5 ms·

Worldwide decoupling from USD? Where do we go from here?

by bix6 2y ago

senectus1 2y ago
thats the questions isnt it? Euro or Yuan is my guess. I'm inclined to say the Euro over the Yuan, if the US collpases then China is bound to follow. Their debts are tightly bound up together.
- ncallaway 2y ago
  I think there's a option here: there could be no replacement. The fact of the world having a singular reserve currency is not guaranteed. A totally possible outcome is nothing really replaces the dollar as the reserve currency, and international trade is just... less efficient because of it. If the world moves away from the dollar, I think having a singular reserve currency replace it is probably the best case scenario
  - klodolph 2y ago
    Sure, it’s possible that international trade would be less efficient. I think it’s more likely that liquidity providers / market makers would step in. These entities have gotten bigger and bigger over the past years.
    - cbogie 2y ago
      nudge force push to dogecoin trumpbux etc quick rich, scorched earth, whatever u can keep
  - flowerthoughts 2y ago
    Agreed. Yuan is too closely regulated to stay in China. I doubt it would be viable unless China first steps up their _attitude_ towards being a currency provider. The EMU is an amalgamation of countries that barely hold together, have vastly different opinions on government spending, and isn't already a "world currency." I do think we'll eventually have a single currency on the planet, but the question is what happens in my lifetime. And that's much less certain.
- wqaatwt 2y ago
  China has pretty strict capital controls. Wouldn’t that more or less entirely disqualify Yuan?
drewcoo 2y ago
We go to BRICs.
- carlosjobim 2y ago
  Not even BRICS countries would trust BRICS. There dollar is horrible, every other currency is much worse.
- pjc50 2y ago
  A country sanctioned by half the world, a country with capital controls and non convertible currency, a country about to fight Pakistan, and whatever is going on with Brazil? That's not stability.
- IAmBroom 2y ago
  I assume you dropped this: /s
klodolph 2y ago
Diversification?
Taniwha 2y ago
Trade imbalances typically solve themselves because they force currency changes, if I have too many Y$ because I sell more to country Y than I buy then I can't use them easily and they become worth less, that means Y's exporters get more Y$ when they sell stuff and importers pay more - trade deficits balance out. If you have a currency that's needed for something like buying a staple like oil from other than that country then that $$ is worth more, is artificially high, and that country will tend to always have trade deficits It's very much a case of "you can't have your cake and eat it too" - it also means that Trump's tariffs are very much an incentive for the rest of the world to get off of the US oil $
YZF 2y ago
There is no quick decoupling from the USD. Everyone holds long term USD instruments. Nobody wants to lose their money. The US is still the world's largest economy - by a lot. Gold isn't that much more expensive than it was in e.g. 1980. It is pretty much just saying there's risk in other places at the moment and people are nervous. You should buy gold if your prediction is a complete collapse of economies along the lines of the great depression. I think this is extremely unlikely. Short gold ;) I've always wanted to get some physical gold just because it's so nice and shiny. But I'll wait for the price to go a little down. Maybe Costco selling gold bars is what's pushing up the price/demand?
- olalonde 2y ago
  > The US is still the world's largest economy - by a lot. China is.
  - danielmarkbruce 2y ago
    No reputable source has China gdp > US gdp. World Bank, IMF, UN all have it at something like $30T US, $20T China.
    - tock 2y ago
      True but its only a matter of this at this rate.
      - wqaatwt 2y ago
        Is it? China unlike US has a declining population. Also it takes a while to catch up even if you’re growing at 5% and your opponent at 3% when the starting base is much lower. Of course this might be entirely moot since US is in the process of committing economic suicide for no apparent reason.
        tock 2y ago
        I think its going to happen. We keep underestimating China. US manufacturing is in the gutter. And it certainly doesn't help that we keep deporting our best minds back to China. They already have 5x the US population. They have a lot of room to grow still.
01100011 2y ago
Probably nowhere. Despite what crypto maximalists, Sino-apologists or Eurofetishists will have you believe, there is nothing like the USD in terms of function. That isn't to say that gold won't go higher in USD terms or that USD won't further weaken against some other currencies, but we are still decades away from the end of king dollar. As bad of a president as trump is, he will not destroy America. Things have been bad before, and they got better. We will see better times again. Edit: And, yes, central banks have as of late been increasing gold reserves. Expect some of those gold reserves to be liquidated in the event that those countries currencies need support. Gold can have amazing periods like we've just witnesses and then just sit there for ten years. It's good for diversification though and from what I've heard from smarter people than me, something like 10% of your portfolio in gold isn't a terrible idea. Just DCA into it instead of panic buying at a potential top. Oh and this is HN. Most of us have no clue when it comes to economics and are merely parroting our favorite twitter guru or Peter Zeihan. Trust us when we talk about software but take everything you hear in these economic related threads with a huge grain of salt.
- csomar 2y ago
  > there is nothing like the USD in terms of function. This might have been true 10 years ago but that's not the case today. I was in Chengdu last week and I paid at a store market with a TnG wallet using Malaysia MYR. Sure this is only South East Asia, but many countries now have their own ewallet thing and they can be ready in a short time to move.
  - lores 2y ago
    "Only SE Asia" is you being modest here, SE Asia to Chengdu is like a quarter of all humans!
  - audunw 2y ago
    How is that relevant? Countries don’t hold reserves in e-wallets. You don’t get a business loan in an e-wallet. What you pay with as a consumer has nothing to do with the dollars reserve currency status. One of the most important aspects of the dollars role is the “Eurodollar”, and how debt can be issued by international banks. There is no alternative to the dollar in that regard.

Worldwide decoupling from USD? Where do we go from here?

by bix6 2y ago

Worldwide decoupling from USD? Where do we go from here?

thats the questions isnt it? Euro or Yuan is my guess. I'm inclined to say the Euro over the Yuan, if the US collpases then China is bound to follow. Their debts are tightly bound up together.

ncallaway 2y ago
I think there's a option here: there could be no replacement. The fact of the world having a singular reserve currency is not guaranteed. A totally possible outcome is nothing really replaces the dollar as the reserve currency, and international trade is just... less efficient because of it. If the world moves away from the dollar, I think having a singular reserve currency replace it is probably the best case scenario
- klodolph 2y ago
  Sure, it’s possible that international trade would be less efficient. I think it’s more likely that liquidity providers / market makers would step in. These entities have gotten bigger and bigger over the past years.
  - cbogie 2y ago
    nudge force push to dogecoin trumpbux etc quick rich, scorched earth, whatever u can keep
- flowerthoughts 2y ago
  Agreed. Yuan is too closely regulated to stay in China. I doubt it would be viable unless China first steps up their _attitude_ towards being a currency provider. The EMU is an amalgamation of countries that barely hold together, have vastly different opinions on government spending, and isn't already a "world currency." I do think we'll eventually have a single currency on the planet, but the question is what happens in my lifetime. And that's much less certain.
wqaatwt 2y ago
China has pretty strict capital controls. Wouldn’t that more or less entirely disqualify Yuan?

drewcoo 2y ago

We go to BRICs.

carlosjobim 2y ago
Not even BRICS countries would trust BRICS. There dollar is horrible, every other currency is much worse.
pjc50 2y ago
A country sanctioned by half the world, a country with capital controls and non convertible currency, a country about to fight Pakistan, and whatever is going on with Brazil? That's not stability.
IAmBroom 2y ago
I assume you dropped this: /s

klodolph 2y ago

Diversification?

Taniwha 2y ago

Trade imbalances typically solve themselves because they force currency changes, if I have too many Y$ because I sell more to country Y than I buy then I can't use them easily and they become worth less, that means Y's exporters get more Y$ when they sell stuff and importers pay more - trade deficits balance out. If you have a currency that's needed for something like buying a staple like oil from other than that country then that $$ is worth more, is artificially high, and that country will tend to always have trade deficits It's very much a case of "you can't have your cake and eat it too" - it also means that Trump's tariffs are very much an incentive for the rest of the world to get off of the US oil $

YZF 2y ago

There is no quick decoupling from the USD. Everyone holds long term USD instruments. Nobody wants to lose their money. The US is still the world's largest economy - by a lot. Gold isn't that much more expensive than it was in e.g. 1980. It is pretty much just saying there's risk in other places at the moment and people are nervous. You should buy gold if your prediction is a complete collapse of economies along the lines of the great depression. I think this is extremely unlikely. Short gold ;) I've always wanted to get some physical gold just because it's so nice and shiny. But I'll wait for the price to go a little down. Maybe Costco selling gold bars is what's pushing up the price/demand?

olalonde 2y ago
> The US is still the world's largest economy - by a lot. China is.
- danielmarkbruce 2y ago
  No reputable source has China gdp > US gdp. World Bank, IMF, UN all have it at something like $30T US, $20T China.
  - tock 2y ago
    True but its only a matter of this at this rate.
    - wqaatwt 2y ago
      Is it? China unlike US has a declining population. Also it takes a while to catch up even if you’re growing at 5% and your opponent at 3% when the starting base is much lower. Of course this might be entirely moot since US is in the process of committing economic suicide for no apparent reason.
      - tock 2y ago
        I think its going to happen. We keep underestimating China. US manufacturing is in the gutter. And it certainly doesn't help that we keep deporting our best minds back to China. They already have 5x the US population. They have a lot of room to grow still.

01100011 2y ago

Probably nowhere. Despite what crypto maximalists, Sino-apologists or Eurofetishists will have you believe, there is nothing like the USD in terms of function. That isn't to say that gold won't go higher in USD terms or that USD won't further weaken against some other currencies, but we are still decades away from the end of king dollar. As bad of a president as trump is, he will not destroy America. Things have been bad before, and they got better. We will see better times again. Edit: And, yes, central banks have as of late been increasing gold reserves. Expect some of those gold reserves to be liquidated in the event that those countries currencies need support. Gold can have amazing periods like we've just witnesses and then just sit there for ten years. It's good for diversification though and from what I've heard from smarter people than me, something like 10% of your portfolio in gold isn't a terrible idea. Just DCA into it instead of panic buying at a potential top. Oh and this is HN. Most of us have no clue when it comes to economics and are merely parroting our favorite twitter guru or Peter Zeihan. Trust us when we talk about software but take everything you hear in these economic related threads with a huge grain of salt.

csomar 2y ago
> there is nothing like the USD in terms of function. This might have been true 10 years ago but that's not the case today. I was in Chengdu last week and I paid at a store market with a TnG wallet using Malaysia MYR. Sure this is only South East Asia, but many countries now have their own ewallet thing and they can be ready in a short time to move.
- lores 2y ago
  "Only SE Asia" is you being modest here, SE Asia to Chengdu is like a quarter of all humans!
- audunw 2y ago
  How is that relevant? Countries don’t hold reserves in e-wallets. You don’t get a business loan in an e-wallet. What you pay with as a consumer has nothing to do with the dollars reserve currency status. One of the most important aspects of the dollars role is the “Eurodollar”, and how debt can be issued by international banks. There is no alternative to the dollar in that regard.