Who is going to buy China, Germany, Japan, and SKs stuff? If they don’t recycle into US assets (and they often hide these purchases or buy alts like MBS), then US consumers can’t afford to consume. All of these countries are deeply structurally imbalanced to exports. There just isn’t anyone big enough to absorb their trade. Quite frankly the US in general would be better off long term if people stopped buying treasuries. There’d be dislocation and Wall St would suffer but it would reshore more manufacturing and spur US growth. So I’m all for it but I doubt the exporters are going to commit suicide if they don’t have to. I think they are stuck.
Switching from gold money to paper money helped the US spend more freely, and countries like Japan and China prefer saving their money as IOUs from the US government because they're easy and usually make good money. But, there are some issues brewing, like tensions with China and other countries not liking what the US is doing, which could change how things work in the financial world.
Of course, the US is prepared for all of this. Let's see how the story unfolds and do what we can to help each other prepare.
Hi... are you aware of the plan to flip from federal reserve notes to dept of the treasury USA dollar bills? with a 1:1 exchange rate initially? The links worth a read. You can sorta indirectly corroborate this by looking at the usdebtclock.org and note the money creation oddities on the bottom left and bottom right, and then compare to the time machines 2028 naming of the same fields.
In essence, this is the dollar milk shake theory which is a play on Triffin dilemma. Ultimately what it comes down to is that structurally the United States accounting books is always going to look horrible in order to keep the plumbing of the global finical system operating. See what happens to the rest of the world when King dollar is on which generally means higher interest rates. Global growth slows, banking crisis tend to occur, trade slow, & default-generally by developing nations-occur. Since the United States does not need to import dollars and as a result of global wars and gold does not affect the amount of dollars in the global economy, it makes sense why the U.S. has the majority of it's reverse in gold. A hand few of developed nations have gold as reverses because of culture, historical, and traded-most countries in EU trade & settle with each other in Euros-which is why Germany, Italy, etc have large gold reverses. In face dollar usage and penetration has increase since the recent wars because: 1) higher rates attract more capital 2) the U.S. is the most establish and safest country that can absorb all the Eurodollars that are out there.
Given the tendency of nations states to misinform (i.e., lie), I have a very hard time believing that the US (or any so-called 'advanced' economy) actually has the gold reserves they claim to have. Unless they happen to have had a recent public and transparent audit of said reserves, their claim must be taken on complete and total faith--a state of trust that no government/politician deserves.
It's important to remember the exponential value of network effects in businesses like Google or Microsoft. But that exponential value works both ways. 10% less users on Google means exponentially less value to the Google network. I suspect that, this is true for the dollar's status as well.
Secondly on the politics situations. China and Russia have sat down and made a deal. "The way to weaken the US is to weaken the dollar".
Who is going to buy China, Germany, Japan, and SKs stuff? If they don’t recycle into US assets (and they often hide these purchases or buy alts like MBS), then US consumers can’t afford to consume. All of these countries are deeply structurally imbalanced to exports. There just isn’t anyone big enough to absorb their trade. Quite frankly the US in general would be better off long term if people stopped buying treasuries. There’d be dislocation and Wall St would suffer but it would reshore more manufacturing and spur US growth. So I’m all for it but I doubt the exporters are going to commit suicide if they don’t have to. I think they are stuck.
Switching from gold money to paper money helped the US spend more freely, and countries like Japan and China prefer saving their money as IOUs from the US government because they're easy and usually make good money. But, there are some issues brewing, like tensions with China and other countries not liking what the US is doing, which could change how things work in the financial world.
Of course, the US is prepared for all of this. Let's see how the story unfolds and do what we can to help each other prepare.
Hi... are you aware of the plan to flip from federal reserve notes to dept of the treasury USA dollar bills? with a 1:1 exchange rate initially? The links worth a read. You can sorta indirectly corroborate this by looking at the usdebtclock.org and note the money creation oddities on the bottom left and bottom right, and then compare to the time machines 2028 naming of the same fields.
https://ssrn.com/abstract=3563007
In essence, this is the dollar milk shake theory which is a play on Triffin dilemma. Ultimately what it comes down to is that structurally the United States accounting books is always going to look horrible in order to keep the plumbing of the global finical system operating. See what happens to the rest of the world when King dollar is on which generally means higher interest rates. Global growth slows, banking crisis tend to occur, trade slow, & default-generally by developing nations-occur. Since the United States does not need to import dollars and as a result of global wars and gold does not affect the amount of dollars in the global economy, it makes sense why the U.S. has the majority of it's reverse in gold. A hand few of developed nations have gold as reverses because of culture, historical, and traded-most countries in EU trade & settle with each other in Euros-which is why Germany, Italy, etc have large gold reverses. In face dollar usage and penetration has increase since the recent wars because: 1) higher rates attract more capital 2) the U.S. is the most establish and safest country that can absorb all the Eurodollars that are out there.
Given the tendency of nations states to misinform (i.e., lie), I have a very hard time believing that the US (or any so-called 'advanced' economy) actually has the gold reserves they claim to have. Unless they happen to have had a recent public and transparent audit of said reserves, their claim must be taken on complete and total faith--a state of trust that no government/politician deserves.
With the growth of repo markets and secured lending, I suspect collateral (Treasuries) will become more & more important - ergo more in demand.
This also ties in with recent Fed inventions such as the FIMA repo facility & BTFP.
It's important to remember the exponential value of network effects in businesses like Google or Microsoft. But that exponential value works both ways. 10% less users on Google means exponentially less value to the Google network. I suspect that, this is true for the dollar's status as well.
Secondly on the politics situations. China and Russia have sat down and made a deal. "The way to weaken the US is to weaken the dollar".