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The idea that a basket of foreign currencies or "BRIC+" will replace the dollar is absolutely not going to happen. If the dollar goes down it takes the entire w

The idea that a basket of foreign currencies or "BRIC+" will replace the dollar is absolutely not going to happen. If the dollar goes down it takes the entire world with it. Nobody is insulated from the risk of a dedollarization.

toomuchtodo 1y ago
I’m somewhat confident in the Euro until India or Africa grows to be a potential competitor. Whether they can achieve a similar risk profile remains to be seen of course. Russia is a non starter, and China is unlikely to make the political change necessary to be a reserve currency.
- throwawaymaths 1y ago
  > I’m somewhat confident in the Euro out of curiosity, why do you believe that?
  - toomuchtodo 1y ago
    Stable governance and a business friendly enough environment (SAP is the most valuable company in Europe currently, for example; business can be done there). Even with populism and right wing extremes popping up there, I’m more confident in Europe staying on the rails vs the US (as it relates to currency stability).
    - declan_roberts 1y ago
      Huge portions of the European economy are backed by a strong USA, and that doesn't include NATO/defense subsidies. Unless they're paying Russia for energy, they're buying oil and LNG in dollars.
  - TacticalCoder 1y ago
    I don't understand why anyone would believe that. The euro does exist since only a quarter of a century and is already in very serious dire straits. It's the worse ever conceived currency (conceived by clueless bureaucrats): it makes no sense at all to have a common currency for countries with different fiscal policies. Nearly all the countries that have the euro are more indebted than the US (GDP wise). One country with the euro already partially defaulted on its public debt (Greece).
    - throwawaymaths 1y ago
      i would say this: if thanos snapped his fingers and made dollars disappear, the euro would be the best choice among a bunch of shitty choices for world reserve currency, but still trailing behind "no reserve currency at all".
- dyauspitr 1y ago
  India is not going to happen for atleast a few decades and Africa isn’t even on the remotest horizon.
- nostromo 1y ago
  If you think the US has a debt problem, the Eurozone is much worse. At least America has economic growth along with debt growth. The EU has slightly less debt but zero economic growth and almost zero population growth (and negative organic population growth). Africa's GDP is tiny and will not a serious contender for any sort of reserve currency status for many decades. I can't imagine a wave of automation will do anything positive for most of Africa.
  - toomuchtodo 1y ago
    Growth is over globally except India and Africa due to demographics [1]. Developed countries and unions will compete for the last of the world’s young, prime age workers over the next century. Financial stability will be a function of who manages this situation to the best of their circumstances. Can you attract and retain these workers and leverage that for economic success? If so, that’s where investment will flow and capital will remain invested. My thesis is Europe is best positioned to succeed in the near term, based on the above. Sibling comment mentions Europe needs the US for energy; Canada has known fossil gas reserves of ~200 years and LNG export capabilities, and Europe is scheduled to end Russian fossil gas consumption in 2027 [2]. The world is deploying 1GW of solar every 15 hours; like the rest of the world, everyone will arrive at energy independence/sovereignty eventually through cheap renewables (solar primarily, but also wind) and battery storage (LFP and sodium most likely, as of this comment) exported by China to the world. China is also selling inexpensive EVs to as many global consumers as they can find (while internal sales of battery electric and hybrids is already at ~50% this year). This leads me to believe the future of US oil and gas is an internal petrostate similar to Russia, not an energy exporter of relevance far into the future. [1] https://www.sas.upenn.edu/~jesusfv/Slides_London.pdf https://www.sas.upenn.edu/~jesusfv/Slides_London.pdf [2] https://news.ycombinator.com/item?id=43506589 https://news.ycombinator.com/item?id=43506589 (not investing advice)
    - nostromo 1y ago
      Having billions of low-skill "prime age workers" is not a good thing in the AI era. Africa's population surge is a liability as much as it is a benefit, especially considering they already have to import a large portion of their food supplies. Africa is 20% of world population but just 2% of world GDP... Maybe they will turn into China at some point, but I wouldn't bet on it yet.
KaiserPro 1y ago
> idea that a basket of foreign currencies or "BRIC+" will replace the dollar is absolutely not going to happen No it'll be renminbi, with the euro, if they are lucky as a distant second place.
- declan_roberts 1y ago
  China simply cannot exist without the USA and unlike Russia they have no real natural resources to back up their currency.
  - KaiserPro 1y ago
    I'm sorry but that is utter utter bullshit. China is an exporting and manufacturing powerhouse. Something that is only accelerating. Don't get me wrong, china has a whole bunch of issues. but currently political instability kneecaping economic growth is not one of them. Also China knows that unemployment means the end of their control. So they will do anything and everything to keep people gainfully employed. the USA less so, and we'll see if that works out for them. Russia has a tiny economy based on war and oil.
- tobias3 1y ago
  China is more in a debt trap than even the US. Their only clean balance sheet is the central government balance sheet.
- moogly 1y ago
  The Swiss Franc perhaps?
  - nic547 1y ago
    Probably too small. Also Switzerland is easy to bully, as can be seen by the current US tariff regime.
- satyrun 1y ago
  It might help if I could actually convert to renminbi. That is kind of a first step. You know, actually being able to convert from one currency to another.
stego-tech 1y ago
Pretty much this. There is no “spare part” currency to swap in for the dollar and preserve the modern economy, here. The end of dollarization means the end of post-WW2 economic policy wholesale. So what we’ll end up with is a post-WW2 supply chain but in a world where every currency dynamically floats, even the dollar. It’ll be a decade of price shocks, trade wars, and likely conflict as everyone vies to define the next era of economic power, until a smattering of core currencies (likely the Yuan, Euro, and Dollar) emerge on top for each respective region. That’s my armchair theorycrafting, anyway.
sparrish 1y ago
Those holding gold and silver may be insulated. Historically, it's a great hedge against hyperinflation (dedollarization).
lossolo 1y ago
Things like this don’t happen overnight, just like the decline of empires doesn’t happen overnight. Have you heard of the Portuguese real? Or the Spanish real? Maybe the Dutch guilder? They were all global reserve currencies in the past. If you haven’t heard of them, don’t worry, someday, people will ask “Do you know the United States dollar?”
- peterfirefly 1y ago
  I wonder what the Maria Theresa dollar of the future will be.
chasing0entropy 1y ago
It's which came first the chicken or egg? The fall of the dollar will happen because anyone(everyone) with significant wealth will divest from the dollar CAUSING the de-dollarization. That's the point of the indicators.
- frnkng 1y ago
  Don’t forget that you also can invest in negative dollar by taking loans. Then, the reduction of purchasing power does actually benefit you. So, whoever has significant wealth will do exactly this and take out loans to purchase productive assets and then, later on, pay back much less because the dollar lost value in the mean time. This works out as long as the interest rate is lower then the actual annual loss in purchasing power.
  - immibis 1y ago
    Shorting is a bad idea unless you can accurately predict the timing of the crash. Otherwise it'd likely your gains will go down to -5000% before they suddenly rocket up to 99%. And you'll close your position out of fear, when it's about -1000%.
s_ting765 1y ago
> If the dollar goes down it takes the entire world with it. This has happened before. GFC 2008 comes to mind.
- senectus1 1y ago
  yeah but that was a hiccup compared to what may come.

toomuchtodo 1y ago

I’m somewhat confident in the Euro until India or Africa grows to be a potential competitor. Whether they can achieve a similar risk profile remains to be seen of course. Russia is a non starter, and China is unlikely to make the political change necessary to be a reserve currency.

throwawaymaths 1y ago
> I’m somewhat confident in the Euro out of curiosity, why do you believe that?
- toomuchtodo 1y ago
  Stable governance and a business friendly enough environment (SAP is the most valuable company in Europe currently, for example; business can be done there). Even with populism and right wing extremes popping up there, I’m more confident in Europe staying on the rails vs the US (as it relates to currency stability).
  - declan_roberts 1y ago
    Huge portions of the European economy are backed by a strong USA, and that doesn't include NATO/defense subsidies. Unless they're paying Russia for energy, they're buying oil and LNG in dollars.
- TacticalCoder 1y ago
  I don't understand why anyone would believe that. The euro does exist since only a quarter of a century and is already in very serious dire straits. It's the worse ever conceived currency (conceived by clueless bureaucrats): it makes no sense at all to have a common currency for countries with different fiscal policies. Nearly all the countries that have the euro are more indebted than the US (GDP wise). One country with the euro already partially defaulted on its public debt (Greece).
  - throwawaymaths 1y ago
    i would say this: if thanos snapped his fingers and made dollars disappear, the euro would be the best choice among a bunch of shitty choices for world reserve currency, but still trailing behind "no reserve currency at all".
dyauspitr 1y ago
India is not going to happen for atleast a few decades and Africa isn’t even on the remotest horizon.
nostromo 1y ago
If you think the US has a debt problem, the Eurozone is much worse. At least America has economic growth along with debt growth. The EU has slightly less debt but zero economic growth and almost zero population growth (and negative organic population growth). Africa's GDP is tiny and will not a serious contender for any sort of reserve currency status for many decades. I can't imagine a wave of automation will do anything positive for most of Africa.
- toomuchtodo 1y ago
  Growth is over globally except India and Africa due to demographics [1]. Developed countries and unions will compete for the last of the world’s young, prime age workers over the next century. Financial stability will be a function of who manages this situation to the best of their circumstances. Can you attract and retain these workers and leverage that for economic success? If so, that’s where investment will flow and capital will remain invested. My thesis is Europe is best positioned to succeed in the near term, based on the above. Sibling comment mentions Europe needs the US for energy; Canada has known fossil gas reserves of ~200 years and LNG export capabilities, and Europe is scheduled to end Russian fossil gas consumption in 2027 [2]. The world is deploying 1GW of solar every 15 hours; like the rest of the world, everyone will arrive at energy independence/sovereignty eventually through cheap renewables (solar primarily, but also wind) and battery storage (LFP and sodium most likely, as of this comment) exported by China to the world. China is also selling inexpensive EVs to as many global consumers as they can find (while internal sales of battery electric and hybrids is already at ~50% this year). This leads me to believe the future of US oil and gas is an internal petrostate similar to Russia, not an energy exporter of relevance far into the future. [1] https://www.sas.upenn.edu/~jesusfv/Slides_London.pdf https://www.sas.upenn.edu/~jesusfv/Slides_London.pdf [2] https://news.ycombinator.com/item?id=43506589 https://news.ycombinator.com/item?id=43506589 (not investing advice)
  - nostromo 1y ago
    Having billions of low-skill "prime age workers" is not a good thing in the AI era. Africa's population surge is a liability as much as it is a benefit, especially considering they already have to import a large portion of their food supplies. Africa is 20% of world population but just 2% of world GDP... Maybe they will turn into China at some point, but I wouldn't bet on it yet.

KaiserPro 1y ago

> idea that a basket of foreign currencies or "BRIC+" will replace the dollar is absolutely not going to happen No it'll be renminbi, with the euro, if they are lucky as a distant second place.

declan_roberts 1y ago
China simply cannot exist without the USA and unlike Russia they have no real natural resources to back up their currency.
- KaiserPro 1y ago
  I'm sorry but that is utter utter bullshit. China is an exporting and manufacturing powerhouse. Something that is only accelerating. Don't get me wrong, china has a whole bunch of issues. but currently political instability kneecaping economic growth is not one of them. Also China knows that unemployment means the end of their control. So they will do anything and everything to keep people gainfully employed. the USA less so, and we'll see if that works out for them. Russia has a tiny economy based on war and oil.
tobias3 1y ago
China is more in a debt trap than even the US. Their only clean balance sheet is the central government balance sheet.
moogly 1y ago
The Swiss Franc perhaps?
- nic547 1y ago
  Probably too small. Also Switzerland is easy to bully, as can be seen by the current US tariff regime.
satyrun 1y ago
It might help if I could actually convert to renminbi. That is kind of a first step. You know, actually being able to convert from one currency to another.

stego-tech 1y ago

Pretty much this. There is no “spare part” currency to swap in for the dollar and preserve the modern economy, here. The end of dollarization means the end of post-WW2 economic policy wholesale. So what we’ll end up with is a post-WW2 supply chain but in a world where every currency dynamically floats, even the dollar. It’ll be a decade of price shocks, trade wars, and likely conflict as everyone vies to define the next era of economic power, until a smattering of core currencies (likely the Yuan, Euro, and Dollar) emerge on top for each respective region. That’s my armchair theorycrafting, anyway.

sparrish 1y ago

Those holding gold and silver may be insulated. Historically, it's a great hedge against hyperinflation (dedollarization).

lossolo 1y ago

Things like this don’t happen overnight, just like the decline of empires doesn’t happen overnight. Have you heard of the Portuguese real? Or the Spanish real? Maybe the Dutch guilder? They were all global reserve currencies in the past. If you haven’t heard of them, don’t worry, someday, people will ask “Do you know the United States dollar?”

peterfirefly 1y ago
I wonder what the Maria Theresa dollar of the future will be.

chasing0entropy 1y ago

It's which came first the chicken or egg? The fall of the dollar will happen because anyone(everyone) with significant wealth will divest from the dollar CAUSING the de-dollarization. That's the point of the indicators.

frnkng 1y ago
Don’t forget that you also can invest in negative dollar by taking loans. Then, the reduction of purchasing power does actually benefit you. So, whoever has significant wealth will do exactly this and take out loans to purchase productive assets and then, later on, pay back much less because the dollar lost value in the mean time. This works out as long as the interest rate is lower then the actual annual loss in purchasing power.
- immibis 1y ago
  Shorting is a bad idea unless you can accurately predict the timing of the crash. Otherwise it'd likely your gains will go down to -5000% before they suddenly rocket up to 99%. And you'll close your position out of fear, when it's about -1000%.

s_ting765 1y ago

> If the dollar goes down it takes the entire world with it. This has happened before. GFC 2008 comes to mind.

senectus1 1y ago
yeah but that was a hiccup compared to what may come.