No, that is a function of our government's stupidity.................
one does not just declare oneself the world’s reserve currency. it does have to be earned, and with partners that have been known to manipulate their currencies, i can see this not ending well for investors...
that is why 2024 is so important... a strong American Economy is the reason for the dollar being in reserve.
Brics is mostly held up by Brazil, Russia, India, China, South America.
How stable do you believe the economies of these countries will be over 10 years?
Look at how Congress spends and imagine: in 20 years that could be my legislature....
Well, if we thought critically about the Chinese spy balloon mapping our electricity-producing dams, and the effect of loss of power of all the data centers holding our financial information, there is no reason to believe that crypto currency has the reliability of money we can handle.
It would be sort of like a regional retail store chain - like Dillard's for example - aiming to supplant Wal-Mart as the largest retail chain in the world. Not only would Dillard's have to grow massively but Wal-Mart would have to simultaneously collapse. And even if Wal-Mart did collapse, it would take many years for Dillard's to build up the infrastrure and economy of scale that Wal-Mart had.
In other words, it's not as easy as it sounds.
Also Russia and China, two pillars of BRIC, are in demographic decline (birthrate not high enough to replace aging populations).
For the near future at least the dollar will still be used in most international trade because of the way the system is set up and it would involve a lot of extra hassle to bypass it completely. But the value of it is definitely headed down and we won’t be able to use economic sanctions any more to compel other countries to get in line.
After we confiscated (stole) $300 billion from Russia, other countries and billionaires and the like are thinking twice about holding their money in dollars. Many of them have already begun to diversify including our allies. And with our exploding deficit at some point they might quit buying our treasuries, that’s when the shtf.
You have reached the heart of something called "Triffin's Dilemma"
You can't have a "world reserve currency" without, eventually, sending your jobs, manufacturing overseas, and creating massive current account (and by consequence fiscal) deficits at home. While Triffin didn't address it, the knock-on effects are that it also empowers a globalist, well-connected, domestic political class, at the expense of the rest of the population. We are seeing this now.
The advantages are that you can export your inflation to the world. And as the world requires more US Dollars, you can generally enforce this system of control on other smaller players. Network Effects - Its like the US Dollar is Google and you have the choice to use that, or create your own search engine.
Like all human constructs, it can't last forever, and it creates at the same time its own conditions for eventual collapse.
five countries can print the same currency
just wonderful
I will add this on Triffin’s Dilemma as a very general intro
https://www.investopedia.com/financial-edge/1011/how-the-triffin-dilemma-affects-currencies.aspx
The BRICS nations now have a GDP larger than the G7.
Think about that. They have the reach.
More and more nations are joining BRICs because they are sick and tired of the US starting wars and using the dollar to punish other nations with sanctions.
That is why so many are still trading with Russia.
China would benefit greatly. They could detach the Yuan from being pegged to the US dollar and it would prop up their ailing economy the same way our economy has been propped up thanks to the dollar being the world reserve currency.
It would also allevite China’s debt problem.
With regard to foreign affairs, as another FReeper said, the US is the stupid one for getting involved in everything and spending on everything around the world.
China would do no such thing and would feel no obligation to help anyone.
As the primary reserve currency, there is a constant demand for U.S. dollars by foreign governments and institutions. This demand creates an artificial value for the dollar, which leads to a stronger dollar compared to other currencies. A stronger dollar makes U.S. exports more expensive for foreign buyers, which can result in decreased demand for U.S. goods and services, contributing to a trade deficit. So one of the reasons we have a perpetual trade deficit it being the reserve currency. If China took over the reserve currency role, it would be hard on their export driven economy.
Serious question would be: could it be a net positive for Americans to lose the dollar value, become poorer relative to the rest of the world, but develop a real industrial economy again.
My view is that the expanded BRICS will never be a “reserve currency”... they will never have the mammoth ability to hold wealth with integrity.
I do believe they will circumvent the USD for trade increasingly, create a new banking system, and many nations - particularly in S. America - will renounce debt to US and instantly have credit in the new system.
Plenty - most of the world trades in US dollars as a standard even those countries that hate us have to convert or pay their currency’s equivalent.
Once we’re not the worlds reserve then other countries can dump the dollar and our treasury bonds will fall - the t-bills are what our banks hold to pay simple interest and back their bottom line. So once the t-bills fail so will the banks (and you’re seeing this already) Once the banks fail and thanks to Biden’s Idiocracy ALL funds are going to be covered and based on what? More fake paper printed by the Biden admin because other nations won’t buy our t-bills (which China had been doing for the past decade)
It’s BAD all around and you’re about to see us become Venezuela.
There is a reason why the UK refused to back the Euro.
Dollar critics tend to look at dollar's seigniorage as an unalloyed blessing. It is not and requires considerable dollar creation and constant monitoring and selling and buying of dollars and US Treasury debt to maintain and defend their value as predictable. These operations in turn require the support and coordination of the Fed and allied central banks and treasuries and international financial institutions like the IMF and World Bank.
For the BRIC nations, these issues are compounded by the problems inherent in coordinating a multinational currency. Unless the member nations are closely aligned economically and politically, it is impossible to manage a common currency without one or more members getting the short end of things. And although the euro does not work well as a global trade and reserve currency, it works as a regional currency only because of the central economic and regulatory control of the European Union and the dominant role of the German economy and central bank.
As much as the BRICs have a set of grievances and complaints and common interests against the US and the dollar, their political and economic interests are too separate and divergent for a common currency to work. At best, they will create and maintain a ledger system of sorts that reduces their need for dollars and enhances trade within the BRIC trading zone. Yet even then, they will carefully monitor the ledgers and the values of the participants' currencies so they do not get so far out of balance as to create a risk of someone getting stuck with credits or currency that has little value outside of the BRICs trading regime.
Well if you really want to be the world Reserve currency, it requires you to create a global baking system with lots of mechanisms to loan money between different banking systems in order to keep it stable. There’s a large risk in doing this that basically the United States has been taking on all by itself.
The Brice are not going to be a reserve currency. Not enough trade is done in that group.
Your assumption about running up debt being a function of the reserve currency is correct—but not for the reason you think. Because we are the reserve currency, we make the rules. Everyone is pegged to the dollar.
Once that slips away, debt is denominated in whatever comes next. It’s impossible to increase your debt a lot when that happens. Our exports would be cheap, but imports would skyrocket. The inflation we’ve seen over the past year would be considered tame compared to what would happen.
There isn’t a single currency that would take the place of the dollar. Yet. But that could change in short order if the large economies decide dump us.