Posted on 05/04/2023 9:40:21 PM PDT by SeekAndFind
Reserve currency is great for interest rates, because Americans get their interest rates subsidized by the rest of the world, but its drawback is abusive politicians who borrow money to the point of unsustainability.
Then why do ascendant powers want to have it?
Review
Americans have by far the highest standard of living in the world. We aren’t smarter or harder working than everyone else, it’s our power to dictate to the rest of the world that gives us the easy life.
It’s never a good thing when the nation you love and call home loses stature.
Because they can create monetary policy that most favours them. Canada, for example, could adopt the American dollar as its currency. We would gain the benefit of lower interest rates, because we are using the world’s reserve currency.
The disadvantage is that we would be stuck with the consequences of US’s monetary policy if it turns out that some of policies have negative effects on Canada’s economy.
So consider the current candidates for “reserve currency”. Do we want to have our monetary policy dictated by them?
Yes.
But that easy life comes to an end, if the US loses its reserve currency. Right now, your country is running $3 trillion deficits now. Lose the reserve status and, if nothing changes, you might run $5 trillion deficits because of increase in interest rates.
Could be ok in the long run. But there is a decade or two of massive inflation, misery and deep changes before ii becomes ok for regular people.
No, probably not. Not one of them wants to fix the US in a way that binds politicians from undoing the fix.
If it means that the Neocons can no longer run around the world starting wars, then I’m for it.
This is pretty much uncharted territory with hypothetical consequences. I’ve tried to compare the switch from the Pound Sterling to the US Dollar as the world’s reserve currency, but there are too many differences between today and the 30’ leading into WWII. For most, a change today is instinctively scary. It’s much more comfortable living with the status quo. Perhaps that’s the real problem, the status quo that is. Other nations are in an ascendancy and quite honestly the U.S. is either stagnant or in decline.
Politicans buy votes. When they can’t borrow or tax to get it they inflate the currency creating inflation. The rest of the world eventually figures out the dollar is becoming worthless and finds another way to conduct trade . The rest of the world has been funding this Insane spending by using our dollars and won’t be a sucker for much longer.
We were freer which is why despite not working harder or being smarter the world owes us everything fr turning medical care into an actual science to ending mankind’s all time’s greatest killer famine. The US has put a halt to war in Northern and Western Europe for 80yrs. Enabling Romans and Parisians to live to 80yo without being warred on for the first time in a long time.
US is responsible for 45% of all new medical: drugs,procedures and equipment. It is 5% of every US HC bill and subsidizes every other HC system on earth.
I look around-flat screen. cell, computer chip, microwave not one thing descends from anywhere but the USA-most of it fr the DoD budget.
7.7 billion non Americans on earth and their collective contributions in recent generations to my life don’t exist.
The Euro was supposed to unseat the dollar?
The always wrong were wrong again?
Instead USD went fr 72% to 65% of all global commerce=
this while the US has debased the dollar about 90% since Nixon left the gold standard and assured us no loss of purchasing power.
Notice how the author did not include a current number?
no different than leaving the race out of crime pieces.
last thing on earth to know is that despite endlessly debasing the USD, the world cannot function without it.
Maybe a glimmer of hope that Taiwan doesn't become the next US victim like Ukraine.
Stupid headline, posing a ludicrous rhetorical question.
"Is It a Good Thing to Lose Your Job, Get Kicked to the Curb, and End Up on Skid Row, Renting Out Your Body Orifices to Random Passersby for Spare Change?"
Gee, let me think about that for a while!
Regards,
You needn't bother doing that!
Rather, just compare the drop in the standard of living and loss of geopolitical importance suffered by the British due to the displacement of the Pound Sterling.
But even that is difficult to assess, since you'd have to try imagining what it would have been like if the £ had instead retained its status (= an exercise in contrafactual history!).
Regards,
The U.S. Navy polices the world's sea lanes!
This ensures rel. free trade and is more responsible than anything else for the unparalleled levels of internat'l commerce (vulgo: economic globalization) and thus PROSPERITY we see today.
Regards,
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