USD as world reserve currency coming to an end?

kmiklas said:
Agree. I was chatting with a friend, and he pointed out that the world's reserve currency is not _dictated_, it's chosen by a _market_consensus_. After WWII, Sterling lost its reserve status because London was flat broke, and people trusted the USD far more.

We are a long way from a market consensus on CNY or RMB. Step 1 would be to unblock it, and let it float against other currencies.
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Agreed. There's no reason the USD should be the world's reserve currency, which allows it to print at will. The EUR has gained credibility over the last 2 decades, not so much as an alternative but as a complementary reserve. It is most likely that China will push for the RMB to join the 2, which leads me back to my original post about a crypto as the reference currency from which all currencies are pegged based on strict parameters. Of course, the US has an interest in maintaining the existing system that gives them the flexibility to print at will.
 
The process is slow and mostly unobserved. Macro trends tend to manifest in decades but yeah it looks like various countries attempt to reduce their use of dollars in transactions. However when it comes to government savings, Treasuries take good part of portfolios
 
VicBee said:
Agreed. There's no reason the USD should be the world's reserve currency, which allows it to print at will. The EUR has gained credibility over the last 2 decades, not so much as an alternative but as a complementary reserve. It is most likely that China will push for the RMB to join the 2, which leads me back to my original post about a crypto as the reference currency from which all currencies are pegged based on strict parameters. Of course, the US has an interest in maintaining the existing system that gives them the flexibility to print at will.
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If anything makes sense to replace the USD it would be crypto, the other currencies simply all have the exact same issues as the USD but more so. That said, a currency that buys a barrel of oil or a ton of steel or a bushel of wheat for X currency units today and .5X units in three months and 2X currency units a year from now is never going to be practical for those engaged in actual business, so there's going to have to be some significant reduction in volatility of crypto for it to ever be used as a reserve currency. And a reserve currency has to be accepted by the governments where it will it will be used, otherwise it will either be outright undermined like China is doing now or, for less than the cost of a squadron of F-35s or J-20s any major government can build the infrastructure for a 51% attack that would forever spook financial markets from using crypto as a reserve currency.
 
zdreg said:
One of the reasons was to make sure his children grew up speaking Chinese.
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A few posts from days gone by.

vanzandt said:
Right before he died, I asked one of the most brilliant entrepreneurs I've ever known what he would do if he were me.
He said invest in water and learn to speak Chinese.
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vanzandt said:
A footnote to the story, and this was at least 15 years ago but right before he died (we all knew it was close, and he was cool with it)... I asked him if he had to give me one piece of advice, what would it be. His answer... "learn to speak Chinese and invest in water".
Smart old dude. Miss him to this day.
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Ya'll notice these water stocks lately btw?
 
The US economy like the British economy which held the reserve currency both countries now run enormous trade deficits which have been enabled by the fact that their currency and their interest rates no matter how much they borrow do not move because foreign corporations are willing to hold their accumulated USD in US banks whilst the rest of the exporting countries which have low interest rates are used as finance currencies in FOREX to fund US investments which has pushed up the us economy despite the fact that the US trade deficit is dragging the economy foreign investment in the US counteracts that and finances a large US budget deficit. The large infrastructure plans will result in a further investment and eventually the additional productivity and perhaps a current account surplus either way if the USD loses its status the foreign investment will cease the USD will fall leading to a current account surplus which can be reinvested or if the US maintains its reserve currency status the foreign investment will keep financing growth. either way the US economic miracle will continue.
 
jonfos said:
the USD will fall leading to a current account surplus which can be reinvested or if the US maintains its reserve currency status the foreign investment will keep financing growth. either way the US economic miracle will continue.[/QUOTE
Your scenario is the equivalent of a wet dream. Depreciating currencies don't result in trade surpluses.
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