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+1 I'd also like to note the, not obvious fact, that the "wealthy" have no other meaningful choice but to put their money in dollars. No other country, or group

+1 I'd also like to note the, not obvious fact, that the "wealthy" have no other meaningful choice but to put their money in dollars. No other country, or group of countries, even comes close to providing the liquidity, safety, and flexibility of the US dollar. The US has never halted trading, has continuously paid its debts, and has shown zero meaningful (congressional shenanigans aside) intention of stopping. That's not to say one day, another country won't have the burden of being the world's reserve currency, but for at least the next 20-30 years it's very likely going to be the US.

effie 6y ago
Wealthy people have other people who manage their money. Only part of that money is in U.S. dollars/bonds at any given time, because it is less risky to have money in various different assets such as land, buildings, stocks.
- rubyn00bie 6y ago
  Yes, wealthy people do pay others to manage their funds... I'm failing to see how that's a revelation here. The people who manage that money, assuming they are responsible, or remotely-qualified, have only one option; which, is going to be investing primarily in securities/assets backed by US dollars. Land, buildings, and stock are all assets because you can get money back for them. That money is only good if its spendable and can be extracted from the asset... which is my point. /shrug I'm just a bit lost at what you're trying to say...
  - exdsq 6y ago
    People rarely hold that much in cash, it goes into assets like buildings. And those assets tend to be diversified around the world - cash will probably be held in banks offshore with good tax rules.
  - effie 6y ago
    > The people who manage that money, assuming they are responsible, or remotely-qualified, have only one option; which, is going to be investing primarily in securities/assets backed by US dollars. That may be a strategy of single person with a little money trying to not lose it long term. But it would be foolish for the really big investors. They don't do that. Wealthy people diversify in different asset classes, not just in US stocks/bonds. Real world assets such as gold, stocks, art, land, buildings, private companies etc. are not in general "backed by US dollars". They can have value largely decoupled from the value of US dollar or its status as top world currency. Which is why those clever managers invest also in those assets.
icelancer 6y ago
It's also tied to a single, very large country. This gives USD a significant boost over EUR in many ways.
blaser-waffle 6y ago
To further that point, the current global trade regime is essentially US-style capitalism writ large. Individual countries don't play that way -- state owned CCP corps in China, for example -- but the US is the bulkwark of the system. If the US dollar totally fails it means the global economic system is in upheaval, and if that happens I'd rather have reserves of water, salt, seeds, and ammo...

effie 6y ago

Wealthy people have other people who manage their money. Only part of that money is in U.S. dollars/bonds at any given time, because it is less risky to have money in various different assets such as land, buildings, stocks.

rubyn00bie 6y ago
Yes, wealthy people do pay others to manage their funds... I'm failing to see how that's a revelation here. The people who manage that money, assuming they are responsible, or remotely-qualified, have only one option; which, is going to be investing primarily in securities/assets backed by US dollars. Land, buildings, and stock are all assets because you can get money back for them. That money is only good if its spendable and can be extracted from the asset... which is my point. /shrug I'm just a bit lost at what you're trying to say...
- exdsq 6y ago
  People rarely hold that much in cash, it goes into assets like buildings. And those assets tend to be diversified around the world - cash will probably be held in banks offshore with good tax rules.
- effie 6y ago
  > The people who manage that money, assuming they are responsible, or remotely-qualified, have only one option; which, is going to be investing primarily in securities/assets backed by US dollars. That may be a strategy of single person with a little money trying to not lose it long term. But it would be foolish for the really big investors. They don't do that. Wealthy people diversify in different asset classes, not just in US stocks/bonds. Real world assets such as gold, stocks, art, land, buildings, private companies etc. are not in general "backed by US dollars". They can have value largely decoupled from the value of US dollar or its status as top world currency. Which is why those clever managers invest also in those assets.

icelancer 6y ago

It's also tied to a single, very large country. This gives USD a significant boost over EUR in many ways.

blaser-waffle 6y ago

To further that point, the current global trade regime is essentially US-style capitalism writ large. Individual countries don't play that way -- state owned CCP corps in China, for example -- but the US is the bulkwark of the system. If the US dollar totally fails it means the global economic system is in upheaval, and if that happens I'd rather have reserves of water, salt, seeds, and ammo...