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The hegemony of the dollar as a reserve currency is finally coming to an end, and while many will disagree with my opinion, I believe it's a very good thing for

The hegemony of the dollar as a reserve currency is finally coming to an end, and while many will disagree with my opinion, I believe it's a very good thing for the world. The US has been allowed by the rest of the world to use the dollar as a weapon since the end of WWII, specifically using it to impose unilateral economic sanctions on anyone they don't like, thereby flouting or downright ignoring other countries sovereignty in the process. The have also used the privileged status of the dollar to gain systematic, unfair and generally undeserved economic advantage in international markets. They have also used this advantage to create a completely unsustainable amount of debt which the US will never be able to repay now that the dollar is becoming just another currency. Picasso was famous for writing checks, knowing fully well that they would never get cashed out because, bearing his signature, there was an intrinsic demand for them and the thing would be kept as is by the owner. US dollars are very similar to Picasso's checks in the sense that foreign country all keep large amounts of US currency reserve and debt instrument, but they never "cash them out" (exchange them for US-based hard assets such as land and businesses). The world has allowed this to happen for near 70-ish years because the for the longest time, the US was perceived by a large part of the world as a force for good. That ship has sailed though, and in 2022 it's getting pretty hard to find folks outside of the US that view it as a force for good anymore (or just don't downright hate their guts with a passion). To be a useful tool, a currency should be, among other things: a) managed in a sane manner (as in: the amount issued should be on a fixed schedule, as per Milton Friedman) b) not used to tilt the playing field c) essentially politically neutral, and in particular managed by an entity not in any way controllable by the government. The US dollar doesn't meet any of these criteria, and the chicken are now coming home to roost and the dollar will slowly lose it's privileged status among world currencies, slowly being replaced by a bunch of other. Good riddance.

dragonelite 4y ago
Wondering what will replace it, maybe the Brics coin a basket of currencies and commodities. A bit like Keynes Bancor concept if i'm not mistaken time will tell what sort of currencies the Russians and Chinese will introduce for BRICS, SCO and BRI nations.
- ur-whale 4y ago
  The Chinese Renminbi (Yuan) is a good candidate to quickly get on par with the USD. If they manage it properly that is, as in: not print mountains of it, and not using it to enforce their political aims. They're currently actively busy making the Renminbi reserve and default trading currency in much of Asia. And, as a last resort, there's always Bitcoin and gold, although, as Ghana will discover (unless they make the mistake of using a 3rd-party custodian) gold is very tricky to move about.
  - pjc50 4y ago
    > not using it to enforce their political aims. Ah yes, the CCP, famously known for not enforcing political aims.
  - meowfly 4y ago
    RMB is a terrible candidate for a reserve currency. If you are concerned about the US meddling with their currency, you will not pick a historically manipulated currency like the RMB. Moreover, in China transactions over 8k USD have to be reported and there is a 50k USD currency exchange limit. The governments managing of outflows hardly gives confidence that the currency is one people want to hold.
  - dragonelite 4y ago
    Asia does seem to move more and more into the renminbi sphere. It would makes sense if China starts exporting more RMB over the next couple of years to facilitate trade in the region and get the USD financial hooks out of the region. For now i'm mostly waiting on South china sea code of conduct being finalised. Seems Vietnam is now willing to cooperate with China on their South China sea issues and resources/border disputes. You also have Xi next month meeting Arab leaders in Saudi Arabia, a lot of people are expecting a PetroYuan announcement or at the very least the foundation of such an agreement. I think after those two events are handled and closed, China should be in an excellent position to become Asia's major energy hub. They can get Russian, Qatari, Central Asian stans and Saudi energy products without having to use Western financial institutions or services. I think the Russian and Arab leaders want a bigger share of the Chinese bonds and financial markets so they can grow their RMB reserves like they are already doing with their dollars. Ghana going with gold for energy imports seems smart for now but yeah moving gold isn't easy, also verifying the gold is also not easy. That's why i think BRICS+, SCO and BRI nations will create a block chain with a digital currency(Central Banks digital Currency) backed by a basket of currencies and commodities to facilitate import and export and government to government financial transactions.
creakingstairs 4y ago
> The hegemony of the dollar as a reserve currency is finally coming to an end, and while many will disagree with my opinion, I believe it's a very good thing for the world. Yeah ideally, I agree that some competition might be good to keep US in check. Chinese Yuan seems most likely at this point. But I think the world would be in a “worse” place when the break happens. Purely due to geopolitical instability and all the second order effects that is bound to happen when US hegemony ends.

dragonelite 4y ago

Wondering what will replace it, maybe the Brics coin a basket of currencies and commodities. A bit like Keynes Bancor concept if i'm not mistaken time will tell what sort of currencies the Russians and Chinese will introduce for BRICS, SCO and BRI nations.

ur-whale 4y ago
The Chinese Renminbi (Yuan) is a good candidate to quickly get on par with the USD. If they manage it properly that is, as in: not print mountains of it, and not using it to enforce their political aims. They're currently actively busy making the Renminbi reserve and default trading currency in much of Asia. And, as a last resort, there's always Bitcoin and gold, although, as Ghana will discover (unless they make the mistake of using a 3rd-party custodian) gold is very tricky to move about.
- pjc50 4y ago
  > not using it to enforce their political aims. Ah yes, the CCP, famously known for not enforcing political aims.
- meowfly 4y ago
  RMB is a terrible candidate for a reserve currency. If you are concerned about the US meddling with their currency, you will not pick a historically manipulated currency like the RMB. Moreover, in China transactions over 8k USD have to be reported and there is a 50k USD currency exchange limit. The governments managing of outflows hardly gives confidence that the currency is one people want to hold.
- dragonelite 4y ago
  Asia does seem to move more and more into the renminbi sphere. It would makes sense if China starts exporting more RMB over the next couple of years to facilitate trade in the region and get the USD financial hooks out of the region. For now i'm mostly waiting on South china sea code of conduct being finalised. Seems Vietnam is now willing to cooperate with China on their South China sea issues and resources/border disputes. You also have Xi next month meeting Arab leaders in Saudi Arabia, a lot of people are expecting a PetroYuan announcement or at the very least the foundation of such an agreement. I think after those two events are handled and closed, China should be in an excellent position to become Asia's major energy hub. They can get Russian, Qatari, Central Asian stans and Saudi energy products without having to use Western financial institutions or services. I think the Russian and Arab leaders want a bigger share of the Chinese bonds and financial markets so they can grow their RMB reserves like they are already doing with their dollars. Ghana going with gold for energy imports seems smart for now but yeah moving gold isn't easy, also verifying the gold is also not easy. That's why i think BRICS+, SCO and BRI nations will create a block chain with a digital currency(Central Banks digital Currency) backed by a basket of currencies and commodities to facilitate import and export and government to government financial transactions.

creakingstairs 4y ago

> The hegemony of the dollar as a reserve currency is finally coming to an end, and while many will disagree with my opinion, I believe it's a very good thing for the world. Yeah ideally, I agree that some competition might be good to keep US in check. Chinese Yuan seems most likely at this point. But I think the world would be in a “worse” place when the break happens. Purely due to geopolitical instability and all the second order effects that is bound to happen when US hegemony ends.