As we see many videos claiming that the US Dollar will cease to be the main currency, I wanted to investigate on this. De-dollarisation rolls off the tongue easily enough, but its supporters and advocates do not really know that they are playing with fire.
The U.S. Dollar is not the world’s prefered currency by chance. The U.S. Dollar is not only backed by the strongest economy in the world, but also by the most reliable and transparent institutions; currently, China is not even close to having transparent, independent institutions similar to the U.S. Nevertheless, China's economy may one day become 4 times larger than the U.S. economy. So, the question posits itself: could the US Dollar be dethroned as the worlds reserve currency? And which currency could substitute it? the Chinese Renmimbi?
Why the US Dollar WON'T colapse?
byu/bredalien ingeopolitics
Posted by bredalien
4 comments
China’s economy becomes 4 times larger than the US? So just multiply population with equal GDP per capita? This is completely nonsense.
Secondly, don’t talk de-dollarization without at least a basic understanding of how macroeconomics work. Balance of trade, balance of payments, money supply, interest rates, productivity, consumption, investments, fiscal and monetary policy. Otherwise this becomes a whose d**k is larger discussion – it would be devoid of critical content.
EDIT: Go check out Dr Michael Pettis. He speaks on this topic and is a Professor who lives in China and teaches Finance. Alternatively you could also look on youtube for Money & Macro (another economics professor) They actually explain the macroeconomics of currency. In short – China does not and never did want the Renminbi to be a reserve currency and until it does, it won’t happen. Without the agreement of a country’s central bank, that central bank currency will never become a reserve currency and the PBOC will not agree to this because the CCP will not agree to this.
Collapse***
The US dollar wont collapse because it’s to the worlds advantage that it doesn’t, simple as.
It’s not about dick measuring of an economy, it’s about a currency that everyone recognizes has value and thus it does.
China also is not going to grow 4 times larger than the US’s, it’s just not. It’s massivley mismanaged and it’s population is rapidly aging with low conusmption.
Being a world reserve currency is also not a great position to be in economically speaking. China can get advantagous positions in trade deals because it can pay in it’s own seperate currency. The US doesn’t have it’s own seperate currency be the Dollar is the currency. The reason the US deals with it is because of ideology(Liberalism with capital L, the trade must flow) and it was already the world capital for finance and buisness when it became the world reserve currency.
I don’t think the term “collapse” is correct, but dollar’s primacy will quite possibly diminish in the long run…the scale by which it diminishes will only be decided by what mechanism other power centers are able to introduce… Chinese yuan, for example, is not a competitor to the dollar, but if the BRICS countries can work together towards a common mechanism, dollar’s power will definitely be eroded to some extent…right now there are too many contrarian viewpoints with BRICS itself for that to happen, in my opinion…also, Europe’s trajectory in the next 20-30 years will also have an impact… In the short to medium term, dollar will undoubtedly remain the No. 1 currency