What happens when USD stops becoming the the reserve currency for the world? And who takes its place?
For the USA - massive inflation. All of those dollars are coming back home, which will weaken the dollar.
Plus, there's the second-order effects from a president taking control of the fed by trumping up charges on its members. So high inflation + low/zero/negative interest rates.
It is not necessarily a question of "takes its place", but more about being more serious about diversification. Or to paraphrase the old IBM saying "nobody got fired for buying USD" is no longer the case.
In terms of options you have JPY, EUR and CNY as the big-three and maybe tag AUD on top.
I guess AUD has higher GDP (but much lower GDP per capita and worse forex rate to the us dollar)
Fair question. And in some circles people would substitute AUD for CHF, and SGD is essentially in the same position as CHF (small, stable, well-connected country).
But AUD mostly because Australia is commodity-rich and so AUD has a naturally high exposure to international trade especially in Asia-Pacific region. Its a bit like CAD but the problem with CAD is its neighbour. ;)
[•] <https://wikipedia.org/wiki/Special_drawing_rights>
SDR's are a type of Keynes' "Bancor" concept, but only transactable between countries. Citizens may resort to the commoner's bancor, e.g. bitcoin (but also gold, silver &c).
Anybody who can (EU, Yuan) does not want to. Primairly because as export based economies, they want a weak currency in relation to a strong reserve (dollar) so they can make their goods more competitive, and also because surplus naturally appreciates a currency without central bank intervention via buying US treasuries to offset the appreciation. And for China, they're not going to accept the liberalized capital controls neede for it either.
So the answer is if the US dollars fail it would be global economic collapse and then chaos, but contrary to the rhetoric the rest of the world's economic systems are too uniquely vested in the USD to see it fail. As for gold, well we come to the same problem as noted above but worse, and in that situation the US actually holds the highest gold reserves so they still benefit the most out of it.
In the past it made things easier for everybody to use the same currency, but is that still the case with modern electronic transactions?
Maybe it splinters into Euro, BRICS, and USD?
Now that we really do have a destructive realignment underway, maybe gold will actually be useful again. I doubt it, but I’m no currency expert.
The other problem seems even bigger: we don’t have many high-skill workers available, but our wages are high enough that anyone bringing manufacturing back is going to try to automate it as much as possible. That seems like a real bind for the Republicans’ isolationist strategy: exports will be down due to a trade war and a difficult price/value ratio in the areas other countries currently dominate, and if we’re heading into a more automated economy we’re going to have a growing number of people who won’t be able to afford to buy much. This seems like a vicious self-inflicted cycle if it gets rolling.
We've been printing pretend money for quite some time, and supressing the value of precious metals (which is why you're now seeing silver bullion sell for $100+ an ounce). Copper is also selling out now.
These precious metals are extremely valuable because they're used to manufacture all of the technology consumers and nation states rely on daily. We're going to see a regression towards mercantilism and commodity hoarding. Most likely fiat will be abandoned in favor of crypto as we enter a new era of hyperinflation.
Buckle up - 2026 is going to be a wild ride.
They are nothing like paper currency outside of being another abstraction of actual value and being issued / controlled by the banking cartel.
If there is need you can now build very complicated systems as everything is digital anyway.
Maybe stable coins would be finally useful. Each currency has own stable coin and then they are automatically traded in massive market... /s
HN seems totally fine with this behaviour too, also super reassuring.
When $100M in armaments can take out a $10000M carrier, it's time to rethink things.
Really curious what your reasoning is here.
https://www.npr.org/2026/01/17/nx-s1-5680167/major-plumbing-...
US Navy would have have no parking spots left in Europe if they try to annex Greenland.
And that’s definitely going to upset the gold bugs.
(In reality lots of things are held in reserve)
USD is a routing currency that is used because it is cheaper than the mesh alternative. When it stops being cheaper whoever is then cheapest will get the routing transactions.