were ~10 years after the great depression where convertibility was suspended. One decade out of nearly two centuries is not "much."

The amount of currency need not, and arguably should not, scale with the size of the economy. Everything is relative in an economy. When the amount of 'stuff' in an economy grows faster than the amount of currency, then prices decrease - your money becomes worth more - deflation. Vice versa, if the amount of currency in an economy grows faster than the amount of stuff in that economy, then prices increase - inflation.

Inflation is undesirable, but it's in a constant tug-of-war with governments and fiat currency. When governments give themselves the power to print infinite money, they end up doing exactly that, often to the point of destroying their own economy. This is precisely why the Founding Fathers chose the US currency to be coins made of precious metals. It limits the government's ability to damage the country through reckless monetary policy.

Think about how fragile everything is already seeming being glued together by massive fed involvement, quantitative easing, and ever more archaic economic ideas like zero or even negative interest rates. And we're only 50 years into this experiment which, on the scale of something like a broad monetary concept, is barely a blink, and it's starting to come apart at the seams. And this is all during extremely stable years compared to the World Wars and other such events that we overcame in the past.

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

#309

Post by cjbgkagh »

throw0101c wrote: post #306
cjbgkagh wrote: post #271

Earlier quoted context omitted.

The US is a completely different country compared to what it was 100 years ago, or even 50 years ago, and economic policy is not the only thing that has changed. It appears that you see ‘progressive solutions’ as an answer which I would expect to arrive in the form of tax normalization which alongside monetary inflation constitutes the much coveted wealth tax. I am in disagreement with progressives that this would re…

> I am in disagreement with progressives that this would result in a decrease of inequality, for one the state will be completely reliant on the wealth of the wealthy increasing, as opposed to the income of the middle class increasing. Funnelling more money from the top tax brackets to social programs like childcare, better teacher salaries (to attract better talent), lower tuition for (community) colleges and (publi…

It hurts those with debts more, they have to pay a higher interest rate than the wealthy and with things being more expensive they have to borrow more. Wages don’t keep up with inflation.

The problem with large redistribution initiatives is that they invite corruption. When such initiatives can be reliably delivered without corruption then maybe I could have some faith in it. I’m to see how all these Somali ‘learning’ daycare centers shake out. Prima facie it looks rather fraudulent. I fail to see how giving more money to fraudsters will help matters.

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

#310

Post by somenameforme »

supertrope wrote: post #272
MisterMower wrote: post #203

Earlier quoted context omitted.

Why is that a problem?

If it's more profitable to keep your money under a mattress than to make things, provide services, or provide loans, the economy will tilt toward hoarding cash instead of more productive activities.

This is the classical argument, but I think it's been largely refuted by practice. Instead of hoarding cash inflationary systems motivate hoarding 'things' and then trying to rent them out to everybody. This is arguably even less productive as it's fundamentally socially harmful.

When the value of things naturally declines over time, there's no real motivation to hoard them. And I think hoarding is less harmful than never-ending rent seeking. This entire issue of sidestepping inflation by hoarding+renting is what led to things like the WEF predicting that 'You will own nothing, and be happy.' That's just fundamentally dystopic because it's setting the recreation of feudalism, under a capitalist shell, as a goal. The unstated implication of their prediction is that the super-rich would own everything, and then rent it to you.

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