Thought Banana
Dollar Making ‘Em Holler
Lacking anything else to freak out about for the time being, all the pseudo-intellectuals, charlatans, fear-mongers, and Jason Calacanis-es of the Twitterverse decided to become macro, geopolitical, and currency trading experts all in one over recent weeks.
Since the immediate aftermath of the SVB collapse got cleaned up rather swiftly (word is, of course, still out on continuing aftershocks), all those listed above and more had to resort to another problem to pontificate in order to maintain their self-perceived status as Twitter-thought-leaders (is that really a title anyone should want?!) Apparently, what they’ve settled on is the demise of the US Dollar.
Now, this is a huge topic – excuse me, I meant a HUGE topic – and not one we could effectively cover in one section or even one Peel, for that matter. This will be an ongoing topic, so get ready because we’re gonna annoy the hell out of you with it.
Let’s start this “series” with the primary claims thrown around on the brain-dead bird app. Basically, the claim can be summarized as follows: Recent trade deals between China and other nations show they all want off the dollar standard, and with the horrific state of American national finances along with dollar-based sanctions, it makes sense they’d want to stop relying on USD.
All of that is true, so we have no problem with the claim. But, when you follow that claim with a resolution like, as commonly seen online, “BTC fixes this,” “China and the yuan are gonna take over soon,” or “the US now is Rome in 476 AD.”
Every one of those claims can be rectified with one step towards thinking in second-order effects, namely:
- BTC is so volatile it’s almost not even worth pointing out. It would require widespread, near-universal adoption to replace USD, and my grandmother, who can’t figure out how to answer a phone call on her iPhone, ain’t spinning up a MetaMask wallet anytime soon.
- The yuan is low-key pegged to the USD and other currencies through its use of a state-controlled floating exchange rate. This allows the CCP near total control over the value of its currency, not something that jives in a global free market economy.
- The US hasn’t even been a superpower for a century, let alone a millennium, meaning we have no right to be compared to Rome. Further, we got problems, but no Visigoths or Gauls are invading, we haven’t had a string of Presidential assassinations, and our military is still functional (for now).
Moreover, the moves China has made in recent months to supplant USD dominance have been more overhyped than that stupid-a** Cocaine Bear movie (trash). Essentially all they’ve done is:
- Pen deals with Brazil, Russia, and Pakistan to not need to use the USD in direct trade solely with each other
- Ask Saudi Arabia if it might be possible to start buying oil using yuan, and
- Develop a competitor to the US’s international transaction settlement system called SWIFT, naming their own CIPS
To be clear, we’re not saying these developments mean nothing and can be overlooked, but we are saying that Tucker Carlson’s 15-minute de-dollarization rant was far more politically than informatively motivated.
Nothing lasts forever, especially relationships, market outperformance, global superpower standings, and, unfortunately, long weekends.
The big question: Will the USD eventually lose its status as the global reserve currency? If so, when?
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