3 ms·

Probably will mirror the experience Britain had once the pound lost its reserve status.

• XorNot 12y ago
  The US dollar isn't losing it's reserve status. What would replace it? The day the Chinese Yuan floats freely might be a small step in that direction, but then we've also got "able to exchange any world currency into it" and "China has a growth rate which is realistically maintainable". You don't get negative interest rates because people don't want to hold US dollars.
  • hga 12y ago
    I don't think it's axiomatic it's status can't end in, say, the medium term, or that it would be replaced per se. As a hypothetical, suppose the Federal government decided to liquidate its debts the Weimar Republic/Zimbabwe way. You are of course correct about the current situation, including the PRC; I interpret it as the US dollar being one of the "least worst" places to put your money. I'm of course looking beyond this period ... which still doesn't necessarily equal people not wanting to hold US dollars, as we saw in the '70s when things got quite ugly. I'm just implicitly pointing out there's a whole lot being built on the current reality of the Federal government being able to borrow essentially for free, and that I expect the latter to end, with bad consequences for the former.