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In simple terms, if you're the Philippines and you're selling fish to Russia, would you rather have Rubles or US dollars? Way back in time, US Dollars were one

In simple terms, if you're the Philippines and you're selling fish to Russia, would you rather have Rubles or US dollars? Way back in time, US Dollars were one to one based on gold in fort knox. Right? But no country has a gold reserve now. Most countries have a dollar reserve to back the paper money they print themselves. This is the main reason the dollar hasn't collapsed already. [edit] someone who graduated college with an economics degree please come and correct the following vague and possibly totally wrong perceptions I have as a subject of the American empire /edit The value of a country's money is backed by a combination of how much they produce and how much foreign currency and assets from other countries they hold (euros, dollars, gold) they have on reserve. Only the US gets away with having no actual reserve ...because a combination of military might and cultural strategic dominance has allowed it to BE the reserve for everyone else. This is why it somehow makes sense for America's economy to be based entirely on consumption rather than production. OP is right. Whichever superpower controls the levers of global trade is the one that can sell debt and enforce the currency regime. Some of us think that it's a lucky thing that it's been America, rather than a more authoritarian power, who had held that control for the past 80 years. Europe would not have recovered from WWII otherwise, and be living behind an iron curtain. Anyone who controls global trade after America is likely to be worse from a human rights perspective.

zaik 2y ago
> if you're the Philippines and you're selling fish to Russia, would you rather have Rubles or US dollars? I would have assumed the fisherman in the Philippines would like to be paid in Philippine peso.
- riffraff 2y ago
  but it's not easy to come by large amounts of Philippine pesos in Russia, cause no-one wants to hold significant amount of foreign currency they can't use for anything else. In some cases it may even be legally problematic. That's why international trade uses "strong" currencies, which are very liquid: you can generally get USD/EUR and then trade them for anything else with a limited spread. Good luck converting Hungarian forints to Lao kips. Being cut off from USD is why news of Russia resorting to barter[0][1] have occurred in the news since they got cut off from the US trading system [0] https://www.newsweek.com/russia-oranges-trade-barter-pakistan-1962512 https://www.newsweek.com/russia-oranges-trade-barter-pakista... [1] https://www.reuters.com/markets/first-russia-china-barter-trade-may-come-this-autumn-sources-say-2024-08-08/ https://www.reuters.com/markets/first-russia-china-barter-tr...
- uyt67764 2y ago
  [dead]
- cutemonster 2y ago
  I think that is (used to be) higher risk: Internal events could make the peso lose its value, but the dollar was pretty stable? (Probably it'd be a pretty big fishing company, exporting to a far away nation like that. Not a single person in a small boat) Edit: I suppose riffraff's sibling answer is better
- noduerme 2y ago
  The fishermen will get paid in pesos but the company will be paid in dollars. And the company will probably put their dollars in a bank outside the Philippines, which only accepts dollars, euros or swiss francs. If the fishermen could be paid in dollars, they would probably prefer that. And the fact that they'd prefer that to being paid in Rubles or Renminbi is the underlying guarantor of American economic power... which, if it goes away and was replaced by Chinese power in the south china sea, would be catastrophic for the fishermen as well.
- quonn 2y ago
  For this the Russian buyer would have to previously sell something to the Philippines and accept pesos. Why would they accept those pesos if they are not generally accepted elsewhere?
- addicted 2y ago
  Where does the Russian company get its Philippine Peso from? Russia overall may have exported some stuff to Philippines but it’s a huge country. The specific company would now need to find a way to acquire a highly illiquid currency available in tiny numbers which would be expensive. Instead, they simply buy dollars which are highly liquid, available in huge numbers, until now absolutely reliable, and accepted by everyone. Trading in dollars was at the end of the day cheap.
rubzah 2y ago
So how about a decentralized currency that no one controls? Preferably digital. If only we had the technology ;-)
- noduerme 2y ago
  Power abhors a vacuum. No such thing can exist without some state eventually dominating 51% of it. We've just tested this out since 2009 and it's already obvious that no crypto can escape state control, because the ingress and egress points are already under state control. Short of establishing your own colony on the moon or Mars, this ain't gonna happen. Luckily, it's still possible to change governments. Sometimes, in some places. Maybe not for much longer. But the idea that crypto will free us is a fantasy that at this point is mostly being peddled by secret police agencies in name-your-country.
- addicted 2y ago
  This is a gross misunderstanding of what a currency actually is. A currency is a social construct. It has no inherent value beyond what people who trade in it place on the currency. As a result people don’t want a currency whose rules of trade are defined once and it’s unable to respond to actual world events. If you have a currency that is indeed responsive to changes in the world then there needs to be someone who you entrust with making those changes. At that point it doesn’t matter whether that currency is digital or cash based. I mean, in actuality even the USD digital trade is order of magnitudes greater than its physical trade. The U.S.’s monetary institutions and its role as a trade promoting superpower is what makes the dollar stronger. Now that those institutions are not as reliable anymore and the U.S. is clearly not a trade promoter anymore, the dollar is definitely at risk.
  - griffzhowl 2y ago
    A currency is a social construct but it doesn't just come down to people who trade in the currency in a decentralized sense: the US govt imposes taxes on economic activity, and demands those taxes be paid in dollars (as other states do in their respective currencies), and this is enforced by the coercive power of the state, which is ultimately based on its military strength, since that's the ultimate guarantor of the continued existence of all the other institutions of the state. Of course, there's more to it in the complex system of the global economy, but the power of the state is still an important central factor in a currencies' strength - it's not just about collective perceptions of value.
specproc 2y ago
I'm sorry, but the US has an abysmal human rights record. It has a per capita incarceration rate lower only than Rwanda, Turkmenistan, Cuba and El Salvador (which is a prison subcontractor _for_ the US). It has started more wars than any other country since the second World War. It is the only country to have used a nuclear weapon in anger. It has a death penalty. It supports numerous regimes with abysmal human rights records, Israel, Egypt and Saudi spring to mind, but that's just `head(3)`. It has bombed it's own population, shot its own students, had racial segregation in living memory. Given its scale and reach, I'd suggest that the US is, in fact, the world's greatest human rights abuser. I'm struggling to think of a country with a worse record.
- skinnymuch 2y ago
  Definitely the worst human rights abuser in history followed by the British, French, Germans, etc.
  - noduerme 2y ago
    uh... are you being ironic? Do you know what's going on to average citizens in North Korea? https://en.m.wikipedia.org/wiki/The_Aquariums_of_Pyongyang https://en.m.wikipedia.org/wiki/The_Aquariums_of_Pyongyang Do you know that showing ANY anti-war symbol in Russia against the invasion of Ukraine will get you arrested? Do you know how many Tibetans put their lives on the line to organize resistance in Tibet, now, against the genocidal CCP? Do you know anything about the civil war in Sudan? So if the worst human rights abusers in your mind are America, the UK, France and Germany, is that because those are the only countries you can name? Or because you don't understand what the rest of the world is?
    - specproc 2y ago
      It's scale. North Korea is mainly abusing North Korean human rights, the US has brutalised many more countries, not incidentally including Korea. Yes, I'm very familiar with the Russia situation, but are you trying to say all arrests in the US are completely justifiable? Despite their apparent arrest-happiness, they've a much smaller prison population than the US. China, I know less about, but let's call the Uighurs and Tibet equivalent to say, Iraq and Libya, the US has done far more besides. Having worked in the aid business, I'd say I'm sadly a little familiar with Sudan. For example I know they've been victims of US sanctions which have created and exacerbated the famines and economic misery paved the way for this war. The US even lobbed a cruise missile them once.
weatherlite 2y ago
> The value of a country's money is backed by a combination of how much they produce and how much foreign currency and assets from other countries they hold (euros, dollars, gold) they have on reserve. I think the simplest way to think about it is simply supply and demand. Currently there is constant high demand for USD due to its reserve status as you said (supply is also growing btw , deficits, printing of money etc). If demand goes down, there will be too much supply so the Dollar will naturally weaken against other currencies. As far as I know the fact that one USD equals 0.95 Euros (or whatever) is simple market forces of supply and demand.
skinnymuch 2y ago
Absolutely crazy when we see countries like China not be close to as bad as the most evil empire ever, the US. And yet somehow the thought is the US isn’t the worst with human rights.
- noduerme 2y ago
  When I was in my early 20s in Thailand I hated America under George W Bush. I had a conversation with a Tibetan guy who was on his way to sneak into China to help his village in Tibet which had been invaded back in the 50s, then colonized. He was going to help dig wells. I said to him: "America is just as bad as China! We're becoming the same thing!" This was during the Iraq war. He stopped me short. He said, "no you cannot compare them, at all, ever. You don't understand. I went to school at [ivy league college]. America is still a democracy. You have no idea how dangerous it is in China." He was right. I didn't...I was a spoiled kid with good intentions, and no understanding of how much evil there was in the world. You don't have the reference point of experiencing pure evil either to say what you're saying.
  - skinnymuch 2y ago
    Tibet was a slave society. What are you talking about? Tibet was also a part of China for many many years. America is a liberal western democracy. Just because you disagree with the democracy of China does not make it true. You know in Tibet, 90%+ of people still speak their native language. Do you know how many indigenous people in Hawaii or the continental US speak their native language? Not close to the same. I am Muslim. I see what the west does to Muslims. I have looked into Xinjiang. If Xinjiang was near Europe or in America, the Muslims would’ve been genocided.
codedokode 2y ago
It seems that other currencies have their own peculiarities; for example, when Russia sold oil to India for Indian rupees (to show that they don't want dirty American currency), they found out that you cannot transfer them outside of India or convert; you need to spend them locally. I wonder can China use this to make Yuan a new world currency (we all buy Chinese things anyway) or they cannot do it or doing this is not beneficial to them?
- NooneAtAll3 2y ago
  China has 2 currencies - Yuan for foreign trade and RMB for internal exchange I can definitely imagine Yuan being used more
  - kaiwen1 2y ago
    RMB and Yuan are two names for the same thing. Maybe you're thinking of FEC? That ended in 1994.
- kasey_junk 2y ago
  China maintains a soft peg on the yuan in order to keep their industrial output cheap. Part of the way they do this is with heavy currency controls. Those currency controls make it difficult to do international trade with the yuan. But worse from Chinas perspective you can’t maintain a peg if your currency is used to trade goods, particularly fungible commodities because the commodity itself becomes the medium of exchange and derails the currency peg. That would be disastrous for their exporters and their economy is not in a position to sustain that currently.
- noduerme 2y ago
  It's likely not beneficial to them, for a couple reasons. First of all, they can print Yuan. They want people to buy those pieces of paper for something of value. It doesn't do much good to have people send all that paper back in exchange for phones and tablets and stuff. Then they would've just got back some paper they printed in exchange for something that took time and resources to make. No, they need something physical or at least valuable for that paper. Such as local labor. Then their own population can spend the paper internally, because it's in theory exchangeable for something external. When China buys stuff from the US, it spends dollars. Which it buys from the US not with Yuan, but with computer parts. It pays its own people Yuan to make the computer parts... but the Yuan is only valuable because the government holds dollars and euros to buy stuff that their citizens can then buy for Yuan. This is why Trump's overall foreign policy and particulatly his tariffs scheme risks destroying America. If at some point enough countries decide that the USD is too unreliable, they may look for the next best paper to trade. That would be catastrophic for the US which may deserve it in any case, but it would be truly terrible if the alternative were a currency privately owned and manipulated by the leaders of a dictatorship. Perhaps the world isn't stupid enough to do that, but the size of China's economy compared to anything else would make it tempting. I'll stipulate right now that if China were a democracy with civil rights and a fair legal system, I would have no problem with it taking over world trade from the US. But currently it's a repressive authoritarian state.
exe34 2y ago
> Anyone who controls global trade after America is likely to be worse from a human rights perspective. Next thing you know they might start sending innocents to megaprisons in El Salvador and lose track of them.
- noduerme 2y ago
  don't get me wrong. I'm writing everything I'm saying because I desperately do not want America to go on a trajectory where it loses all credibility and becomes as bad as all the other human rights abusers. I think most Americans have no idea how much power their country wields. And it's horrific that they're susceptible to the kind of small thinking jingoist nationalism that doesn't befit a country so large built on an idea of cohesion.
csomar 2y ago
> Only the US gets away with having no actual reserve Money is a credit. The US didn't get away with anything. Being a reserve currency has its advantages but the US is holding these liabilities with assets inside the country itself: https://en.wikipedia.org/wiki/List_of_countries_by_net_international_investment_position_per_capita#List_of_debtor_nations https://en.wikipedia.org/wiki/List_of_countries_by_net_inter...
tzs 2y ago
> In simple terms, if you're the Philippines and you're selling fish to Russia, would you rather have Rubles or US dollars? I can easily see why Rubles would have been unacceptable several decades ago, but nowadays with the speed of financial markets why not set the price in the seller's currency and at payment time the buyer can trade enough of their currency for the seller's currency on the currency markets to get the payment?
- lackstein 2y ago
  The challenge is that for a lot of countries, the forex markets for their own currency aren’t deep enough to settle all of their international trade. Consider a country that has a large trade imbalance—they import a lot of goods and have very few exports. When a business in that country tries to import goods, say from the Philippines in Pesos or from Germany in Euros, the business will have to go to a forex markets and sell their local currency to buy the foreign currency. Who’s going to take the other side of that trade? Normally, if a country exports a lot of goods, then foreign businesses will need to buy the country’s local currency to pay for them, and that provides a market for exchanging Pesos and Euros for the local currency. But the country doesn’t export very much, so other businesses in the Philippines or the Eurozone don’t have much use for the business’ local currency, and that means that there isn’t a large market of people selling Pesos or Euros to buy the local currency. This example is a bit of an edge case where this fictional country runs a trade deficit with all of its trading partners. In reality, you’ll likely have a trade deficit with some partners and a surplus with others. If you decide to denominate some of your international trade in US Dollars, then you’re able to use the excess dollars coming in to your country from your exports to finance your imports. It’s a lot easier than hoping that you can sell enough of your local currency or the currencies of the countries you’re exporting to to buy enough of the currencies of the countries you’re importing from. In some ways it’s similar to the hub-and-spoke model of airlines. If you want to get from small town A to small town B, there might not be enough traffic in both directions to warrant a direct flight. But if there’s a hub X, then there might be enough traffic between A and all the other flights into X to make it worthwhile to fly from X to B and vice versa. There might not be enough balanced trade between two small countries for there to be a deep market in their currency pair, but if you have both imports and exports denominated in US Dollars then you can generate an internal market in your country for exchanging your local currency for USD.
ImJamal 2y ago
> But no country has a gold reserve now. Supposedly Zimbabwe's new currency ZiG is gold based. Not sure how many people would trust them though. They don't have the best experience with currency... https://www.bbc.com/news/world-africa-68736155 https://www.bbc.com/news/world-africa-68736155

zaik 2y ago

> if you're the Philippines and you're selling fish to Russia, would you rather have Rubles or US dollars? I would have assumed the fisherman in the Philippines would like to be paid in Philippine peso.

riffraff 2y ago
but it's not easy to come by large amounts of Philippine pesos in Russia, cause no-one wants to hold significant amount of foreign currency they can't use for anything else. In some cases it may even be legally problematic. That's why international trade uses "strong" currencies, which are very liquid: you can generally get USD/EUR and then trade them for anything else with a limited spread. Good luck converting Hungarian forints to Lao kips. Being cut off from USD is why news of Russia resorting to barter[0][1] have occurred in the news since they got cut off from the US trading system [0] https://www.newsweek.com/russia-oranges-trade-barter-pakistan-1962512 https://www.newsweek.com/russia-oranges-trade-barter-pakista... [1] https://www.reuters.com/markets/first-russia-china-barter-trade-may-come-this-autumn-sources-say-2024-08-08/ https://www.reuters.com/markets/first-russia-china-barter-tr...
uyt67764 2y ago
[dead]
cutemonster 2y ago
I think that is (used to be) higher risk: Internal events could make the peso lose its value, but the dollar was pretty stable? (Probably it'd be a pretty big fishing company, exporting to a far away nation like that. Not a single person in a small boat) Edit: I suppose riffraff's sibling answer is better
noduerme 2y ago
The fishermen will get paid in pesos but the company will be paid in dollars. And the company will probably put their dollars in a bank outside the Philippines, which only accepts dollars, euros or swiss francs. If the fishermen could be paid in dollars, they would probably prefer that. And the fact that they'd prefer that to being paid in Rubles or Renminbi is the underlying guarantor of American economic power... which, if it goes away and was replaced by Chinese power in the south china sea, would be catastrophic for the fishermen as well.
quonn 2y ago
For this the Russian buyer would have to previously sell something to the Philippines and accept pesos. Why would they accept those pesos if they are not generally accepted elsewhere?
addicted 2y ago
Where does the Russian company get its Philippine Peso from? Russia overall may have exported some stuff to Philippines but it’s a huge country. The specific company would now need to find a way to acquire a highly illiquid currency available in tiny numbers which would be expensive. Instead, they simply buy dollars which are highly liquid, available in huge numbers, until now absolutely reliable, and accepted by everyone. Trading in dollars was at the end of the day cheap.

rubzah 2y ago

So how about a decentralized currency that no one controls? Preferably digital. If only we had the technology ;-)

noduerme 2y ago
Power abhors a vacuum. No such thing can exist without some state eventually dominating 51% of it. We've just tested this out since 2009 and it's already obvious that no crypto can escape state control, because the ingress and egress points are already under state control. Short of establishing your own colony on the moon or Mars, this ain't gonna happen. Luckily, it's still possible to change governments. Sometimes, in some places. Maybe not for much longer. But the idea that crypto will free us is a fantasy that at this point is mostly being peddled by secret police agencies in name-your-country.
addicted 2y ago
This is a gross misunderstanding of what a currency actually is. A currency is a social construct. It has no inherent value beyond what people who trade in it place on the currency. As a result people don’t want a currency whose rules of trade are defined once and it’s unable to respond to actual world events. If you have a currency that is indeed responsive to changes in the world then there needs to be someone who you entrust with making those changes. At that point it doesn’t matter whether that currency is digital or cash based. I mean, in actuality even the USD digital trade is order of magnitudes greater than its physical trade. The U.S.’s monetary institutions and its role as a trade promoting superpower is what makes the dollar stronger. Now that those institutions are not as reliable anymore and the U.S. is clearly not a trade promoter anymore, the dollar is definitely at risk.
- griffzhowl 2y ago
  A currency is a social construct but it doesn't just come down to people who trade in the currency in a decentralized sense: the US govt imposes taxes on economic activity, and demands those taxes be paid in dollars (as other states do in their respective currencies), and this is enforced by the coercive power of the state, which is ultimately based on its military strength, since that's the ultimate guarantor of the continued existence of all the other institutions of the state. Of course, there's more to it in the complex system of the global economy, but the power of the state is still an important central factor in a currencies' strength - it's not just about collective perceptions of value.

specproc 2y ago

I'm sorry, but the US has an abysmal human rights record. It has a per capita incarceration rate lower only than Rwanda, Turkmenistan, Cuba and El Salvador (which is a prison subcontractor _for_ the US). It has started more wars than any other country since the second World War. It is the only country to have used a nuclear weapon in anger. It has a death penalty. It supports numerous regimes with abysmal human rights records, Israel, Egypt and Saudi spring to mind, but that's just `head(3)`. It has bombed it's own population, shot its own students, had racial segregation in living memory. Given its scale and reach, I'd suggest that the US is, in fact, the world's greatest human rights abuser. I'm struggling to think of a country with a worse record.

skinnymuch 2y ago
Definitely the worst human rights abuser in history followed by the British, French, Germans, etc.
- noduerme 2y ago
  uh... are you being ironic? Do you know what's going on to average citizens in North Korea? https://en.m.wikipedia.org/wiki/The_Aquariums_of_Pyongyang https://en.m.wikipedia.org/wiki/The_Aquariums_of_Pyongyang Do you know that showing ANY anti-war symbol in Russia against the invasion of Ukraine will get you arrested? Do you know how many Tibetans put their lives on the line to organize resistance in Tibet, now, against the genocidal CCP? Do you know anything about the civil war in Sudan? So if the worst human rights abusers in your mind are America, the UK, France and Germany, is that because those are the only countries you can name? Or because you don't understand what the rest of the world is?
  - specproc 2y ago
    It's scale. North Korea is mainly abusing North Korean human rights, the US has brutalised many more countries, not incidentally including Korea. Yes, I'm very familiar with the Russia situation, but are you trying to say all arrests in the US are completely justifiable? Despite their apparent arrest-happiness, they've a much smaller prison population than the US. China, I know less about, but let's call the Uighurs and Tibet equivalent to say, Iraq and Libya, the US has done far more besides. Having worked in the aid business, I'd say I'm sadly a little familiar with Sudan. For example I know they've been victims of US sanctions which have created and exacerbated the famines and economic misery paved the way for this war. The US even lobbed a cruise missile them once.

weatherlite 2y ago

> The value of a country's money is backed by a combination of how much they produce and how much foreign currency and assets from other countries they hold (euros, dollars, gold) they have on reserve. I think the simplest way to think about it is simply supply and demand. Currently there is constant high demand for USD due to its reserve status as you said (supply is also growing btw , deficits, printing of money etc). If demand goes down, there will be too much supply so the Dollar will naturally weaken against other currencies. As far as I know the fact that one USD equals 0.95 Euros (or whatever) is simple market forces of supply and demand.

skinnymuch 2y ago

Absolutely crazy when we see countries like China not be close to as bad as the most evil empire ever, the US. And yet somehow the thought is the US isn’t the worst with human rights.

noduerme 2y ago
When I was in my early 20s in Thailand I hated America under George W Bush. I had a conversation with a Tibetan guy who was on his way to sneak into China to help his village in Tibet which had been invaded back in the 50s, then colonized. He was going to help dig wells. I said to him: "America is just as bad as China! We're becoming the same thing!" This was during the Iraq war. He stopped me short. He said, "no you cannot compare them, at all, ever. You don't understand. I went to school at [ivy league college]. America is still a democracy. You have no idea how dangerous it is in China." He was right. I didn't...I was a spoiled kid with good intentions, and no understanding of how much evil there was in the world. You don't have the reference point of experiencing pure evil either to say what you're saying.
- skinnymuch 2y ago
  Tibet was a slave society. What are you talking about? Tibet was also a part of China for many many years. America is a liberal western democracy. Just because you disagree with the democracy of China does not make it true. You know in Tibet, 90%+ of people still speak their native language. Do you know how many indigenous people in Hawaii or the continental US speak their native language? Not close to the same. I am Muslim. I see what the west does to Muslims. I have looked into Xinjiang. If Xinjiang was near Europe or in America, the Muslims would’ve been genocided.

codedokode 2y ago

It seems that other currencies have their own peculiarities; for example, when Russia sold oil to India for Indian rupees (to show that they don't want dirty American currency), they found out that you cannot transfer them outside of India or convert; you need to spend them locally. I wonder can China use this to make Yuan a new world currency (we all buy Chinese things anyway) or they cannot do it or doing this is not beneficial to them?

NooneAtAll3 2y ago
China has 2 currencies - Yuan for foreign trade and RMB for internal exchange I can definitely imagine Yuan being used more
- kaiwen1 2y ago
  RMB and Yuan are two names for the same thing. Maybe you're thinking of FEC? That ended in 1994.
kasey_junk 2y ago
China maintains a soft peg on the yuan in order to keep their industrial output cheap. Part of the way they do this is with heavy currency controls. Those currency controls make it difficult to do international trade with the yuan. But worse from Chinas perspective you can’t maintain a peg if your currency is used to trade goods, particularly fungible commodities because the commodity itself becomes the medium of exchange and derails the currency peg. That would be disastrous for their exporters and their economy is not in a position to sustain that currently.
noduerme 2y ago
It's likely not beneficial to them, for a couple reasons. First of all, they can print Yuan. They want people to buy those pieces of paper for something of value. It doesn't do much good to have people send all that paper back in exchange for phones and tablets and stuff. Then they would've just got back some paper they printed in exchange for something that took time and resources to make. No, they need something physical or at least valuable for that paper. Such as local labor. Then their own population can spend the paper internally, because it's in theory exchangeable for something external. When China buys stuff from the US, it spends dollars. Which it buys from the US not with Yuan, but with computer parts. It pays its own people Yuan to make the computer parts... but the Yuan is only valuable because the government holds dollars and euros to buy stuff that their citizens can then buy for Yuan. This is why Trump's overall foreign policy and particulatly his tariffs scheme risks destroying America. If at some point enough countries decide that the USD is too unreliable, they may look for the next best paper to trade. That would be catastrophic for the US which may deserve it in any case, but it would be truly terrible if the alternative were a currency privately owned and manipulated by the leaders of a dictatorship. Perhaps the world isn't stupid enough to do that, but the size of China's economy compared to anything else would make it tempting. I'll stipulate right now that if China were a democracy with civil rights and a fair legal system, I would have no problem with it taking over world trade from the US. But currently it's a repressive authoritarian state.

exe34 2y ago

> Anyone who controls global trade after America is likely to be worse from a human rights perspective. Next thing you know they might start sending innocents to megaprisons in El Salvador and lose track of them.

noduerme 2y ago
don't get me wrong. I'm writing everything I'm saying because I desperately do not want America to go on a trajectory where it loses all credibility and becomes as bad as all the other human rights abusers. I think most Americans have no idea how much power their country wields. And it's horrific that they're susceptible to the kind of small thinking jingoist nationalism that doesn't befit a country so large built on an idea of cohesion.

csomar 2y ago

> Only the US gets away with having no actual reserve Money is a credit. The US didn't get away with anything. Being a reserve currency has its advantages but the US is holding these liabilities with assets inside the country itself: https://en.wikipedia.org/wiki/List_of_countries_by_net_international_investment_position_per_capita#List_of_debtor_nations https://en.wikipedia.org/wiki/List_of_countries_by_net_inter...

tzs 2y ago

> In simple terms, if you're the Philippines and you're selling fish to Russia, would you rather have Rubles or US dollars? I can easily see why Rubles would have been unacceptable several decades ago, but nowadays with the speed of financial markets why not set the price in the seller's currency and at payment time the buyer can trade enough of their currency for the seller's currency on the currency markets to get the payment?

lackstein 2y ago
The challenge is that for a lot of countries, the forex markets for their own currency aren’t deep enough to settle all of their international trade. Consider a country that has a large trade imbalance—they import a lot of goods and have very few exports. When a business in that country tries to import goods, say from the Philippines in Pesos or from Germany in Euros, the business will have to go to a forex markets and sell their local currency to buy the foreign currency. Who’s going to take the other side of that trade? Normally, if a country exports a lot of goods, then foreign businesses will need to buy the country’s local currency to pay for them, and that provides a market for exchanging Pesos and Euros for the local currency. But the country doesn’t export very much, so other businesses in the Philippines or the Eurozone don’t have much use for the business’ local currency, and that means that there isn’t a large market of people selling Pesos or Euros to buy the local currency. This example is a bit of an edge case where this fictional country runs a trade deficit with all of its trading partners. In reality, you’ll likely have a trade deficit with some partners and a surplus with others. If you decide to denominate some of your international trade in US Dollars, then you’re able to use the excess dollars coming in to your country from your exports to finance your imports. It’s a lot easier than hoping that you can sell enough of your local currency or the currencies of the countries you’re exporting to to buy enough of the currencies of the countries you’re importing from. In some ways it’s similar to the hub-and-spoke model of airlines. If you want to get from small town A to small town B, there might not be enough traffic in both directions to warrant a direct flight. But if there’s a hub X, then there might be enough traffic between A and all the other flights into X to make it worthwhile to fly from X to B and vice versa. There might not be enough balanced trade between two small countries for there to be a deep market in their currency pair, but if you have both imports and exports denominated in US Dollars then you can generate an internal market in your country for exchanging your local currency for USD.

ImJamal 2y ago

> But no country has a gold reserve now. Supposedly Zimbabwe's new currency ZiG is gold based. Not sure how many people would trust them though. They don't have the best experience with currency... https://www.bbc.com/news/world-africa-68736155 https://www.bbc.com/news/world-africa-68736155