General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsTPM: the Dollar Challenged, and the day the American imperium ends
Much of American economic and global power rests on the universal use of the dollar as the settlements and reserve currency of choice. It allows the United States, among other things, to run huge trade and budget deficits and to impose crippling economic sanctions on other countries. If the American dollar became overnight a exotic national currency like Turkeys Lira, then in order to balance its accounts and pay for its deficit, the U.S. would have to raise interest rates to attract foreign currencies, even if that meant crippling business and home finance. If the dollar were to cease being a global currency, that would weaken the American economy and damage international trade. The moves by Russia, China, France, Germany, and the UK to begin to decouple themselves from the American-dominated monetary system could come to nothing but these could also lay the basis for a greater challenge down the road to American dominance.
Its happening largely in response to Trumps Hobbesian diplomacy, which sees the U.S. engaged in a zero-sum battle against its longtime allies as well as against competitors like China and also by his fiscal policies that promise huge deficits in years ahead. My friend Taggart Murphy, who wrote the definitive study of U.S.-Japan economic relations, The Weight of the Yen, says of Trumps effect on the global economy:
Trump is doing everything he can to bring on the end of the days when the US can borrow whatever it wants in whatever amounts it wants. To be sure, there is no recipe book. The dollar is now so entrenched as the worlds money that if your assignment were to bring the curtain down on that and thus the ability of the US to borrow whatever it wants whenever it wants its not at all clear what you would do. But youd start by doing everything that Trump is doing pick fights with all your allies, blow the government deficit wide open at the peak of an economic recovery, abandon any notion of fiscal responsibility, threaten sanctions on anyone and everyone who seeks to honor the deal Obama struck with Iran (thereby almost begging everyone to figure out some way to bypass the US banking system in order to do business), throw spanners into the works of global trade without any clear indication of what it is precisely you want for a country that structurally consumes more than it produces and thus by the laws of accounting MUST run trade and current account deficits.
https://talkingpointsmemo.com/edblog/100966
Me.
(35,454 posts)and please note your pal Putin is stabbing you in the back
dlk
(11,577 posts)Before its all said and done, Trump could very well bring it all crashing down, just like Steve Bannon wanted/predicted. Thanks GOP.
MaryMagdaline
(6,856 posts)NurseJackie
(42,862 posts)... Putin's plan will have worked perfectly.
*or less.
bermudat
(1,329 posts)It will be less than that.
Wounded Bear
(58,709 posts)Trump and Miller seem determined to take America down.
SWBTATTReg
(22,166 posts)actions by rump being a major factor, it may be successful. If this does happen, then the ramifications of this will be more severe than folks realize.
Blue_true
(31,261 posts)Allies saw that they could trust us once again after Bush. My guess is the notion that they can trust the American voter to make wise choices is what now have them determined to succeed. The interesting part is that Russia is involved when it was them that started the Trump lunacy. Russia wants us out of the way as a great power, it will use any device to bring that about, weakening our currency and making us a beggar nation meets Russia's ends nicely.
Fred Sanders
(23,946 posts)no more printing free money to pay off the massive debt. For real, endless deficits WILL matter!
Inflation will gallop and interest rates will spiral...the deal with the world that America gets to be the world's policeman in return for printing money for free would be over...the cop is corrupt.
"Much of American economic and global power rests on the universal use of the dollar as the settlements and reserve currency of choice. It allows the United States, among other things, to run huge trade and budget deficits and to impose crippling economic sanctions on other countries. If the American dollar became overnight a exotic national currency like Turkeys Lira, then in order to balance its accounts and pay for its deficit, the U.S. would have to raise interest rates to attract foreign currencies, even if that meant crippling business and home finance."
Wellstone ruled
(34,661 posts)This is how our Country operates and those whom tried to change the World Currency of Settlement,have long since been forgotten. Remember those fellows from Iraq,Libya,and Valenzuela,they tried to sell Oil using other World Currencies and even Barter.
And the Republicans will never forget Iran,which btw,they deposed a duly elected President and replace him with the Shaw in order to control any and all Oil Reserves which would be sold based on US Dollar.
Fred Sanders
(23,946 posts)currencies who can not print their way to prosperity with massive deficits.
Wellstone ruled
(34,661 posts)examples from our past. Three Thousand per cent inflation. And if the Dollar does do Par,or stays at Par for some time,we are so screwed.