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It's all riding on the faith of the rest of the world in the US. Watch the USD. Once it plunges, it's over. Won't be able to print money anymore. Until then the

It's all riding on the faith of the rest of the world in the US. Watch the USD. Once it plunges, it's over. Won't be able to print money anymore. Until then they can print away a lot of problems.

digi_owl 9y ago
More like riding on the world's need for oil, as oil is by decree traded in USD.
- jacobush 9y ago
  Yes, the US went from backing USD by gold to oil quite some time ago. The exchange rate is not quite fixed, but it’s upheld by the US military against anyone who would try to exchange oil for anything but USD.
  - jacobush 9y ago
    Oh, down vote, no voice. What started the Iraq war? Russia and Iraq wanted to create a new exchange dominated in Euro. Try that shit again and see how far you go.
    - konart 9y ago
      Russia has exchanges in local currency with several countries already. No problem with that. And that Iraq shit won't happen this easily anymore.
      - jacobush 9y ago
        But do they have any of “our” countries?
- JumpCrisscross 9y ago
  > oil is by decree traded in USD This is patently false. OPEC quotes oil in U.S. dollars, because people tend to have U.S. dollars lying around as a result of the massive American consumer base (as well as deep and open financial system), but e.g. North Sea oil is sold for pounds sterling and Bakken shale oil is sold for loonies. Oil is quoted, future and spot, in every major currency FX traders can think up. Wall Street would love if crude were quoted in more currencies. It would mean FX revenue. Sadly for it the world has some sense.
AlexCoventry 9y ago
Faith in the US for what? If it's faith that the US can annihilate you if you get in its way, I agree with you. But if it's faith in the USD and US debt as reliable stores of value, I would say that the economics of a sovereign power is different from the economics of a subject household.
- emodendroket 9y ago
  If the USD is doomed why isn't everyone pulling out?
  - zanny 9y ago
    Because everyone and everything is doomed on a long enough time scale. If the USD falls so does every other currency. You wouldn't see the kind of money people want in currencies moving into less fungible goods that would hold value over a recession. I think the more general idea should be - no king rules forever, but the eventual fall of US dominance in the world economy will bring most of that economy down with it.
  - AlexCoventry 9y ago
    I'm not saying it's doomed.
saas_co_de 9y ago
there is more than faith involved. If you compare the U.S. to the rest of the world in terms of wealth, measured by productive land, population density, industrial development, and access to critical natural resources it is still in the #1 position and has the best natural defenses with no hostile nations on its borders. Economics is all relative. Even if the U.S. is a disaster in many ways it only has to be as good or better than other large economic blocks in order to be competitive. Since the U.S. is in a superior territorial position and has the advantages of accumulated wealth and knowledge you really have to go out of your way to f--- things up for the U.S. to ever fall out of a leadership position. Consequently, a "plunge" is very unlikely. More likely is a few more decades of high inflation, which is just a backdoor way to default on pension, social security, and debt obligations, followed by some kind of new stasis. The people buying US debt are not dumb. They fully understand that it is impossible for the debt to ever be "paid" in any conventional sense. What they are betting is that the U.S. is still a better investment than other nations and that owning U.S. debt gives them leverage and access that outweighs the nominal losses. That is unlikely to change.
- eternalban 9y ago
  > he people buying US debt are not dumb. You are right. When presented with offers you can not refuse the smart thing to do is to go along, as a matter of survival. > Since the U.S. is in a superior territorial position and has the advantages of accumulated wealth and knowledge you really have to go out of your way to f--- things up for the U.S. to ever fall out of a leadership position. They really have gone out of their way. I give it 5 years tops and U.S.A. will be given its U.S.S.R. moment. Don't worry, no actual oligarch families will be harmed in this process.
- alphaalpha101 9y ago
  >Consequently, a "plunge" is very unlikely. More likely is a few more decades of high inflation, which is just a backdoor way to default on pension, social security, and debt obligations, followed by some kind of new stasis. Decades of high inflation? What? The issue is that inflation is low not that it's too high. Unless you're of the generation that thinks that 5% inflation is high...
- 9y ago
pjc50 9y ago
That supposes it's possible for the USD to plunge relative to other currencies without also wrecking the economies of the rest of the world on the way down. In a globalised world we're all climbers roped together.
eighthnate 9y ago
> Watch the USD. Once it plunges, it's over. Historically ( past few decades ), during recessions and international crisis, foreign money would flow into the US, japan, switzerland, etc. But primarily to the US because we are the safe haven for the world and that inflow helped prop up the dollar. If a major recession or international crisis occurred and foreign money didn't flow into the US, then it would signify a paradigm shift in the international political/economic order. I don't think ( at least I hope ) we are anywhere near a paradigm shift in the world order given our preeminent military and economic position and our alliances around the world. But I guess even the brits during reign of the british empire thought that their party would last forever.
- padobson 9y ago
  There were some pretty decent warning signs the British Empire was over, the American Revolution being a good one. For the USD to collapse and not take the rest of the world with it, there would have to be some sort of global currency diversification that diminished the centralized power of the US in the global economy. To continue the British Empire analogy, there would have to be some currency "revolutions" around the world. If the USD tanked, would Euros be able to replace it? Pounds? Yen? Yuan? All of the countries tied to those currencies are heavily invested in US debt and many of their fortunes are tied to the US consumer. That paradigm shift may be coming, but it seems like it's still a ways off to me.
jbooth 9y ago
We're coming up on a full decade of people saying hyperinflation is "just around the corner". How many years can it be around the corner?

It's all riding on the faith of the rest of the world in the US. Watch the USD. Once it plunges, it's over. Won't be able to print money anymore. Until then they can print away a lot of problems.

digi_owl 9y ago

More like riding on the world's need for oil, as oil is by decree traded in USD.

jacobush 9y ago
Yes, the US went from backing USD by gold to oil quite some time ago. The exchange rate is not quite fixed, but it’s upheld by the US military against anyone who would try to exchange oil for anything but USD.
- jacobush 9y ago
  Oh, down vote, no voice. What started the Iraq war? Russia and Iraq wanted to create a new exchange dominated in Euro. Try that shit again and see how far you go.
  - konart 9y ago
    Russia has exchanges in local currency with several countries already. No problem with that. And that Iraq shit won't happen this easily anymore.
    - jacobush 9y ago
      But do they have any of “our” countries?
JumpCrisscross 9y ago
> oil is by decree traded in USD This is patently false. OPEC quotes oil in U.S. dollars, because people tend to have U.S. dollars lying around as a result of the massive American consumer base (as well as deep and open financial system), but e.g. North Sea oil is sold for pounds sterling and Bakken shale oil is sold for loonies. Oil is quoted, future and spot, in every major currency FX traders can think up. Wall Street would love if crude were quoted in more currencies. It would mean FX revenue. Sadly for it the world has some sense.

AlexCoventry 9y ago

Faith in the US for what? If it's faith that the US can annihilate you if you get in its way, I agree with you. But if it's faith in the USD and US debt as reliable stores of value, I would say that the economics of a sovereign power is different from the economics of a subject household.

emodendroket 9y ago
If the USD is doomed why isn't everyone pulling out?
- zanny 9y ago
  Because everyone and everything is doomed on a long enough time scale. If the USD falls so does every other currency. You wouldn't see the kind of money people want in currencies moving into less fungible goods that would hold value over a recession. I think the more general idea should be - no king rules forever, but the eventual fall of US dominance in the world economy will bring most of that economy down with it.
- AlexCoventry 9y ago
  I'm not saying it's doomed.

saas_co_de 9y ago

there is more than faith involved. If you compare the U.S. to the rest of the world in terms of wealth, measured by productive land, population density, industrial development, and access to critical natural resources it is still in the #1 position and has the best natural defenses with no hostile nations on its borders. Economics is all relative. Even if the U.S. is a disaster in many ways it only has to be as good or better than other large economic blocks in order to be competitive. Since the U.S. is in a superior territorial position and has the advantages of accumulated wealth and knowledge you really have to go out of your way to f--- things up for the U.S. to ever fall out of a leadership position. Consequently, a "plunge" is very unlikely. More likely is a few more decades of high inflation, which is just a backdoor way to default on pension, social security, and debt obligations, followed by some kind of new stasis. The people buying US debt are not dumb. They fully understand that it is impossible for the debt to ever be "paid" in any conventional sense. What they are betting is that the U.S. is still a better investment than other nations and that owning U.S. debt gives them leverage and access that outweighs the nominal losses. That is unlikely to change.

eternalban 9y ago
> he people buying US debt are not dumb. You are right. When presented with offers you can not refuse the smart thing to do is to go along, as a matter of survival. > Since the U.S. is in a superior territorial position and has the advantages of accumulated wealth and knowledge you really have to go out of your way to f--- things up for the U.S. to ever fall out of a leadership position. They really have gone out of their way. I give it 5 years tops and U.S.A. will be given its U.S.S.R. moment. Don't worry, no actual oligarch families will be harmed in this process.
alphaalpha101 9y ago
>Consequently, a "plunge" is very unlikely. More likely is a few more decades of high inflation, which is just a backdoor way to default on pension, social security, and debt obligations, followed by some kind of new stasis. Decades of high inflation? What? The issue is that inflation is low not that it's too high. Unless you're of the generation that thinks that 5% inflation is high...
9y ago

pjc50 9y ago

That supposes it's possible for the USD to plunge relative to other currencies without also wrecking the economies of the rest of the world on the way down. In a globalised world we're all climbers roped together.

eighthnate 9y ago

> Watch the USD. Once it plunges, it's over. Historically ( past few decades ), during recessions and international crisis, foreign money would flow into the US, japan, switzerland, etc. But primarily to the US because we are the safe haven for the world and that inflow helped prop up the dollar. If a major recession or international crisis occurred and foreign money didn't flow into the US, then it would signify a paradigm shift in the international political/economic order. I don't think ( at least I hope ) we are anywhere near a paradigm shift in the world order given our preeminent military and economic position and our alliances around the world. But I guess even the brits during reign of the british empire thought that their party would last forever.

padobson 9y ago
There were some pretty decent warning signs the British Empire was over, the American Revolution being a good one. For the USD to collapse and not take the rest of the world with it, there would have to be some sort of global currency diversification that diminished the centralized power of the US in the global economy. To continue the British Empire analogy, there would have to be some currency "revolutions" around the world. If the USD tanked, would Euros be able to replace it? Pounds? Yen? Yuan? All of the countries tied to those currencies are heavily invested in US debt and many of their fortunes are tied to the US consumer. That paradigm shift may be coming, but it seems like it's still a ways off to me.

jbooth 9y ago

We're coming up on a full decade of people saying hyperinflation is "just around the corner". How many years can it be around the corner?