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I think the far larger concern is what would happen should the US Dollar lose "reserve currency" status? At this point it is probably the only thing holding th

I think the far larger concern is what would happen should the US Dollar lose "reserve currency" status? At this point it is probably the only thing holding the US dollar up? It is easy to borrow when you hold the reserve currency, but once that is gone why would the world want to hold "dollars" anymore?

nine_zeros 4y ago
> I think the far lager concern is what would happen should the US Dollar lose "reserve currency" status? When (if) a replacement currency shows up, it's more likely that USD will continue to be "one of the primary reserve currencies" instead of getting completely yanked from central bank reserves all over the world. This gradual decline happened with British Pound around/after WW2 so it is not unprecedented.
spywaregorilla 4y ago
> At this point it is probably the only thing holding the US dollar up? So by "the only thing holding the US dollar up" you mean "rapidly strengthening against pretty much every other currency on the planet", right?
- kmlx 4y ago
  > rapidly strengthening against pretty much every other currency on the planet that's only because of the inflation brought about by the disastrous economic response to covid, a response which ironically was initiated by the same politicians that are now claiming inflation needs to be brought down.
  - spywaregorilla 4y ago
    Having inflation does not cause your currency to get stronger. The cause is simply that the US is well positioned and most other countries are not, so the demand for dollars is very high.
- kennend3 4y ago
  Dude.. it is the reserve currency.. when there are risks in the markets people RUN to it. The same as when the markets are volatile people dump stocks and buy bonds. Thanks for proving my point, that being a reserve currency gives you some pretty powerful special rights.
  - spywaregorilla 4y ago
    That is backwards. It is the reserve currency because it is stable and desirable and backed by an enormous military and economic engine. You also implied it was a fragile position. It is not. Because of the above.
    - kennend3 4y ago
      Take a read sometime : https://www.principles.com/big-debt-crises https://www.principles.com/big-debt-crises He covers many historical "reserve currencies" and how they eventually ran out of time and were replaced by another. He also feels the US is in a fragile position, and given he only makes money when he is correct..and he has been making money since 1974... I did not imply it was fragile, i said that should it lose reserve currency status the US debt will become a far larger problem.
      - spywaregorilla 4y ago
        I've no interest in reading Ray Dalio. > i said that should it lose reserve currency status the US debt will become a far larger problem. Again, the only way the US loses its reserve currency status is by already being in deep shit, so this is tautological. It's hardly inconceivable that the US is in a bad economic position in the future. But for the short term outlook of at least a decade or so, the US is in the best position it's seen in a century.
        taolegal 4y ago
        > I've no interest in reading Ray Dalio. By admitting to bigoted ignorance, you lose the argument. Money is half of practically every transaction. Therefore its value has an enormous influence on economic activity. All economic calculation of individuals going about their lives ends up based on these flawed artificial signals created by self-righteous academics & experts. Why does practically every important sector of the economy suck? They're managed by the government & based in expansionary monetary policy. Cheap money leads to cheap services & products. It's only when economic activity is based on long-term thinking (the opposite of near-zero interest rates) will society have a prosperous economy. Also, the entire salaried economy is debased since the transaction cost of changing jobs will be a constant force along with devaluing money, in effect, constantly & indefinitely stealing money from every worker.
newaccount2021 4y ago
There is nothing that can supplant the dollar right now. The Yuan is radioactive now that the Western world is compartmentalizing China. The Euro may not even survive the next few years if energy, conflict and other issues take down the EU. Japanese Yen? British Pound? No way. What's left? Nothing really. The dollar is it, and everyone knows it.
_8j50 4y ago
Why would that be the only thing holding it up? The US military and the resulting stability if the US is keeping it up. The amount of debt is not an issue, its eventual ability to pay off the debt is and keep in mind a huge chunk of this debt is intragovernmental (different parts of the governmenr borrowing from treasury). If the military weakens and/or the US is seen as very unstable or if for some reason defaults on its debt obligations, then it will lose reserve currency status. Look at the Chinese RMB for example, their military is not all that tested and their stability hinges upon one guy Xi keeping power and they are fairly new to having a great economy with housing crashes, corruptiom purges, predatory loans in africa, looming conflict with US on multiple geopolitical conflicts. Most of the west might end up sanctioning their currency in a major war like with Russia. Big, scary and stable wins the game everytime for reserve currency.
- kennend3 4y ago
  > The US military and the resulting stability if the US is keeping it up. Do share with the larger audience how the US military is funded when you run a deficit year after year? It is weird to conflate "military" with "currency strength". Prior to the US being the reserve currency it was the British pound, how's that working out these days? > for some reason defaults on its debt obligations, this tells me you are unaware of the topic you discuss. You can NEVER default on a debt issued in your own currency. You simply print more (The US calls it quantitative easing). You only default on debt which is NOT in your own currency. So Russia's default for example: "On 4 April 2022, Russia technically defaulted on its foreign debt by failing to pay its obligations in US dollars (and after the grace period it actually defaulted because it did not pay 30 days grace period interest of around 1.9 million USD)." Notice this was "obligations in US dollars"?? Argentina: "The Argentine debt restructuring is a process of debt restructuring by Argentina that began on January 14, 2005, and allowed it to resume payment on 76% of the US$82 billion in sovereign bonds that defaulted in 2001 '" "Sovereign bonds" - Again, notice this is US dollar debt?
  - _8j50 4y ago
    What are you even talking about. How the US military is funded is not what is relevant but its perception as a force capable of preventing external hostile entities from harming the US and disrupting its government. If your money was in Ruble for example, the weakness of the russian army makes it a bad currency to use as a reseve among other things. You did not add any new information here, refusing to print money to pay your debts means you defaulted right? I did say for whatever reason right? If you are so knowledgable then perhaps you might also know that printing money is inflationary and at some point the government will have to decide between devaluing its currency so much chaos and civil unrest breaks out or you stop printing money to pay your debts. This is most unlikely with the US so it is a good reserve dollar. But other countries like lebanon and venezuela were forced to be in that position. I mean whether or not they actual refuse to print money is not even the issue, it is the perception that they might have to make that decision.

nine_zeros 4y ago

> I think the far lager concern is what would happen should the US Dollar lose "reserve currency" status? When (if) a replacement currency shows up, it's more likely that USD will continue to be "one of the primary reserve currencies" instead of getting completely yanked from central bank reserves all over the world. This gradual decline happened with British Pound around/after WW2 so it is not unprecedented.

spywaregorilla 4y ago

> At this point it is probably the only thing holding the US dollar up? So by "the only thing holding the US dollar up" you mean "rapidly strengthening against pretty much every other currency on the planet", right?

kmlx 4y ago
> rapidly strengthening against pretty much every other currency on the planet that's only because of the inflation brought about by the disastrous economic response to covid, a response which ironically was initiated by the same politicians that are now claiming inflation needs to be brought down.
- spywaregorilla 4y ago
  Having inflation does not cause your currency to get stronger. The cause is simply that the US is well positioned and most other countries are not, so the demand for dollars is very high.
kennend3 4y ago
Dude.. it is the reserve currency.. when there are risks in the markets people RUN to it. The same as when the markets are volatile people dump stocks and buy bonds. Thanks for proving my point, that being a reserve currency gives you some pretty powerful special rights.
- spywaregorilla 4y ago
  That is backwards. It is the reserve currency because it is stable and desirable and backed by an enormous military and economic engine. You also implied it was a fragile position. It is not. Because of the above.
  - kennend3 4y ago
    Take a read sometime : https://www.principles.com/big-debt-crises https://www.principles.com/big-debt-crises He covers many historical "reserve currencies" and how they eventually ran out of time and were replaced by another. He also feels the US is in a fragile position, and given he only makes money when he is correct..and he has been making money since 1974... I did not imply it was fragile, i said that should it lose reserve currency status the US debt will become a far larger problem.
    - spywaregorilla 4y ago
      I've no interest in reading Ray Dalio. > i said that should it lose reserve currency status the US debt will become a far larger problem. Again, the only way the US loses its reserve currency status is by already being in deep shit, so this is tautological. It's hardly inconceivable that the US is in a bad economic position in the future. But for the short term outlook of at least a decade or so, the US is in the best position it's seen in a century.
      - taolegal 4y ago
        > I've no interest in reading Ray Dalio. By admitting to bigoted ignorance, you lose the argument. Money is half of practically every transaction. Therefore its value has an enormous influence on economic activity. All economic calculation of individuals going about their lives ends up based on these flawed artificial signals created by self-righteous academics & experts. Why does practically every important sector of the economy suck? They're managed by the government & based in expansionary monetary policy. Cheap money leads to cheap services & products. It's only when economic activity is based on long-term thinking (the opposite of near-zero interest rates) will society have a prosperous economy. Also, the entire salaried economy is debased since the transaction cost of changing jobs will be a constant force along with devaluing money, in effect, constantly & indefinitely stealing money from every worker.

newaccount2021 4y ago

There is nothing that can supplant the dollar right now. The Yuan is radioactive now that the Western world is compartmentalizing China. The Euro may not even survive the next few years if energy, conflict and other issues take down the EU. Japanese Yen? British Pound? No way. What's left? Nothing really. The dollar is it, and everyone knows it.

_8j50 4y ago

Why would that be the only thing holding it up? The US military and the resulting stability if the US is keeping it up. The amount of debt is not an issue, its eventual ability to pay off the debt is and keep in mind a huge chunk of this debt is intragovernmental (different parts of the governmenr borrowing from treasury). If the military weakens and/or the US is seen as very unstable or if for some reason defaults on its debt obligations, then it will lose reserve currency status. Look at the Chinese RMB for example, their military is not all that tested and their stability hinges upon one guy Xi keeping power and they are fairly new to having a great economy with housing crashes, corruptiom purges, predatory loans in africa, looming conflict with US on multiple geopolitical conflicts. Most of the west might end up sanctioning their currency in a major war like with Russia. Big, scary and stable wins the game everytime for reserve currency.

kennend3 4y ago
> The US military and the resulting stability if the US is keeping it up. Do share with the larger audience how the US military is funded when you run a deficit year after year? It is weird to conflate "military" with "currency strength". Prior to the US being the reserve currency it was the British pound, how's that working out these days? > for some reason defaults on its debt obligations, this tells me you are unaware of the topic you discuss. You can NEVER default on a debt issued in your own currency. You simply print more (The US calls it quantitative easing). You only default on debt which is NOT in your own currency. So Russia's default for example: "On 4 April 2022, Russia technically defaulted on its foreign debt by failing to pay its obligations in US dollars (and after the grace period it actually defaulted because it did not pay 30 days grace period interest of around 1.9 million USD)." Notice this was "obligations in US dollars"?? Argentina: "The Argentine debt restructuring is a process of debt restructuring by Argentina that began on January 14, 2005, and allowed it to resume payment on 76% of the US$82 billion in sovereign bonds that defaulted in 2001 '" "Sovereign bonds" - Again, notice this is US dollar debt?
- _8j50 4y ago
  What are you even talking about. How the US military is funded is not what is relevant but its perception as a force capable of preventing external hostile entities from harming the US and disrupting its government. If your money was in Ruble for example, the weakness of the russian army makes it a bad currency to use as a reseve among other things. You did not add any new information here, refusing to print money to pay your debts means you defaulted right? I did say for whatever reason right? If you are so knowledgable then perhaps you might also know that printing money is inflationary and at some point the government will have to decide between devaluing its currency so much chaos and civil unrest breaks out or you stop printing money to pay your debts. This is most unlikely with the US so it is a good reserve dollar. But other countries like lebanon and venezuela were forced to be in that position. I mean whether or not they actual refuse to print money is not even the issue, it is the perception that they might have to make that decision.