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US Treasuries Have Become Unappetizing for Foreign Central Banks and Governments

152 points · 132 comments · iamnothere

  1. Arubis · · focus · HN ↗
    Dedollarizing the world economy has more net losers than the US (though that's the obvious one).

    It's not without its benefits -- over the last couple decade, the US has found ways to weaponize access to USD, so if you're not a fan of having a country other than your own able to effectively regulate or sanction you and your business, there's some niceties here.

    Being able to trade and invest in a stable, highly liquid, easily converted, low risk currency was a net win for most of the world for about half a century. There isn't an obvious replacement, so we'll just see more friction.

    1. nostrademons · · focus · HN ↗
      It's kind of a prelude to a Thucydides Trap.

      The problem with replacing the world reserve currency with something else is that nobody can agree on what that something else should be. Expect to see a lot of jockeying for power as people realize the U.S. isn't the world hegemon anymore. Jockeying, on a state level, usually means war.

      1. thijson · · focus · HN ↗
        I think that's becoming gold. That's why we're seeing the price action in it over the last few years. In a world with little trust, only gold is trusted. Even the Netherlands is repatriating a portion of their gold reserves from New York to London.
        1. upboundspiral · · focus · HN ↗
          Hopefully not. We've lived that movie already with currencies tied to gold. It significantly slowed down past WW1 reconstruction, and is in general makes it very hard to adjust the money supply to enable economic recovery.

          The ideal would be something like the International clearing currency proposed by Keynes durin Bretton Woods (he was overruled in favor of the dollar as reserve currency since America had all the power at the time).

          Here&#x27;s an Op Ed from Greece&#x27;s past finance minister in favor of this scheme: <a href="https:&#x2F;&#x2F;www.weforum.org&#x2F;stories&#x2F;economic-growth&#x2F;yanis-varoufakis-imagining-a-new-keynesian-bretton-woods&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.weforum.org&#x2F;stories&#x2F;economic-growth&#x2F;yanis-varouf...

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