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What happens if US becomes insolvent? Is USD going to be inflated? hyperinflated? Will other currencies appreciate or just devalue their own currency by the sam
by thelastgallon 2mo ago
What happens if US becomes insolvent? Is USD going to be inflated? hyperinflated? Will other currencies appreciate or just devalue their own currency by the same percentage to keep up the exports and continue to earn USD for oil?
- blahblaher 2mo agoThere is no way, unless by political choice, for the US to become insolvent, meaning, not paying it's "debt" in US dollars
- iAMkenough 2mo agoThere is a deliberate effort by the current administration to weaken the dollar. Given their track record and interest in other forms of currency, I could see them going too far.
- deleted 2mo ago[deleted]
- florkbork 2mo agoThere is no way (except for the way I just articulated)...
- atq2119 2mo ago[dead]
- 317070 2mo agoIf the US becomes insolvent, that would severely impact the USD. But other currencies will not try to follow the USD, there would be no point in that. The USD would just lose more status as an anchoring point. The US is also not a major oil exporter, so presumably most oil will trade for other currencies, rather than try to sell for an inflationary currency. In short, if the US becomes insolvent, the rest of the world will largely ignore what happens in the (at that point) 8th economy in the world, and mostly try to untie their economy from it.
- petcat 2mo ago> The US is also not a major oil exporter I believe this is wrong? USA is the largest oil producer in the world, and also one of the 5 largest oil exporters.
- GJim 2mo ago> and mostly try to untie their economy from it. That is already happening. The rest of the world is finding the likes of China to be more stable and predictable trading partners than the USA.
- mrngld 2mo agoAbsolutely no one serious thinks that, but when you feel like you need to diversify you don't have to find a like-for-like replacement. Any port in a storm. Just consult Google. All a country has to do to find itself on the receiving end of punishing Chinese trade actions is being mildly critical of China in the wrong way, and next thing they know their exporters to China report being held up for months. The EU has taken offense at how China kicks around smaller EU members, Australia has been on the receiving end of it more than once. If you'd said the EU might be seen as a relatively more stable trading partner, that may be true, the EU does seem to be fairly happy deindustrializing itself. Though it's fueling a rise in the fractured politics there too.
- alfiedotwtf 2mo agoAmerica will move to Trump Coin of course! /s
- api 2mo agoHe would legitimately try this. There’s no limit to the cartoonish narcissism. It’s absurd and would fail of course.
- Havoc 2mo agoNobody knows. There is no precedent for that happening in a post globalisation world. Think sht would get very real for everyone fast both inside and outside the US. Global economy can’t even deal with a ship stuck in the suez without wobbling…
- mikewarot 2mo ago>There is no precedent Sure, there's a precedent for what's happening, the Late Bronze Age collapse.[1] Instead of the Sea People, we've got rogue actors with drones. [1] https://en.wikipedia.org/wiki/Late_Bronze_Age_collapse https://en.wikipedia.org/wiki/Late_Bronze_Age_collapse
- ahnick 2mo agoI'll tell you what is going to happen, b/c it is happening as we speak. The U.S. Government is soft-defaulting on the debt by devaluing the currency. (The debasement rate is somewhere in the 7%-8% range) There will never be a real default, but it is likely that the USD will lose reserve currency status. The U.S. Government has $114+ Trillion in total debt. (Something like $325,000 per person in the US) We are never paying that off. The only way we can do anything about it is to grow the economy and devalue the debt via inflation.
- _ink_ 2mo agoBut who will take over world reserve currency status?
- ahnick 2mo agoIt will likely be a cryptocurrency or perhaps a basket of cryptocurrencies. You essentially want a way to store wealth directly on the Internet as it is the fastest and easiest way to reassign ownership of money or collateral. The nice benefit too, then is the U.S. (and no other country as well) is subject to the Triffin Dilemma.
- upboundspiral 2mo agocrypto is a solution in search of a problem.
- ahnick 2mo agocryptocurrencies solved the double-spend problem for digital currencies. There is no ongoing search. https://en.wikipedia.org/wiki/Double-spending https://en.wikipedia.org/wiki/Double-spending
- delfinom 2mo agoWhich was never really a problem before cryptocurrencies. Nor does it any way address the core issue we have with physical currency, taking out loans now, against future wealth generation, which is happening in the crypto space too.
- neilwilson 2mo agoThe US can’t become insolvent. Those who say it can are just hard of accounting. It’s scaremongering nonsense. All treasuries will be swapped back into dollars on maturity and interest settled
- Tangurena2 2mo ago> continue to earn USD for oil? Iraq started taking Euros for oil. Shortly after that, they were invaded. Venezuela started selling oil for Yuan. Shortly after that, their president was kidnapped by American troops. Iran is selling oil in Yuan. Shortly after that, American bombs started falling on them. There is a very strong incentive for oil producing nations to only accept USD.
- bluGill 2mo agoWhile the facts are not wrong, they are not compelling as a description of things that were building for years before the currency changes. Iraq/Venezuela were both collecting US ire for decades before the currency attempts. (Not supporting US actions on either - but currency was not a factor in what happened)
- ksbd-pls-finish 2mo agoDo American people ever wonder "are we the baddies"? If this is an accurate description, I think everyone would agree that this is a bully behaviour. And arguably evil and opposite to the "free market" it champions officially. In fact, is China or Russia involved in similar planet-scale military enforcement?
- Tangurena2 2mo ago> Do American people ever wonder "are we the baddies"? Any American who ponders this out loud is quickly silenced with "America! Love it or leave it!". https://en.wikipedia.org/wiki/Thought-terminating_clich%C3%A9 https://en.wikipedia.org/wiki/Thought-terminating_clich%C3%A...
- testing22321 2mo agoThe US is a very violent place. Founded by war, exists in part to feed the military industrial complex. The vast majority of Americans have no problem with exporting violence around the world if it means “America wins” and not the fear of muslims or socialism or all the other boogeymen.