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This is perhaps the best written article on the current state and future of US dollar (and thus, America). As an avid follower of geopolitics and with exposure
by nine_zeros 6y ago
This is perhaps the best written article on the current state and future of US dollar (and thus, America). As an avid follower of geopolitics and with exposure to both east and west, I've often had to work out where the future lies and the thoughts of this article appear to mirror mine.
Especially since Trump's election, I have always wondered about the future of America, not just socially but also economically. Trump's excessive use of sanctions and bullying comes at a major loss for future generations. And this line from the article elucidates it:
"However, when major powers like China, Russia, and India begin pricing things outside of the dollar-based system and using their currencies for trade, including for energy in some cases, the US can’t realistically intervene militarily, and instead can only intervene with sanctions or trade disputes and other forms of geopolitical pressure."
and
"Chinese officials have said on numerous occasions that their reliance on the dollar system is a security risk for them. Having surpassed the United States as the world’s largest trading partner and world’s biggest importer of commodities, China increasingly has an interest in being able to acquire commodities and perform global trade without dollars, which as we see with trading partners like Russia, or with China’s yuan-based oil futures contract, they’re increasingly able to do with small steps at a time."
The bullying is the last straw. A lot of countries are very independent and are only trading in dollars because of oil. Take that away with sanctions and the demand for dollars drops rapidly. Thus, US dollar doesn't need to be a major reserve currency, holding US dollars might even be a risk.
Had bitcoin not been deflationary, bitcoin could have filled this gap. More likely though is that the declining faith in American politics will force other countries to go back to a multicurrency system and thus, US will no longer remain the top dog.
History repeats.
- birdyrooster 6y agoI used to think losing US reserve currency was a bad thing, but now I see it as our responsibility to hand the world back their sovereignty. This could heal the planet more.
- nine_zeros 6y agoYep. It's a trap that has allowed us to live an unusually high standard of living. By letting go of reserve status, we don't need to go to wars, we'll get some manufacturing back domestically and less shipping from across the world. Sure, we'll have to reduce our quality of life with smaller houses, smaller cars, denser towns and lesser "stuff" in general but that's not a bad thing necessarily. So what if gas costs $7/gallon, we just need to reduce our consumption.