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It has everything to do with USD dominance. Ghana is shouting out loud I can’t get my hands on USD. They’re echoing what the global market in general has been p
by danielschonfeld 4y ago
It has everything to do with USD dominance. Ghana is shouting out loud I can’t get my hands on USD. They’re echoing what the global market in general has been pricing.
Now true, having your product be a hot commodity everybody wants is good for business but there’s only so much of that before your competitor starts offering a more readily available product.
Pepper that with some morally objectionable stances the US has taken over the past 22 years and suddenly your ultra safe and liquid commodity while still good and desirable for this present crisis might not be as desirable for the post crisis era. Where one crack starts many others can possibly form.
- gtirloni 4y agoAre you advocating for printing more USD? edit: not sure why I'm being downvoted for asking a relevant question
- whatever1 4y agoPeople outside the US love it, so no issue with devaluing the USD if we print an extra couple of trillions. The main issue is that the global supply chain cannot literally serve richer American consumers, so the cost of supply increases and everyone (in the US and out) faces inflation pressure.
- miguelazo 4y agoPeople outside the US loved it. Recent moves by Japan, Switzerland and some others in the (quickly-losing-liquidity) Treasury Market suggest that era is coming to a close.
- ghostwriter 4y ago> People outside the US loved it. Correction: foreign central banks guided by IMF subsidiaries loved it dearly, people - not that much, perhaps the opposite [1] [1] https://youtu.be/p5Ac7ap_MAY?t=1769 https://youtu.be/p5Ac7ap_MAY?t=1769
- kobalsky 4y agono one with savings in USD is glad that it inflated, but the reality is that other easily accesible currencies bit the dust harder.
- ars 4y agoIf we devalue the USD all that will happen is the price of oil, as denominated in USD, will go up. You don't actually accomplish anything.
- rsync 4y agoI downvoted you because you complained about your downvotes. Don't watch the score and, especially, don't complain about it.
- gtirloni 4y agoI did not complain. Maybe you should revisit your downvoting principles. I inquired why I was being downvoted for asking a question. I was genuinely curious about how that was bad.
- ketzo 4y agoJust bad form to mention your own score, period.
- benj111 4y agoTrue, but if you ask a genuine question and get downvotes, what are you supposed to infer from that? Yes it may be bad form to mention your own score, but it's equally bad form to downvote for asking a question, or read into a question something that wasn't said which may require a down vote. Why don't you take the time to answer the parents question rather than downvote them for querying why their question got downvotes? If there's anywhere that appreciates the gaining of knowledge on the internet, surely hn must be one of the top candidates. So why downvote questions? And yes it's happened to me multiple times, and it's bloody annoying. Doubly so because you know if you try to clarify you'll get someone downvoting you because why? I don't know. Because that would be 'bad form'? BS. /Rant
- dislikedtom2 4y agoOften I think it means that you asked a painful question. Don't think that downvotes are always bad, they merely just tell what is popular, just like in reddit.
- benj111 4y ago
- MerelyMortal 4y agoMaybe the edit could have instead provided clarification to why it's relevant.
- danielschonfeld 4y agoGenerally speaking yes. If from your question I deduce that you’re worried about how much we already “printed” then do some googling over why the common citing of growth of M2 chart is interpreted wrong. Spoiler - we didn’t print nearly as much as you think we did. And we generally haven’t even scratched the surface of how much more a normal growth of the currency since 2008 was needed. The question that needs to be asked is more political and societal than monetary. Does the US want to lead the world by resuming at marketing a more true and secular beacon of hope and freedom or does it want to become isolationist and toe the line of each dog to its own. If we choose the former the question than arises if that’s even still possible and if we ever were true to it or were we just lucky enough to enjoy the arbitrage of developing countries not having developed yet. I personally don’t have all the answers but it seems to me that combined with our questionable moral standing in the last 22 years and our secular stagnation the latter is the path we’re choosing to follow.
- unboxingelf 4y agoSpoiler - we didn’t print nearly as much as you think we did. And we generally haven’t even scratched the surface of how much more a normal growth of the currency since 2008 was needed. What are you talking about? Aside from the indoctrinated belief that money printing is good and normal, in the past 2 years alone the US has printed nearly 80% of USD in existence. Our debt to GDP is over 130%. If by “normal” you mean debasing and destroying the government money just like every empire before, sure.
- danielschonfeld 4y ago> in the past 2 years alone the US has printed nearly 80% of USD in existence Often cited and incorrect metric. The fed changed how the count M2 I believe because they started paying interest on reserves during their response to the COVID crisis. Either way the chart often cited showing an increase in M2 is not telling the whole story, namely that not nearly enough USD has been “printed” to satisfy world hunger and needs. (Think, if dollar was a plenty then why is DXY at the close to the second highest in history. Demand outpaces supply.) You can Google it. Have fun! While you’re at it also Google Triffin Paradox. Read about trade deficits as they relate to a country who’s currency is a global reserve currency.
- ars 4y ago> Ghana is shouting out loud I can’t get my hands on USD. That doesn't make sense - just take some gold, and buy USD. Is there some physical shortage of paper or something?
- codehalo 4y ago[flagged]
- MonkeyClub 4y agoIf you’re referring to the paper USD is printed on, it’s cotton rather than paper. But even if there was a shortage, I doubt that on a country level USD (or any currency, for that matter) is bought in physical form - it’s just credited to the country’s bank account.
- ectopod 4y agoIt is paper. Paper made with cotton.
- hbarka 4y agoIt’s a blend of linen and cotton. Linen comes from the flax plant and cotton comes from the cotton plant. Linen versus cotton have a great history. Linen was used on WW1 era airplanes as outer skins because it didn’t run like cotton canvas when the material was shot through.
- markdown 4y agoSo paper made with linen and cotton.
- deleted 4y ago[deleted]
- hnews_account_1 4y agoI hope you’re being sarcastic rather than thinking paper currency is used for international transactions.
- onlyrealcuzzo 4y agoWhy can't they get dollars? I was under the impression that you can buy dollars much easier than oil.
- bagels 4y agoBuy them with what? The implication is that nobody wants to accept Ghana currency.
- zizee 4y agoTypically exports are used to gather USD. It sounds like Ghana has gold. Presumably people want their gold? They could sell the gold for USD, then use that to purchase the oil. But using the gold for currency does sound like it could be more efficient, cutting out the middleman. Note: normally countries maitain a float of foreign reserves for this, and I'm guessing this stash of economic lubrication has run a business dry for Ghana and they don't have the luxury of rebuilding their reserves, and hoping to use gold as a more immediate solution.
- markdown 4y agoImplication? Only a handful of currencies are accepted in international trade.
- danielschonfeld 4y agoBecause the world has an anemic shortage of dollars. The reason for that is post 2008 banks have become much more risk averse (seeing what happened to Lehman et al) and they are mostly the conduit through which broad currency is generated. That mechanism is mostly broken unless you’re an ultra rich company like Apple or Google. So today to make a bank create USD for you you’d be required to have the best of the best collateral namely sovereign bonds. As it stands the US hasn’t taken even close to enough debt and thus issued Treasuries to even come close to the shortage in dollars that banks’ risk aversion has created since 2008.
- jkepler 4y agoDoesn't help that the US seems set on destroying the world's confidence in the US dollar: first the 2008 financial crises and monetary creation (I.e. devaluation) in response; then much more recently they hammered nails in the coffin of Breton Woods 2 (I.e. the post-1971 monetary status quo of floating fiat currencies) by confiscating the Afghan Central Bank's reserves (which included private individuals' deposits, and they gave the money to families of September 11th victims) and by freezing the assets of the Russian Central Bank. inter-Central Bank settlements were supposed to be apolitical. All that in the context of multiple hot wars (Iran in 2003 and then Libya, perhaps?) and military actions that appear to be in defense of US dollar dominance: https://bitcoinmagazine.com/culture/the-hidden-costs-of-the-petrodollar https://bitcoinmagazine.com/culture/the-hidden-costs-of-the-....
- delecti 4y ago> Doesn't help that the US seems set on destroying the world's confidence in the US dollar Over the last 15 years, USD has increased in value against the Ghanaian Cedi by almost 16x. If we're trying to destroy confidence in USD, then Ghana sure makes it seem like we're doing an awful job. https://www.google.com/search?q=1+USD+to+GHS&oq=1+USD+to+GHS https://www.google.com/search?q=1+USD+to+GHS&oq=1+USD+to+GHS
- jkepler 4y agoYou're correct that the Cedi has lost value compared with the US dollar while existing in a world where USD is one side if nearly every international business transaction. However, look at the US dollar over longer durations against wheat [1], copper [2], gold[3], or Bitcoin [4]: the dollar buys significantly less than 10, 15, 40, or 100 years ago. While the Cedi may be much weaker against the dollar, the dollar is loosing against real commodities/assets that can't simply be created by banker's fiat. So, the dollar's the cleanest dirty shirt in the room. And Ghana just announced that they'd rather trade oil for a clean shirt (gold) rather than taking a dirty one. [1] https://www.macrotrends.net/2534/wheat-prices-historical-chart-data https://www.macrotrends.net/2534/wheat-prices-historical-cha... [2] https://www.macrotrends.net/1476/copper-prices-historical-chart-data https://www.macrotrends.net/1476/copper-prices-historical-ch... [3] https://goldprice.org/gold-price-charts/15-year-gold-price-history-in-us-dollars-per-ounce https://goldprice.org/gold-price-charts/15-year-gold-price-h... / For 100 year chart, https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart https://www.macrotrends.net/1333/historical-gold-prices-100-... [4] https://www.xe.com/currencycharts/?from=USD&to=BTC&view=10Y https://www.xe.com/currencycharts/?from=USD&to=BTC&view=10Y
- enkid 4y agoWouldn't any attempt to alleviate demand make inflation worse, when it already at levels not seen in decades?
- immibis 4y agoIf getting its hands on USD is hard, where's it going to get gold...?
- bjornsing 4y ago> Ghana is shouting out loud I can’t get my hands on USD. If you have gold but can’t get your hands on USD then something is very wrong, but I doubt that is the case.
- ShivShankaran 4y agobecause it's not the case at all. de-dollarization is picking up rapidly across most neutral/anti-US countries and this is the start of it. China is trading with Russia in yuan and even India has allowed small players to bypass USD and trade in INR directly https://www.reuters.com/world/india/india-allows-international-trade-settlements-rupees-export-promotion-schemes-2022-11-09/ https://www.reuters.com/world/india/india-allows-internation... Something I have been shouting hoarse is that this war in Ukraine is going to have multi-generational effect on world order with USD coming under US pressure. If Saudi drops USD, which now seems extremely unlikely, then it's truly a descent for the US empire.
- nojito 4y agoUSD in Forex is well over $5T per day USD in oil is barely $3T per year Nothing external will ever pressure USD without the United States having collapsed first.
- deleted 4y ago[deleted]
- pphysch 4y ago> Nothing external will ever pressure USD Not completely true. The current crisis is driven by foreign buyers not being enthusiastic about buying more US debt. The current inflation crisis is directly related to the large amount of price support for US debt provided by the US Fed in 2020-21. US govt is essentially holding foreign creditors hostage. If you try to move away from US debt, they will just print more dollars and devalue all your (and everyone else's) assets. So the non-Western world (90% of humans) very strongly wants to dedollarize as smoothly as possible. US debt is extremely toxic, which isn't an obvious fact if you look at the surface only.
- RC_ITR 4y agoLol I thought the problem was the US created too many dollars? I guess inflation is a lot more complex than the comments section here would have you believe.
- anomaly_ 4y agoOf course it is. Hacker news is full of “educated” nerds who think the world would be a better place if we just followed their direction (tm).