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Even Tucker Carlson now saying dollar in major decline. Trade and invest using the concepts of MMT. Get a 30-day free trial to MMT Trader. https://www.mmteconomics.com/ Mike Norman Twitter https://twitter.com/mikenorman Mike Norman Economics: https://www.pitbulleconomics.com Understanding the Daily Treasury Statement video course. https://www.pitbulleconomics.com/understanding-daily-treasury-statement-video-course/?s2-ssl=yes
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Even Tucker Carlson now saying dollar in major decline. Trade and invest using the concepts of MMT. Get a 30-day free trial to MMT Trader. https://www.mmteconomics.com/ Mike Norman Twitter https://twitter.com/mikenorman Mike Norman Economics: https://www.pitbulleconomics.com Understanding the Daily Treasury Statement video course. https://www.pitbulleconomics.com/understanding-daily-treasury-statement-video-course/?s2-ssl=yes
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| Even Tucker Carlson now saying dollar in major decline. Trade and invest using the concepts of MMT. Get a 30-day free trial to MMT Trader. https://www.mmteconomics.com/ Mike Norman Twitter https://twitter.com/mikenorman Mike Norman Economics: https://www.pitbulleconomics.com Understanding the Daily Treasury Statement video course. https://www.pitbulleconomics.com/understanding-daily-treasury-statement-video-course/?s2-ssl=yes |
There's two ways the rest of the world can get rid of dollars, Mike. The one that you mentioned: buying US goods and services. And the other one? Repaying outstanding IMF and World Bank dollar loans. To do that, the Third World would have to take out dollar loans from China, repayable in yuan.
Is that happening? I don't know. But it would be a possibility if an actual currency war broke out.
why only IMF/World Bank loans? Private loans from US banks to foreigners (individuals and states) are also USD. Plenty of ways for de-dollarization to occur.
I wouldn't say that those are that different. So I only mentioned the IMF and WB.
Whether the lender is the IMF, WB, or a private bank, it's all loan repayment. Sure, there are many sources of dollar loans, but they all need to be repaid. And repaying any of them de-dollarises the economy in the same way.
@Derek Ross Yes, Indeed. The USD loans of private banks espc to facilitate the trade of commodities is the weak link that is now being chipped away at by nations 'de-dollarizing'. Whether it's Indians paying for oil in 'rupees' or China paying in 'yuan' for soybeans from Brazil or anything else similar, the US Dollar will have a much smaller 'base of operation' in the future if it is only used for 'goods and services' from the USA. There is very little chance of 'growth' for US banks if this trend takes hold, since US 'goods and services' are only a minority portion (20%?) of world trade now.
Who will become the next petro dollar. Crude LNG etc trade across the globe in petro dollar. Is the FX market shrinking?
Would Like to see Blond Hair Again — Happy Easter! I hope you are able to get an Awesome Easter dinner in NYC .
Always the valid argument Mike. It's why I am here, thanks.
8:04 Classic Mike!
Great work this week Mike!
China has a huge demographic problem right now. The one child policy really hurt them and they need a high birthrate to keep labor costs low.
You did say that weaponizing the dollar was about the only way the Fed could lose number one reserve status. Since then I've heard some points that I'd like you to comment on:
The domestic purchasing power of the dollar must have lost 20 or 30% over the last few years– Too volatile to use US bonds to secure the payout purchasing power of future pension fund checks. This is a real concern for pension funds all over the world that primarily use US treasuries. Also, if rehypothecation of bonds has occurred to the extent that 20 others may have claims to the same bond, couldn't that make the resale value decline. Who wants to get stuck with a bond that someone else has a claim to
Take away the overpriced healthcare, the prison industry and military industrial complex … I doubt the US would be in the top 10 economies.
Mike – if most of the world stops buying oil in US dollars AND we keep deficit spending like we do THEN all else being equal we will see more inflation in our economy because we will have less buyers of our currency. I agree with you that those dollars already out there can't go away unless they get repatriated BUT if there is a smaller market of buyers of the US dollar in the future (and there will be) then we will see inflation unless we import more and/or deficit spend less. And frankly importing more means we export employment (not good for our future) and if we deficit spend less then it either means less govt programs AND/OR increased taxes (increased taxes are more likely and really not good for our economy). What am I missing Mike?
China has horrendous demographics tho
I will never bet on anyone but America.
Thats why America wants war by 2025
This is why I subscribe
Great analysis, as always
And… I like the drinking stories too 😂
China cannot survive without USA. We still in control Mike.
I have heard that usually when a country stops having a "world reserve currency" status, the common people of that country are actually better off… i.e., when the British lost its reserve currency status.
Thanks again for the awesome insights Mike
@4:30 Yes, but people could also just swap usd at any forex desk (as you say at 8 min). That'll put downward pressure on the exchange rate, so if they are the late ones they lose, but guess what? No one should care except those foreigners too late to swap. US Gov can always boost injection so you guys can still buy imports from us. You only get an import shock in the USA if your people don't understand floating exchange rates and pass-through adjustment. (But who knows, maybe they don't and you will get an import shock, but that'll by US policy choice, not due to any de-dollarization.) All hypothetical, because foreign US treasury holders aren't going to dump, precisely because they don't want to collapse the usd.
Good, balanced explanation.
Yeah it's the failed strategy of the US government to use the dollar as a weapon that is causing other countries to seek other alternatives.
Dollar isn't going away, but there has certainly been a shift away that will accelerate going forward.
Mike, one clarification to your point…you said exchange dollars for goods or services….you left out the most critical option…when they exchange dollars for u.s. ASSETS!…assets is ownership….the stuff dollars can't buy from China, India, or several other countries…there in lies the risk to usa…we sell our corps, our land, and our govt to foreigners…