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I'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 debas
by ahnick 2mo ago
I'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.
- ahnick 2mo agoIncorrect. It's always been a problem. Go back and look what has happened to the purchasing power of the dollar throughout the 1900s. If the dollar is losing purchasing power you can hedge that loss by buying Gold, commodities or cryptocurrencies. (Basically anything scarce) Also, there are no loans being taken out against the future wealth generation in crypto. That is entirely a fiat phenomenon. Call your Senator.
- upboundspiral 2mo agoWorld reserve currency was solved by Keynes and Joan Robinson in the 1940s. What you do is have a currency no country controls that acts purely for exchanging one national currency for another. Give it to the united nations or something. If you take a national currency and make it a world reserve currency then the nation that does do has problems with balance of trade, deficits, and mathematically screws themselves over. This is because you currency becomes overvalued compared to those of over countries, meaning your domestic manufacturing has problems competing, among other things. We already made the mistake of one national currency becoming the world currency post WW2. I hope its not a mistake the world chooses to repeat.
- ahnick 2mo agoThis is what cryptocurrencies do, but remove the need for an intermediary and codify the rules in software, so it is much harder (near impossible?) for politicians to manipulate the money supply.
- Gud 2mo agoWhy would there have to be a world reserve currency? Seems to me a basket of Euros, Yen and MAYBE US dollars is better than relying on the USD.
- matwood 2mo ago> but it is likely that the USD will lose reserve currency status To what though? Even if we accept the US and USD have issues, there is no other currency even close to be able to step in.
- cjs_ac 2mo agoTo all the other currencies that are currently used as reserve currencies, other than the US dollar. There has never been a single reserve currency in the world.
- mikewarot 2mo agoIt doesn't matter who/what gets it next, what's important is that we're about to take a 60-80% haircut on our standard of living. It's what happened to the British when the lost it with the Pound Sterling, and now it's our turn. Most people don't remember what hard money is, and why it's important.[1] [1] https://en.wikipedia.org/wiki/Hard_money_(policy) https://en.wikipedia.org/wiki/Hard_money_(policy)
- toomuchtodo 2mo agoTo Hedge or Not to Hedge? Lessons from History for US Equity Investors - https://www.msci.com/research-and-insights/blog-post/to-hedge-or-not-to-hedge-lessons-from-history-for-us-equity-investors https://www.msci.com/research-and-insights/blog-post/to-hedg... - October 3rd, 2025 The Depreciation of the Dollar - https://www.morganstanley.com/insights/articles/us-dollar-declines https://www.morganstanley.com/insights/articles/us-dollar-de... - August 6th, 2025 Key takeaways: * The value of the U.S. dollar against other currencies dropped about 11% in the first half of this year, the biggest decline in more than 50 years, ending a 15-year bull cycle. * Morgan Stanley Research estimates the U.S. currency could lose another 10% by the end of 2026. * Despite a recovery of 3.2% in July, the delayed impact of tariffs on growth and unemployment – besides policy uncertainties – are likely to keep negative pressure on the dollar. * Foreign investors have been adding hedges to their exposure to U.S. assets, which will likely further weaken the dollar.
- Ancalagon 2mo agowhere did you get the $114 Trillion figure? Doesnt surprise me at all that there is shadow debt beyond the ~$40 Trillion regularly advertised but I've never seen that figure.
- rationalist 2mo agoProbably unfunded liabilities, which are estimated to be somewhere between 80-200 trillion dollars.