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Pretty sure the point was to highlight that people hold faith in the value of USD as a currency in spite of its youth, not to discuss its merits as a long-term

Pretty sure the point was to highlight that people hold faith in the value of USD as a currency in spite of its youth, not to discuss its merits as a long-term investment. >nobody holds USD because they think the value will go up long term People can and do implicitly invest in USD. For example, I might use an FX hedge on a foreign investment to protect against foreign currency volatility in favor of exposure to USD because I have more faith in its value during the lifespan of my investment. >Holding fiat currency means you lose money constantly due to inflation Sure, but it's also protected against losses in a market downturn. Cash is outperforming if market returns are negative and in excess of inflation loss (which becomes more likely as poor market performance slows inflation). Not arguing that people should hold cash out of fear, but your characterization of cash seems a little simplistic.

landryraccoon 9y ago
> I might use an FX hedge on a foreign investment to protect against foreign currency volatility I sort of think that's an abuse of the term "invest". Sure you're investing in some kind of instrument that is highly affected by the value of the USD, but you're not really investing in USD. You're not long USD by holding that investment. By that metric people who short Bitcoin or Bitcoin exchanges are also "investing" in bitcoin.
- dsacco 9y ago
  You are long USD if you believe USD will remain relatively stable while many other securities actually diminish in value for various reasons. Even if the investor is not ultimately correct, this qualifies as investing. Investing involves risk management, not just positive returns, and hedging a long position with a position in something like USD is not comparable to shorting.