Comment by spwa4
20 hours ago
True, except you're being way too easy on those other currencies. Currencies need to be issued by groups able to guarantee international trade, otherwise there's no point.
RMB - maybe, but nobody sane trusts China to not immediately change priorities on a dime
EUR - imho (much) less chance than RMB, but they're using a hack: of EUR is a massive entity and internally there's no choice. Literally not allowed (due to tax reasons) (exceptions of course made for favored entities) (I feel that those favored entities exist, and how big they are, should be a huge red flag for anyone considering using EUR)
JPY - can't project force ... and doesn't even try
AUD - no
CAD - no
SGD - no
I don't understand why you're not listing GBP, as they have at least at some point done this. Of course they were a worse steward of international trade than the worst point of the US. Also, you consider AUD, but not CHF?
So what choice is there, really? This is really a way to try to push the US to do more, for less "exorbitant privilege" (especially EUR). Of course, a great many people are very interested in doing just that. It strikes me as an extremely dangerous game to play. Yes, the odds of winning are good, but if you lose, you lose everything.
I was going by foreign currency reserves, which feature CAD and AUD in much greater quantities than CHF. Also I swapped in SGD for GBP, whoops.
Global reserves continue to hold USD in greater quantities than anything else. A movement away from the USD still means a relative loss of faith in the US. If there's nobody who can guarantee trade then you still need to hold reserves, right? You just have to hold a broad and shallow pool rather than going deep on one currency.
Pretty confident it’s going to be EUR, note how they dealt with Trump tariff’s shenanigans. Took it slowly, and decidedly, sure let the countries say words and what not, but at the end of the day it’s decided by the EU. Just one persons opinion.
And you're not terrified that's the situation? The beef the US has with the EUR is simple: the US is what's defending Europe militarily (nuclear and non-nuclear. The Pentagon is the reason Ukraine hasn't been nuked yet, or more likely, that Kiyv didn't surrender because they didn't have nukes). That was never given freely. It was politically impossible to get governments to actually pay for that, so it was decided to trade in USD (this was before petrodollar), giving the US "exorbitant privilege" (which roughly translates to that the US gets to tax most of global trade at something like 2 to 4% and use that for themselves). That the US got that was not an accident, but a policy decision. The Euro takes that away, but of course, no European country is willing to either now start paying, or to defend itself. To say nothing of France, the Netherlands or Denmark defending remote EU territories like Greenland, ABC islands or Polynesia (which would require, for starters, militarily controlling supply lines to those territories).
Given the history of economic sanctions (what the EU is doing) ... of course people don't know that history, but the TLDR is that nearly always economic sanctions are a prelude to war. They don't just not work. In many cases they cause wars. WW1 was caused by economic sanctions (and the scale of EU economic sanctions is 100x bigger than what caused WW1), and often the economic sanctions on Germany after WW1 are generally thought to be the big reason for WW2. It makes sense from a game theory perspective: if a government, whose power is fundamentally based on force, lets economic sanctions convince them, they will be attacked by their own people. So they simply cannot give in, and historically that's what you indeed mostly see: when a country is targeted by economic sanctions, it's government usually decides to attack.
The EUR is imposing very large scale sanctions on ... essentially everyone. Russia and China most obviously of course, but sanctions are so widely used by the EU you can literally say it's being used against everyone from Afghanistan to Zimbabwe, or geographically from Paraguay to North Korea. And why is the EU doing this? Exactly the reason Trump is doing it: sanctions are "power without needing parliament to approve the budget for anything".
The fear is: the historically most likely outcome of what the EU is doing, what EUR is being used for, is another very large scale war.