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"It is unavoidable that one day in the far far future, the U.S. loses reserved currency status. " There are some opposing opinions on this being far far away.

"It is unavoidable that one day in the far far future, the U.S. loses reserved currency status. " There are some opposing opinions on this being far far away. Recently the USD has lost a significant amount in global percentage mainly due to all the sanction the US imposes. The US treasury itself warned that these sanctions are bad for thr US. [1] [1] https://www.livemint.com/news/world/yellen-says-sanctions-may-risk-hegemony-of-us-dollar-11681663258430.html https://www.livemint.com/news/world/yellen-says-sanctions-ma...

Temporary_31337 3y ago
Also by the time US loses its privileged position it will already be too late to reinvest elsewhere without losses. So many funds are already moving money to China and elsewhere. Having said that China etc have their own economic and demographic problems so nowhere seems safe at the moment.
- csense 3y ago
  Investing in China seems terribly risky to me. China's been telegraphing it will attack Taiwan pretty soon. When that happens, good luck not having your investments either destroyed or nationalized.
  - lockhouse 3y ago
    I think war or no war those possibilities are a major risk with China given their form of government.
    - toomuchtodo 3y ago
      Not to mention their rapidly aging population. People forget: growth and economic power comes from demographics. China got old too fast. India and Africa are the remaining global youth, and I’m unsure there is appetite to invest in either market.
- anonuser123456 3y ago
  > So many funds are already moving money to China and elsewhere. Good luck to those investors. China has no established tradition of respecting property rights. It can change the rules of the game as it sees fit politically. The only way to make it workable is to have some critical trading relationship that makes the cost of seizing property/money unpalatable.
  - Razengan 3y ago
    > China has no established tradition of respecting property rights. https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United_States https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United... and that's against their own citizens.
    - Our_Benefactors 3y ago
      Are we really doing this? https://en.m.wikipedia.org/wiki/Land_Reform_Movement_(China) https://en.m.wikipedia.org/wiki/Land_Reform_Movement_(China) Landlords — had their land confiscated and they were subjected to mass killing by the CCP and former tenants, with the estimated death toll ranging from hundreds of thousands to millions.
    - anonuser123456 3y ago
      You can fight civil forfeiture and not risk having your family sent to a work camp in the US. It’s also politically very unpalatable to use it on businesses. Use it on a business and good luck getting re-elected as a prosecutor / police chief etc. Is it used to suppress poor brown people? Sure. Is that a good thing? No. But it’s not really a barrier to investment.
  - i2cmaster 3y ago
    [flagged]
- HyperSane 3y ago
  "So many funds are already moving money to China" No they aren't.
mark_l_watson 3y ago
I hope it is far in the future but you are probably correct that losing reserve currency status may occur much faster than the pundits say it will. I worry that weaponizing the dollar with excessive sanctions will hurry this process, with not much real value to US citizens.
- NemoNobody 3y ago
  What currency is stable enough to replace the Dollar? Very likely we repeat the Cold War - Western countries will definitely continue to use the Dollar. I wouldn't want to use the Yuan considering the frequent government manipulation of the currency.
  - dilyevsky 3y ago
    It’s not just about stability (and rmb is basically pegged to dollar anyway) - you also need to run a deficit and that’s not something China is willing or able to do for foreseeable future
    - photonbeam 3y ago
      > you also need to run a deficit Why is this needed?
      - nly 3y ago
        > > you also need to run a deficit > Why is this needed? At a guess...being the worlds reserve currency creates demand for your currency which drives it's price up. This is bad in general because it means your exports become more expensive. The way you deal with that is to create debt to export in the form of US treasuries, which foreigners can then buy. One way to create treasuries is to create a public deficit (not strictly necessarily, you could raise money even with a surplus and then invest it)
  - shreyshnaccount 3y ago
    Probably only the euro. The yuan isn't the best option for reasons you mention, and the next largest reserve which countries hold is only the euro. Link to interesting podcast episode about exactly that: The Red Line Podcast https://open.spotify.com/episode/6DVtj0E1v6pRgAiZwytmbo https://open.spotify.com/episode/6DVtj0E1v6pRgAiZwytmbo
HyperSane 3y ago
There is no real alternative to the US dollar as a reserve currency.

Temporary_31337 3y ago

Also by the time US loses its privileged position it will already be too late to reinvest elsewhere without losses. So many funds are already moving money to China and elsewhere. Having said that China etc have their own economic and demographic problems so nowhere seems safe at the moment.

csense 3y ago
Investing in China seems terribly risky to me. China's been telegraphing it will attack Taiwan pretty soon. When that happens, good luck not having your investments either destroyed or nationalized.
- lockhouse 3y ago
  I think war or no war those possibilities are a major risk with China given their form of government.
  - toomuchtodo 3y ago
    Not to mention their rapidly aging population. People forget: growth and economic power comes from demographics. China got old too fast. India and Africa are the remaining global youth, and I’m unsure there is appetite to invest in either market.
anonuser123456 3y ago
> So many funds are already moving money to China and elsewhere. Good luck to those investors. China has no established tradition of respecting property rights. It can change the rules of the game as it sees fit politically. The only way to make it workable is to have some critical trading relationship that makes the cost of seizing property/money unpalatable.
- Razengan 3y ago
  > China has no established tradition of respecting property rights. https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United_States https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United... and that's against their own citizens.
  - Our_Benefactors 3y ago
    Are we really doing this? https://en.m.wikipedia.org/wiki/Land_Reform_Movement_(China) https://en.m.wikipedia.org/wiki/Land_Reform_Movement_(China) Landlords — had their land confiscated and they were subjected to mass killing by the CCP and former tenants, with the estimated death toll ranging from hundreds of thousands to millions.
  - anonuser123456 3y ago
    You can fight civil forfeiture and not risk having your family sent to a work camp in the US. It’s also politically very unpalatable to use it on businesses. Use it on a business and good luck getting re-elected as a prosecutor / police chief etc. Is it used to suppress poor brown people? Sure. Is that a good thing? No. But it’s not really a barrier to investment.
- i2cmaster 3y ago
  [flagged]
HyperSane 3y ago
"So many funds are already moving money to China" No they aren't.

mark_l_watson 3y ago

I hope it is far in the future but you are probably correct that losing reserve currency status may occur much faster than the pundits say it will. I worry that weaponizing the dollar with excessive sanctions will hurry this process, with not much real value to US citizens.

NemoNobody 3y ago
What currency is stable enough to replace the Dollar? Very likely we repeat the Cold War - Western countries will definitely continue to use the Dollar. I wouldn't want to use the Yuan considering the frequent government manipulation of the currency.
- dilyevsky 3y ago
  It’s not just about stability (and rmb is basically pegged to dollar anyway) - you also need to run a deficit and that’s not something China is willing or able to do for foreseeable future
  - photonbeam 3y ago
    > you also need to run a deficit Why is this needed?
    - nly 3y ago
      > > you also need to run a deficit > Why is this needed? At a guess...being the worlds reserve currency creates demand for your currency which drives it's price up. This is bad in general because it means your exports become more expensive. The way you deal with that is to create debt to export in the form of US treasuries, which foreigners can then buy. One way to create treasuries is to create a public deficit (not strictly necessarily, you could raise money even with a surplus and then invest it)
- shreyshnaccount 3y ago
  Probably only the euro. The yuan isn't the best option for reasons you mention, and the next largest reserve which countries hold is only the euro. Link to interesting podcast episode about exactly that: The Red Line Podcast https://open.spotify.com/episode/6DVtj0E1v6pRgAiZwytmbo https://open.spotify.com/episode/6DVtj0E1v6pRgAiZwytmbo

HyperSane 3y ago

There is no real alternative to the US dollar as a reserve currency.