poll: will the us dollar be replaced as the world's reserve currency?

It's going to be a currency made up of bits of every world currency that is a float. Much like bundling mortgages to lower risk, merging currency values according to some as yet undefined formula will make a more stable background currency, less susceptible to 40 crazy people in one countries legislature sabotaging it because they don't like a black President repackaging one of their own plans and making it law under his name.

I voted yes, but the timeline I have in mind is not before the middle part of this century. I don't know enough about it to say what the effects will be, or what it will be replaced by, but I don't think it will be some calamitous event.

I voted yes, but it's obviously going to be a long time. It won't happen tomorrow like whatever doomsday story OP read.

What do you even mean? We've been off Bretton Woods since '72ish, that other economies peg their currency to our dollar?

That there will be soaring inflation if other countries stop pegging?

Sylverlokk_sl said:

It's going to be a currency made up of bits of every world currency that is a float. Much like bundling mortgages to lower risk, merging currency values according to some as yet undefined formula will make a more stable background currency, less susceptible to 40 crazy people in one countries legislature sabotaging it because they don't like a black President repackaging one of their own plans and making it law under his name.

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Or you know, every currency could float. Instead of like the current 80% which do.

The really fucked up part of this is what happens when all these foreign central banks that are currently holding trillions of dollars decide they don't need them anymore, and sell them off? The value of the US currency absolutely tanks, massive price increases in foreign goods in the US market. With a trade deficit like the US has, that spells disaster for their economy. The only reason the money printing spree post-bretton woods hasn't created massive inflation is because firstly, foreign central banks were holding tons of excess dollars, meaning they couldn't come home and bid up domestic prices. Secondly, most of the money-printing that didn't end up in foreign central banks ended up on Wall Street for "investment banks" to speculate with, leading to massive inflation in non-CPI prices, namely financial assets (dot-com stocks up to 2000, real estate up to 2007, bonds currently). And thirdly, what CPI-inflation there should have been was offset by 500 million Chinese flooding out of the rice paddies and in to the factories, driving down the price of imported consumer goods as China pegged their currency to maximize exports. Of course, there was nothing they could do about things like energy and food seeing huge increases in price, so they labelled those things "too volatile" and pulled them from the CPI.

With all this fear about inflation, there's shockingly little of it to be found in any actual data. Just because transactions will take place in NewCurrency (as others have said, a fictitious currency based on a basket of other currencies -- not all currencies, but probably USD, GBP, RMB, EUR, CHF), which will immediately be converted from any of the other currencies, doesn't mean the Dollar loses value. Central banks aren't holding onto dollars because they can't buy oil with Euros. They're holding on to them because the US makes up 50% of the global economy.

Still no inflation, and austerity has been performing poorly across the pond. We're fine. Inflation is like the new apocalypse. Folks keeps screaming "it's coming!", and yet...no inflation. This nonsense has been going on since at least QE1.

Also, can't vote with those options.

Agraza_sl said:

Still no inflation, and austerity has been performing poorly across the pond. We're fine. Inflation is like the new apocalypse. Folks keeps screaming "it's coming!", and yet...no inflation. This nonsense has been going on since at least QE1.

Also, can't vote with those options.

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There's been tons of inflation, it just hasn't shown up in the CPI. Inflation is a rise in prices, not necessarily a rise in consumer goods prices. All the freshly minted money is flowing in to wall street speculation on financial assets, so that's where the inflation is showing up. The speculative mania of the dot-com bust and the housing bust were just symptoms of fed-induced financial asset inflation.

it seems inevitable, doesn't it? We're not living in a post-war, pre fiber optic world anymore.

When actions taken in New York by private authorities can ravage a smaller nation economically and the government of the United States is vocally and publicly opposed to responsible regulation of those private entities... Well, damn, I wouldn't want anything to do with the dollar either and I would get away from it just as quickly as I was able if presented a viable alternative. That's not even subtle. It seems to be, being unstudied and largely ignorant of the issues at hand, the only reason the dollar is the reserve currency is because there aren't viable alternatives. And it seems like the USA has gone to war at least once or twice in service of that convenient fact. So yeah, if a stable trade coalition can offer a viable alternative isn't it the nature of rational business to minimize risk and maximize profit? What is America, really, besides for a stable trade coalition? The biggest one and the most stable.

voted wtf is this even because watching a few episodes of charlie rose doesn't mean I know shit about fuck. I wouldjust assumethat with globalization a world currency (backed by a basket of local ones) would emerge. It would seem to be a completely natural, predictable, and logical consequence. Plus it just simplifies everything.

Papashlapa_sl said:

There's been tons of inflation, it just hasn't shown up in the CPI. Inflation is a rise in prices, not necessarily a rise in consumer goods prices. All the freshly minted money is flowing in to wall street speculation on financial assets, so that's where the inflation is showing up. The speculative mania of the dot-com bust and the housing bust were just symptoms of fed-induced financial asset inflation.

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Since quantitative easing involves the Fed essentially printing money to buy financial assets, why can't the Fed just sell those assets back to the market in the event inflation were to spiral out of control, and remove all the printed money from circulation? Did they overpay for them? Have they become worthless in the interim?

Xequecal_sl said:

Since quantitative easing involves the Fed essentially printing money to buy financial assets, why can't the Fed just sell those assets back to the market in the event inflation were to spiral out of control, and remove all the printed money from circulation? Did they overpay for them? Have they become worthless in the interim?

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You assume they could sell those assets for the same price they bought them for. What do you think would happen to the market if they tried to sell off the 3 trillion dollars in financial assets they've accumulated over the last 5 years, in order to get back down to their more manageable baseline of 800 billion or so?

The world economy doesn't stop on a dime. Internationally very little would change in the near term, but the voices looking to diminish our effect on the world economy would become more persuasive, and international agreements would reflect this. China has already been making big changes since 2008 to improve their domestic economy so they're less reliant upon exports.

Domestically I think the republican civil war heats up. The youth vote is anti-tea party, and if this shit actually happens they'll become even more radicalized towards socialism.

EDIT:
It feels kinda like the oil shit from the 70s. OPEC got ballsy, and then the west began looking seriously for alternatives. Carter wanted us to use less oil every year thereafter, installed solar panels, etc. We reached an agreement with OPEC, and all that shit went out the window. The oil was flowing and we consumed more rabidly than ever. So really this dollar shit could just be a blip that is overlooked in a few years time, but if it happens again and again, our soft power will come to a crashing halt as the world seeks stable alternatives. The most stable alternatives would probably be Germany and China.