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This may be a chink in the armor, but so long as the USD still the dominant reserve currency and oil is mostly traded in dollars, does anyone care what Fitch th

This may be a chink in the armor, but so long as the USD still the dominant reserve currency and oil is mostly traded in dollars, does anyone care what Fitch thinks? Now there may be some movement away from USD for both of these uses, but I think this has more to do with geopolitics than what Fitch thinks or the petulance of the GOP.

sgift 3y ago
Afaik there are companies/investment products which can only invest in AAA. As long as two of three rating agencies said the US was still AAA they could probably argue that that counts. Now that it's 1/3 that probably won't work anymore.
- bombcar 3y ago
  The smarter ones have a phrase like “US treasuries or AAA rated securities” or similar. People who aren’t familiar with the bond market would be surprised to learn all the ways you can lose money on perfectly secure bonds - if you have to sell before maturity.
cced 3y ago
Who cares if the world is signalling that they are starting to think about getting off the dollar and credit agencies are downgrading the US? Saudi Arabia is also talking about accepting Yuan as an alternative to USD. Here we have three signals among others, go ahead and ignore them I guess…
- bombcar 3y ago
  The key is that you can always dump dollars into US bonds. Any alternative currency needs something similar, until they have that sink it doesn’t really matter.
- lotsofpulp 3y ago
  They have been signaling that for decades, yet no action indicates that people around the world still trust the US and hence USD more than any other currency.
- datavirtue 3y ago
  Well just shove a missle up someone's ass if it gets too bad. I'm not worried.
  - GoblinSlayer 3y ago
    This, Arabia sits on the Big American Missile.
legulere 3y ago
Oil consumption will in the medium term go down and in the long term become unimportant.
- spacephysics 3y ago
  Debatable if it’ll go down by a significant amount. Still have electric cars being infeasible from a price and charging standpoint for much of America (and our electric grid can’t come anywhere close to handling a sizable percent of people changing to electric) Batteries are getting better, but energy density is still superior with oil Oil used for many manufacturing processes and items. I’m all for switching from plastic to glass, but the world loves plastic Speaking of the world, developing nations still rely on coal, never the less moving to electric cars I’d like to think we would make progress in medium term, but given the geopolitical instability, if a major world war breaks out (if it hasn’t already), I think we’d be stuck in time with oil-to-electric progress unless there’s some national security reason to go away from it. But relying more on our grid seems to be more of a national security risk, given it’s weakly protected. And the US has been (still is?) a net exporter of oil. Worst case we ramp up production if the Saudi’s/OPEC do something crazy. I’m still young, but I see a constant cycle of XYZ tech being promoted, promised, investors jump in, then it evaporates for 5-10 years and we slowly get the actual promises (sometimes). There’s a famous graph for this somewhere.
  - bombcar 3y ago
    The family requirements lead me to get a minivan. There simply is no electric one, and the closest you can get is the Chrysler PHEV, which is so much more expensive than the other options (and you lose the stow and go seats) that even with the tax rebate I can’t fully take advantage of its not competitive. $10k buys quite a bit of fuel. But if someone wants to send me $10k I’ll buy the Pacifica today ;) Otherwise it’s a Kia or Sienna for us. We’ve even looked at going up to the electric Transit and the money just doesn’t work out.
    - avidphantasm 3y ago
      Have you considered the Toyota Hybrid minivan? The people I know who have them love them. Might be a good compromise.
0xDEF 3y ago
It seems like both Americans and non-Americans overestimate the importance of the US dollar being the dominant reserve currency and petroleum trade currency in the world. I would say the S&P500 and the long-term economic productivity it represents is a far more important economic asset of the US than their currency. Many European pension funds would have little to show for if they didn't hold trillions in US stocks.
- deleted 3y ago
  [deleted]
- lotsofpulp 3y ago
  USD being a desirable currency to do business in is a function of the trust people have in the US’s long term economic productivity. And being able to apply force to anyone who messes with the currency such as counterfeiting it.
soonnow 3y ago
I think AI is going to be the driving force behind technological innovation for at least the next 10 years. And the US has that market cornered expecially with the CHIPS act. I think that will drive growth in the US and be more relevant than the reserve currency status.

sgift 3y ago

Afaik there are companies/investment products which can only invest in AAA. As long as two of three rating agencies said the US was still AAA they could probably argue that that counts. Now that it's 1/3 that probably won't work anymore.

bombcar 3y ago
The smarter ones have a phrase like “US treasuries or AAA rated securities” or similar. People who aren’t familiar with the bond market would be surprised to learn all the ways you can lose money on perfectly secure bonds - if you have to sell before maturity.

cced 3y ago

Who cares if the world is signalling that they are starting to think about getting off the dollar and credit agencies are downgrading the US? Saudi Arabia is also talking about accepting Yuan as an alternative to USD. Here we have three signals among others, go ahead and ignore them I guess…

bombcar 3y ago
The key is that you can always dump dollars into US bonds. Any alternative currency needs something similar, until they have that sink it doesn’t really matter.
lotsofpulp 3y ago
They have been signaling that for decades, yet no action indicates that people around the world still trust the US and hence USD more than any other currency.
datavirtue 3y ago
Well just shove a missle up someone's ass if it gets too bad. I'm not worried.
- GoblinSlayer 3y ago
  This, Arabia sits on the Big American Missile.

legulere 3y ago

Oil consumption will in the medium term go down and in the long term become unimportant.

spacephysics 3y ago
Debatable if it’ll go down by a significant amount. Still have electric cars being infeasible from a price and charging standpoint for much of America (and our electric grid can’t come anywhere close to handling a sizable percent of people changing to electric) Batteries are getting better, but energy density is still superior with oil Oil used for many manufacturing processes and items. I’m all for switching from plastic to glass, but the world loves plastic Speaking of the world, developing nations still rely on coal, never the less moving to electric cars I’d like to think we would make progress in medium term, but given the geopolitical instability, if a major world war breaks out (if it hasn’t already), I think we’d be stuck in time with oil-to-electric progress unless there’s some national security reason to go away from it. But relying more on our grid seems to be more of a national security risk, given it’s weakly protected. And the US has been (still is?) a net exporter of oil. Worst case we ramp up production if the Saudi’s/OPEC do something crazy. I’m still young, but I see a constant cycle of XYZ tech being promoted, promised, investors jump in, then it evaporates for 5-10 years and we slowly get the actual promises (sometimes). There’s a famous graph for this somewhere.
- bombcar 3y ago
  The family requirements lead me to get a minivan. There simply is no electric one, and the closest you can get is the Chrysler PHEV, which is so much more expensive than the other options (and you lose the stow and go seats) that even with the tax rebate I can’t fully take advantage of its not competitive. $10k buys quite a bit of fuel. But if someone wants to send me $10k I’ll buy the Pacifica today ;) Otherwise it’s a Kia or Sienna for us. We’ve even looked at going up to the electric Transit and the money just doesn’t work out.
  - avidphantasm 3y ago
    Have you considered the Toyota Hybrid minivan? The people I know who have them love them. Might be a good compromise.

0xDEF 3y ago

It seems like both Americans and non-Americans overestimate the importance of the US dollar being the dominant reserve currency and petroleum trade currency in the world. I would say the S&P500 and the long-term economic productivity it represents is a far more important economic asset of the US than their currency. Many European pension funds would have little to show for if they didn't hold trillions in US stocks.

deleted 3y ago
[deleted]
lotsofpulp 3y ago
USD being a desirable currency to do business in is a function of the trust people have in the US’s long term economic productivity. And being able to apply force to anyone who messes with the currency such as counterfeiting it.

soonnow 3y ago

I think AI is going to be the driving force behind technological innovation for at least the next 10 years. And the US has that market cornered expecially with the CHIPS act. I think that will drive growth in the US and be more relevant than the reserve currency status.