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.
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
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".
How is that different from trust erosion?
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.
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.
Past returns are not indicative of future performance
Source?
I live in the US and I have lived in countries with 4-5 gdp growth
The problem is the AI bubble, without it it is speculated that the US economy might actually be in a recession [2] - effectively, that web of investments, deals, ownerships, purchase contracts and god knows what is nothing more than wash trading that will come crashing down hard.
That is why for the 99%, the economy doesn't "feel" like 4.3% of growth. If you're not in AI directly or at least adjacent (e.g. datacenter or utility construction), you don't feel any of that money.
[1] https://tradingeconomics.com/united-states/gdp-growth
[2] https://www.cnbc.com/2025/10/14/ai-infrastructure-boom-masks...
https://www.nbcnews.com/business/economy/us-economy-grew-thi...
It’s bad enough that America’s foreign policy lately swings wildly every four years. More recently, it’s been acting aggressive toward allies, and making very strange and unpredictable moves.
The USA’s tariff policies are, frankly, utterly insane. Yes, I do mean the tariffs are irrational and incoherent. The approach to the tariffs has been overly aggressive. They’ve been changing almost daily, at times. Now, tariffs are specifically a thing that must be stable and predictable on a multi-year horizon. This must be, at least, off-putting to other governments, and to any companies wishing to do business in or adjacent to the USA.
Monkeying with the Fed is dangerous and basically unprecedented. This is going to make people nervous because it marks the end of an era of stability in monetary policy. We may be at the start of a new era where interest rates, much like the tariffs, change frequently for bad reasons or for no reason at all. Who can say?
And THAT is the problem.
I can't see how, since the end of habeas corpus, you can claim legal stability.
Your leader is World renowned for reneging on debts and is demanding bribes for companies to operate.
Isn't borrowing through the roof to pay for things like your stasi?
Daily those stasi are murdering and disappearing people seemingly attempting to foment an excuse to escalate the violence.
I don't know how that knife edge can look anything like stable to you.
Additionally, we've now seen the EU survive the departure of a major economic power (the UK). More people are certainly willing to believe in the stability of the EU now.
Another major currency is the Yuan, and some countries may be as willing to trade in Yuan to improve relations with China, so perhaps we won't see one single reserve currency but two spheres of influence with most countries maintaining reserves of multiple currencies.
https://www.atlanticcouncil.org/blogs/econographics/what-to-...
Obviously that's extremely impractical and at best you're hiring a 3rd party to streamline that for you. It's a clusterfuck at tax time.
Retailers already dealing with capital gains and with high chargeback rates love it though. For instance, it's usually the cheapest same-day clearing way to buy precious metals online since credit card rates are high (chargeback), ACH takes days, and wires tend to cost $15+ with many banks.
It’s worthless money and I don’t see anything out of china that would cause that to change.
This is quickly going away[1].
[1] https://www.nortonrosefulbright.com/en/knowledge/publication...
The Chinese government spend a lot of money keeping the value of the RMB low.
A lot of growing economies don't/can't trust their local currency and they overwhelmingly use USD instead of EUR or CNY. As those economies grow the USD gets a boost that will sustain it for a while over the increasing competition of CNY. But this can't sustain it forever and the US is not doing anything to offset the lost ground in global trade and forex reserves.
I don’t really understand the impact of Brexit on the euro, as Britain wasn’t on it. But clearly they were a key part of the EU. It’ll be interesting to see which side regrets the move more.
In June 2025, 56% of people in Great Britain thought it was the wrong decision:
https://www.statista.com/statistics/987347/brexit-opinion-po...
It's hard to imagine this number would be going down after recent events like USA suddenly threatening arbitrary new tariffs on the UK.
It's not so clear when you consider that 48.1% of the original referendum voters wanted to stay in the EU. I'm honestly very surprised by this poll, 8% change is pretty minimal considering the turmoil the country has gone through since 2016.
How much of this can be explained by older voters dying in the intervening 10 years, I recall that demographic skewed much more heavily Leave in 2016
seems like once it starts falling, it would accelerate.
Venezuela? Hello?
Greenland?
fed independence is important, but literally irrelevant in the face of rampant money printing
https://www.sciencedirect.com/science/article/abs/pii/S00941...
this president is trying to money print during non-crisis, to ramp up economy to "20% GDP".
why downvote? Trump literally said he wants a GDP that goes to 20% or 100%. Shoot to the moon.
what would have been the correct actions in that situation?
really the government should tax in good times.
and
spend in bad times.
and be a counter weight to private sector
There was a surge and a pull back.
Post-COVID Tightening: After this historic surge, the Federal Reserve began "quantitative tightening" in 2022 to combat inflation, slowing M2 growth to near zero and eventually reversing it.
The M2 money supply went from 15.4b at the start of 2020 to a peak of 21.7b, before slightly reversing to 20.7b. Then they just continued printing. Now it currently stands at a record high of 22.2b. The dollar is more diluted than ever.
The government can print money and inject into the system. Some people have money so they continue to buy stuff but maybe at a slower pace or less amount. Things also can get expensive but it is not a total collapse.
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?
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.
> 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.
A direct link exists between a nation's status as the world's primary reserve currency and its tendency to run persistent trade deficits.
This relationship is often described by the Triffin Dilemma, a paradox where the global demand for the reserve currency necessitates that the issuing country consistently supplies the world with its currency, primarily through importing more than it exports.
It's like watching the fall of Rome.. on TV
I have about zero clue how finances really work but it looks to me as the statement is only true if the dollar is the predominant currency for international trade. This looks to be slowly changing for various reasons.
Well, not really, because obviously that deprecation via buying government treasuries is balanced by the appreciation in the other currencies. But if everybody (large enough to matter) dosen't want their currency to appreciate, if somebody buys Japanese bonds for example to weaken their own currency, then Japan will buy somebody else's treasuries to offset the increase in Yen, and if we go to the long chain of musical chairs of people offsetting each other's behaviours, it just leads back to the USA as the only ones both large enough and willing to take in those capital inflows.
That's not a interpretation mind you, that's a description of what central banks are doing right now. If that has to change, you need somebody willing to take the mantle of the absorber of global deficits, and nobody wants to do that.
So a 100bn deficit out of 800bn total US imports.
The deficit is there, but it's not nearly as lopsided as some reporting would have you believe.
I suspect there might be a lot of "de-dollarization" going on in realms that might not be easy to measure. To be specific: it is interesting that crypto-currencies have emerged as the currency of choice for illegal activities.
https://www.macrotrends.net/1380/gold-to-oil-ratio-historica...
Obviously, you can't drawn any hard conclusions, but I was wondering what the OP was thinking narratively when posting.
It’s doing to be interesting to see how this plays out as the producers and makers of the world unite, and the EU turns away from the US.
That's the party line & there have been some eye catching military exercises and statements to this effect, but daily life is still very much western aligned. It exports a ton of ore to china and imports a bunch of things from there certainly...but that's kinda just every country these days isn't it.
I mean, it sure looks like the goal.
If you've ever had the unfortunate opportunity to interact with your average CEO at a mid-level business it's the same thing but on a much smaller scale. They can't fail, only be failed.
And if you feel like something long (pdf): https://www.atlanticcouncil.org/wp-content/uploads/2025/05/A...
The US is making an absolute mockery over the honor and responsibility granted to in the post-WW2 world. It has sophisticated rivals that are predictably and effectively making use of the self-inflicted crisis. So far the ruling class of the US has been happy enough to let this go, and has been too busy making rocket ships, fake computer currencies, and large estates in south Florida to deal with real world problems.
If you are in the US, buy some gold or a house so your savings aren't destroyed - utterly predictably - by the man who declared Chapter 11 bankrupcy at least 6 times.
The US was a rather empire without many scruples before WW2 and after it. It engaged in genocide in Vietnam, and was complicit in several others, including the ongoing one in Gaza - which was sanctioned, funded and facilitated first and foremost by the Biden-Harris administration.
So, without detracting from Trump's crimes and jingoist rhetoric and action, his deviation from US foreign policy tradition is not as far as one might imagine.
Vietnam, Korea, Iraq, Gaza, and so many others are atrocities but they are well understood by anyone with a casual understanding of 20th century geopolitics.
Anything you could list is awful but still respected the norms and rules that exist between nation states. There is not a high bar for these things, but some people within a specific flavor of the Republican party reject these rules and norms. By a quirk of history they were able to gain power. I could describe this in more technical and impressive sounding language, but "FAFO, and we are in the find-out stage" goes by many names and is accurate.
JP Morgan see gold prices crossing $4,000/oz by Q2 2026
Also. Any attack to the independence of the federal reserve damages whee vale of the dollar
> "Your ‘little men,’ your Nazi friends, were not against National Socialism in principle. Men like me, who were, are the greater offenders, not because we knew better (that would be too much to say) but because we sensed better.
Those who act on behalf of evil are not free from guilt, of course. But the truly damned are those who sense better but look the other way. They walk in the footsteps of the millions who tacitly supported the last time this evil took hold of the world, by not acting.
This entire book, but especially this exerpt, is a must read: https://press.uchicago.edu/Misc/Chicago/511928.htm
Wow, seems on point.
Wow
"kept us so busy with continuous changes and ‘crises’ and so fascinated, yes, fascinated, by the machinations of the ‘national enemies,’ without and within, that we had no time to think about these dreadful things that were growing, little by little, all around us."
There is some probability that US global influence does significantly decline but I wouldn't hold my breath.
I would like for the US to continue being a beacon of freedom where people can come and build great lives.
But that is not the direction we are going, and one might reasonably forecast that no country can maintain indefinite dominance. Paul Kennedy wrote "The Rise and Fall of the Great Powers" almost 40 years ago. Regression to the mean and all that, but also, great powers tend to overstep.
Your first sentence says "not true". Your second sentence says "true".
Your dislike of the current US regime/behavior causes you to forcast the decline of US influence. I'm not saying you should like current US behavior, just that there isn't good evidence for any decline.
These things are hard to predict. The most likely situation is not decline: it is continuity, where the US retains its global influence for the time being.
Industrial scale warfare isn't some secret forgotten by accident.
The current American power-trip fantasy delusion is rightfully scaring the shit out of people, and the scary thing is the people who aren't scared.
It's reaching the point that I think the best thing is for Germany to detonate a nuke between the US and Greenland just to wake up the idiots who think it would be unreasonably difficult.
Given that the multipolar world is nigh, the only path forward is through. If America and her erstwhile allies are no longer aligned, then any attempt by America to repair this is doomed. Consequently, Trump’s approach is the only way forward.
It's the DoD.
Prior to Trump's actions, the American-led "world order" seemed to work, even if we couldn't get China to agree to a "Bretton Woods 2.0".
Biden tried diplomacy with the EU. He tried to get them to agree to a renewed US-led world order, but it wasn't working. The EU decided to play the US and China against each other to improve its own standing, which is why the US is now moving away from the EU.
I think the US could seriously pull out of NATO and leave the EU to fend off Russia by itself. It'll have to start spending enormous tax dollars on defense and war.
Meanwhile, if the world is truly becoming multi-polar, then the US wants to consolidate power in its own hemisphere. This is why there's all the rhetoric and action on Venezuela, Cuba, Greenland, Canada, etc. The US will keep Chinese ports, basing, and trade completely out and secure the trade routes for when the Arctic opens up. It recently changed control over the Panama Canal, and the DoD is dead serious about taking Greenland and maintaining complete hemispheric control.
With whatever energy the US has left, it will dedicate to Asia. It will strengthen alliances and project power there instead of dealing with Europe.
The world is going to be a much more violent place without hegemony. Free trade doesn't exist in that type of world. The US realizes this and is playing 50 years ahead. None of the nice words matter when the energy, trade, and economic lines are redrawn.
People like to say the US is led by lawyers and China is led by scientists and engineers. This is wrong. The US is led by war generals and intelligence. The career DoD folks are the ones impressing upon the administration to make these moves.
To be clear: I hate this. I loved the world I grew up in. I think we're headed for a violent world that could easily erupt into war. I don't like it.
This is sanewashig this whole thing. The fact is, the US is moving away from the EU because Trump doesn't like democracies. It's that simple. You have a large percentage of your population in what is essentially a cult and you have givem them the reigns.
This was being called back during the Biden admin and before Trump even ran again.
Back during the Obama admin, even!
https://www.atlanticcouncil.org/blogs/new-atlanticist/no-piv...
https://www.gisreportsonline.com/r/us-pivot-asia/
https://www.project-syndicate.org/commentary/europe-biggest-...
If the US can't build strong coalitions with Europe, it wants to spend its energy elsewhere.
Even pop-geopolitik wonk Peter Zeihan was pointing this out during Covid. I can't find his videos, but this has been top of mind for a lot of people for a very long time. These are anti-Trump people, too.
Multipolarity means instability, violence, fights over resources, fights over trade. Post-WWII was unusually (relatively) stable.
The US can turtle up, just like it did before WWII. It doesn't share a land border with any other major powers, unlike European and Asian countries. It commands the two oceans on its sides (and soon Arctic), and doesn't need anyone else - this was the US' defense posture since its founding.
But, anyway, good luck. You'll need it.
These are military decisions. These are 50-year plans.
Here I was 10 months ago and two years ago saying the same thing:
Can you elaborate on that? It seems to me it "wasn't working" mostly in the sense that Trump got elected again.
> The EU decided to play the US and China against each other to improve its own standing, which is why the US is now moving away from the EU.
Seems like confusing cause and effect. The EU is drifting away from the US towards China because the US pushed them away.
> The world is going to be a much more violent place without hegemony. Free trade doesn't exist in that type of world. The US realizes this and is playing 50 years ahead. None of the nice words matter when the energy, trade, and economic lines are redrawn.
This is happening largely because of the US, although they stand to lose by replacing a world order that benefits them with a world order that benefits China and Russia. Well maybe the US will become sufficiently like China and Russia that they can benefit too. But even with a gradual loss of hegemony there was nothing inevitable about a transition to the law of the jungle and it's doubtful that the net result will be positive for the US.
> People like to say the US is led by lawyers and China is led by scientists and engineers. This is wrong. The US is led by war generals and intelligence.
I think the relevant distinction is that the US is democratic while China is authoritarian. But the current US government wants to be authoritarian.
> The career DoD folks are the ones impressing upon the administration to make these moves.
Again a reversal of cause and effect? I doubt old career DoD folks like the current developments. But the current government might give a bigger role to the war generals.
How so? What actions did the EU take?
You don't think the declaration of himself as dictator and the immediate threats against EU allies might have changed EU attitudes at all?
What makes us think this is possible?
It may not be possible for a nuclear powered empire to fall without the death of billions.
Mankind is in uncharted territory.
Even Russia never fully fell after the USSR collapsed. Whoever kept the nuclear weapons continued to be a first tier power.
Nothing in human history compares to the present question of how the current empires fall. And if they can even do so safely.
It is an egregious violation of the Constitution, which specifically says that only Congress can impose taxes.
Ahistorical BS, I am sorry. As if Trump is a radical departure of NORMS. Euros were chanting HO HO HO CHI MIN in 1968 in the streets of Berlin and Paris.
There is a long tradition of anti-American feelings outside the US, like with any hegemon.
The global left had to build walls to keep their people IN, crush them with tanks, from Prague to Berlin to Beijing. So there is that.
HN turning so left is weird to watch, I guess a reflection of PG's stances and moderation/group votes. Well, money does not give a fig.
if you don't think Trump is a departure from norms you aren't paying enough attention
We're not going to debate the measuring stick when the stick itself is incapable of measuring the outcome.
In none of those scenarios provided did a sitting US president come close to insinuating acquisition of land by "hook or crook" - either agree with us or we take it.
The closest modern discussion that comes to mind is the PRC saying they could militarily "walk in and take the whole this afternoon" in regard to Hong Kong.
Thatcher, for all her wrongs, provided a salient response:
"There is nothing I could do to stop you, but the eyes of the world would now know what China is like."
The US has shown the world what we're like with the current administration.
Invading ones allies has been treacherous for millenia. If you want to be pedantic, you can say the U.S. President is openly threatening treachery, and showing as part of his character an affinity for it.
However, the US is more of a "killer" nowadays. The "killer" is usually more efficient than the "giver", because people value their life more than their wallet. So that's why I think she still has some time left. I don't blame it on Trump though. Being a "giver" is a lot more trouble than being a "killer", and I think the US elites gradually rolled back from the role of "giver" since many years ago. Trump is just here to remind other states that the US can and will be a very efficient killer.
And this is probably the most dangerous time for other states because she cannot afford to lose.
We were on metal standards for millenia. Governments routinely spent beyond their means, including for imperial aims. This is like four centuries of Roman history.
Maybe, maybe not. We're currently the Soviet Union in the 1970s. Gerontocratic. Sclerotic. Hyped up on a new mythology. And economically uncompetitive on several levels, with the future (then computers, now elecrification) sweeping past us to our applause.
Unlike the Soviets, however, we can see it happening and debate it. If '26 and '28 change course, the damage will still be done. But the America Empire is still young. And Trump's stupidest policies–the tariffs, fighting the Fed, Greenland and raising a Gestapo–don't have the support of most Americans. That leaves hope for reform through electoral pressure.
It will take work. But it's as incorrect to assume indefinite American hegemony as it is to preëmptively concede the game.
Now look at the gold chart over this past year. Yeah, people are uneasy and we're likely to see a lot of printing.
After the nonsense with Greenland no one really wants to give anymore financial power to the US so we'll see more assets kept in local currency or different reserves currencies like the Euro, Yen, Sterling, or ChF.
What would replace it? I guess the options are Yuan, Gold, Oil or maybe BRICS in the future, none of which are safe, stable, and liquid.
The dollar isn't indestructible. If not the Euro, what?
- easy to verify/impossible to forge (as opposed to gold and paper currency)
- fixed supply (as opposed to paper currency, oil, and even gold)
- easy to transfer from one party to another (as opposed to gold, oil, and physical cash)
At that point just hoard resources. Holding a bunch of Bitcoin in a crisis is useless for a country if no other country will buy them off you in exchange for tradeable hard currency.
"Let me just set up my P2P connection to the Bitcoin network and pay mining fees and hope a miner validates the block"
vs
"Here's a bar of gold mate"
Sure, real easy
Yeah, super convenient. Well worth it. I'll just go with gold bars on me to the market to buy lettuce.
By it sure does sound simpler to type some numbers that to cut up pieces of metal.
The euro is difficult to manage because of the diffuse control, pound an even smaller economy, RMB just not global enough (and tough argument to see that happening), gold/bitcoin/whatever not the same inherent stability.
Indeed the dollar weakening, but nothing really to take it's place.
It is entirely possible to manage funds in crypto for growth and move some amount into more liquid USD denominated assets or MMFs when you need liquidity.
It is so obvious in the context of globalization: countries seeking power will chip away at fiscal dominance of others with a thousand cuts. Why wouldn't they? Especially after years of getting bullied.
So many people are so dependent on this reality that I think it's going to happen long before any Americans accept it has happened.
And since the wealth effect is really the only thing keeping the US out of a recession, if the MAG7 fail then we’re looking at serious economic problems.
1 - https://www.reddit.com/r/economy/comments/1o2s6qp/yuan_has_s...
2 - https://www.economist.com/china/2025/09/10/china-is-ditching... ( https://archive.is/aNRmm )
3 - https://www.amazon.com/dp/B006JAM3UU/ "Currency Wars" by James Rickards (2011)
[4] - https://www.macrotrends.net/1437/sp500-to-gold-ratio-chart
"Define real money"
I think everyone can agree if you specify your definition.
https://chatgpt.com/share/696fb3e8-91d4-800a-9b2b-32eacdadeb...
Times they are a-changing.
I can't say that anyone is going to find that very convincing, even if it's a compelling idea to consider gold inflation over the centuries.
https://www.macrotrends.net/1437/sp500-to-gold-ratio-chart
Makes it look like the US peaked at Sep 2000 and has been downhill ever since. Doesn't track at all with GDP which has almost doubled since 2000. I.e. it doesn't track with growth, but does track with dollar index somewhat, which makes sense because it's tracking a dollar value intermediate when considering "how much gold it takes to buy S&P 500", which means it really ends up tracking something else entirely.
> Compared to real money (Gold) the S&P500 is down over the past 10 years. [4]
Isn't this the real chart to look at for that? Completely different story when you select max on the timeline.
https://www.perplexity.ai/finance/%5EGSPC?comparing=GCUSD
Personally I am about $10M USD poorer for listening to people on the internet. I wish people would not spread falsities about finance that can actually ruin lives. (Albeit to be fair, the trend is towards conservative advice...my life was uniquely affected in terms of limiting upside, so I am at least grateful that most online posts work very hard to limit downside.)
Also the US capital market is huge. Surprisingly huge, even, and there is very little that can change that for the foreseeable future.
It's a very different thing to trust that China will maintain the value of its currency, than to trust that investment in Chinese companies will remain liquid and not be arbitrarily cut to a price of zero.
I'm not saying you're wrong, but I also don't fully understand the need to have grander access to capital markets. Perhaps access to the equivalent of US Treasury auctions?
That's why do many Chinese people buy assets in the Anglo world; assets are much better protected here
If China signals that it is changing its attitude on its currency, that it wants to be the reserve currency and establish a consumer economy, it wouldn't take much for people to shift these days. Nobody needs to adopt the Renminbi 100% right away, they can transition to multiple currencies for a while as a hedge against the US, and the situation will evolve. Dedollarization won't happen in a month or a year, it will be a multi-year process once it kicks off. But once it kicks off, it will be because of such a loss of confidence in the US that it probably won't be possible to stop it.
Well if you use the renminbi or yuan as just a medium of exchange, well, why bother when you already have the dollar?
To answer your question better, what is the point of access to capital markets of a country and how does that stabilize or strengthen its currency, or make it more highly sought after?
> when the dollar is propped up precisely on the good will
The dollar isn't valuable because of good will. Central banks in Europe, or Japan, or elsewhere don't hold dollars because they want to be nice to the United States. They hold them because the United States is incredibly wealthy, has incredibly deep capital markets, high liquidity, and because the dollar is a great medium of exchange.
The constant devaluation makes it unappealing.
> My current hypothesis is that the growth in the _price_ of the US Stock market (eg S&P 500) is actually devaluation of the dollar.
I generally agree. But economic orthodoxy says 'Inflation is only 2%', despite precovid, it seemed more like 4%.
If this is the complaint the dollar is safe. And international holders of dollars aren't idiots. They hold Treasuries, which more or less preserve their purchasing power. (Nobody outside the poor, who have to, and nutters, who don't know better, hold cash as an asset. It's so thoroughly assumed that in finance, cash refers to cash and cash equivalents.)
There's such large fluctuations though, especially compared to the S&P 500 in USD [5] or even TFA's USD shares of FX reserves.
[5] https://www.macrotrends.net/2324/sp-500-historical-chart-dat...
USD dominance isn't going anywhere despite hurt feelings over Trump or US policies.
Obama started a process, Biden and Trump are in lockstep. They've reduced this issue by about 1/3rd by 2024. Trumps' tariffs are almost certainly going to be upheld by the supreme court.
This has led to a reshoring boom and trillions of new investment in the usa. Estimates seem to suggest only a marginal improvement of about 3%, so roughly another 20% improvement.
But fixing the very broken trade balances for the USA has long term benefit but it will result in a strong USD, but weaker reserve currency. Obviously the USA is rapidly moving away from bretton woods and being the world police.
They will drop below 50%, but nobody else is there to pick up the reserve currency crown. They get all the benefits of seignoiorage and very little of the downsides for decades.
Their dominance is over but they clearly saw that the cost-benefit was not worth continuing into the future.
Meanwhile, since they stop being the world police and reshored the important things. They dont care about the stability of global trade. Instead their super carrier groups will move to poke their nose only in their own business. You're going to see a fast shift from the usa being hated to being loved over the next 10-20 years.
It's time.
Who is so stupid, racist and ignorant shouldn't be the world leader.
At this point we have the EU with the dollar and values and real freedom and don't forget the Chinese.
They might control there people and also do other shitty things but they are at least doing this for their people
The chance of the dollar losing its reserve currency status is slim-to-none. No matter how bizarre the US is, nobody trusts the Chinese Communist Party (CPP). And although the US can manipulate the value of the dollar, its tools are limited compared to the CPP.
Plus, the US is still the only country that's willing and able to prop up the world financial system with no immediate benefit (see Argentina). The US can and will intervene when necessary. And as history has shown, the Euro Zone can't really make decisions quickly and effectively. How many times has the Euro been on the verge of collapse in the last 20 years? And is proximity to Russia is, well, risky.
In any case there is no currency big enough to take the dollar's spot at this point in time. Trillions of dollars flow through the financial system every day.
Also, manufacturing in the US is growing not shrinking. For a long time.
Well, at least up to 2024...
I think when people run the next number, there will be a surprise there.
The US has been playing a currency game since 1980 to make up for the loss of the free money it got for reconstructing Europe and Japan, and using that money to buy things from impoverished workers in China. And as China got on its feet through careful planning and management, it moved to India, Pakistan, Mexico, Indonesia, the Philippines, anywhere that was willing to stomp on its workers and pollute its air and water.
Now China has gotten to the point that it is a viable alternative to the US, so the US can't unilaterally set terms anymore for its suppliers. It's dumping US treasuries. It's competing for natural resources in countries that the US just tried to topple and steal their natural resources through sieges that ironically served to cut the US's legs from under them, giving China a huge discount. The game is up.
China going from nowhere to the greatest economy on the planet in 50 years is what happens when you manage and cultivate manufacturing. US real estate and an economy run on luxury consumption is what you get when you outsource manufacturing and play word games to cover it up. We literally can't tariff China significantly, they could crush our economy just by embargoing us like we freely embargo everyone else. That's the power of a manufacturing base. We might want to fix our bridges, too.
If you cannot see this, or cannot believe it, you should probably check if you are in a ideological bubble.
Is the world going to de-dollarize though? Probably not, shy of an EU independence, which is about as likely as Europeans adopting an American work culture. Although, I won't rule out the possibility of the EU moving it's eggs to China's basket either. What a world that would be, a Sino-Euro axis and an North American axis. Whew
It has nothing really to do with populism. It's the US's only rational option. You can't just run trade deficits forever, no matter what the people who make money from trade deficits tell you. A parasite that gets so big that it disables the host is a dead parasite.
People act like this is the how the US always worked. We just started this with Reagan, and every moment since then has seen the rise of finance, the victory of unproductive capital and speculation, and the decline in domestic manufacturing and standard of living that you would expect.
There's never been a moment where there's been anything to point at for a finance capitalist to feel vindicated that his success would lead to the US's greater good, so he resorts to claiming that it is simply impossible to be any other way. At best this is sunk cost fallacy, but at worst, it's just propagandistic gaslighting from a bunch of people who don't have any connection or loyalty to anyone in the US, don't care when it's people suffer, don't care how its children will live, and will just leave if their houses start to feel insecure. There's your populism.
I agree with your assessment, but Europe is in unique trouble that the rest of the world has no need to relate to. The US will simply have Europeans jailed or killed who steer Europe counter to US interests. Right now the US is on a slow road to peace with Russia, while trying to cultivate and maximize European animosity and estrangement from Russia. The world in which the US is mocked in Europe by NATO (a device to carry out US interests) for trying to appease Russia is a world that no one but a realist could have predicted.
Everybody else will de-dollarize, and the US will threaten Europe and the UK with tariffs if they don't peg the Euro and pound to the dollar. The US will be trading freely with Russia and China, while sanctioning Europeans for buying energy from Russia and bribing European governments to harass Chinese companies.
Understand this and you'll avoid falling into various traps and conspiracy theories. For example, there are people who believe that the US invasion of Iraq was caused by Iraq wanting to sell oil in euros instead of dollars.
This is a nonsen theory because every oil transaction could be denominated in euros tomorrow and it wouldn't change anything. The same demand for US dollars would still exist so people would simply convert to euros, buy oil then convert back.
This same understanding debunks the "threat" of a BRICS alliance.
The real problem, if you can call it that, is we have an administration who is both incredibly inept AND intent on destroying the post-WW2 world order. Wealth inequality is getting so bad and the deficit is so bad. Worse, nobody expects either to improve anytime soon. I'm not saying the budget needs to be in balance. It doesn't. A country doesn't work like a business when you can print your own money. But at some point, crippling public debt (in terms of GDP) will devalue the dollar.
Put another way: the illusion of "safety" is at risk. It's just a question of when the vibes shift.
• Despite a smaller share of global trade and output, the dollar still dominates in transactions like trade invoicing.
• Dedollarization is advancing in central bank reserves, with USD share at a two decade low.
• Foreign ownership of US Treasuries has declined for 15 years, signaling reduced external reliance on the dollar.
• The shift is most visible in commodities, where an increasing share of energy is priced in non USD contracts.
It should go without saying that this would be shortsighted - China made it work because they were able to take advantage of a strong international market denominated in USD. The US cannot destroy our own common market and currency and expect to take advantage of it.
Furthermore, we know what a de-dollarized world looks like - imperialism. If you need to secure oil/mineral/food for your economy but you need expensive foreign currencies to acquire it, it suddenly becomes much more economically appealing to take the resources.
The U.S. is a net exporter of oil and food and self-sufficent for majority of its mineral needs as well.
There is no need for U.S. to crash its currency to incentivize domestic production, it can just impose tariffs on imports to do so.
Trump is actively fighting the federal reserve to drop the interest rate to 0%. Members of his team regularly do interviews where they say "it's going to get worse before it gets better". Inflation is being held down despite this administration's best efforts.
> The U.S. is a net exporter of oil and food and self-sufficent for majority of its mineral needs as well.
And has been for a while. But the current conservative rhetoric is specifically about bringing manufacturing jobs back.
> There is no need for U.S. to crash its currency to incentivize domestic production, it can just impose tariffs on imports to do so.
I don't think autarky is this administration's only stated goal. They specifically see an export-led economy as being more important or even "legitimate" and are pushing for other countries to import our goods. Devaluing currency is a strong way to incentivize exports and China's currency manipulations were the key to their rise as a manufacturing power.
This is how you grow a sclerotic, internationally-uncompetitive domestic industry. See: shipbuilding.
Where tariffs work is as a nursery policy. Give firms a safe haven to grow in. Then let competition hone them. South Korea has pioneered this playbook; China copied it. We were sort of doing it, but the current administration blew up our nascent new energy industry.
Is this some kind of joke? Or is it only imperialism when other countries besides the US do it?
The two are very linked - the tacit agreement of the postwar order was for America to use its might to expand a common market on behalf of the shared benefit of NATO members. But the collapse of today's "American empire" does not mean the end of empires. If anything, the opposite: instead of one common international market, we will return to a 19th century scramble for land.
Actual answer? In global real estate. So… they don’t or “it’s complicated”.
Trouble will really come when the US tries to get out of its ridiculous debt trap. What will they do, wave a wand and their debt goes away?
Losing the dollar as a reserve currency is losing the empire.
[0] - https://www.youtube.com/watch?v=pT2cohNt6a4 [1] - https://www.youtube.com/watch?v=P2b4TjQa4gk
Would they implement capital flight controls? if you invest in the US, can you get your money out? No one knows but it seems increasingly less likely. Red lines are being crossed weekly.
The country is heading towards a decline into a developing world style authoritarian dictatorship.
Contrary to popular opinion, IMO PRC doesn't want reserve currency trade off (triffin / trade deficits etc). What PRC wants is to secure her own interests with RMB, which is mostly happening, energy contracts, lots of bilateral trade happening in RMB now. What PRC also wants is to make maintaining reserve USD onerous, i.e. high rates, high debt servicing... which already indirectly limits US in real ways like reduced defense acquisitions in last few years.
PRC wants USD exorbitant privilege to be just exorbitant.
Then US incentivized to dump system (etc debasing) which will fuck over global USD users and tank US reputation even more. A lot of US actions make sense when you realize Trump doesn't want to deal with an increasingly unprofitable global utility. PRC doesn't want to step in to build new pipelines, they want to see US (mis)manage existing US owned plumbing that everyone is using so poorly it fucks up things at home and for everyone else, meanwhile PRC has comfy off the grid setup for herself and her guests.
This may be a historically significant speech.
I’d still bet that any sudden movements in this direction will be checked
That assumes it can be undone. Reversing course and hoping the damage done heals isn't a sure bet. Especially with timing delays.
There is definitely real risk here
I suspect were about to see that pivot
It does risk missing out on AI though (or AI crash depending on your perspective).
There's no replacing the US dollar until a better option comes along. You need a currency that's open (which rules out Yuan), a currency that is backed up by a strong government (which rules out places like Russia, India, Japan, and the UK), and you'd want something that isn't subject to the same geopolitical rules as the US dollar (which rules out the Euro).
if an article ends in a question mark, the answer is no.
> the greenback dominated 88% of traded FX volumes — close to record highs — while the Chinese yuan (CNY) made up just 7%, according to data from the Bank for International Settlements (BIS).
> Likewise, there is little sign of USD erosion in trade invoicing. “The share of USD and EUR has held steady over the past two decades at around 40–50%.
there is currently no other alternative to meet the global liquidity demands
One of the most effective ways to ease the trade deficit is to reduce USD's status as a reserve currency.
Then along came the absolute moron Wilhelm, and he managed to Leroy Jenkins Germany's beautifully arranged relationships into an aggressive, tactless nightmare where all Germany's allies were turned into enemies, and everything turned out exactly like you'd expect.
As the saying goes, history doesn't repeat but it often rhymes.
jacquesm•1h ago
andsoitis•1h ago
The dollar's portion of global forex reserves has fallen from over 70% in the late 1990s to around 60%.
The Supreme Court's ruling on Fed independency is to be watched.
blurbleblurble•1h ago
softwaredoug•1h ago
TSiege•1h ago
JumpCrisscross•30m ago
One of these exists. The other is bluster.
blibble•1h ago
marcosdumay•59m ago
mkoubaa•1h ago
quantum_state•1h ago
rvz•1h ago
nish__•1h ago
Edit: to the downvoters, did I lie?
tclancy•8m ago
lavezzi•58m ago
827a•56m ago
The US dollar being used less across the world has both negative and positive consequences for the US and USG. This is the Triffin Dilemma, and dates back to the 1960s; the USD's dominance over-values the currency relative to other currencies, which hurts exports and thus domestic manufacturing. It also conflicts USG/UST priorities between making decisions that are best for the US people, versus best for international customers of the dollar. Triffin covered this at length in his address to the Joint Economic Committee of Congress in 1959, but in short, the USD acting as world reserve currency creates demand for the dollar, which the US has to be able to supply, which pre-1971 meant extreme strain on her gold supply, and post-1971 means greater monetary inflation.