5 ms·

USD 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 fir

by nojito 4y ago

USD 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.
- jdkee 4y ago
  "The current crisis is driven by foreign buyers not being enthusiastic about buying more US debt." That is largely irrelevant. As the world's reserve currency, the Federal Reserve could buy up Treasuries as needed. The domestic inflation problem is another matter.
  - pphysch 4y ago
    Suppose the Fed buys 100% of outstanding US debt via QE, etc. Then USD is no longer the global reserve currency.
- bjornsing 4y ago
  > US debt is extremely toxic, which isn't an obvious fact if you look at the surface only. Is it? Why do you think so? I’d say it’s the safest asset in the world. Sure, if you buy a 10y US bond you risk having some of the value eaten by inflation. But that’s a relatively “soft” risk in that hyperinflation is unlikely. Default I think is extremely unlikely.
  - grogers 4y ago
    US treasuries are sometimes called "return-free risk". It seems pretty clear that the US government is borrowing unsustainably high amounts. We can't keep this pace of borrowing up for very long. So either the government starts being financially responsible (how likely do you think that is?), or by the time those 10y bonds mature you'll either get highly devalued dollars or just nothing at all.
- nojito 4y ago
  What crisis? The USD has never been stronger and FX volume for USD is increasing.
amluto 4y ago
That’s like saying “cryptocurrency trades 7 zillion dollars of value per day but only $3M per day of actual business occurs, so actual business considerations can’t possibly affect the price of cryptocurrency”. There is a whole lot of money moving around via forex transactions, but that doesn’t control the value of the dollar.
- nojito 4y ago
  USD FX runs the entire world. Comparing it to crypto shows a lack of understanding of international markets.
  - amluto 4y ago
    USD is extremely important internationally. The ability to exchange it freely is part of why it’s important. This does not mean that the $5T per day of FX outweighs the actual commerce in determining the value of the dollar. (I’m not interested in the “lack of understanding” game.)

by nojito 4y ago

USD 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.

jdkee 4y ago
"The current crisis is driven by foreign buyers not being enthusiastic about buying more US debt." That is largely irrelevant. As the world's reserve currency, the Federal Reserve could buy up Treasuries as needed. The domestic inflation problem is another matter.
- pphysch 4y ago
  Suppose the Fed buys 100% of outstanding US debt via QE, etc. Then USD is no longer the global reserve currency.
bjornsing 4y ago
> US debt is extremely toxic, which isn't an obvious fact if you look at the surface only. Is it? Why do you think so? I’d say it’s the safest asset in the world. Sure, if you buy a 10y US bond you risk having some of the value eaten by inflation. But that’s a relatively “soft” risk in that hyperinflation is unlikely. Default I think is extremely unlikely.
- grogers 4y ago
  US treasuries are sometimes called "return-free risk". It seems pretty clear that the US government is borrowing unsustainably high amounts. We can't keep this pace of borrowing up for very long. So either the government starts being financially responsible (how likely do you think that is?), or by the time those 10y bonds mature you'll either get highly devalued dollars or just nothing at all.
nojito 4y ago
What crisis? The USD has never been stronger and FX volume for USD is increasing.

amluto 4y ago

That’s like saying “cryptocurrency trades 7 zillion dollars of value per day but only $3M per day of actual business occurs, so actual business considerations can’t possibly affect the price of cryptocurrency”. There is a whole lot of money moving around via forex transactions, but that doesn’t control the value of the dollar.

nojito 4y ago
USD FX runs the entire world. Comparing it to crypto shows a lack of understanding of international markets.
- amluto 4y ago
  USD is extremely important internationally. The ability to exchange it freely is part of why it’s important. This does not mean that the $5T per day of FX outweighs the actual commerce in determining the value of the dollar. (I’m not interested in the “lack of understanding” game.)