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What happens when USD stops becoming the the reserve currency for the world? And who takes its place?
by adrr 9mo ago
What happens when USD stops becoming the the reserve currency for the world? And who takes its place?
- petcat 9mo agoThat would never happen until the US Navy ceases to be effective globally.
- deleted 9mo ago[deleted]
- deadbabe 9mo ago[flagged]
- sonotathrowaway 9mo agoYou mean like how the Houthi’s unilaterally decided to shut down Red Sea shipping and the US Navy is still powerless to restore it?
- petcat 9mo agoThat's regional politics. Nothing to do with the superiority of one navy over another
- estearum 9mo agoWhat? The Houthis shutting down a major global shipping route and the US openly giving up on restoring it is not "regional politics."
- Mordisquitos 9mo agoThe dollar being the reserve currency is international finance. Nothing to do with the superiority of one navy over another.
- CamperBob2 9mo agoNavies appear to be obsolete (edit: I'll exempt ballistic missile subs from this statement, though.) You don't even need a navy of your own to sink another country's navy these days. When $100M in armaments can take out a $10000M carrier, it's time to rethink things.
- epistasis 9mo agoWhat is the theory of how the US Navy keeps the dollar the reserve currency, when the US has made itself a pariah state? What mechanism? Would the US Navy be doing piracy and demand protection money in dollars? Piracy payoffs would be a far far lower demand for dollars than there currently is and, and also greatly reduce all other trade with the US, further reducing demand for US dollars. Really curious what your reasoning is here.
- jimnotgym 9mo agoI think it works as a statement right up until you start an actual war, then the threat is gone. No point worrying US will invade if you don't support it economically, if it already invaded
- mythical_39 9mo agoI saw an interesting article about plumbing problems on one of our aircraft carriers. https://www.npr.org/2026/01/17/nx-s1-5680167/major-plumbing-headache-haunts-13-billion-u-s-carrier-off-the-coast-of-venezuela https://www.npr.org/2026/01/17/nx-s1-5680167/major-plumbing-...
- actionfromafar 9mo agoThe argument made like that is an original argument bent backwards. The argument was that the US Navy guaranteed open shipping lanes and kept Pax Americana. Now we get closed shipping lanes and Bellum Americanum.
- jansper39 9mo agoIf the US pisses enough countries off with this Greenland stuff that they shut down US bases around the world, that substantially curtails the US Navy's ability to be effective globally.
- sekai 9mo ago> That would never happen until the US Navy ceases to be effective globally. US Navy would have have no parking spots left in Europe if they try to annex Greenland.
- basilgohar 9mo agoThe US starts more wars until its eventual complete collapse. See The Rise and Fall of the Roman Empire. We're operating out of a playbook for imperial destruction word for word.
- drstewart 9mo ago"History buffs" that literally only know the Roman Empire and Hitler should probably try expand their purview.
- saubeidl 9mo agoI think Qing dynasty China might be a better fit.
- woooooo 9mo agoQing suffered a century of unequal treaties before they fell, they were the bullied and not the bully. (They were also medieval and isolationist which further hurts the comparison IMO).
- cratermoon 9mo agoFrance and most of the European imperialists before the first world war.
- shermantanktop 9mo agoThat’s the manly history that appeals to men! Men of masculinity.
- CamperBob2 9mo agoWhat are some better parallels? Seriously, no snark, please throw out some suggestions for reading. I can't think of any other country that has done this to itself.
- mitthrowaway2 9mo ago
- WarmWash 9mo agoThe dollar sucks but everything else is worse.
- vdupras 9mo agoHey, it's nice that you came in signed up to HN to cheer for the USD. I think it's going to be needed to change the overall sentiment.
- pixelpoet 9mo agoYep, nothing signals stability and genuine sentiment like a bunch of brand new accounts swooping in and touting the strength of the dollar. HN seems totally fine with this behaviour too, also super reassuring.
- woooooo 9mo agoHN trusts the community by giving us green text for the new accounts.
- deleted 9mo ago[deleted]
- WarmWash 9mo agoI would say the same on my old accounts too. I rotate accounts annually (it is january). I'm not anyone note worthy or famous, this account and my others are just as generic as any other HN commoner.
- LunaSea 9mo agoThe USD dollar sank -10% this last year versus the euro.
- drstewart 9mo agoThe Euro sank -10% this last year versus the Zambian Kwacha
- jimnotgym 9mo agoMy guess would be EUR takes its place, gold will also be used more. I guess what happens is USD gets much weaker and US buying power goes down. Maybe destroying the USD will eventually cause the boost to domestic manufacturing that Trump wanted, since foreign goods will be out of reach. Cut down the forest to kill a squirrel. I'm no expert though
- throwway120385 9mo agoThere will never be a boost to domestic manufacturing without some kind of investment. The booms of the 1950's and 1960's were a result of massive government spending in the 1930's and 1940's building a bunch of capacity and researching novel manufacturing techniques and building new tools. If we don't have the morale for that we will simply stop having as many things.
- dpc050505 9mo agoIt also included a bunch of women joining the workforce, an enormous baby-boom and brown people acquiring the freedom and prosperity necessary to become consumers. Demographics are always the fundamental driver of economic movements.
- shermantanktop 9mo agoHistorically, gold’s day in the sun is always juuust around the corner, right after the disastrous collapse that never quite arrives. Now that we really do have a destructive realignment underway, maybe gold will actually be useful again. I doubt it, but I’m no currency expert.
- jimnotgym 9mo agoIt seems to be in demand. It is getting really expensive!
- acdha 9mo agoDomestic manufacturing isn’t coming back without a thoughtful investment program. A lot of older people still think of China like in the 1980s where it was mostly low-wage, low-quality products but that’s nothing like true now and they have entire clusters of world-class product pipelines with long supply chains which would take a long time to bring back in stages. The other problem seems even bigger: we don’t have many high-skill workers available, but our wages are high enough that anyone bringing manufacturing back is going to try to automate it as much as possible. That seems like a real bind for the Republicans’ isolationist strategy: exports will be down due to a trade war and a difficult price/value ratio in the areas other countries currently dominate, and if we’re heading into a more automated economy we’re going to have a growing number of people who won’t be able to afford to buy much. This seems like a vicious self-inflicted cycle if it gets rolling.
- diggyhole 9mo ago[flagged]
- fisherjeff 9mo agoAs much as it pains me to say it, this is a plausible answer in 2026
- neilwilson 9mo agoWe finally realise there is no such thing as a “reserve currency” in the floating exchange rate era and that the concept is a long dead hangover from fixed exchange rates. And that’s definitely going to upset the gold bugs. (In reality lots of things are held in reserve) USD is a routing currency that is used because it is cheaper than the mesh alternative. When it stops being cheaper whoever is then cheapest will get the routing transactions.
- Archelaos 9mo agoThe share of the USD as a reserve currency has already been slowly declining over the last decade, although it is all but dramatic. The reduction is not in favour of another particular currency. Instead, the proportion of minor currencies is increasing. Here is a diagram for the years 2016 to 2023: https://de.statista.com/statistik/daten/studie/232562/umfrage/verteilung-der-weltweiten-waehrungsreserven/ https://de.statista.com/statistik/daten/studie/232562/umfrag...
- shimman 9mo agoLook up something called "dedollarization," it's been talked about in academic circles for quite some time and now more mainstream institutions are discussing it more too.
- KPGv2 9mo agoYes, in my undergrad government policy classes twenty years ago, we were talking about a "basket of currencies" that would replace the USD as the global reserve.
- ProllyInfamous 9mo agoIMF has this, intra-countries, with their SDR ("Special Drawing Rights"). China was added in the 2010s, and USD has slowly been losing its percentage of the SDR's overall-makeup. [•] <https://wikipedia.org/wiki/Special_drawing_rights https://wikipedia.org/wiki/Special_drawing_rights> SDR's are a type of Keynes' "Bancor" concept, but only transactable between countries. Citizens may resort to the commoner's bancor, e.g. bitcoin (but also gold, silver &c). [•] https://en.wikipedia.org/wiki/Bancor https://en.wikipedia.org/wiki/Bancor
- NoboruWataya 9mo agoI doubt it would be replaced by a single global reserve currency. More likely there would be a handful of currencies that perform a similar role (USD, EUR, CNY, maybe some others) and which you primarily use depends on whose sphere of influence you are in.
- Ekaros 9mo agoProbably some type of balanced trade. Holding each trade partners currency and balancing it at times. Or even between multiple holders and currency pairs. If there is need you can now build very complicated systems as everything is digital anyway. Maybe stable coins would be finally useful. Each currency has own stable coin and then they are automatically traded in massive market... /s
- tinfoilhatter 9mo agoThe petrodollar (a product of Kissinger) has been in collapse since Saudi Arabia began divesting from it. We've been printing pretend money for quite some time, and supressing the value of precious metals (which is why you're now seeing silver bullion sell for $100+ an ounce). Copper is also selling out now. These precious metals are extremely valuable because they're used to manufacture all of the technology consumers and nation states rely on daily. We're going to see a regression towards mercantilism and commodity hoarding. Most likely fiat will be abandoned in favor of crypto as we enter a new era of hyperinflation. Buckle up - 2026 is going to be a wild ride.
- tinfoilhatter 9mo agoGotta love HN - getting downvoted with no explanation, but most likely because the truth is uncomfortable and people would rather press the downvote button than face facts.
- actionfromafar 9mo agoI think you should rather assume that when you mention crypto taking over fiat, it's just too outlandish to even comment.
- tinfoilhatter 9mo agoExcept governments around the world have been talking about a digital dollar / digital currencies for years now. I'm not sure exactly what is so outlandish about it. The fiat system is collapsing, and the signs are quite plain to see. Can't print fake money forever...
- actionfromafar 9mo agoUsually, what they mean is fiat tokens, minted much like paper currency.
- 9mo ago
- traceroute66 9mo agoThe USD has already been in decline as a reserve currency. The only thing that is happening is the decline is accelerating. It is not necessarily a question of "takes its place", but more about being more serious about diversification. Or to paraphrase the old IBM saying "nobody got fired for buying USD" is no longer the case. In terms of options you have JPY, EUR and CNY as the big-three and maybe tag AUD on top.
- itake 9mo agoWhy AUD and not SGD? I guess AUD has higher GDP (but much lower GDP per capita and worse forex rate to the us dollar)
- traceroute66 9mo ago> Why AUD and not SGD? Fair question. And in some circles people would substitute AUD for CHF, and SGD is essentially in the same position as CHF (small, stable, well-connected country). But AUD mostly because Australia is commodity-rich and so AUD has a naturally high exposure to international trade especially in Asia-Pacific region. Its a bit like CAD but the problem with CAD is its neighbour. ;)
- axus 9mo agoBitcoins, probably
- mywittyname 9mo agoTo the rest of the world - Nothing. Trade works just fine without a reserve currency. For the USA - massive inflation. All of those dollars are coming back home, which will weaken the dollar. Plus, there's the second-order effects from a president taking control of the fed by trumping up charges on its members. So high inflation + low/zero/negative interest rates.
- corimaith 9mo ago>And who takes its place? Anybody who can (EU, Yuan) does not want to. Primairly because as export based economies, they want a weak currency in relation to a strong reserve (dollar) so they can make their goods more competitive, and also because surplus naturally appreciates a currency without central bank intervention via buying US treasuries to offset the appreciation. And for China, they're not going to accept the liberalized capital controls neede for it either. So the answer is if the US dollars fail it would be global economic collapse and then chaos, but contrary to the rhetoric the rest of the world's economic systems are too uniquely vested in the USD to see it fail. As for gold, well we come to the same problem as noted above but worse, and in that situation the US actually holds the highest gold reserves so they still benefit the most out of it.
- jlarocco 9mo agoI wonder if there needs to be a single reserve currency any more. In the past it made things easier for everybody to use the same currency, but is that still the case with modern electronic transactions? Maybe it splinters into Euro, BRICS, and USD?
- kzrdude 9mo agoIt's easier if contracts run on the same currency I think, your suppliers price in USD, you sell your products in USD, it's easier for a whole supply chain that way. I can imagine that fracturing or switching to Euro for things like manufacturing and semiconductors.