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The lack of any viable alternative has kept the dollar in its current dominant position. That alternative won't exactly announce itself so that US policymakers

by aazaa 7y ago

The lack of any viable alternative has kept the dollar in its current dominant position. That alternative won't exactly announce itself so that US policymakers can rationally decide to change course about the weaponization of money. It will instead, sneak up on the country in the form of weird little experiments that don't seem worth the time and effort to track or regulate. By the time one of them becomes the obvious marketplace disruptor, the die will have been cast.

LatteLazy 7y ago
Isn't the answer the euro? Stable, inflation proof, light or no sanctions. As brexit proceeds and more financial services move to mainland Europe, you won't even have to worry about the brits messing with it... I seem to remember the EU agreeing to setup a psudo bank to deal direct with Iran so they can bypass restrictions on trade? Edit: here it is! https://www.google.com/amp/s/amp.dw.com/en/eu-mechanism-for-trade-with-iran-now-operational/a-49407662 https://www.google.com/amp/s/amp.dw.com/en/eu-mechanism-for-...
- aazaa 7y ago
  Every country sponsoring a currency approaching the reach of the dollar will begin to experience the same political forces as the US. Weaponization of the currency in the service of foreign and domestic policies is viewed as a cheap alternative to war. And so the pressure to weaponize will sooner or later become irresistible.
  - deleted 7y ago
    [deleted]
- ApolloFortyNine 7y ago
  Didn't the whole Greece debt situation show why that could be a problem? One country's debt crisis caused the euro to tank 30% in a very short time. It ended up rebounding, but pretty much forced the EU to handle the situation (write off debt and provide low interest loans for the rest) or risk the whole thing exploding. It seems like your betting on 5-10 countries not failing, when with most currencies you just have to deal with 1. Which is probably why it's not currently the reserve currency, one would assume.
  - baybal2 7y ago
    Greece was fiasco for Euro. It's a lesson learned now, and ECB will hold binge spenders on a leash. UK can leave EU, Greece or Eastern Europe can not.
    - stephen_g 7y ago
      It’s more that the Euro has been a fiasco for Greece, Italy, Portugal and Spain... It’s fundamentally problematic to have a single exchange rate between countries with different inflation rates, balances of trade, etc. - because you can’t have an exchange rate that works for everyone and the value can’t move between the other economies to balance out the differences. The only way around that (apart from going to separate currencies with floating exchange rates) is to have some kind of fiscal balancing method. In the US, for example, federal taxing and spending tends to do this between the states. But that is probably politically impossible in the EU (redistribution from richer countries to poorer is pretty unpopular).
      - baybal2 7y ago
        Very easy to do, and that's actually what ECB is now doing as I understood. They now enforce the limit of how much debt a country can sell, and at what terms much more rigorously
- DeonPenny 7y ago
  Definitely not the Euro. Its not only not inflation proof infact because poorer country will need higher inflation that's exactly whats going to happen. It's not stable, Brexit, Greece, spain, italy have all gone through a lot of recessions. Not to mention they don't have a central bond market. The Euro can't really ever be a replacement.
- empath75 7y ago
  The thing is any currency that took over would be used for similar ends.
- elfexec 7y ago
  > Isn't the answer the euro? Only 19 out of the 28 european union members use the euro. So I don't think the euro (a 19 year old currency ) is the answer. Unless something changes, then in the future it might be one of the answers. > you won't even have to worry about the brits messing with it... The brits never adopted the euro as their currency, so they never messed with it to begin with. > Stable, inflation proof, light or no sanctions. As brexit proceeds a Stable... brexit. The problem with the euro is that its political foundation ( european union ) seems weak. With britain leaving the european union, with the EU sovereign debt crisis and potential for further problems in the near term, it's more likely the EU will break apart and the euro discarded than the euro will replace the dollar as the reserve currency of the world. Being the reserve currency of the world requires the political and military backing of a stable superpower. For all our problems, the US isn't losing states like the EU is losing countries. If the dollar's stranglehold in the world break, we'll probably get regionally dominant currencies. The dollar will still dominate the western hemisphere. The eastern hemisphere will be dominated by regional economic powers and their currencies.
  - lispm 7y ago
    > the near term, it's more likely the EU will break apart and the euro discarded That's not likely at all.
    - blibble 7y ago
      it's all but certain that the EU will start to break up in 12 days time (whether or not it will stop there is a separate question)
      - lispm 7y ago
        There are countries waiting to join the EU. Some go, some come. Since 2000 thirteen countries have joined the EU.
        kmlx 7y ago
        1. the expansion is over. last expansion resulted in some pretty nasty stuff. from massive EU fund corruption to a member leaving. 2. on this last point, how many hundreds of albanias would you need to replace the particular qualities the brits were bringing to the table? the only thing the EU can do is bring Russia onboard. something France and Germany are already doing, to the horror of the Eastern Europeans and the US
- crisdux 7y ago
  The Euro doesn't look great either. The EU's sovereign debt crisis gets worse every year. The economic growth of the region is predicted to lag the US. A rising banking crisis is being swept under the rug. An aging population. The EU proved during the Cyprus banking crisis that they will reach into bank accounts and confiscate deposits.

by aazaa 7y ago

LatteLazy 7y ago

Isn't the answer the euro? Stable, inflation proof, light or no sanctions. As brexit proceeds and more financial services move to mainland Europe, you won't even have to worry about the brits messing with it... I seem to remember the EU agreeing to setup a psudo bank to deal direct with Iran so they can bypass restrictions on trade? Edit: here it is! https://www.google.com/amp/s/amp.dw.com/en/eu-mechanism-for-trade-with-iran-now-operational/a-49407662 https://www.google.com/amp/s/amp.dw.com/en/eu-mechanism-for-...

aazaa 7y ago
Every country sponsoring a currency approaching the reach of the dollar will begin to experience the same political forces as the US. Weaponization of the currency in the service of foreign and domestic policies is viewed as a cheap alternative to war. And so the pressure to weaponize will sooner or later become irresistible.
- deleted 7y ago
  [deleted]
ApolloFortyNine 7y ago
Didn't the whole Greece debt situation show why that could be a problem? One country's debt crisis caused the euro to tank 30% in a very short time. It ended up rebounding, but pretty much forced the EU to handle the situation (write off debt and provide low interest loans for the rest) or risk the whole thing exploding. It seems like your betting on 5-10 countries not failing, when with most currencies you just have to deal with 1. Which is probably why it's not currently the reserve currency, one would assume.
- baybal2 7y ago
  Greece was fiasco for Euro. It's a lesson learned now, and ECB will hold binge spenders on a leash. UK can leave EU, Greece or Eastern Europe can not.
  - stephen_g 7y ago
    It’s more that the Euro has been a fiasco for Greece, Italy, Portugal and Spain... It’s fundamentally problematic to have a single exchange rate between countries with different inflation rates, balances of trade, etc. - because you can’t have an exchange rate that works for everyone and the value can’t move between the other economies to balance out the differences. The only way around that (apart from going to separate currencies with floating exchange rates) is to have some kind of fiscal balancing method. In the US, for example, federal taxing and spending tends to do this between the states. But that is probably politically impossible in the EU (redistribution from richer countries to poorer is pretty unpopular).
    - baybal2 7y ago
      Very easy to do, and that's actually what ECB is now doing as I understood. They now enforce the limit of how much debt a country can sell, and at what terms much more rigorously
DeonPenny 7y ago
Definitely not the Euro. Its not only not inflation proof infact because poorer country will need higher inflation that's exactly whats going to happen. It's not stable, Brexit, Greece, spain, italy have all gone through a lot of recessions. Not to mention they don't have a central bond market. The Euro can't really ever be a replacement.
empath75 7y ago
The thing is any currency that took over would be used for similar ends.
elfexec 7y ago
> Isn't the answer the euro? Only 19 out of the 28 european union members use the euro. So I don't think the euro (a 19 year old currency ) is the answer. Unless something changes, then in the future it might be one of the answers. > you won't even have to worry about the brits messing with it... The brits never adopted the euro as their currency, so they never messed with it to begin with. > Stable, inflation proof, light or no sanctions. As brexit proceeds a Stable... brexit. The problem with the euro is that its political foundation ( european union ) seems weak. With britain leaving the european union, with the EU sovereign debt crisis and potential for further problems in the near term, it's more likely the EU will break apart and the euro discarded than the euro will replace the dollar as the reserve currency of the world. Being the reserve currency of the world requires the political and military backing of a stable superpower. For all our problems, the US isn't losing states like the EU is losing countries. If the dollar's stranglehold in the world break, we'll probably get regionally dominant currencies. The dollar will still dominate the western hemisphere. The eastern hemisphere will be dominated by regional economic powers and their currencies.
- lispm 7y ago
  > the near term, it's more likely the EU will break apart and the euro discarded That's not likely at all.
  - blibble 7y ago
    it's all but certain that the EU will start to break up in 12 days time (whether or not it will stop there is a separate question)
    - lispm 7y ago
      There are countries waiting to join the EU. Some go, some come. Since 2000 thirteen countries have joined the EU.
      - kmlx 7y ago
        1. the expansion is over. last expansion resulted in some pretty nasty stuff. from massive EU fund corruption to a member leaving. 2. on this last point, how many hundreds of albanias would you need to replace the particular qualities the brits were bringing to the table? the only thing the EU can do is bring Russia onboard. something France and Germany are already doing, to the horror of the Eastern Europeans and the US
crisdux 7y ago
The Euro doesn't look great either. The EU's sovereign debt crisis gets worse every year. The economic growth of the region is predicted to lag the US. A rising banking crisis is being swept under the rug. An aging population. The EU proved during the Cyprus banking crisis that they will reach into bank accounts and confiscate deposits.