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I feel like there's some credibility to 'this time it's different' The US economy depends on the country's position of world hegemon - the US dollar is the wor

I feel like there's some credibility to 'this time it's different' The US economy depends on the country's position of world hegemon - the US dollar is the world's main reserve currency, the US enforces international order and trade rules via its military strength, it dominates technology and culture through 'US defaultism'. I dont think AI even factors in to this. The US economy is priced for global reach - if it manages to lose that through a combination of credible competitors, and loss of goodwill - it's going to be in heaps of trouble. The looming US debt is also a great question - a lot of economists have argued that since most US debt is good. It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand. Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue. All said, I think if the US continues down the political path it currently seems to be pursuing, 'this time it's different' actually will be.

adventured 9mo ago
> The US economy depends on the country's position of world hegemon Your premise depends on that being true, and you stated that like it's a fact. It's an unsupported opinion. The US economy was the world's largest before 1890, without anything remotely resembling the global reserve currency or superpower military.
thuridas 9mo ago
You need US dollars because you have with US. Tarrifs hurt the need for dollars.
SllX 9mo ago
> Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue. Right now this is much more of a maybe, possibly, eventually, over a long enough time horizon. As of the end of 2025, USD still made up 57% of foreign reserves vs 20% for the Euro and 3% for the Chinese renminbi. Nearly all commodities are still priced in USD and about 50% of trade invoicing is done in dollars, closer to 60% if you exclude the Eurozone. USD also makes up about 60% of SWIFT transactions. So the demand is still there today and de-dollarization is not really a thing in aggregate as of January 2026, despite all of the events of the past year or so. So if this time is different, I’m not seeing it yet.
- maxglute 9mo ago
  >demand is still there today Not all demand the same. There are broadly 2 types of USD buyers 1. price insensitive: sovereign banks, who buys for liquidity/storage 2. price sensitive: hedge funds, private buyer who buys returns Type 1 buyers are bailing out of treasury. Type 1 are marginal buyers, the close auction regardless or rate, this keeps rates low -> debt servicing low. They artificially depress yield to non market rates, without them rate go up because you have more price sensitive buyers who buy for returns. This increases borrowing costs, hence US debt repayment rising massively. Type 1 buyers, i.e. US allies (and historically even adversaries) soaked up treasuries are now de-dollarizing / buying gold in lieu of _more_ USD. Type 1s underpin the "privilege" part of exorbitant privilege. The more they de-dollarize the more dollars become exorbitant, aka debt like everyone else. Type1, sovereign held 60% of USD to 40% in last 5 years. This large part of why interest tripled and debt servicing went from 350B to 1T in 5 years. Type1s exit to 20% in another 5 years and maybe interest goes to 5%, debt servicing 2T+. It's the difference between 10%/20%/30% debt servicing as % of federal revenue. This not to mention USD reserve ticking down at 1% per year means meaningful changes in our lifetimes, and velocity may increase with developments like Saudi no longer locking oil to dollar. Less USD as % of global reserve = more network effects of alternate payment = increased potential velocity of USD reserve drop. This doesn't mean other currencies pickup all slack, i.e. central banks seem to be going in gold / commodities with no counter party risk for new storage. The net result is USD will still be around, in large volumes, but the cost/debt to sustain the system will be "normalized" while US budget is historically is built around USD debt being privileged. AKA difference between borrowing money from family vs payday loans. >Nearly all commodities are still priced in USD PRICED as in benchmarked in USD, but =/= USD is being spent to settle them. There's a fuckload of commodities where PRC alone buys 30/40/50%+ of global production, and while quoted in USD, increasingly settled in rmb/CIPS, bilateral currencies, BRI infra or other swaps mechanisms that bypasses USD. This one of the largest source of dedollarization - PRC went from single digit % to plurality of cross-border settlements in RMB/non USD. Though this is just very recent leading indicator that USD is functionally circumventable.
  - cbdevidal 9mo ago
    There is another type of demand that I rarely see mentioned. Not only does the United States owe trillions of US dollars, other nations do, as well. They hold many trillions worth of loans denominated in US dollars. They must be repaid in US dollars and not in any other currency. And not just to the United States but to other nations, as well. South Africa owes US dollars to Australia, Australia owes US dollars to Brazil, Brazil owes US dollars to Argentina, etc. These nations are hungry for every dollar we print. Even if every trading partner dropped the dollar for trade tomorrow, and if everyone who owned Treasuries all sold them at once, there would still be demand for US dollars to repay their loans. The IMF made them an offer they couldn’t refuse, and spun a sticky web of a debt trap as a result. Three minute video: https://m.youtube.com/watch?v=_SaG9HVXMQg&pp=ygUQZG9sbGFyIG1pbGtzaGFrZQ%3D%3D https://m.youtube.com/watch?v=_SaG9HVXMQg&pp=ygUQZG9sbGFyIG1...
bayarearefugee 9mo ago
> 'this time it's different' I remember reading this a lot in 2000-2001 and 2007-2008 That said, overall I sort of agree with your assessment except for having any optimism that the US changes course. The current looming problems with the US economy are almost entirely unforced errors of the Trump administration (they could have done basically nothing and taken credit for the Biden soft landing and economic growth) but they aren't going to course correct. Trump has no ability to admit mistakes even to himself and he's now surrounded by lots of people who stand to enrich themselves from the chaos even as the average American is harmed greatly.
- JKCalhoun 9mo ago
  Still, he'll be gone one day and I am going to be all in on that day. It'll all be hockey-sticks from that moment on.
  - baby_souffle 9mo ago
    Trump, yes. The millions of people that voted for him multiple times despite no shortage of reports and credible allegations that he was a scumbag... Will not. Trump isn't the problem, he's a symptom.
    - datsci_est_2015 9mo ago
      The rest of the Republican Party is completely devoid of charisma, especially the kind that drew so many voters to Trump. There is no drop-in replacement. Lots of money will be spent trying to manufacture a replacement, though. That will be fun to watch. If you thought the last-minute rally around Kamala was tough to watch…
      - backpackviolet 9mo ago
        But what the republican party has, is a lot of isolationist voters who cannot be moved by appeals to markets or international trade. They don’t care about that stuff. Sure, the republicans will look hilarious trying to replace Trump for a while … but those Americans aren’t going anywhere and will gladly vote for the next Trump whenever they show up, same as they voted for Reagan and Bush II. The American attitude driving this current period is much deeper and wider than one man, and people thinking it will all go away when one old man steps down are going to be “surprised” when we’re dealing with this again in ten years or twenty years or three years.
fjordofnorway 9mo ago
> I dont think AI even factors in to this. I think another way to look at the expansion of the capitalist economy is the onboarding of people into entry day jobs and transitions of economies upward.. AI may have relatively little to do with the US' tantrums yet I think it has a lot to do with the end of expansion and a fast contraction of the availability of top jobs as the last economies enter the middle of the funnel can't be good.
leptons 9mo ago
Trump famously bankrupted 3 casinos. The US economy will be the 4th.
- ulfw 9mo ago
  He bankrupted 4 casinos. 2 in one swoop.
phkahler 9mo ago
The dollar is going down in value right now. Thats the plan. It makes foreign goods more expensive and exports more affordable to other countries. Meanwhile it should have less inflationary pressure on domestically produced stuff like housing. I dont know if this is going to work or collapse. If it does work IMO they still need to reduce the debt - current actions are because we are backed into a corner, so that needs to be corrected.
- laluser 9mo ago
  It also increases profits for multi-national US companies since they get paid in other currencies, which they then convert to dollars locally. Basically, they have favorable FX tailwinds.
- echelon 9mo ago
  The "Mar a Lago Accord" plan [1], for those curious. The US debt is one major rationale behind the strategy. It's a dangerous plan that relies on keeping allies happy and re-establishing hegemony via a Plaza Accords / Bretton Woods 2.0 type system. It's not going to work if you simultaneously piss all of the allies off. [1] https://www.youtube.com/watch?v=1ts5wJ6OfzA https://www.youtube.com/watch?v=1ts5wJ6OfzA by Money & Macro, which is a fantastic economics YouTube channel. Patrick Boyle has also spoken about this in pieces.
  - deleted 9mo ago
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- SmirkingRevenge 9mo ago
  Eh, it's not a plan, it's make believe. It's a flimsy back-filled rationale thrown on top the mercurial (and often sadistic) whims of an American Caligula, so the elite enablers can pretend there's something rational - or even good - about the chaos and destruction they are supporting. There isn't. It's just chaos and destruction.
  - tonetheman 9mo ago
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rayiner 9mo ago
> The US economy depends on the country's position of world hegemon Citation needed? This feels like a retcon. Remember that the U.S. became the biggest economy in the world in 1890: https://www.digitalhistory.uh.edu/disp_textbook.cfm?smtid=2&psid=3158 https://www.digitalhistory.uh.edu/disp_textbook.cfm?smtid=2&.... That was half a century before World War II and the military empire that followed.
- t-3 9mo ago
  The trillion dollars a year pumped into the military support the stock prices of quite a few highly-valued companies. A sudden collapse of hegemony would be bad for "the market", but that seems unlikely unless WW3 actually kicks off instead of a few more rounds of opportunistic snatching and bullying by the big countries, and in that case few people would care about the stock market.
  - rayiner 9mo ago
    That seems like an application of broken windows fallacy.
benSaiyen 9mo ago
Simple solution; raise taxes. Been saying that will be the outcome eventually as the olds continue to die and the youth feel zero obligation to senile pants shitters and corpses. GenZ fucking hates Boomers and a whole lot of GenX (that insurance CEO? GenX. Epipen price hiking CEO? GenX. Whole lot of tech CEOs of note? Yup, GenX) Generations beyond Z will never experience Boomers and 1900s American life. They won't care about an arbitrary line in the sand. GenX ain't getting any younger, won't have Boomer support. A reasonable scenario right now; rest of the world intentionally collaborates to isolate US, destabilize US, act as a forcing function for US to reassert internal control by swiftly deflating buying power of useless rich[1]. The world is sick of US CEOs who do little but jiggle values in spreadsheets. Sundar and many others have said CEOs are likely a very easy job to automate away; useless pageantry. There is rapidly growing domestic and overseas will to depose those non-contributors. Fastest way to stem the collapse of reality for 10s of millions of Americans with a lot of guns too. [1] Americans buying power has been deflated by 300% since 1980... I am sure it is purely coincidence Boomers have run the world for most of it.
- majormajor 9mo ago
  "Soak the rich" laws were passed around a hundred years ago in the US in response to obscene wealth; worked out pretty well for a long time before they got rolled back and we got a new round of oligarchs.
deleted 9mo ago
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YZF 9mo ago
This time is not different in the sense that at some point crazy valuations get a reality check. But that's not "the crash of the US economy", that's a stock market crash, and those will happen (tell me when - I'd also like to know) and they also tend to crash all around the world. The US economy has had ups and downs and I'm sure will still have but despite the wishful thinking of Marxists it's still the least worst economy around in perhaps the least worst country. It still attracts talent and money. It still leads in many areas. It's still very productive. There are huge ecosystems and a cultural base. It's still the world's largest economy. Where will the balance tilt? China? India? Anyways, be careful of what you wish for, if the power shifts to China we are going to have a very different world, and not in a good way. I don't think it's even in China's interest to see a large decline of the US, after all they're a big customer.
- junofan 9mo ago
  > I don't think it's even in China's interest to see a large decline of the US, after all they're a big customer. Yeah aren’t they just Leninist but using us as a signal of what to make? I thought rough shape of the scheme was you get to build a factory using free loans in bullshit money that buys rice and apartments but can’t leave the country, then use that to get real money you can take elsewhere by making shit Americans want to buy. You can’t trade the bullshit money for real money without the factory step.
nazcan 9mo ago
This is one thing I've heard repeated - that USD needs to be spent in America - seems like other countries could just transact with it directly.
- thaumasiotes 9mo ago
  They can and they do; that's called dollarization. It's worth observing that dollars that are never supposed to return to the US don't have the same anti-counterfeiting pressure that dollars spent in the US do. I don't know how much of a market there is in counterfeiting USD for dollarized economies.
  - etskinner 9mo ago
    This sounds hard to believe. Adding anti-counterfeit messures to the bills that have them ($10s and up?) can't be that expensive compared to the value of the note, why would they make two different versions? Not to mention, that would break fungibility. Can you provide a source?
    - thaumasiotes 9mo ago
      > Can you provide a source? A source... for what claim? What do you think I'm saying?
ActorNightly 9mo ago
Its standard Republican playbook. Get in power, enrich themselves, kick the can down the road to Democrats, then blame the Democrats for poor economy. This is why ironically Trump cancelling elections and installing himself as a 3d term president would actually be good. People need to see that no matter how bad they think things were under Democrats, it can get much much worse. Say goodbye to your house value and 401k plans for retirement, you gonna be a wage slave well into your 60s, but hey, at least we fixed "wokeness"
deleted 9mo ago
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BobbyJo 9mo ago
> It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand. Strangely enough, this is exactly the opposite of how it works. The dollars abroad tend to stay abroad, as either a more stable alternative to local currencies, or a reserve currency. Likewise, treasuries held abroad tend to stay there as reserves. This is how the US is able to run both a huge debt, and a huge trade deficit. If the dollars were being repatriated, the trade deficit would close, and the influx of money would cause hotter inflation. Same with treasuries, yields would spike as demand fell. There are lots of second order effects there, good and bad, but, basically, those dollars not coming home has funded America for quite some time.
- CraigJPerry 9mo ago
  I, a foreign entity, have sold something to an american and now have 10 dollars and zero treasuries. I purchase a treasury. I have zero product, zero dollars and one treasury. At some point in future i have zero product, maybe 12 dollars and zero treasuries. Presumably i now either repeat the cycle or use my winnings to spend on us output. GP’s version checks out, your assertion about dollars staying abroad doesnt track? What am i misunderstanding - How did these dollars get abroad, how did they repatriate to buy treasuries, how did a treasury become a reserve, how did the dollars still exist abroad after being exchanged for treasuries?
  - carbonguy 9mo ago
    > I, a foreign entity, have sold something to an american and now have 10 dollars and zero treasuries. Or you sold something to a non-American entity in a dollar-based market, eg. oil. The dollars do come from America to begin with, but once they get "out there" they work as a medium of exchange for whoever wants to use them for that purpose.
    - direwolf20 9mo ago
      Which is why the US historically bombed any country that sold oil for other currencies, but now china is negotiating the petroyuan and it's working.
willtemperley 9mo ago
De-dollarisation is happening, but slowly. China has decreased its US treasury holdings by about 7% a year over the last five years [1]. It won't happen quickly because no-one would want to tank the market while they're selling. [1] https://tradingeconomics.com/united-states/foreign-treasury-holdings-china https://tradingeconomics.com/united-states/foreign-treasury-...
fuckyah 9mo ago
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fsckboy 9mo ago
>The US economy depends on the country's position of world hegemon no it doesn't. it's much closer to "you need the best economy to be a hegemon"
oceanplexian 9mo ago
> The US economy depends on the country's position of world hegemon Unfortunately, the data doesn't back this up. The US economy is actually one of the least trade-dependent nations in the world. 27% of GDP is trade-oriented (The value of imports and exports as a function of GDP), while the global average is 63%. The US is so developed, that even if the country was completely cut off from the world and operated as an internal economy it would still remain the world's largest.
- AnthonyMouse 9mo ago
  That's mostly a result of you using percentages rather than dollars and the US being one of the largest countries. 27% of US GDP is 165% of Germany's GDP and Germany is the third largest economy in the world after the US and China.
- mndgs 9mo ago
  Nonsense. If 27% of GDP is suddenly gone, how US economy could be the largest? (rest of the world can substitute US trade between itself)
  - oceanplexian 9mo ago
    The US Economy is 53% larger than the next largest, China, in terms of real GDP (Not fake PPP nonsense). 28T vs 18T.
    - ben_w 9mo ago
      How is PPP "fake"? Nominal only matters specifically for trade, which in this hypothetical is the thing the USA is expressly failing to do.
    - anukin 9mo ago
      PPP is more relevant than gdp nominal.
- deleted 9mo ago
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baby 9mo ago
Can US debt be seen as equity? We mint equity from times to times, do buy backs, allow people to tokenize it to pay with it and so on...
raincole 9mo ago
> The looming US debt is also a great question - a lot of economists have argued that since most US debt is good. It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand. You got it wrong (I'm sure most economists don't get it wrong and you just misread/misquote). USD is the default reserve and settlement medium for many countries. They buy US treasuries mainly to satisfy the demand of USD itself, not to buy goods and services from the US. That's why the US has such a huge trade deficit. The US doesn't point a gunpoint at other countries to force them buy treasuries[0]. It can lend so much money because the other countries want treasuries. [0]: Ironically the US tends to do the opposite - forcing other countries to buy US goods and close trade gap.
- wahern 9mo ago
  He's not wrong in his conclusion, just not accurate in why. If countries start moving away from depending on the trade imbalance with the US, the demand for USD will dry up. And they are trying to move away from it because of politics, specifically because of US bullying. But more importantly, the US is increasing trade barriers in a naive attempt to reduce that trade imbalance, which is the biggest reason everybody holds so many dollars--they're paid in dollars when exporting to the US, but don't buy enough US imports (individually or collectively) to spend & exchange all those dollars, which is why they park them in treasuries and other US investments. And it won't be long before oil begins receding from the picture (at least relative to total global trade, if not absolute dollars), displaced by renewables. Though oil is odd in that while creating demand for USD to settle transactions even for non-US oil, it's also a significant US export and has the effect of repatriating dollars. The importance of USD globally was always on borrowed time. Global GDP has exploded in the 21st century, and the size of the US economy relative to the global economy is shrinking, albeit slowly. The US share of global GDP was like 35% in 1985. By 2030 it's projected to be as low as 12%. It doesn't necessarily follow that this would change the dynamic of strong dollar demand supporting US investments and debt, but it makes it much easier for this dynamic to change as countries become increasingly less reliant in relative terms on exporting to the US. In fact, it's kinda idiotic to rock this boat unless/until we're prepared for some serious fiscal belt tightening. As global GDP increases relative to the US, in theory the rest of the world could support profligate US debt in perpetuity.
jillesvangurp 9mo ago
Economic crashes are hard to predict. In the end stock markets are a bit irrational. They don't crash just because there are good rational reasons. And then some irrational thing triggers a mass panic when you least expected and the whole thing crashes. The circumstances and timing (it's been a while) suggest we are probably closer to a crash happening. From a loan/interest point of view, the dollar de-valuating a bit is actually not a bad thing for the US. It stimulates exports and inflation. And at the same time that reduces the value of the debt (and that is paid in dollars). The downside is that inflation going up usually also means interest going up. And Trump resisting that because he wants to accelerate the economy might not be a good thing. The big picture here is oil. The world is slowly moving away from oil as the key driver for economies and paying for it in dollars. China is well on its way electrifying large parts of its economy. To the point where it is starting to import less diesel. And they border on Russia with whom they trade in Yen, not dollars. A world that is going to trade less and less oil is going to be less dependent on dollars. I'm not an economist though. But planning for some kind of crash/correction seems prudent.
- pyrale 9mo ago
  > Economic crashes are hard to predict. Some of them are, some of them aren't. An economic crash is pretty much guaranteed if international relations break down in such a way that international partners believe trading with the US is a liability. Dollar going down won't stimulate exports if the cause for it was an aversion to buying US products in the first place. Whether or when that will happen, and to which extent, is another story, all we can say is that the momentum created by the current US administration moves us closer to that point. Will they come to their mind before that happen? Will they be able to restore trust? Will the lingering effect from the damage already done subside? These are hard questions.
- ezconnect 9mo ago
  The next crash will probably be a race for assets or hard assets for the people who can afford it. It means the stock market will reach all time high, gold all time high and land prices skyrocketing as people try to escape from the dollar currency. The US President will still be proud the economy is still good because the stock market is at all time high and the people are rich because their homes are at all time high valuation but the middle class can barely afford food because there are no available jobs that pays good enough.
dgellow 9mo ago
This time is already different. It's way past the point where the US is unfriendly towards the western world
cookiengineer 9mo ago
I wanted to add that since the last threat of Trump in Davos where he didn't even know the difference between Iceland and Greenland and accidentally threatened another sovereign country, almost all social insurances of EU countries have started to liquidate/sell their US bonds and assets. If that is not a red sign to BlackRock, then I don't know...
sandworm101 9mo ago
>> Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue. For those who want to return the US to the haydays of manufacturing, the days of cheap steel and people working in mills, a rock-bottom dollar is a necessary first step. To sell widgets, the US dollar needs to be low. And to get workers into low-wage mill jobs the population needs to be hungry.
eduction 9mo ago
> if the US continues down the political path it currently seems to be pursuing, 'this time it's different' actually will be You’ve set no time bound so what you say here is essentially irrefutable. It boils down to “on this path we will eventually have a big bust.” You’re right if it happens in 1 year or 30. You’ve also not defined the bounds of the path. Paths can weave. So essentially that part of it becomes meaningless because anyone can draw a line that starts with today. Tech has a long history of boom bust cycles. Some busts are much more mild than others. Some upend the whole economy for protracted periods. In reality no one knows when AI will bust and how bad it will be. Those are the key questions, not whether there will eventually be a tech (or broad) bust. Of course there will be if you’re looking out to infinity days from today. Most economic commentary is like this including the linked article: so poorly defined as to be low worth as even speculation.
b112 9mo ago
If the US debt gets to the point that interest on debt can't be paid, the US will just print enormous sums of money. Debt is in $, not in valued or devalued currency. Sure, the end result will be a deprecation of the dollar. But the interest will be paid. So the real downside to debt is not-overly apparent. Look at how much money was printed for COVID payments, and the like? And at other economic downturns? I do wonder, when will the merry-go-round stop?

adventured 9mo ago

> The US economy depends on the country's position of world hegemon Your premise depends on that being true, and you stated that like it's a fact. It's an unsupported opinion. The US economy was the world's largest before 1890, without anything remotely resembling the global reserve currency or superpower military.

thuridas 9mo ago

You need US dollars because you have with US. Tarrifs hurt the need for dollars.

SllX 9mo ago

> Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue. Right now this is much more of a maybe, possibly, eventually, over a long enough time horizon. As of the end of 2025, USD still made up 57% of foreign reserves vs 20% for the Euro and 3% for the Chinese renminbi. Nearly all commodities are still priced in USD and about 50% of trade invoicing is done in dollars, closer to 60% if you exclude the Eurozone. USD also makes up about 60% of SWIFT transactions. So the demand is still there today and de-dollarization is not really a thing in aggregate as of January 2026, despite all of the events of the past year or so. So if this time is different, I’m not seeing it yet.

maxglute 9mo ago
>demand is still there today Not all demand the same. There are broadly 2 types of USD buyers 1. price insensitive: sovereign banks, who buys for liquidity/storage 2. price sensitive: hedge funds, private buyer who buys returns Type 1 buyers are bailing out of treasury. Type 1 are marginal buyers, the close auction regardless or rate, this keeps rates low -> debt servicing low. They artificially depress yield to non market rates, without them rate go up because you have more price sensitive buyers who buy for returns. This increases borrowing costs, hence US debt repayment rising massively. Type 1 buyers, i.e. US allies (and historically even adversaries) soaked up treasuries are now de-dollarizing / buying gold in lieu of _more_ USD. Type 1s underpin the "privilege" part of exorbitant privilege. The more they de-dollarize the more dollars become exorbitant, aka debt like everyone else. Type1, sovereign held 60% of USD to 40% in last 5 years. This large part of why interest tripled and debt servicing went from 350B to 1T in 5 years. Type1s exit to 20% in another 5 years and maybe interest goes to 5%, debt servicing 2T+. It's the difference between 10%/20%/30% debt servicing as % of federal revenue. This not to mention USD reserve ticking down at 1% per year means meaningful changes in our lifetimes, and velocity may increase with developments like Saudi no longer locking oil to dollar. Less USD as % of global reserve = more network effects of alternate payment = increased potential velocity of USD reserve drop. This doesn't mean other currencies pickup all slack, i.e. central banks seem to be going in gold / commodities with no counter party risk for new storage. The net result is USD will still be around, in large volumes, but the cost/debt to sustain the system will be "normalized" while US budget is historically is built around USD debt being privileged. AKA difference between borrowing money from family vs payday loans. >Nearly all commodities are still priced in USD PRICED as in benchmarked in USD, but =/= USD is being spent to settle them. There's a fuckload of commodities where PRC alone buys 30/40/50%+ of global production, and while quoted in USD, increasingly settled in rmb/CIPS, bilateral currencies, BRI infra or other swaps mechanisms that bypasses USD. This one of the largest source of dedollarization - PRC went from single digit % to plurality of cross-border settlements in RMB/non USD. Though this is just very recent leading indicator that USD is functionally circumventable.
- cbdevidal 9mo ago
  There is another type of demand that I rarely see mentioned. Not only does the United States owe trillions of US dollars, other nations do, as well. They hold many trillions worth of loans denominated in US dollars. They must be repaid in US dollars and not in any other currency. And not just to the United States but to other nations, as well. South Africa owes US dollars to Australia, Australia owes US dollars to Brazil, Brazil owes US dollars to Argentina, etc. These nations are hungry for every dollar we print. Even if every trading partner dropped the dollar for trade tomorrow, and if everyone who owned Treasuries all sold them at once, there would still be demand for US dollars to repay their loans. The IMF made them an offer they couldn’t refuse, and spun a sticky web of a debt trap as a result. Three minute video: https://m.youtube.com/watch?v=_SaG9HVXMQg&pp=ygUQZG9sbGFyIG1pbGtzaGFrZQ%3D%3D https://m.youtube.com/watch?v=_SaG9HVXMQg&pp=ygUQZG9sbGFyIG1...

bayarearefugee 9mo ago

> 'this time it's different' I remember reading this a lot in 2000-2001 and 2007-2008 That said, overall I sort of agree with your assessment except for having any optimism that the US changes course. The current looming problems with the US economy are almost entirely unforced errors of the Trump administration (they could have done basically nothing and taken credit for the Biden soft landing and economic growth) but they aren't going to course correct. Trump has no ability to admit mistakes even to himself and he's now surrounded by lots of people who stand to enrich themselves from the chaos even as the average American is harmed greatly.

JKCalhoun 9mo ago
Still, he'll be gone one day and I am going to be all in on that day. It'll all be hockey-sticks from that moment on.
- baby_souffle 9mo ago
  Trump, yes. The millions of people that voted for him multiple times despite no shortage of reports and credible allegations that he was a scumbag... Will not. Trump isn't the problem, he's a symptom.
  - datsci_est_2015 9mo ago
    The rest of the Republican Party is completely devoid of charisma, especially the kind that drew so many voters to Trump. There is no drop-in replacement. Lots of money will be spent trying to manufacture a replacement, though. That will be fun to watch. If you thought the last-minute rally around Kamala was tough to watch…
    - backpackviolet 9mo ago
      But what the republican party has, is a lot of isolationist voters who cannot be moved by appeals to markets or international trade. They don’t care about that stuff. Sure, the republicans will look hilarious trying to replace Trump for a while … but those Americans aren’t going anywhere and will gladly vote for the next Trump whenever they show up, same as they voted for Reagan and Bush II. The American attitude driving this current period is much deeper and wider than one man, and people thinking it will all go away when one old man steps down are going to be “surprised” when we’re dealing with this again in ten years or twenty years or three years.

fjordofnorway 9mo ago

> I dont think AI even factors in to this. I think another way to look at the expansion of the capitalist economy is the onboarding of people into entry day jobs and transitions of economies upward.. AI may have relatively little to do with the US' tantrums yet I think it has a lot to do with the end of expansion and a fast contraction of the availability of top jobs as the last economies enter the middle of the funnel can't be good.

leptons 9mo ago

Trump famously bankrupted 3 casinos. The US economy will be the 4th.

ulfw 9mo ago
He bankrupted 4 casinos. 2 in one swoop.

phkahler 9mo ago

The dollar is going down in value right now. Thats the plan. It makes foreign goods more expensive and exports more affordable to other countries. Meanwhile it should have less inflationary pressure on domestically produced stuff like housing. I dont know if this is going to work or collapse. If it does work IMO they still need to reduce the debt - current actions are because we are backed into a corner, so that needs to be corrected.

laluser 9mo ago
It also increases profits for multi-national US companies since they get paid in other currencies, which they then convert to dollars locally. Basically, they have favorable FX tailwinds.
echelon 9mo ago
The "Mar a Lago Accord" plan [1], for those curious. The US debt is one major rationale behind the strategy. It's a dangerous plan that relies on keeping allies happy and re-establishing hegemony via a Plaza Accords / Bretton Woods 2.0 type system. It's not going to work if you simultaneously piss all of the allies off. [1] https://www.youtube.com/watch?v=1ts5wJ6OfzA https://www.youtube.com/watch?v=1ts5wJ6OfzA by Money & Macro, which is a fantastic economics YouTube channel. Patrick Boyle has also spoken about this in pieces.
- deleted 9mo ago
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SmirkingRevenge 9mo ago
Eh, it's not a plan, it's make believe. It's a flimsy back-filled rationale thrown on top the mercurial (and often sadistic) whims of an American Caligula, so the elite enablers can pretend there's something rational - or even good - about the chaos and destruction they are supporting. There isn't. It's just chaos and destruction.
- tonetheman 9mo ago
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rayiner 9mo ago

> The US economy depends on the country's position of world hegemon Citation needed? This feels like a retcon. Remember that the U.S. became the biggest economy in the world in 1890: https://www.digitalhistory.uh.edu/disp_textbook.cfm?smtid=2&psid=3158 https://www.digitalhistory.uh.edu/disp_textbook.cfm?smtid=2&.... That was half a century before World War II and the military empire that followed.

t-3 9mo ago
The trillion dollars a year pumped into the military support the stock prices of quite a few highly-valued companies. A sudden collapse of hegemony would be bad for "the market", but that seems unlikely unless WW3 actually kicks off instead of a few more rounds of opportunistic snatching and bullying by the big countries, and in that case few people would care about the stock market.
- rayiner 9mo ago
  That seems like an application of broken windows fallacy.

benSaiyen 9mo ago

Simple solution; raise taxes. Been saying that will be the outcome eventually as the olds continue to die and the youth feel zero obligation to senile pants shitters and corpses. GenZ fucking hates Boomers and a whole lot of GenX (that insurance CEO? GenX. Epipen price hiking CEO? GenX. Whole lot of tech CEOs of note? Yup, GenX) Generations beyond Z will never experience Boomers and 1900s American life. They won't care about an arbitrary line in the sand. GenX ain't getting any younger, won't have Boomer support. A reasonable scenario right now; rest of the world intentionally collaborates to isolate US, destabilize US, act as a forcing function for US to reassert internal control by swiftly deflating buying power of useless rich[1]. The world is sick of US CEOs who do little but jiggle values in spreadsheets. Sundar and many others have said CEOs are likely a very easy job to automate away; useless pageantry. There is rapidly growing domestic and overseas will to depose those non-contributors. Fastest way to stem the collapse of reality for 10s of millions of Americans with a lot of guns too. [1] Americans buying power has been deflated by 300% since 1980... I am sure it is purely coincidence Boomers have run the world for most of it.

majormajor 9mo ago
"Soak the rich" laws were passed around a hundred years ago in the US in response to obscene wealth; worked out pretty well for a long time before they got rolled back and we got a new round of oligarchs.

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YZF 9mo ago

This time is not different in the sense that at some point crazy valuations get a reality check. But that's not "the crash of the US economy", that's a stock market crash, and those will happen (tell me when - I'd also like to know) and they also tend to crash all around the world. The US economy has had ups and downs and I'm sure will still have but despite the wishful thinking of Marxists it's still the least worst economy around in perhaps the least worst country. It still attracts talent and money. It still leads in many areas. It's still very productive. There are huge ecosystems and a cultural base. It's still the world's largest economy. Where will the balance tilt? China? India? Anyways, be careful of what you wish for, if the power shifts to China we are going to have a very different world, and not in a good way. I don't think it's even in China's interest to see a large decline of the US, after all they're a big customer.

junofan 9mo ago
> I don't think it's even in China's interest to see a large decline of the US, after all they're a big customer. Yeah aren’t they just Leninist but using us as a signal of what to make? I thought rough shape of the scheme was you get to build a factory using free loans in bullshit money that buys rice and apartments but can’t leave the country, then use that to get real money you can take elsewhere by making shit Americans want to buy. You can’t trade the bullshit money for real money without the factory step.

nazcan 9mo ago

This is one thing I've heard repeated - that USD needs to be spent in America - seems like other countries could just transact with it directly.

thaumasiotes 9mo ago
They can and they do; that's called dollarization. It's worth observing that dollars that are never supposed to return to the US don't have the same anti-counterfeiting pressure that dollars spent in the US do. I don't know how much of a market there is in counterfeiting USD for dollarized economies.
- etskinner 9mo ago
  This sounds hard to believe. Adding anti-counterfeit messures to the bills that have them ($10s and up?) can't be that expensive compared to the value of the note, why would they make two different versions? Not to mention, that would break fungibility. Can you provide a source?
  - thaumasiotes 9mo ago
    > Can you provide a source? A source... for what claim? What do you think I'm saying?

ActorNightly 9mo ago

Its standard Republican playbook. Get in power, enrich themselves, kick the can down the road to Democrats, then blame the Democrats for poor economy. This is why ironically Trump cancelling elections and installing himself as a 3d term president would actually be good. People need to see that no matter how bad they think things were under Democrats, it can get much much worse. Say goodbye to your house value and 401k plans for retirement, you gonna be a wage slave well into your 60s, but hey, at least we fixed "wokeness"

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BobbyJo 9mo ago

> It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand. Strangely enough, this is exactly the opposite of how it works. The dollars abroad tend to stay abroad, as either a more stable alternative to local currencies, or a reserve currency. Likewise, treasuries held abroad tend to stay there as reserves. This is how the US is able to run both a huge debt, and a huge trade deficit. If the dollars were being repatriated, the trade deficit would close, and the influx of money would cause hotter inflation. Same with treasuries, yields would spike as demand fell. There are lots of second order effects there, good and bad, but, basically, those dollars not coming home has funded America for quite some time.

CraigJPerry 9mo ago
I, a foreign entity, have sold something to an american and now have 10 dollars and zero treasuries. I purchase a treasury. I have zero product, zero dollars and one treasury. At some point in future i have zero product, maybe 12 dollars and zero treasuries. Presumably i now either repeat the cycle or use my winnings to spend on us output. GP’s version checks out, your assertion about dollars staying abroad doesnt track? What am i misunderstanding - How did these dollars get abroad, how did they repatriate to buy treasuries, how did a treasury become a reserve, how did the dollars still exist abroad after being exchanged for treasuries?
- carbonguy 9mo ago
  > I, a foreign entity, have sold something to an american and now have 10 dollars and zero treasuries. Or you sold something to a non-American entity in a dollar-based market, eg. oil. The dollars do come from America to begin with, but once they get "out there" they work as a medium of exchange for whoever wants to use them for that purpose.
  - direwolf20 9mo ago
    Which is why the US historically bombed any country that sold oil for other currencies, but now china is negotiating the petroyuan and it's working.

willtemperley 9mo ago

De-dollarisation is happening, but slowly. China has decreased its US treasury holdings by about 7% a year over the last five years [1]. It won't happen quickly because no-one would want to tank the market while they're selling. [1] https://tradingeconomics.com/united-states/foreign-treasury-holdings-china https://tradingeconomics.com/united-states/foreign-treasury-...

fuckyah 9mo ago

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fsckboy 9mo ago

>The US economy depends on the country's position of world hegemon no it doesn't. it's much closer to "you need the best economy to be a hegemon"

oceanplexian 9mo ago

> The US economy depends on the country's position of world hegemon Unfortunately, the data doesn't back this up. The US economy is actually one of the least trade-dependent nations in the world. 27% of GDP is trade-oriented (The value of imports and exports as a function of GDP), while the global average is 63%. The US is so developed, that even if the country was completely cut off from the world and operated as an internal economy it would still remain the world's largest.

AnthonyMouse 9mo ago
That's mostly a result of you using percentages rather than dollars and the US being one of the largest countries. 27% of US GDP is 165% of Germany's GDP and Germany is the third largest economy in the world after the US and China.
mndgs 9mo ago
Nonsense. If 27% of GDP is suddenly gone, how US economy could be the largest? (rest of the world can substitute US trade between itself)
- oceanplexian 9mo ago
  The US Economy is 53% larger than the next largest, China, in terms of real GDP (Not fake PPP nonsense). 28T vs 18T.
  - ben_w 9mo ago
    How is PPP "fake"? Nominal only matters specifically for trade, which in this hypothetical is the thing the USA is expressly failing to do.
  - anukin 9mo ago
    PPP is more relevant than gdp nominal.
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baby 9mo ago

Can US debt be seen as equity? We mint equity from times to times, do buy backs, allow people to tokenize it to pay with it and so on...

raincole 9mo ago

> The looming US debt is also a great question - a lot of economists have argued that since most US debt is good. It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand. You got it wrong (I'm sure most economists don't get it wrong and you just misread/misquote). USD is the default reserve and settlement medium for many countries. They buy US treasuries mainly to satisfy the demand of USD itself, not to buy goods and services from the US. That's why the US has such a huge trade deficit. The US doesn't point a gunpoint at other countries to force them buy treasuries[0]. It can lend so much money because the other countries want treasuries. [0]: Ironically the US tends to do the opposite - forcing other countries to buy US goods and close trade gap.

wahern 9mo ago
He's not wrong in his conclusion, just not accurate in why. If countries start moving away from depending on the trade imbalance with the US, the demand for USD will dry up. And they are trying to move away from it because of politics, specifically because of US bullying. But more importantly, the US is increasing trade barriers in a naive attempt to reduce that trade imbalance, which is the biggest reason everybody holds so many dollars--they're paid in dollars when exporting to the US, but don't buy enough US imports (individually or collectively) to spend & exchange all those dollars, which is why they park them in treasuries and other US investments. And it won't be long before oil begins receding from the picture (at least relative to total global trade, if not absolute dollars), displaced by renewables. Though oil is odd in that while creating demand for USD to settle transactions even for non-US oil, it's also a significant US export and has the effect of repatriating dollars. The importance of USD globally was always on borrowed time. Global GDP has exploded in the 21st century, and the size of the US economy relative to the global economy is shrinking, albeit slowly. The US share of global GDP was like 35% in 1985. By 2030 it's projected to be as low as 12%. It doesn't necessarily follow that this would change the dynamic of strong dollar demand supporting US investments and debt, but it makes it much easier for this dynamic to change as countries become increasingly less reliant in relative terms on exporting to the US. In fact, it's kinda idiotic to rock this boat unless/until we're prepared for some serious fiscal belt tightening. As global GDP increases relative to the US, in theory the rest of the world could support profligate US debt in perpetuity.

jillesvangurp 9mo ago

Economic crashes are hard to predict. In the end stock markets are a bit irrational. They don't crash just because there are good rational reasons. And then some irrational thing triggers a mass panic when you least expected and the whole thing crashes. The circumstances and timing (it's been a while) suggest we are probably closer to a crash happening. From a loan/interest point of view, the dollar de-valuating a bit is actually not a bad thing for the US. It stimulates exports and inflation. And at the same time that reduces the value of the debt (and that is paid in dollars). The downside is that inflation going up usually also means interest going up. And Trump resisting that because he wants to accelerate the economy might not be a good thing. The big picture here is oil. The world is slowly moving away from oil as the key driver for economies and paying for it in dollars. China is well on its way electrifying large parts of its economy. To the point where it is starting to import less diesel. And they border on Russia with whom they trade in Yen, not dollars. A world that is going to trade less and less oil is going to be less dependent on dollars. I'm not an economist though. But planning for some kind of crash/correction seems prudent.

pyrale 9mo ago
> Economic crashes are hard to predict. Some of them are, some of them aren't. An economic crash is pretty much guaranteed if international relations break down in such a way that international partners believe trading with the US is a liability. Dollar going down won't stimulate exports if the cause for it was an aversion to buying US products in the first place. Whether or when that will happen, and to which extent, is another story, all we can say is that the momentum created by the current US administration moves us closer to that point. Will they come to their mind before that happen? Will they be able to restore trust? Will the lingering effect from the damage already done subside? These are hard questions.
ezconnect 9mo ago
The next crash will probably be a race for assets or hard assets for the people who can afford it. It means the stock market will reach all time high, gold all time high and land prices skyrocketing as people try to escape from the dollar currency. The US President will still be proud the economy is still good because the stock market is at all time high and the people are rich because their homes are at all time high valuation but the middle class can barely afford food because there are no available jobs that pays good enough.

dgellow 9mo ago

This time is already different. It's way past the point where the US is unfriendly towards the western world

cookiengineer 9mo ago

I wanted to add that since the last threat of Trump in Davos where he didn't even know the difference between Iceland and Greenland and accidentally threatened another sovereign country, almost all social insurances of EU countries have started to liquidate/sell their US bonds and assets. If that is not a red sign to BlackRock, then I don't know...

sandworm101 9mo ago

>> Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue. For those who want to return the US to the haydays of manufacturing, the days of cheap steel and people working in mills, a rock-bottom dollar is a necessary first step. To sell widgets, the US dollar needs to be low. And to get workers into low-wage mill jobs the population needs to be hungry.

eduction 9mo ago

> if the US continues down the political path it currently seems to be pursuing, 'this time it's different' actually will be You’ve set no time bound so what you say here is essentially irrefutable. It boils down to “on this path we will eventually have a big bust.” You’re right if it happens in 1 year or 30. You’ve also not defined the bounds of the path. Paths can weave. So essentially that part of it becomes meaningless because anyone can draw a line that starts with today. Tech has a long history of boom bust cycles. Some busts are much more mild than others. Some upend the whole economy for protracted periods. In reality no one knows when AI will bust and how bad it will be. Those are the key questions, not whether there will eventually be a tech (or broad) bust. Of course there will be if you’re looking out to infinity days from today. Most economic commentary is like this including the linked article: so poorly defined as to be low worth as even speculation.

b112 9mo ago

If the US debt gets to the point that interest on debt can't be paid, the US will just print enormous sums of money. Debt is in $, not in valued or devalued currency. Sure, the end result will be a deprecation of the dollar. But the interest will be paid. So the real downside to debt is not-overly apparent. Look at how much money was printed for COVID payments, and the like? And at other economic downturns? I do wonder, when will the merry-go-round stop?