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https://www.truthdig.com/articles/goodbye-to-the-dollar/
The inept and corrupt presidency of Donald Trump has unwittingly triggered the fatal blow to the American empire—the abandonment of the dollar as the world’s principal reserve currency. Nations around the globe, especially in Europe, have lost confidence in the United States to act rationally, much less lead, in issues of international finance, trade, diplomacy and war. These nations are quietly dismantling the seven-decade-old alliance with the United States and building alternative systems of bilateral trade. This reconfiguring of the world’s financial system will be fatal to the American empire, as the historian Alfred McCoy and the economist Michael Hudson have long pointed out. It will trigger an economic death spiral, including high inflation, which will necessitate a massive military contraction overseas and plunge the United States into a prolonged depression. Trump, rather than make America great again, has turned out, unwittingly, to be the empire’s most aggressive gravedigger.
(Score: 4, Informative) by BenJeremy on Tuesday February 05 2019, @12:53PM (4 children)
So what is replacing it this time? The Euro, again? The Yuan, again? Bitcoin, again?
Too many stacks of U.S. cash in safety deposit boxes and stuffed in mattresses, I suspect more than half of the minted U.S. cash is sequestered away outside of this country, much of it by people and groups too powerful to let anybody else try and upset their applecart.
Sometime in the 50s and 60s the U.S. Dollar became the de facto world currency, and it has a momentum all its own now.
(Score: 2) by JoeMerchant on Tuesday February 05 2019, @03:50PM
The point is that the momentum is actively being pushed back against... of course this has been a long time coming, but Trump's presidency is increasing the rest of the world's resolve to push back harder and abandon straddling positions where they might re-embrace the US dollar at some point in the future.
Will the change snap overnight? Of course not, but looking at a graph of how it changed - in the future there should be a pretty sharp inflection point just after the cofvete tweet - not a reaction to that particular tweet, but to all the idiocy surrounding and following it.
Україна досі не є частиною Росії Слава Україні🌻 https://news.stanford.edu/2023/02/17/will-russia-ukraine-war-end
(Score: 0) by Anonymous Coward on Tuesday February 05 2019, @03:57PM
Yeah, that will greatly contribute to the problem … oh wait, you thought it prevents it? Think again!
(Score: 2) by Runaway1956 on Tuesday February 05 2019, @04:44PM (1 child)
You're right, as far as you go. However - the US is obligated to pay the Federal Reserve interest on each and every one of those notes being hoarded in safety deposit boxes, or wherever. THAT is the source of our debt. The US may yet default on that debt. Then what? There is nothing backing any of that scrap paper - nothing. Not gold, not silver, not even wheat. The paper is worthless once the US defaults on the debt.
There need not be a global reserve currency to replace the dollar. The Euro will work well in Europe. The yuan will work well throughout most of Asia. Who knows what Africa of South America will turn to - Israeli pounds and pesos, I guess - according to whatever treaties are hammered out.
Abortion is the number one killed of children in the United States.
(Score: 1, Insightful) by Anonymous Coward on Tuesday February 05 2019, @05:43PM
We're only obligated to pay the interest in dollars, so backing is completely irrelevant. Furthermore the interest rates can be any value, even negative. We literally cannot default. Finally as a last resort, the US Mint can in fact simply mint a 1 Trillion Dollar coin out of anything it chooses although the current contender is Platinum, and that coin must be accepted as legal tender as well.
The problem with all you anti-fed reserve types is you don't really have a clue about what money is or how it operates. I guess this is why we need a fed which is seperate from politics and operated by the people closest to the monetary system, i.e. the banks.
Unfortunately, you're like everyone else, you think like an individual or at best a corporation and your frame of reference is walled in and limited by that perspective. You are used to the idea that a debt must be paid in something that you cannot create yourselves. But the US Dollar isn't like that. The US Govt has two entities capable of creating them, the fed and the mint and they literally can print as many of them as they choose. If screws with inflation, but it is still legal tender.
Furthermore the dollar itself isn't subject to interest rates, but its purchasing power parity is effected by them. The interest rate paid is versus treasury bills and other bonds. The dollars themselves are just fine how they are, but inflation does translate to a negative interest rate for holding them. The fed interest rate isn't about the govt, it is about controlling inflation for the benefit of the economy.
The higher the rate we pay on bonds, the less money is in circulation, the more value each circulating dollar has. The lower the interest rate, the more money circulates, the lower the value each dollar has.
This is used like gas and brakes on the economy to try and keep inflation within a specific target value. It is maintaining a steady and predictable rate of inflation that is key to long term stability and this stability is the reason we've maintained position as the world's reserve currency.