The fraying of the U.S. global currency reserve system • Hacker News Board

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

#91

Post by chaostheory » Sun, Dec 13, 2020, 6:44 PM UTC

“ What the next system will look like is an open question. I’ve seen multiple proposals. Whatever form it takes, it’ll be decentralized in the sense that it won’t be completely tied to any one country’s currency, since no country is big enough for that anymore. It’ll be based around neutral reserve assets, and/or a more regional-reserve model based on a handful of key country currencies, with an expanded variety of payment channels.”

No wonder Facebook continues to fight hard for their Libra / Diem project

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

#92

Post by paulpauper » Sun, Dec 13, 2020, 6:45 PM UTC

justinzollars wrote: post #42

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…

Lynn addresses your point directly if you read the article. She provides 2 options a slow and fast option. She notes, it is already happening, slowly. But it can also happen very quickly: > On the other hand, a structural change could happen with a shock and stepwise change, like the end of the Bretton Woods system. This can happen in a few ways, but becomes more probable if the United States decides to actively prom…

in his defense, it is more like a book than an article, so it is understandable if he missed some of important points

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

#93

Post by CraigJPerry » Sun, Dec 13, 2020, 6:46 PM UTC

lettergram wrote: post #49

CoffeeDregs wrote: post #12

"Instead of drawing down our gold reserves, however, we gradually draw down our domestic manufacturing base and it gets replaced piece-by-piece in foreign countries." To me, this is the money shot. I hadn't seen this expressed before and it makes perfect sense. I'm baffled that we (the US) caused this to happen to the US. I'm (unhappily) registered Republican but I argued vociferously to a Dem friend in 2000 that our…

My father was one of the last tool makers in the US working for Molex. They spent years teaching the Chinese, the Chinese would disassemble all molds sent over to China and often break them, so my fathers team would have to fix / rebuild them. They spent years training the Chinese side-by-side in the US. In the end they still haven’t exactly caught up to the quality we had in the US. However, they now have 5x the too…

>> To compete, you really do have to cut minimum wage. You have to loosen regulations

That’s not what Germany has done but there’s little doubt that Germany’s manufacturing ability is held in a higher regard globally.

So i challenge the “have to”. It’s the unproven talk of a particular tribe but i stress unproven since economics is a social science. That means there’s lots of science but is fundamentally stories we tell each other and not akin to, for example, the unassailable truth of gravitational pull.

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

#94

Post by elevenoh » Sun, Dec 13, 2020, 6:46 PM UTC

RhodoYolo wrote: post #90

The collapse of the dollars strength and rise of crypto being thought of as 'a store of wealth' may lead to the next financial revolution. Imagine a world where etheruem has enough market cap where it's volatility decreases, smart contracts for services are wide spread, everyone works free-lance giving the economy a inherent conflict of interest problem that rockets innovation forward while at the same time of having…

I like the open, competitive, low-middle-man economic vision.

I'm not sure whether the volatility of ETH price matters much when stablecoins are readily available.

Generally: I'll switch to ethereum for daily spending when I can spend through a proxy that allows revert an erroneous transaction (e.g. a overcharge or wrong recipient), perhaps necessarily arbitrated by a 3rd party. It's just a little too stressful sending >$100-500 frequently w/ ethereum right now.

This week, I bought a little airbnb pre-ipo, then sold post-ipo through Ethereum->FTX exchange.

Also bought some 24 hr traded synthetic tesla stock on eth.mirror.finance. (completely anonymously)

Wild times. Hard to go back once you have a taste of financial freedom.

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

#95

Post by JumpCrisscross » Sun, Dec 13, 2020, 6:46 PM UTC

> At this stage, instead of just blue-collar labor in America being hurt by the system, the geopolitical ambitions of United States hegemony are also subverted. As far as Americans were concerned, for 40+ years the petrodollar system used to work for the top half of the income spectrum but not really the bottom half, and now it neither particularly works for the top half nor the bottom half. It’s now a system without a purpose.

This is the article’s key insight. Dollar hegemony no longer works for anyone.

The Fed needs to support international payments in multiple currencies and build its non-dollar reserves. Congress should prioritise domestic manufacturing and wage growth.

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

#96

Post by zhdc1 » Sun, Dec 13, 2020, 6:49 PM UTC

lettergram wrote: post #49

CoffeeDregs wrote: post #12

"Instead of drawing down our gold reserves, however, we gradually draw down our domestic manufacturing base and it gets replaced piece-by-piece in foreign countries." To me, this is the money shot. I hadn't seen this expressed before and it makes perfect sense. I'm baffled that we (the US) caused this to happen to the US. I'm (unhappily) registered Republican but I argued vociferously to a Dem friend in 2000 that our…

My father was one of the last tool makers in the US working for Molex. They spent years teaching the Chinese, the Chinese would disassemble all molds sent over to China and often break them, so my fathers team would have to fix / rebuild them. They spent years training the Chinese side-by-side in the US. In the end they still haven’t exactly caught up to the quality we had in the US. However, they now have 5x the too…

In all fairness, the same is happening to China as well. Manufacturing as a percentage of GDP has been declining every year since 2010, and iirc manufacturing in total value has stagnated entirely in many provinces over the last couple of years.

Manufacturing is still moving to SE Asian countries (Viet Nam in particular), but even there producers are increasingly moving production in India and East Africa because of rising costs (e.g., wages).

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

#97

Post by paulpauper » Sun, Dec 13, 2020, 6:49 PM UTC

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…

There is no correlation between FOMC and fiscal policy and the dollar. The dollar has strengthened since 2008 despite all this QE, stimulus, and other stuff that has gone on. I think the dollar is more like a proxy for US dominance in the world. If the US assumes a smaller role, likely the dollar will fall.

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

#98

Post by birdyrooster » Sun, Dec 13, 2020, 6:49 PM UTC

RhodoYolo wrote: post #85

namdnay wrote: post #67

Earlier quoted context omitted.

Without a very strong (and therefore expensive) social security net, “Letting people work for whatever wage they can achieve” is slavery. See 19th century Britain Germany still has a strong industrial base, without a race to the bottom and with strong unions. So it is possible :)

Do you think the 19th century is a good anecdote for what would happen nowadays? Setting minimum wage seems to create this standard that may do more harm than good. Increasing the 'standard' harms the 'middle-class' and this 'standard' may set the wages lower than entitled per job.

Wealth inequality is a problem you can’t fix by reducing the income of the poor.

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

#99

Post by selectodude » Sun, Dec 13, 2020, 6:52 PM UTC

jaredtn wrote: post #37

selectodude wrote: post #23

Earlier quoted context omitted.

None of them. It's a constant battle. I always hear the trope that we "owe" China money because they buy bonds but the entire reason they're buying bonds is to keep the Renminbi weaker than the USD. Germany is a weird corner case where the entire reason for the Euro is to allow them to keep their currency artificially weak by using the rest of Europe's economy as a place to dilute their export power. The DM was getti…

China is no longer a net buyer of Treasuries. They have begun to sell off their position over the last 5 years. And the renminbi is actually quite strong lately, the Chinese government is maintaining positive interest rates and allowing corporate defaults instead of money-printing.

China has sold off a net of 40 billion worth of treasuries in the past year. Less than a percent. "Sell off" is putting it exceptionally strongly. The Yuan is still in a very managed float position. It doesn't swing by more than a percent or two over a long horizon.

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

#100

Post by paulpauper » Sun, Dec 13, 2020, 6:52 PM UTC

CoffeeDregs wrote: post #12

"Instead of drawing down our gold reserves, however, we gradually draw down our domestic manufacturing base and it gets replaced piece-by-piece in foreign countries." To me, this is the money shot. I hadn't seen this expressed before and it makes perfect sense. I'm baffled that we (the US) caused this to happen to the US. I'm (unhappily) registered Republican but I argued vociferously to a Dem friend in 2000 that our…

Had you shorted the US stock market in 2000 on that prediction/hunch, you would be down a lot. The economy has moved beyond manufacturing. Data, payment, and information processing and intellectual ropery have taken over manufacturing in importance.