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I think what will really blow the top off of the CPI and inflation numbers are if the dollar loses reserve currency status. Right now inflation is relatively c

I think what will really blow the top off of the CPI and inflation numbers are if the dollar loses reserve currency status. Right now inflation is relatively contained because everyone piles into USD as a safe haven asset, which allows the US to purchase a lot of imports since the dollar is strengthening when that happens.

echelon 5y ago
> I think what will really blow the top off of the CPI and inflation numbers are if the dollar loses reserve currency status. How likely is that to happen this decade?
nostromo 5y ago
The risk seems overblown. Mostly because nobody trusts China either, which has as many economic and political problems as does the US, if not more. Russia just doesn’t have enough power to move global markets. Its economy is smaller than Texas’, and is rapidly shrinking.
- akmarinov 5y ago
  Russia doesn’t have enough power to move global markets, yet here we are with all time high gas prices and inflation.
  - jjeaff 5y ago
    We actually don't have all time high gas prices, at least not yet. They were higher pre-2008 crash when adjusted for inflation. Which is the only price that matters. After all, we also have all time high average income right now as well.
- poilcn 5y ago
  California is supposed to be fifth economy in the world. You can use software produced in California under sanctions by ignoring intellectual rights. This wouldn't work with physical goods. You can't replace oil from one source with oil from another. Deficit of some resource chokes production of things that depend on this resource. And it's a chain reaction.
jvm 5y ago
I keep hearing this business about the US being a reserve currency and it makes no sense. First off, lots of other currencies are valuable without being reserve currencies. Swiss franc, Japanese yen, etc. Being a reserve currency probably boosts USD a bit but it's not the only pillar holding the thing up that people imply. If you disagree show your model: You have to believe that value for the euro, GBP, JPY, Swiss Franc is determined by thing X, USA does not have thing X and instead depends on being a reserve currency. Second, what's the alternative reserve currency? Bitcoin? Don't make me laugh. RMB? Even more ridiculous. Euro? Probably the most realistic contender but seems to have major governance problems. As with democracy, the USD is the worst reserve currency, except for all the alternatives.
- vmception 5y ago
  USD has a variety of “thing X’s” to drive demand as well as being a destination when things seem uncertain, driving further demand. When people move their money out of monetary unions, there are only a few places and assets to purchase in large amounts. Everything has already been stretched to insane valuations, so USD is it. I think your pragmatic look is refreshing, but too willing to reject a notion just because its popular, you’re right on the money just incorporate the demand drivers instead of excluding them.
- AnthonyMouse 5y ago
  It's not that the dollar would have long-term instability, it's that the act of going from reserve currency to non-reserve currency would see people in other countries dumping dollars for whatever the new thing is. There would be a short period of hyperinflation in the US. That doesn't mean it's going to happen, but if it did happen, it wouldn't be nothing.
  - nradov 5y ago
    Hyperinflation is a monetary phenomenon. USD sales by foreigners wouldn't be sufficient to cause hyperinflation. Who are they selling to, and for what?
    - 5y ago

echelon 5y ago

> I think what will really blow the top off of the CPI and inflation numbers are if the dollar loses reserve currency status. How likely is that to happen this decade?

nostromo 5y ago

The risk seems overblown. Mostly because nobody trusts China either, which has as many economic and political problems as does the US, if not more. Russia just doesn’t have enough power to move global markets. Its economy is smaller than Texas’, and is rapidly shrinking.

akmarinov 5y ago
Russia doesn’t have enough power to move global markets, yet here we are with all time high gas prices and inflation.
- jjeaff 5y ago
  We actually don't have all time high gas prices, at least not yet. They were higher pre-2008 crash when adjusted for inflation. Which is the only price that matters. After all, we also have all time high average income right now as well.
poilcn 5y ago
California is supposed to be fifth economy in the world. You can use software produced in California under sanctions by ignoring intellectual rights. This wouldn't work with physical goods. You can't replace oil from one source with oil from another. Deficit of some resource chokes production of things that depend on this resource. And it's a chain reaction.

jvm 5y ago

I keep hearing this business about the US being a reserve currency and it makes no sense. First off, lots of other currencies are valuable without being reserve currencies. Swiss franc, Japanese yen, etc. Being a reserve currency probably boosts USD a bit but it's not the only pillar holding the thing up that people imply. If you disagree show your model: You have to believe that value for the euro, GBP, JPY, Swiss Franc is determined by thing X, USA does not have thing X and instead depends on being a reserve currency. Second, what's the alternative reserve currency? Bitcoin? Don't make me laugh. RMB? Even more ridiculous. Euro? Probably the most realistic contender but seems to have major governance problems. As with democracy, the USD is the worst reserve currency, except for all the alternatives.

vmception 5y ago
USD has a variety of “thing X’s” to drive demand as well as being a destination when things seem uncertain, driving further demand. When people move their money out of monetary unions, there are only a few places and assets to purchase in large amounts. Everything has already been stretched to insane valuations, so USD is it. I think your pragmatic look is refreshing, but too willing to reject a notion just because its popular, you’re right on the money just incorporate the demand drivers instead of excluding them.
AnthonyMouse 5y ago
It's not that the dollar would have long-term instability, it's that the act of going from reserve currency to non-reserve currency would see people in other countries dumping dollars for whatever the new thing is. There would be a short period of hyperinflation in the US. That doesn't mean it's going to happen, but if it did happen, it wouldn't be nothing.
- nradov 5y ago
  Hyperinflation is a monetary phenomenon. USD sales by foreigners wouldn't be sufficient to cause hyperinflation. Who are they selling to, and for what?
  - 5y ago