4 ms·

What would happen to life in the US if the dollar was no longer the global reserve currency?

mark_l_watson 7y ago
I think it would put us on par with other countries, we would lose a nice advantage. Worst case scenario would be a sharp economic decline, but I optimistically think it would be a slow leveling out, a slow decline in consumer purchasing power, limit government expenditures, etc. But, I am not at all sure what will happen.
- shostack 7y ago
  Do you think that hostile foreign nations are actively trying to end the run of the petrodollar?
  - mark_l_watson 7y ago
    I think the point of the original article is yes, it is in some other countries interests to end the dollar being the sole reserve currency. On the other hand, the USA provides stability, so everyone who is rational in the world should want any transition to be slow. The whole world is in this together, I think we prosper together, or suffer together. Let’s hope for the first option.
nine_zeros 7y ago
Costs will be very high. Have you ever been to third world countries and wondered why their shopkeepers, barbers, regular service people don't live in houses with good materials? Because its too expensive for them. That expensiveness will come here to the US
empath75 7y ago
I think the main immediately recognizable change would be a slide in dollar denominated assets— houses, stocks, bonds, etc, as countries and corporations and crime syndicates stop using the US as a safe place to invest their wealth. Though that may go along with inflation, so it might be hard to tell it’s happening right away.
thawaway1837 7y ago
The most direct impact would be an increase in costs because the American supply chain, which is currently almost completely dealt in dollars would need to factor in currency risks, since, for example, they may have to start paying manufacturers in Yuan, and shippers in Euros. More indirect results would be things like making American companies less competitive than they are worldwide. For one thing, most American companies have little to no experience dealing with multi currency issues, while companies in other countries deal with these every day and do have experience. This will give those other countries and people a slight advantage against American competitors. Also, America gets a decent chunk of stuff for free or cheaper than it would otherwise, because countries are paying Americans goods and services in return for pieces of paper. Those benefits will gradually reduce and disappear.

I think it would put us on par with other countries, we would lose a nice advantage. Worst case scenario would be a sharp economic decline, but I optimistically think it would be a slow leveling out, a slow decline in consumer purchasing power, limit government expenditures, etc. But, I am not at all sure what will happen.

shostack 7y ago
Do you think that hostile foreign nations are actively trying to end the run of the petrodollar?
- mark_l_watson 7y ago
  I think the point of the original article is yes, it is in some other countries interests to end the dollar being the sole reserve currency. On the other hand, the USA provides stability, so everyone who is rational in the world should want any transition to be slow. The whole world is in this together, I think we prosper together, or suffer together. Let’s hope for the first option.

nine_zeros 7y ago

Costs will be very high. Have you ever been to third world countries and wondered why their shopkeepers, barbers, regular service people don't live in houses with good materials? Because its too expensive for them. That expensiveness will come here to the US

empath75 7y ago

I think the main immediately recognizable change would be a slide in dollar denominated assets— houses, stocks, bonds, etc, as countries and corporations and crime syndicates stop using the US as a safe place to invest their wealth. Though that may go along with inflation, so it might be hard to tell it’s happening right away.

thawaway1837 7y ago

The most direct impact would be an increase in costs because the American supply chain, which is currently almost completely dealt in dollars would need to factor in currency risks, since, for example, they may have to start paying manufacturers in Yuan, and shippers in Euros. More indirect results would be things like making American companies less competitive than they are worldwide. For one thing, most American companies have little to no experience dealing with multi currency issues, while companies in other countries deal with these every day and do have experience. This will give those other countries and people a slight advantage against American competitors. Also, America gets a decent chunk of stuff for free or cheaper than it would otherwise, because countries are paying Americans goods and services in return for pieces of paper. Those benefits will gradually reduce and disappear.