91–100 of 367 posts
The idea that a basket of foreign currencies or "BRIC+" will replace the dollar is absolutely not going to happen. If the dollar goes down it takes the entire world with it. Nobody is insulated from the risk of a dedollarization.
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…
There is no "overspending." There is only undertaxing. The debt is literally just the accumulated difference between spending and taxation. If extreme wealth was taxed, the debt would be zero. The point isn't even to "pay for spending" but to enforce a functional social contract, and to limit the political and democratic distortions created by extreme inequality. "Markets" should not have a veto on policy in a democr…
Fiat currencies are like Unicorns and Santa Claus, they stop existing when people grow up and stop believing in them. And there is no need for a "replacement" (i.e. the nothing is better argument) or a need for "enforcement" (i.e. the military argument) or a need for a "system" (i.e. the rule-based-order & courts argument). Fiat currencies simply die off due to lack of trust and belief, and it often happens by way of…
The idea that a basket of foreign currencies or "BRIC+" will replace the dollar is absolutely not going to happen. If the dollar goes down it takes the entire world with it. Nobody is insulated from the risk of a dedollarization.
> idea that a basket of foreign currencies or "BRIC+" will replace the dollar is absolutely not going to happen No it'll be renminbi, with the euro, if they are lucky as a distant second place.
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.
> I’m somewhat confident in the Euro out of curiosity, why do you believe that?
Even if the dollar was "dead" the time and effort required by the world economy to switch away from the dollar system would be enormous so not much is likely to happen quicker than a few decades.
I think a lot depends on whether the US keeps being an unreliable actor and thus a pain to deal with. If there's enough pain, it'll outweigh the pain of switching.
Almost every major currency has lost value relative to the US Dollar over the past 10 years. Not just, like, a little bit. Like, a lot a bit. The Indian Rupee has lost 53% since 2007. Yen, down. Pound, down. Canada, down. That's reality. There is no "switching to avoid devaluation of the USD" when the USD has devalued so much less than almost any other currency on the planet.
One major country that has managed to maintain the value of their currency relative to the USD is China. Who has by some estimates a ~300%+ debt to GDP load (if you think that number is too high, its because whatever estimates you've read before didn't take into account municipal debt, because that's where China hides it). And a 72 year old leader with zero politically-feasible line of succession. And a critically shrinking population. And literally zero global military force projection. Any faith that any country puts into China is going to be destroyed just a few short years after Xi's death; the main thing China has going for it isn't their manufacturing base, AI strategy, or whatever; its that Xi hopefully won't die in the next decade.
Fiat currencies are like Unicorns and Santa Claus, they stop existing when people grow up and stop believing in them. And there is no need for a "replacement" (i.e. the nothing is better argument) or a need for "enforcement" (i.e. the military argument) or a need for a "system" (i.e. the rule-based-order & courts argument). Fiat currencies simply die off due to lack of trust and belief, and it often happens by way of…
USD strength comes from military. Just as it was the case with all other currencies in the past. Do you see anyone challenging the US in a conflict? China won’t even invade Taiwan because they are afraid. ‘Nuff said.
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.
I agree with you. I don't even think in the near future there will be a single global reserve currency. There will be multiple ones, all of which weaker in terms of power and influence than the dollar.
The only thing saving the dollar is a lack of suitable replacement. Trust in the PRC is lower than even the current highly politicized United States, so the Yuan is out. The replacement could be an index of currents tied to G7 or BRICS countries, but that likely gets complicated.