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The international value of the dollar as a reserve and trade currency is inherently tied to the behavior of the US Government and the Federal Reserve. The beha
by snovymgodym 9mo ago
The international value of the dollar as a reserve and trade currency is inherently tied to the behavior of the US Government and the Federal Reserve.
The behavior of the US Government has been very unusual lately, and the independence of the Federal Reserve is actively being challenged.
So draw from that whatever conclusions you wish.
- mkoubaa 9mo ago[flagged]
- mothballed 9mo agoI don't know how you can say that about an institution that was formed by people using false identities on Jekyll Island and ramming it through congress as fast as possible because in their own words "if the people found out they would stop them" (paraphrased).
- Eji1700 9mo agoIt does have a strong economic reason to exist and be independent.
- lovich 9mo agoMy local town doesn't have a Constitutional right to exist or be independent either. This has very little to do with the price of tea in China. Parties outside of the US who don't give a fuck all about the Constitution are involved in keeping us as a reserve currency, and they care that the fed is independent. We have kept it so to keep the economy stable and to reap the benefits of that stability.
- RealityVoid 9mo agoOk? Trump doesn't have a constitutional right to do a bunch of crap but he's doing them anyway. This is the world we live in.
- twh270 9mo agoIt does exist, and it has been independent, and consequently global markets have priced that in. If that changes, markets will respond accordingly.
- mkoubaa 9mo agoThis much is understood.
- tencentshill 9mo agoTheir stability has worked to benefit a lot of rich and powerful people, so I would question the motives of this sect of billionaires who are trying to destabilize it. They must believe they can extract something from the ashes.
- blackoil 9mo agoAlmost Hanlon's razor. "Don't try to find logic in actions of monkey brain."
- thatguy0900 9mo agoLook at Russia. They just want to be the billionaires who can throw other billionaires out of windows for Crossing them.
- throwaway5752 9mo agoHolders of US debt have no obligation to give a shit about the statutory background of the Fed, and to just make decisions about who is the best fiduciary of their currency. If holders of US debt goes away, we have immediate inflation to the point where our currency hits trade equilibriums such that we can service our debt. All of your savings are worthless.
- stackghost 9mo ago>The federal reserve has no constitutional right to exist or be independent. Irrelevant. Actions have consequences, and the natural consequence of the actions of the US administration is that corporations and states that value stability are looking elsewhere than the US Dollar. Whether or not the Fed has a constitutional right to independence is irrelevant to this situation. If Americans want to cheer while Trump flushes nearly a century of soft power down the toilet that's their prerogative, but the trend of de-dollarization has already begun and it's unlikely to be reversed.
- softwaredoug 9mo agoWhile maybe true, the history of direct democratic control of monetary policy is not a pretty one.
- AnimalMuppet 9mo agoNeither is the history of control of the money supply by private financial institutions.
- sleepybrett 9mo agothe fed has been doing a pretty good job for the last 100+ years. I'm not a fan of the 'we'll let's just try it this other way, we haven't in awhile' argumentation.
- mitthrowaway2 9mo agoThat's true, but the US dollar also doesn't have a constitutional right to be the international reserve currency.
- tjwebbnorfolk 9mo agoAh yes, the "sovereign citizen" argument applied to the Fed. You've been wrong for 110 years -- I predict you will remain wrong.
- mathgradthrow 9mo agoSomething tells me you aren't exactly steelmanning your opponents here.
- Pet_Ant 9mo agoThis is a non-sequitor. Google has no constitutional right to exist or have accurate search results either. However, it's value depends on the quality of their search results. People outside the US don't care about the particulars of the US constitution like it's a holy document, but rather the US governance as a whole and whether it's well-ordered, lawful, and predictable.
- munk-a 9mo agoIt isn't prohibited by the constitution and was created as an independent body. You are correct that it wasn't specifically outlined by the constitution but that's an empty statement - the constitution included the allowance of the creation of agencies and laws outside of itself... that's the main power and strength of the constitution. Your statement was equivalent to saying that Hacker News has no constitutional right to exist - it is equally vapid.
- calvinmorrison 9mo agoMaybe unsaid but the idea that Congress can create an organization that is not executed by the executive is the issue
- shawabawa3 9mo agoIsn't that the entire point of congress? Otherwise why not just have an all powerful president and do away with the houses
- fatbird 9mo agoIt wasn't an issue for 250 years, or at least until the Unitary Executive Theory became a dream of the Federalist Society.
- SailorJerry 9mo agoI don't understand why you're being downvoted. This sounds like a reasonably debatable argument.
- thatguy0900 9mo agoAnd I sure Trump would be a great steward of our fiscal policy and wouldn't wildly throw the levers back and forth every Friday as his whims change
- FuckButtons 9mo agoIt has about 38 trillion reasons exist. if you want to see what national debt looks like for countries without an independent central bank, there are plenty of examples around the world and throughout history. I’m sure the Wikipedia page on failed states would be a good starting point.
- ezst 9mo agoWhat the other said about it being a non sequitur, adding on top of that "constitutional right" is no longer as strong a statement as you think it is considering the kangaroo court that is the SCOTUS nowadays.
- adamc 9mo agoIn many ways, this is the real problem.
- SecretDreams 9mo ago> The federal reserve has no constitutional right to exist or be independent. Do we suddenly care about the constitution again?
- collinmcnulty 9mo agoThat’s correct, Congress could pass a law removing its independence or eliminating it entirely whenever it so chooses. Until then, it’s independent because that’s how Congress created it using its powers under Article 1 of the Constitution.
- torlok 9mo ago[flagged]
- ambicapter 9mo agoI've been trying to read more about investing properly recently and this is such an annoying characteristic of most advice you read. Sometimes it's also "well, economic theory says this, and that doesn't follow the behavior of these markets, so decide for yourself".
- kingkawn 9mo agowhat unsupported gut-feeling conclusion would you prefer they reach for you?
- ambicapter 9mo agoSurely the issue here is all they've got is unsupported gut-feeling conclusions, not that I'm asking them to be useful?
- jonasdegendt 9mo agoI feel like we do generally brush, a little too easily, over the fact that economics is still a theoretical science, of which finance is subsequently the practical and technical implementation. Much like psychology, sometimes we turn out to be right about theories, sometimes we're not.
- NoboruWataya 9mo agoWhat else would you expect? If the person writing the advice knew how to reliably beat the market they would be doing that, not writing financial advice.
- deleted 9mo ago[deleted]
- chroma205 9mo ago> Are you a financial analyst by any chance, because the "here's a few facts, interpret how that's going to impact the market yourself" is very on-brand. What do you want him to say? 1. De-dollarization is all Trump’s fault Or 2. The world is reacting to Trump putting America first
- omgJustTest 9mo agoCurrencies fundamentally relate to some trust. I believe that the near-term de-dollarization isn't as much trust erosion as it is a tool to provide monetary penalty for behaving in unpredictable ways. However it will provide incentive to move away from the dollar in the long-term, ie as Fareed Zakaria says "recent actions are accelerating the world to the multipolar future".
- tigerlily 9mo agoMultipolar? So kind of like Europe before the beginning of World War 1, with major powers all competing with each other?
- Espressosaurus 9mo agoYes, though I expect there to be a European block, the US, and a Chinese block. Russia there as a wildcard. I doubt we see Germany in competition with Britain.
- kspacewalk2 9mo agoRussia firmly in that second tier along with better behaved peers that have brighter demographic futures and an actual economy, like India, Indonesia and Brazil.
- schmidtleonard 9mo ago
- softwaredoug 9mo agoIt’s not just that This is a gradual decline. From 70% in the 90s to 60% today. Today there are more options like the Euro that didn’t exist in the 90s. People can argue over EU economic stability, but it’s there as reasonable option.
- FrustratedMonky 9mo agowhen do we reach a tipping point for rapid decline? seems like once it starts falling, it would accelerate.
- plaidthunder 9mo agoThere's an excellent and eerily prescient novel that attempts to portray what such a "tipping point" might look like, and when it could arrive: https://en.wikipedia.org/wiki/The_Mandibles https://en.wikipedia.org/wiki/The_Mandibles
- jacquesm 9mo agoThere is a pretty good chance you're right on top of it.
- munk-a 9mo agoThere is a very sudden shift though - those options have existed but not generally been seriously considered. The US was seen as a bastion of stability and while sanctions could drastically impact a country's ability to trade due to the reliance on US currency exchange it has arguably been used relatively scarcely. The change is that suddenly the US isn't a bastion of stability and having an independent trading currency could ensure more internal stability for other nations.
- chrisco255 9mo agoThe U.S. is as stable as it gets. It has been one continuous republic and has 250 years of legal stability and a history of paying its debts. It has 4.2% GDP growth, with the largest economy in the world and growing.
- llmslave 9mo agodid you forget about all the money the fed printed during covid? fed independence is important, but literally irrelevant in the face of rampant money printing
- altcognito 9mo agoWhy did the fed raise interest rates? To soak up some of that cash. It was too slow, but this is exactly the sound money policy that everyone expects. You loosen cash (what you mistakenly call printing money), when you need investment, and tighten cash when inflation and risk taking is out of control.
- llmslave 9mo agoa sound response to some of the worst fed decision making in US history. they essentially ruined the housing market, priced out a generation of younger buyers, which is now crushing fertility rates, savings, and more
- spiderfarmer 9mo agoIt's almost like pandemics have consequences.
- pempem 9mo agoWas it them that did that or employers freezing wages and losing R&D credits/facing tarrifs / wild instability?
- DaSHacka 9mo agoWell, seeing is how that happened before the tariffs, yeah, I'd have to agree with GP.
- marssaxman 9mo agoStrict zoning ruined the housing market, and this is a multigenerational problem: https://www.sciencedirect.com/science/article/abs/pii/S009411902500049X https://www.sciencedirect.com/science/article/abs/pii/S00941...
- thehumanmeat 9mo agoThe Fed and largely US policy has absolutely no effect on the real reserve currency: https://en.wikipedia.org/wiki/Eurodollar https://en.wikipedia.org/wiki/Eurodollar
- m00dy 9mo agoFew people actually know how Eurodollar system works under the hood.
- imadierich 9mo ago[dead]
- alex7o 9mo agoDidn't know that was a real term Mike Pondsmith used for cyberpunk
- jjoonathan 9mo agoIt is, but he got the macroeconomics backwards so enjoying it on an aesthetic level rather than a mechanical level is still the right choice.
- deleted 9mo ago[deleted]
- mrcwinn 9mo agoThis is an article about multi-decade trends but you’re associating recent current events with the behavior. Consider reading the article.
- the_real_cher 9mo agoOur federal deficit interest rate is like 15% of government expenditures. The dollar being the reserve currency which leads to demand for the dollar keeps the dollar from deflating. But as people no longer demand the dollar because they don't want to support a imperialistic government what happens?
- Barrin92 9mo agoThe US would no longer be able to export the cost of its spending on other countries which is the so called 'extraordinary privilege' of running the world's reserve currency and the US population would feel the consequences of its out of control spending. Which is to say, that is a fairly traditional way of how empires go the way of the dodo. First losing their financial dominance, which loses them their international power, which then causes internal rupture.
- hopelite 9mo agoThat is true, but it also goes well beyond that. Much of the "US Gov't behavior" is largely related to trashing and panicked frantic moves because the consequences of its prior and long tailed actions over decades has now not only started bearing rotten fruit, but a previous strategy of world domination through "globalism" has also turned against those who control the Wizard of the USA from behind the curtain. On the face of it the Greenland situation makes no sense on a national security level regarding a non-existent, fabricated Chinese or Russian threat, nor related to the fantastical grift of the "Golden Dome" that is even more useless against what Russia has recently developed, than it was for things prior to about 3 years ago. What we are looking at here (you can tell your children that you heard it here first) is a strategic move to essentially take Canada and all of the NA continent, and eventually all of the Americas. Yes, Canada, you are indeed in danger as well as Mexico. I don't see how it could be any other way in the face of current developments; remember Trumps USMCA, i.e., a de facto North American Union? Biden stated that he wants the USA to have 300 million more "immigrants" before he let in about 15 million in 4 years. Annexing Canada is about 40M by the time we do it, Mexico would add another 150M plus however many people would flood into Mexico to become "Americans". That bring us to a total of around 550 million by the time the North American Union comes around. Perhaps if the UK joins, we will just call it Oceania already. It does not address the fact that China has 1.4 billion and India another 1.4 billion, but it puts us in contention, especially as Europe has about 700 million by that time if/when the EU absorbs most of Europe. That also doe not take into account the Wizard of the USA wanting to take over all of South America for positive control eventually… another ~480 million by that time, putting the American Union of Oceania at about 1 Billion, ±100M. These are real tabletop calculations and how things are seen at the top and discussed amidst cocktails.
- stuffn 9mo agoThis is quite obviously written by someone with no intelligence experience. > On the face of it the Greenland situation makes no sense on a national security level regarding a non-existent, fabricated Chinese or Russian threat, nor related to the fantastical grift of the "Golden Dome" that is even more useless against what Russia has recently developed, than it was for things prior to about 3 years ago. Power projection in the arctic is weak. Russia has made multiple tactical movements towards soft projection in the arctic. You have zero idea what submarines are on station. Taking greenland is arguably stupid, boosting it's defense to prevent a Russian incursion is not. > What we are looking at here (you can tell your children that you heard it here first) is a strategic move to essentially take Canada and all of the NA continent, and eventually all of the Americas. Yes, Canada, you are indeed in danger as well as Mexico. I don't see how it could be any other way in the face of current developments; remember Trumps USMCA, i.e., a de facto North American Union? No evidence. Unless you're arguing while NAFTA was around this was a way to create a "United America". > That also doe not take into account the Wizard of the USA wanting to take over all of South America for positive control eventually No evidence. Most think-tanks have recognized that maintaining positive control of south america would be disastrous. If anything, Maduro and his friends were probably happy the US decided to black bag him. It is well known that whoever was going to attempt control over Venezuela in particular was going to be responsible for spending the money to rebuild it. > These are real tabletop calculations and how things are seen at the top and discussed amidst cocktails No.
- nospice 9mo ago> The international value of the dollar as a reserve and trade currency is inherently tied to the behavior of the US Government and the Federal Reserve. I think this oversimplifies things. The dominance of the dollar emerged chiefly because most of the alternatives were worse, for a combination of military, political, and economic reasons. There is a positive feedback loop at the core of it, because the US economy benefits greatly from being able to issue foreign debt in their own currency. But that doesn't matter: as long as the US faces little risk of getting invaded by any of its neighbors or defaulting on its obligations, everyone is happy. What's been changing - and it started long before Trump - is that the US is also increasingly willing to use its control of USD (and thus the Western banking system) to pursue sometimes petty policy goals. This is giving many of our partners second thoughts, not because of the fundamentals of USD but because they imagine finding themselves at odds with the US policymakers at some point down the line.
- nonethewiser 9mo agoThey are related but I think the lack of de-dollarization already shows there are other, more raw mechanics that are operative. Namely, liquidity and lack of alternatives.
- onlyrealcuzzo 9mo ago> The behavior of the US Government has been very unusual lately, and the independence of the Federal Reserve is actively being challenged. This is mostly due to the behavior of the country being unusual. The US had grown at a healthy clip for a long time. Due to the amount of boomers exiting the workforce, and withdrawing rather than adding to their savings - the US is going to be in a very different position for the next 10-20 years before things start to level out. If something like AI doesn't save us with a pretty sizable productivity boost, we're in for uncharted territory.
- BatteryMountain 9mo agoThe bro's in the whitehouse is using their mouthpieces to create a volatile market, thus gaming the system with pump & dumps. They are stealing from everyone in a sense.
- jyounker 9mo agoThis is a pretty astute interpretation. Here's a write-up of Trump's grift so far: https://www.nytimes.com/interactive/2026/01/20/opinion/editorials/trump-wealth-crypto-graft.html https://www.nytimes.com/interactive/2026/01/20/opinion/edito...
- GoldenMonkey 9mo agoWhy is the independence of the Federal Reserve sacrosanct? For one, they should have oversight and they should have accountability. Not ever passing an audit of any kind. And the FED chairman spending $2.5B on renovations to an office complex. While misleading congress about the kinds of renovations. There should be less 'independence', if it means zero accountability.
- MattGaiser 9mo ago> Why is the independence of the Federal Reserve sacrosanct? Then the value of the USD is entirely at the whim of whoever is elected and should be priced accordingly.
- elAhmo 9mo agoI can't believe you are making an office complex renovation argument. FED has been instrumental is keeping the monetary policy sane in the recent years, unlike some pushes from the orange person you are taking talking points from.
- dhosek 9mo agoDo you realize that you’ve digested a whole bunch of misinformation uncritically?
- jazzyjackson 9mo agoIt's not sacrosanct, it's just a 14 year term for the Fed chair so that they don't give in to political pressure to be re-appointed.
- darkarmani 9mo ago> they should have oversight Congress provides oversight and accountability of the Fed. The GAO does audits as well. Frank-Dodd provides more windows into the Fed. Why did you think the Fed doesn't have oversight? > Not ever passing an audit of any kind It might have been hard for you to find because it is hidden under the "audit" page on their website: https://www.federalreserve.gov/regreform/audit.htm https://www.federalreserve.gov/regreform/audit.htm > Why is the independence of the Federal Reserve sacrosanct? It's never been completely independent. It's independent from short-term (4 years) political influence. It's audited and has congressional oversight and the President nominates people to the board. What else do you want? Interest rates set by Presidential tweets?
- bastardoperator 9mo agoUnusual? That's one way of putting it. I think unpredictable, erratic and criminal paint a more a realistic picture. The fact we're threatening Greenland is absolutely insane. If the goal of this administration is to destroy America, they're doing a fine job.
- azepoi 9mo agoIt's easier to cancel elections during à conflict
- TacticalCoder 9mo ago> So draw from that whatever conclusions you wish. Sure but replaced by what? The abysmal failure that the EUR is? Or a chinese currency? What other options are there besides either a Chinese currency or the EUR? Chinese. EUR. Seen these twho choices, everybody understands why the USD isn't anywhere near losing its dominance status.
- seasongs 9mo agoI love the complete lack of argumentations this comment has