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The US has the world reserve currency. There are excess US dollars in existence so that countries can trade in US dollars outside of the US. Many foreign entities see it as a safe haven.
The fact that the US punishes countries that misbehave by using the US dollar and shutting them out from the dollar, SWIFT, confiscating their treasuries, etc means that the USD has less reliability.
More and more countries might seek to get rid of their USD. There could be a flood of USD back into the country pumping inflation more.
The central banks are supposed to manage the money supply. We shall see if they are up to the task. We've had ongoing QE since 2008 that shows no signs of slowing despite their assurances of a tightening stance to manage inflation. I'd say it's best not to rely on the US dollar as a store of value.
The central banks are supposed to manage the money supply. We shall see if they are up to the task. We've had ongoing QE since 2008 that shows no signs of slowing despite their assurances of a tightening stance to manage inflation. I'd say it's best not to rely on the US dollar as a store of value.
QE was supposed to be temporary and we were supposed to have QT to unwind the Fed balance sheet.
QE seems permanent and when they try QT it tanks the market.
I am afraid the era of US Dollar as World Reserve Currency is gone. Each country will be balancing its imports and exports using either national or regionally dominating currency.
I admit I did not expect the rise in mortgage rates. Part of me hopes they lose control of them and they shoot up to 10%, but as long as QE is going on the central banks basically control the bond market.
Look at the decades long downtrend in interest rates... this is the thing to watch. Everyone's expecting major inflation and higher rates and when everyone says something usually the opposite happens. If rates go up the central banks lose control. It will be an interesting decade to see how the MMT experiment plays out.
The US Dollar is the most potent nonmilitary weapon available. A big stick as they say. The problem with a big stick, is it eventually breaks down after enough strikes. So, no it's not smart to use the US Dollar as a weapon if you are concerned about long-term dollar stability. Unfortunately, presidents are elected for a short term; therefore, long-term outlook is out of their vocabulary. Each president has successfully upped the sanctions ante to the tune of 1 out of every 10 countries are now under some form of U.S. sanctions.
Just using some common sense. If were a central bank or wealthy individual, why would I buy U.S. dollar backed assets if at any time the U.S. government could freeze or seize my assets or block me from trading. It's better to diversify. Foreign policy experts have banked on the fact that there are no suitable alternatives to the dollar; therefore, nations will just put up with it. This is no longer the case. The rise of cryptocurrency, China, and stable currencies has presented alternatives which are getting better every day. Saudi Arabia is looking into trading oil outside of the U.S. dollar for the first time since the 70s. If they do, other oil producing nations will follow.
It can/could be. Beats dropping bombs everywhere. On the other hand, decades of Democrat and Republican monetary malfeasance is going to leave the currency impotent at some point—and sooner rather than later. When that happens, the poop hits the fan in a way that virtually nobody will be prepared for.
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