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> 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.

> 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.

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.