7 ms·

What are the alternatives? - euro Too many cooks spoil the kitchen, unpredictable policy, serious liability monetization issues. Currently Europe runs the

What are the alternatives? - euro Too many cooks spoil the kitchen, unpredictable policy, serious liability monetization issues. Currently Europe runs the presses about as much as the US. IT is going to be running the presses even more as the entire continent militarizes while the US's share of security agreement wanes and Europe pays for a greater share of its defense. - yuan Debt to GDP ratio of 200%, highly manipulated currency (uhh how do you think the evergrande crisis just disappeared one day), *capital controls* where citizens can't take money out of the country... When capital controls are removed, necessary to achieve reserve currency status, the whole system will suddenly be incredibly unstable. - ruble Is using the reserve currency of a pariah state really a consideration? - reais Let's use a currency that has its name because they had to trick people into acceting a remonetization for the Nth time. The whole dedollarization narrative is like some weird propaganda pushed by china. Look, the dollar sucks, and maybe some countries will flip to the yuan (it's easy to buy off politicians) but those countries that do are going to be utterly screwed because the it's structurally worse than the dollar, and emerging markets will be forced to be shackled to a currency controlled by a competing (producer) interest.

brianmcc 3y ago
GBP! There before the USA never mind the dollar! ;-)
- ghusto 3y ago
  Nice troll, but now that I think about it, why not?
  - throwawaymaths 3y ago
    You could do worse, but probably the same reason why you wouldn't go with say the swedish krona: volume.
    - Ekaros 3y ago
      Also UK has way too many issues for long term stability as of reserve currency.
      - brianmcc 3y ago
        Sadly cannot disagree :-(
- TheLoafOfBread 3y ago
  Let's get Truss back as PM, so she can announce another Minibudget. Masochistic Tory voters will be screaming in combination of pain and pleasure as falling Pound will melt away their retirement funds.
gmuslera 3y ago
It doesn’t have to be just one alternative. From what I have around Brazil is pushing a new(?) common currency for trading within Latin American countries, China is pushing Yuan for bilateral trading with several countries, and probably more blocks and trade partners follow similar policies elsewhere. Not having all the eggs in the same basket may lead to some egg breaking, but not all of them at the same time. And the increasing perception of risk relying on dollars may make that strategy attractive.
- throwawaymaths 3y ago
  An international free banking era might be exciting (ok, I think it would be exciting), but even in such a regime literally everything that I wrote still applies, and anyone choosing alternatives to the dollar for transactions in the small is going to get screwed in those individual subdomains for exactly the reasons I point out.
- throw0101b 3y ago
  > From what I have around Brazil is pushing Ah yes, the BRICS idea: > You combine Brazil's history of monetary stability, with Russia's respect for property rights, India's domestic tranquility, China's financial transparency, and South Africa's investment opportunities - and hey presto, you've got a new global money. * https://twitter.com/davidfrum/status/1665053372402081792 https://twitter.com/davidfrum/status/1665053372402081792
dom96 3y ago
Obviously forgetting about Bitcoin /s
- deleted 3y ago
  [deleted]
Longlius 3y ago
I don't think de-dollarization is particularly pushed by places like China. From the Chinese perspective, dollarization is a good thing because it means they can engage in intl trade without needing to open up their domestic currency and deal with the potential political instability that might result. I think it's more oft pushed by 'sound money' cranks (either gold bugs or their fellow travelers) or by particularly ornery fiscal conservatives with an axe to grind about whatever monetary policy the US is pursuing this week.
- throwawaymaths 3y ago
  De-dollarization is pushed by china. I think you're right, the dollar hegemony is in their interest, but every country does dumb as shit things (e.g. the US re-invaded Iraq) https://www.scmp.com/comment/opinion/article/3216363/after-decades-us-hegemony-global-shift-away-dollar-suddenly-picking-speed https://www.scmp.com/comment/opinion/article/3216363/after-d... Actual propaganda arm of the CPC: https://www.globaltimes.cn/content/1195115.shtml https://www.globaltimes.cn/content/1195115.shtml https://www.globaltimes.cn/page/202304/1289865.shtml https://www.globaltimes.cn/page/202304/1289865.shtml https://www.globaltimes.cn/page/202304/1289944.shtml https://www.globaltimes.cn/page/202304/1289944.shtml https://www.globaltimes.cn/page/202304/1288446.shtml https://www.globaltimes.cn/page/202304/1288446.shtml
- KRAKRISMOTT 3y ago
  De-dollarization for the Chinese is purely because of geopolitical and strategic reasons (rendering bank level SWIFT sanctions ineffective). Whether trade is done/settled in USD or yuan doesn't really affect them as they are an export economy with a peg to the USD. Switching to a currency swap system with specific countries doesn't mean the efficient market hypothesis stops holding. The underlying value of the swaps can still contain a USD peg.
psychphysic 3y ago
It's almost like diversification is the solution. Having all debts and credits in one currency is a recipe for disaster. Not only where the US wishes to make it so (Russia), but when times are hard and the US needs to move to protect its own economy (Sri Lanka).
- throwawaymaths 3y ago
  Hold on: the eurozone is WAY harsher on Russia than the US, they are the ones restricting the price of Russian oil, not the US (US doesn't control the shipping insurance market). I mean that's understandable, Europe is in the line of fire next
  - psychphysic 3y ago
    Perhas you're not sure what I mean by diversification? If that's the case look into the original ideas from Markowitz. If you really can't grasp the difference, consider the PIGS eurozone crisis as a Euro risk lower in USD (other than global correlation), and consider the recurrent US debt crisis (as lower in Eur other than global correlation). China weathered 2008 very well, and it was by learning from them that most of the world decided on furlough for the COVID recession. Most economic analysis requires that you leave your prejudices at the front door. It matters to you because we are coming to one of the harest periods for retirees in modern history. You need to know this stuff and it's a shame it's not taught in school any longer.
    - throwawaymaths 3y ago
      I mean look at one of my sibling posts: I welcome an international free banking in concept, but I claim 1) it's not going to happen in the large and 2) while it will happen in the small, every player that does it in the small will get screwed. Theoretically diversification is a good in itself, but if all the alternatives suck, reality will come running at that theory real quick.
      - psychphysic 3y ago
NoboruWataya 3y ago
The alternative is all of them, and more. Dedollarisation does not mean that another single currency will step into the dollar's shoes as the global reserve currency. You will more likely have multiple spheres of influence with each one having a de facto dominant currency, and you will also have more countries doing trade in multiple currencies in order to "hedge their bets" as it were. Like, the EU has no interest in trying to force the euro on the world. But in the aftermath of Brexit and the Trump presidency, they have grown concerned about other powers having too much control over their trade.
- thworp 3y ago
  In theory this sounds like it might work, but in practice any international reserve/settlement currency will see more inflows than outflows. This will cause that currency to appreciate, which by itself is a deal-breaker for many countries. A good case study is pre-Euro Germany. It had all the ingredients of a secondary reserve currency and was in fact used as such. However the appreciation that resulted from those inflows was not wanted at all since it didn't fit with the export-oriented economic model and made exports noncompetitive. As a result German capital markets were never opened to foreigners to the same degree British or American markets are. While being the world's reserve currency is undoubtedly an "exorbitant privilege" in some respects, it also has many drawbacks. I don't think India or China would be willing to issue Bonds to foreign entities at the volume that the US is doing.
EA-3167 3y ago
The two camps I hear pushing the "de-dollarization" narrative are: BRICS (Mostly the R and C in that) for the purposes of domestic propaganda. Bankers and Crypto folks who use the HIGHLY unlikely specter of de-dollarization to drive up the price of things like precious metals and crypto as "safe alternatives. Even a cursory glance at the state of the dollar shows that there is no reality to the notion of its fall, for all of the reasons you already stated and more.
andreygrehov 3y ago
Nobody is looking for _the_ alternative currency. The idea is to decentralize, which is, imho, a fair deal. > The whole dedollarization narrative is like some weird propaganda pushed by china China or not, it's not "weird". Each country pursues its own interests (obviously, including the US). And that is... normal?
- throwawaymaths 3y ago
  Oh sorry, I should have been clearer: it's obviously not weird for china to do it, it's weird that so many otherwise smart people buy the narrative hook line and sinker.
88913527 3y ago
The more interesting thing is that, because the dollar has no serious reserve status competitor, the maintainers of the currency can be less restrictive in its management, and people can whine about it, but since there is no alternative, they're stuck with it, except for niche use cases that don't matter on a global scale. That's where all the discussion is stemming from: the dollar isn't as good, but it's still the best. It's normal to lament things that used to be better.
storkhm 3y ago
The article is basically trash. If anything the content of the article is the opposite of the headline. To me, on a 50+ year time frame, the rupee is more interesting than any of the 4 mentioned. I was just thinking yesterday how if 1989 in China went differently that the dollar right now could be in trouble. Lula's currency is pretty laughable. A currency that you share with Argentina? What could possibly go wrong?
SilasX 3y ago
- IMF special drawing rights (SDR), some basket of multiple currencies. - Swiss Franc (CHF). "But it's such a small market" -> lol they can make more. - Japanese Yen (JPY). Also, please don't format with monospace, it breaks things on mobile or small screens.
throw0101b 3y ago
> - yuan The Odd Lots podcast just had an episode on this: > There's a lot of discussion these days about de-dollarization and whether the US dollar will lose its standing as the world's sole reserve currency. Generally, people seem open to the idea, but they also don't see many good alternatives out there. The renminbi is the obvious candidate to take share away from the dollar, given the size of the Chinese economy and China's role in global trade. But for various reasons, the currency isn't suited to be a global reserve currency. So what would it actually take to become one? And what would be the effects if it started to play a major role in global trade? On this episode of the podcast, we speak with Karthik Sankaran, a longtime FX veteran, about what China would have to do if it really has global aspirations for its currency, and why a more multipolar FX landscape might be good for world financial stability. * https://www.youtube.com/watch?v=T_EZDfe4y1Q https://www.youtube.com/watch?v=T_EZDfe4y1Q * https://omny.fm/shows/odd-lots/what-needs-to-happen-for-the-renminbi-to-seriously https://omny.fm/shows/odd-lots/what-needs-to-happen-for-the-... Snippet/clip on prerequisite(s): * https://www.youtube.com/watch?v=mIfMC41-Zfc https://www.youtube.com/watch?v=mIfMC41-Zfc Transcript: * https://www.bloomberg.com/news/articles/2023-05-22/transcript-what-needs-to-happen-for-the-rmb-to-go-global https://www.bloomberg.com/news/articles/2023-05-22/transcrip... * https://archive.is/8iNgy https://archive.is/8iNgy
somenameforme 3y ago
We're largely headed for Bretton Woods 2.0. Nobody wants a single country to operate as controller of the world reserve/trade currency, because it gives that country a grossly unfair economic advantage over the entire world, which also loosely equates to a military advantage. Bretton Woods was designed such that the USD would be the defacto world currency with all other currencies directly set against it. To prevent the US from exploiting this position, the USD was to be directly convertible to gold at a fixed rate, which severely handcuffed the ability to do things like 'print' excessive money. So, the ideal is we'd behave responsibility with an unimaginable amount of power at our fingertips. You'll never guess what happened next. Anyhow, after we found ourselves without enough gold to pay off our debts, we simply defaulted and withdrew from Bretton Woods, collapsing the entire system. A fun quote from Nixon's Secretary of the Treasury of the era is, "The dollar is our currency, but it's your problem." Here [1] are some interesting graphs of result economic changes after the dollar became completely free-floating. So the "real" question is what form Bretton Woods 2.0 will take. One reasonable, if not likely, possibility is BRICS new currency, which is set to be introduced as early as August. The details have not been released, but it seems likely that it will be backed by gold in a similar fashion to the original Bretton Woods, but without any single country having uncontested control over it or the ability to 'default' the entire system. If nothing else, we sure live in interesting times... [1] - https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
- CatWChainsaw 3y ago
  Read Moneyland and Butler to the World. On the legal side of things, we need to close loopholes that allow shell companies to hide oligarch money, and prevent countries from selling diplomatic passports to investors that prevent their prosecution anywhere in the world.
908B64B197 3y ago
> The whole dedollarization narrative is like some weird propaganda pushed by china. The beauty of the US dollar is it's always worth a US dollar... It's strength is a measure of much foreigners trust the US economy and it's political and judicial system. What drives the demand for the dollar is the will of people to invest money in American securities and on the American capital market. I don't see it ending anytime soon. Chinese investors invest on the Chinese market in Yuans. Rich Chinese investors invest on the US market with US dollars.
jcfrei 3y ago
Not a big fan of how the history of the euro played out but I think I need to provide some nuance to your claims: Policy of the ECB has been as predictable as any other CB, European Govs have become much more fiscally prudent in the wake of the euro crisis (maybe too prudent). Eurozone debt to GDP levels stands at 91% (vs. 129% in the US). The "entire continent militarizing" will not meaningfully impact debt ratios (goal is to increase avg. military budgets from ~1.3% to 2% of annual GDP). The bigger question mark in Europe is potentially unsustainable expenses for social security and (related to this) a relative decline in the working age population (as everywhere else).
MilStdJunkie 3y ago
Yeah, the costs of changing are greater than the costs of staying the same. But the basic idea of using a nation's currency as global reserve currency is a bad design. "Triffin Dilemma" - a national currency used in a global context will always result in spiralling imbalances. Some China guy cited this as a proximal cause of the collapse in 2007-2008 and I don't think anyone would argue with that at all[1]. So there's a pressure to move to an OCA/OCR (optimum currency area or optimal currency region) that's more like "The World", even if that's a hypothetical space. I mean, look at the United States today, aside from extractive industries. It's pretty much a military humping/fighting a financial industry on these teeny tiny little fast food legs. That's exactly what you would theoretically expect from an economy that's been the global currency for a couple generations, but it's a damn weird shape to bend your nation into. The solution is not crypto, but definitely an analytically-arrived at unit that's redeemable in a bucket of commodities via a real World Bank structure. Maybe crypto could be a part of that, maybe a "carbon coin" or some other quantitative measure of future value. All this waffle spells the lie to the "international capitalism" story we've been telling ourselves - without World Cops, World Courts, World Laws, there is no World Market. It's bandits in Brioni with nukes and red tape. [1] Although, of course, yes yes yes, his motives are suspect, but his statement was not. He wants the Yuan but no one else should.
simonblack 3y ago
The 'unit of currency' is immaterial. It all depends on whether or not it is usable by ALL players. In a prison, they often use cigarettes rather than some monetary currencies. Maybe in the future, the 'unit of currency' could be 'barrels of oil', grams of gold, grams of platinum, etc. The US has blocked too many people from using the Dollar that the Dollar is not as 'universal' as it once was. So people will look for another alternative, or even many alternatives.

brianmcc 3y ago

GBP! There before the USA never mind the dollar! ;-)

ghusto 3y ago
Nice troll, but now that I think about it, why not?
- throwawaymaths 3y ago
  You could do worse, but probably the same reason why you wouldn't go with say the swedish krona: volume.
  - Ekaros 3y ago
    Also UK has way too many issues for long term stability as of reserve currency.
    - brianmcc 3y ago
      Sadly cannot disagree :-(
TheLoafOfBread 3y ago
Let's get Truss back as PM, so she can announce another Minibudget. Masochistic Tory voters will be screaming in combination of pain and pleasure as falling Pound will melt away their retirement funds.

gmuslera 3y ago

It doesn’t have to be just one alternative. From what I have around Brazil is pushing a new(?) common currency for trading within Latin American countries, China is pushing Yuan for bilateral trading with several countries, and probably more blocks and trade partners follow similar policies elsewhere. Not having all the eggs in the same basket may lead to some egg breaking, but not all of them at the same time. And the increasing perception of risk relying on dollars may make that strategy attractive.

throwawaymaths 3y ago
An international free banking era might be exciting (ok, I think it would be exciting), but even in such a regime literally everything that I wrote still applies, and anyone choosing alternatives to the dollar for transactions in the small is going to get screwed in those individual subdomains for exactly the reasons I point out.
throw0101b 3y ago
> From what I have around Brazil is pushing Ah yes, the BRICS idea: > You combine Brazil's history of monetary stability, with Russia's respect for property rights, India's domestic tranquility, China's financial transparency, and South Africa's investment opportunities - and hey presto, you've got a new global money. * https://twitter.com/davidfrum/status/1665053372402081792 https://twitter.com/davidfrum/status/1665053372402081792

dom96 3y ago

Obviously forgetting about Bitcoin /s

deleted 3y ago
[deleted]

Longlius 3y ago

I don't think de-dollarization is particularly pushed by places like China. From the Chinese perspective, dollarization is a good thing because it means they can engage in intl trade without needing to open up their domestic currency and deal with the potential political instability that might result. I think it's more oft pushed by 'sound money' cranks (either gold bugs or their fellow travelers) or by particularly ornery fiscal conservatives with an axe to grind about whatever monetary policy the US is pursuing this week.

throwawaymaths 3y ago
De-dollarization is pushed by china. I think you're right, the dollar hegemony is in their interest, but every country does dumb as shit things (e.g. the US re-invaded Iraq) https://www.scmp.com/comment/opinion/article/3216363/after-decades-us-hegemony-global-shift-away-dollar-suddenly-picking-speed https://www.scmp.com/comment/opinion/article/3216363/after-d... Actual propaganda arm of the CPC: https://www.globaltimes.cn/content/1195115.shtml https://www.globaltimes.cn/content/1195115.shtml https://www.globaltimes.cn/page/202304/1289865.shtml https://www.globaltimes.cn/page/202304/1289865.shtml https://www.globaltimes.cn/page/202304/1289944.shtml https://www.globaltimes.cn/page/202304/1289944.shtml https://www.globaltimes.cn/page/202304/1288446.shtml https://www.globaltimes.cn/page/202304/1288446.shtml
KRAKRISMOTT 3y ago
De-dollarization for the Chinese is purely because of geopolitical and strategic reasons (rendering bank level SWIFT sanctions ineffective). Whether trade is done/settled in USD or yuan doesn't really affect them as they are an export economy with a peg to the USD. Switching to a currency swap system with specific countries doesn't mean the efficient market hypothesis stops holding. The underlying value of the swaps can still contain a USD peg.

psychphysic 3y ago

It's almost like diversification is the solution. Having all debts and credits in one currency is a recipe for disaster. Not only where the US wishes to make it so (Russia), but when times are hard and the US needs to move to protect its own economy (Sri Lanka).

throwawaymaths 3y ago
Hold on: the eurozone is WAY harsher on Russia than the US, they are the ones restricting the price of Russian oil, not the US (US doesn't control the shipping insurance market). I mean that's understandable, Europe is in the line of fire next
- psychphysic 3y ago
  Perhas you're not sure what I mean by diversification? If that's the case look into the original ideas from Markowitz. If you really can't grasp the difference, consider the PIGS eurozone crisis as a Euro risk lower in USD (other than global correlation), and consider the recurrent US debt crisis (as lower in Eur other than global correlation). China weathered 2008 very well, and it was by learning from them that most of the world decided on furlough for the COVID recession. Most economic analysis requires that you leave your prejudices at the front door. It matters to you because we are coming to one of the harest periods for retirees in modern history. You need to know this stuff and it's a shame it's not taught in school any longer.
  - throwawaymaths 3y ago
    I mean look at one of my sibling posts: I welcome an international free banking in concept, but I claim 1) it's not going to happen in the large and 2) while it will happen in the small, every player that does it in the small will get screwed. Theoretically diversification is a good in itself, but if all the alternatives suck, reality will come running at that theory real quick.
    - psychphysic 3y ago

NoboruWataya 3y ago

The alternative is all of them, and more. Dedollarisation does not mean that another single currency will step into the dollar's shoes as the global reserve currency. You will more likely have multiple spheres of influence with each one having a de facto dominant currency, and you will also have more countries doing trade in multiple currencies in order to "hedge their bets" as it were. Like, the EU has no interest in trying to force the euro on the world. But in the aftermath of Brexit and the Trump presidency, they have grown concerned about other powers having too much control over their trade.

thworp 3y ago
In theory this sounds like it might work, but in practice any international reserve/settlement currency will see more inflows than outflows. This will cause that currency to appreciate, which by itself is a deal-breaker for many countries. A good case study is pre-Euro Germany. It had all the ingredients of a secondary reserve currency and was in fact used as such. However the appreciation that resulted from those inflows was not wanted at all since it didn't fit with the export-oriented economic model and made exports noncompetitive. As a result German capital markets were never opened to foreigners to the same degree British or American markets are. While being the world's reserve currency is undoubtedly an "exorbitant privilege" in some respects, it also has many drawbacks. I don't think India or China would be willing to issue Bonds to foreign entities at the volume that the US is doing.

EA-3167 3y ago

The two camps I hear pushing the "de-dollarization" narrative are: BRICS (Mostly the R and C in that) for the purposes of domestic propaganda. Bankers and Crypto folks who use the HIGHLY unlikely specter of de-dollarization to drive up the price of things like precious metals and crypto as "safe alternatives. Even a cursory glance at the state of the dollar shows that there is no reality to the notion of its fall, for all of the reasons you already stated and more.

andreygrehov 3y ago

Nobody is looking for _the_ alternative currency. The idea is to decentralize, which is, imho, a fair deal. > The whole dedollarization narrative is like some weird propaganda pushed by china China or not, it's not "weird". Each country pursues its own interests (obviously, including the US). And that is... normal?

throwawaymaths 3y ago
Oh sorry, I should have been clearer: it's obviously not weird for china to do it, it's weird that so many otherwise smart people buy the narrative hook line and sinker.

88913527 3y ago

The more interesting thing is that, because the dollar has no serious reserve status competitor, the maintainers of the currency can be less restrictive in its management, and people can whine about it, but since there is no alternative, they're stuck with it, except for niche use cases that don't matter on a global scale. That's where all the discussion is stemming from: the dollar isn't as good, but it's still the best. It's normal to lament things that used to be better.

storkhm 3y ago

The article is basically trash. If anything the content of the article is the opposite of the headline. To me, on a 50+ year time frame, the rupee is more interesting than any of the 4 mentioned. I was just thinking yesterday how if 1989 in China went differently that the dollar right now could be in trouble. Lula's currency is pretty laughable. A currency that you share with Argentina? What could possibly go wrong?

SilasX 3y ago

- IMF special drawing rights (SDR), some basket of multiple currencies. - Swiss Franc (CHF). "But it's such a small market" -> lol they can make more. - Japanese Yen (JPY). Also, please don't format with monospace, it breaks things on mobile or small screens.

throw0101b 3y ago

> - yuan The Odd Lots podcast just had an episode on this: > There's a lot of discussion these days about de-dollarization and whether the US dollar will lose its standing as the world's sole reserve currency. Generally, people seem open to the idea, but they also don't see many good alternatives out there. The renminbi is the obvious candidate to take share away from the dollar, given the size of the Chinese economy and China's role in global trade. But for various reasons, the currency isn't suited to be a global reserve currency. So what would it actually take to become one? And what would be the effects if it started to play a major role in global trade? On this episode of the podcast, we speak with Karthik Sankaran, a longtime FX veteran, about what China would have to do if it really has global aspirations for its currency, and why a more multipolar FX landscape might be good for world financial stability. * https://www.youtube.com/watch?v=T_EZDfe4y1Q https://www.youtube.com/watch?v=T_EZDfe4y1Q * https://omny.fm/shows/odd-lots/what-needs-to-happen-for-the-renminbi-to-seriously https://omny.fm/shows/odd-lots/what-needs-to-happen-for-the-... Snippet/clip on prerequisite(s): * https://www.youtube.com/watch?v=mIfMC41-Zfc https://www.youtube.com/watch?v=mIfMC41-Zfc Transcript: * https://www.bloomberg.com/news/articles/2023-05-22/transcript-what-needs-to-happen-for-the-rmb-to-go-global https://www.bloomberg.com/news/articles/2023-05-22/transcrip... * https://archive.is/8iNgy https://archive.is/8iNgy

somenameforme 3y ago

We're largely headed for Bretton Woods 2.0. Nobody wants a single country to operate as controller of the world reserve/trade currency, because it gives that country a grossly unfair economic advantage over the entire world, which also loosely equates to a military advantage. Bretton Woods was designed such that the USD would be the defacto world currency with all other currencies directly set against it. To prevent the US from exploiting this position, the USD was to be directly convertible to gold at a fixed rate, which severely handcuffed the ability to do things like 'print' excessive money. So, the ideal is we'd behave responsibility with an unimaginable amount of power at our fingertips. You'll never guess what happened next. Anyhow, after we found ourselves without enough gold to pay off our debts, we simply defaulted and withdrew from Bretton Woods, collapsing the entire system. A fun quote from Nixon's Secretary of the Treasury of the era is, "The dollar is our currency, but it's your problem." Here [1] are some interesting graphs of result economic changes after the dollar became completely free-floating. So the "real" question is what form Bretton Woods 2.0 will take. One reasonable, if not likely, possibility is BRICS new currency, which is set to be introduced as early as August. The details have not been released, but it seems likely that it will be backed by gold in a similar fashion to the original Bretton Woods, but without any single country having uncontested control over it or the ability to 'default' the entire system. If nothing else, we sure live in interesting times... [1] - https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/

CatWChainsaw 3y ago
Read Moneyland and Butler to the World. On the legal side of things, we need to close loopholes that allow shell companies to hide oligarch money, and prevent countries from selling diplomatic passports to investors that prevent their prosecution anywhere in the world.

908B64B197 3y ago

> The whole dedollarization narrative is like some weird propaganda pushed by china. The beauty of the US dollar is it's always worth a US dollar... It's strength is a measure of much foreigners trust the US economy and it's political and judicial system. What drives the demand for the dollar is the will of people to invest money in American securities and on the American capital market. I don't see it ending anytime soon. Chinese investors invest on the Chinese market in Yuans. Rich Chinese investors invest on the US market with US dollars.

jcfrei 3y ago

Not a big fan of how the history of the euro played out but I think I need to provide some nuance to your claims: Policy of the ECB has been as predictable as any other CB, European Govs have become much more fiscally prudent in the wake of the euro crisis (maybe too prudent). Eurozone debt to GDP levels stands at 91% (vs. 129% in the US). The "entire continent militarizing" will not meaningfully impact debt ratios (goal is to increase avg. military budgets from ~1.3% to 2% of annual GDP). The bigger question mark in Europe is potentially unsustainable expenses for social security and (related to this) a relative decline in the working age population (as everywhere else).

MilStdJunkie 3y ago

Yeah, the costs of changing are greater than the costs of staying the same. But the basic idea of using a nation's currency as global reserve currency is a bad design. "Triffin Dilemma" - a national currency used in a global context will always result in spiralling imbalances. Some China guy cited this as a proximal cause of the collapse in 2007-2008 and I don't think anyone would argue with that at all[1]. So there's a pressure to move to an OCA/OCR (optimum currency area or optimal currency region) that's more like "The World", even if that's a hypothetical space. I mean, look at the United States today, aside from extractive industries. It's pretty much a military humping/fighting a financial industry on these teeny tiny little fast food legs. That's exactly what you would theoretically expect from an economy that's been the global currency for a couple generations, but it's a damn weird shape to bend your nation into. The solution is not crypto, but definitely an analytically-arrived at unit that's redeemable in a bucket of commodities via a real World Bank structure. Maybe crypto could be a part of that, maybe a "carbon coin" or some other quantitative measure of future value. All this waffle spells the lie to the "international capitalism" story we've been telling ourselves - without World Cops, World Courts, World Laws, there is no World Market. It's bandits in Brioni with nukes and red tape. [1] Although, of course, yes yes yes, his motives are suspect, but his statement was not. He wants the Yuan but no one else should.

simonblack 3y ago

The 'unit of currency' is immaterial. It all depends on whether or not it is usable by ALL players. In a prison, they often use cigarettes rather than some monetary currencies. Maybe in the future, the 'unit of currency' could be 'barrels of oil', grams of gold, grams of platinum, etc. The US has blocked too many people from using the Dollar that the Dollar is not as 'universal' as it once was. So people will look for another alternative, or even many alternatives.