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>these currencies are highly stable Can you truly call them stable with 7+% official inflation, negative real interest rates, and China owning 3+ trillion USD-

by fuoqi 5y ago

>these currencies are highly stable Can you truly call them stable with 7+% official inflation, negative real interest rates, and China owning 3+ trillion USD-nominated assets, which it probably will start to gradually sell in the wake of sanctions against the Central Bank of Russia?

JumpCrisscross 5y ago
None of these factors, other than inflation, point to instability. With respect to inflation, that’s being directly addressed. Compared to every other currency, historical and extant, the major trading currencies of the day are highly stable across multiples of even the longest transaction time frames. They aren’t good long-term stores of value because that’s not what they’re built for.
- lowkey 5y ago
  > With respect to inflation, that’s being directly addressed. Please explain. I don’t understand how that’s true. In last night’s SOTU President Biden said inflation was mostly due to car prices or something equally silly. I don’t see any nation seriously addressing inflation which is officially 7.5% but I believe to be much higher for most.
  - anonymoushn 5y ago
    I think there are multiple interest rate hikes planned for this year and the fed will cease marginal asset purchases (but not sell assets).
    - lowkey 5y ago
      What if I told you that multiple 0.25% interest rate hikes are unlikely to meaningfully counter 7.5% inflation? The last time the US had inflation this high Volcker had to raise rates to double-digits in order to break the back of inflation. Also, don't forget that 20% of all USD ever printed were printed in the past year and the Fed has made no claims that they plan to taper the money printer anytime soon.
  - WoahNoun 5y ago
    The 7% inflation number is measured as an increase in prices in consumer goods. Used car prices are up >30% and are a significant piece of consumer spending.
    - rswail 5y ago
      Perhaps because the demand for vehicles post COVID is exceeding supply. However, is it just drawing forward future demand, which would mean the inflation is temporary? I mean after a 2 year recession caused by the pandemic, in terms of large consumer items, like vehicles, you'd expect that. People want/need to start travelling again.
imtringued 5y ago
There is truly nothing worse than China giving money to Russia so they can pay off their dollar denominated debts...

by fuoqi 5y ago

JumpCrisscross 5y ago

None of these factors, other than inflation, point to instability. With respect to inflation, that’s being directly addressed. Compared to every other currency, historical and extant, the major trading currencies of the day are highly stable across multiples of even the longest transaction time frames. They aren’t good long-term stores of value because that’s not what they’re built for.

lowkey 5y ago
> With respect to inflation, that’s being directly addressed. Please explain. I don’t understand how that’s true. In last night’s SOTU President Biden said inflation was mostly due to car prices or something equally silly. I don’t see any nation seriously addressing inflation which is officially 7.5% but I believe to be much higher for most.
- anonymoushn 5y ago
  I think there are multiple interest rate hikes planned for this year and the fed will cease marginal asset purchases (but not sell assets).
  - lowkey 5y ago
    What if I told you that multiple 0.25% interest rate hikes are unlikely to meaningfully counter 7.5% inflation? The last time the US had inflation this high Volcker had to raise rates to double-digits in order to break the back of inflation. Also, don't forget that 20% of all USD ever printed were printed in the past year and the Fed has made no claims that they plan to taper the money printer anytime soon.
- WoahNoun 5y ago
  The 7% inflation number is measured as an increase in prices in consumer goods. Used car prices are up >30% and are a significant piece of consumer spending.
  - rswail 5y ago
    Perhaps because the demand for vehicles post COVID is exceeding supply. However, is it just drawing forward future demand, which would mean the inflation is temporary? I mean after a 2 year recession caused by the pandemic, in terms of large consumer items, like vehicles, you'd expect that. People want/need to start travelling again.

imtringued 5y ago

There is truly nothing worse than China giving money to Russia so they can pay off their dollar denominated debts...