Worldwide decoupling from USD? Where do we go from here?
If you have a currency that's needed for something like buying a staple like oil from other than that country then that $$ is worth more, is artificially high, and that country will tend to always have trade deficits
It's very much a case of "you can't have your cake and eat it too" - it also means that Trump's tariffs are very much an incentive for the rest of the world to get off of the US oil $
Euro or Yuan is my guess.
I'm inclined to say the Euro over the Yuan, if the US collpases then China is bound to follow. Their debts are tightly bound up together.
A totally possible outcome is nothing really replaces the dollar as the reserve currency, and international trade is just... less efficient because of it.
If the world moves away from the dollar, I think having a singular reserve currency replace it is probably the best case scenario
Yuan is too closely regulated to stay in China. I doubt it would be viable unless China first steps up their _attitude_ towards being a currency provider.
The EMU is an amalgamation of countries that barely hold together, have vastly different opinions on government spending, and isn't already a "world currency."
I do think we'll eventually have a single currency on the planet, but the question is what happens in my lifetime. And that's much less certain.
quick rich, scorched earth, whatever u can keep
Gold isn't that much more expensive than it was in e.g. 1980. It is pretty much just saying there's risk in other places at the moment and people are nervous. You should buy gold if your prediction is a complete collapse of economies along the lines of the great depression. I think this is extremely unlikely.
Short gold ;)
I've always wanted to get some physical gold just because it's so nice and shiny. But I'll wait for the price to go a little down. Maybe Costco selling gold bars is what's pushing up the price/demand?
The nice thing about physical gold compared to just about everything else is that it has a non-zero bottom. You put money there not because you expect growth, but because you want to still be holding something once this is all over.
In general, looking at history, wealth stayed with the wealthy no matter what. Example study: http://blogs.wsj.com/economics/2016/05/19/the-wealthy-in-flo...
It is simply a historical fact that nothing preserved value over time better than broad stock ownership. Not gold. It mostly carries psychological value.
(UK people: do not buy as investment any gold which will require you to pay VAT!)
Anyway, ditto to everything you said. Fade the doomers who are calling for the collapse of the USD. There simply isn't an alternative. China won't give up the control as they would need to do to be the holder of the next reserve currency. The EU is a fractured joke of a union that can't be trusted to manage it either. The US continues to be the least bad option. We have deep markets to provide liquidity needed for the global economy. We still have, more or less, the rule of law and a system of checks and balances. The USD will eventually be replaced but it will likely take decades.
Sure US share of world gdp is hovering around 25% for decades. But, world gdp share of what I would call US adjacent economies, like EU, JPN, UK etc., is decreasing with rise of chinese economy. US could comfortably run petrodollar and global reserve currency with the help of these adjacent economies by exporting US deficit, by forcing these adjacent economies to make concessions like plaza accords when running deficit dollar becomes tough.
China on the other hand is making moves to make maintaining deficit dollar impossible in long run, non-floating yuan, export dumping, belt road etc. We are running in to situation where deficit dollar and global economy decoupling could happen from both sides US and other countries. This is one way triffn dilemma could get resolved.
Gold is likely in a structural bull market. It thrives in times of uncertainty and the world is far from certain.
Gold / Global M2 would be a better metric, but I haven't analyzed that yet.
China is.
https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
Having hundreds of millions of poor near-subsistence farmers will add quite a lot to a country’s GDP (PPP), but does not make that country more powerful on the international stage.
I’d argue that PPP is more misleading than meaningful.you
Like, you can get an apartment built really cheaply in China. Yes, your money goes further there. But there’s also a much higher risk that the building is very low quality and will fall apart in a short time. And what’s more, you’re not actually buying and fully owning it. The land is leased from the government
In what sense? By definition, subsistence farmers primarily produce for their own consumption rather than for the market, meaning their output is largely not captured in official GDP statistics.
Or should the question draw the boundary differently, and be asking about the size of the dollar economy rather than the US economy, with e.g. all international trade that is denominated in USD being counted?
Thing is, to quote @YZF a way up chain: "There is no quick decoupling from the USD." — I'm curious about the dollar itself in this case, rather than about the goods.
Of course this might be entirely moot since US is in the process of committing economic suicide for no apparent reason.
That had little effect on GDP growth, though.
It’s not like the gap has been narrowed that much in the last 15 years:
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?location...
It’s not that long until China’s demographic issues will start having a huge impact.
Unless something significant changes it’s not inconceivable if China never catches up.
Obviously such longterm projections are semi meaningless but China will likely have less than 500 million people by the end of the century.
As bad of a president as trump is, he will not destroy America. Things have been bad before, and they got better. We will see better times again.
Edit: And, yes, central banks have as of late been increasing gold reserves. Expect some of those gold reserves to be liquidated in the event that those countries currencies need support. Gold can have amazing periods like we've just witnesses and then just sit there for ten years. It's good for diversification though and from what I've heard from smarter people than me, something like 10% of your portfolio in gold isn't a terrible idea. Just DCA into it instead of panic buying at a potential top.
Oh and this is HN. Most of us have no clue when it comes to economics and are merely parroting our favorite twitter guru or Peter Zeihan. Trust us when we talk about software but take everything you hear in these economic related threads with a huge grain of salt.
This might have been true 10 years ago but that's not the case today. I was in Chengdu last week and I paid at a store market with a TnG wallet using Malaysia MYR. Sure this is only South East Asia, but many countries now have their own ewallet thing and they can be ready in a short time to move.
What you pay with as a consumer has nothing to do with the dollars reserve currency status.
One of the most important aspects of the dollars role is the “Eurodollar”, and how debt can be issued by international banks. There is no alternative to the dollar in that regard.
You sure about that? Lincoln almost managed it just by getting elected, given secession happened between election and inauguration.
I can't tell how bad Trump really is. If he's what he looks like, then he's purging anyone who won't butter up his ego. With that in mind: What would have happened if nobody had been willing to tell him it was a bad idea to open the northern California dams to solve the fire in Los Angeles, and they'd all been drained?
You see this as an existential threat to the United States and the dollar's dominant role in world finance?
Federal intervention would be required to avoid western states suffering food shortages, because the current logistics presume they can get it from CA.
Mishandling food could end the USA, never mind merely the dollar.
"For Want of a Nail", as the verse goes: https://en.wikipedia.org/wiki/For_Want_of_a_Nail