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Quick way to think about it: If you believe that Russia or China's currencies will be a safe place to hold your wealth for 10+ years, then it will be a threat.
by MR4D 6y ago
Quick way to think about it:
If you believe that Russia or China's currencies will be a safe place to hold your wealth for 10+ years, then it will be a threat. Safe means "keep its value & is accessible".
If you do not believe that they will be safe, then there is no threat to the dollar.
The rationale is that people generally want to have their wealth in a safe place (currency, not necessarily a physical location).
Right now (and for the foreseeable future) there is no currency that can compete with the Dollar. However, Gold could displace it if people lose confidence in the Dollar's value (ability to safely store wealth).
- effie 6y agoBig wealth is not in general hold in a currency, for reasons of inflation and currently, for reasons of negative interest rates. Currency is used to settle transactions. Any wealth that could move geopolitics/global economics is kept in different, more dependable form.
- ryanwaggoner 6y agoThis doesn’t make sense to me. The reason interest rates are negative is that the demand for USD is so high that you have to pay for the privilege of storing your wealth in USD.
- effie 6y agoAny source for such a wild claim? Interest rates are so low because people controlling the FED decided the rates to be low. They did so, as the story goes, to stimulate the economy growth, to make banks more likely to lend and companies more likely to borrow money and use the money they have to buy things, hire people, increase production. Of course, the reality is more complicated and lot of that newly created money just pumps the stock market with little benefit to economy. One indeed has to pay banks for storing money, whether in USD or EUR, that's why big wealth managers don't keep big wealth as money but invest in diverse assets. Storing some USD is no privilege, it is a necessary liability. USD is needed for transactions, not for storing wealth.
- blaser-waffle 6y ago> However, Gold could displace it if people lose confidence in the Dollar's value (ability to safely store wealth). Bitcoin is spiking like mad right now. I trust gold more, but if you're willing to tolerate the BTC risk, it maybe more lucrative. And I'm staying this as a notable BTC skeptic.