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Old 06-10-2020, 01:59 PM
Location: Washington Park, Denver
8,082 posts, read 7,505,926 times
Reputation: 9105


Originally Posted by kanonka View Post
1. “Fiscally” and “politically” are different things. Politically system got abused from the moment US first imposed first unilateral sanctions. In normal situation the affected country would just show middle finger to US, and continue business with everybody else. But in the situation when dollar is reserved currency the chain is so deep that almost every company on the planet is affected. This is called dictatorship. Earlier US was using this tool very carefully, trying to avoid unilateral sanctions, and just blackmail other counties in UN to create illusion of "world support". Lately though the tool got abused too much. Right now over half of the world is under this or that US financial sanctions. Do you think other countries will just continue to love the dictator, or would work hard to become independent?

2. Fiscally system got abused at the moment "The Fed" (same as "Feds"*) started to print more t-bills that was tolerably for other countries to absorb. Recent influx of $4T was a killer. Do you think other countries are so stupid to sell real assets for thin air?

So overall, days of dollar as "reserve" currency are counted. As I said, new mechanisms are not as convenient, but countries are willing to pay this price for their independence - US dictatorship now costs them more than usage of other mechanisms.

* You can sing all day long about independence of "The Feds", but it's same fairy tale as "free market", "independent courts" etc.
It’s pretty clear you don’t understand the difference between fiscal policy and monetary policy. Khan Academy will help you.
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