themissinglink said:

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There are significant risks to tying your currency to any commodity, particularly one whose primary use (outside of banking) is jewelry with limited industrial value. The boom and bust cycles of the 1800s and first half of the 1900s aren't exactly a ringing endorsement of commodity-backed money.

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There are definitely settlement issues that would be all the more problematic in our current era. However, the first half of the 1900s were a mess because most of Europe left the gold standard in 1914 when WWI broke out. They wanted a way to fund the war that didn't limit them to their existing gold reserves which would have run out.

Recall the more ancient wars in Europe that would simply end in negotiations when funds ran out and rulers could no longer pay their armies or feed them.

AggieAL1 said:

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The. U.S. generally ran a trade surplus after World War II, but trade was curtailed because the countries that needed new goods the most could not come up with enough gold to settle accounts. As America and the world discovered earlier in the 20th century, a fixed-value currency stifled commerce and exacerbated economic downturns.

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What are you referring to? The last half of the 19th century leading up to WWI was largely a massive era of growth. And then most left the gold standard to pay for WWI in the early 20th century.

Fiat, by default, leads to economic downturns. It's a feature of the system. The ability to print and spend money into perpetuity tends to do that. The majority economic theory in place right now is idiocy.

The trick is to find a non-inflatable currency that doesn't have the physical settlement issues that gold had. And I think we all know what that is...

You honestly think we go a decade because our economy is so great and our monetary policy is good?

Interesting debate. Thanks for posting this OP!

Didn't watch the video or read any posts.

I could be way off.

But I'm thinking this is about the Petrodollar hegemony created by Nixon/Kissinger when France demanded their gold?

So the OPEC was formed where all oil is sold in US Dollar denomination...so anyone/country wanting to buy oil must trade with the US to get dollar..and the dollar goes to OPEC. We in turn protect the house of SAUD with our military...and they reinvest USD back to us.

In essence we the US own all the OPEC oil...as we can just print the money.

Of course this was the reason for Osama Bin Laden and some of the Sauds to take down the US in 911 and not Saddam.

Saddam's crime was selling his oil to Germany in Euros...as oil for food program thinking Europe will support him. No, they turned their back on Saddam and he was executed by public hanging that broadcasted worldwide.

Basically, it's us sending a message to the rest of OPEC, don't mess with the PetroDollar.

It's been all about the Petrodollar for the past 50 years.

AggieDruggist89 said:

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Didn't watch the video or read any posts.

I could be way off.

But I'm thinking this is about the Petrodollar hegemony created by Nixon/Kissinger when France demanded their gold?

So the OPEC was formed where all oil is sold in US Dollar denomination...so anyone/country wanting to buy oil must trade with the US to get dollar..and the dollar goes to OPEC. We in turn protect the house of SAUD with our military...and they reinvest USD back to us.

In essence we the US own all the OPEC oil...as we can just print the money.

Of course this was the reason for Osama Bin Laden and some of the Sauds to take down the US in 911 and not Saddam.

Saddam's crime was selling his oil to Germany in Euros...as oil for food program thinking Europe will support him. No, they turned their back on Saddam and he was executed by public hanging that broadcasted worldwide.

Basically, it's us sending a message to the rest of OPEC, don't mess with the PetroDollar.

It's been all about the Petrodollar for the past 50 years.

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This is awfully cynical. Not saying it's wrong but it is worth noting OPEC only sells it's oil anywhere because we protect their shipments in transit. We don't need to do that and if we stop doing it OPEC can sell their oil to anyone they want in whatever currency they wish to accept, all they've got to do is create a navy capable of protecting those tankers. IMO as long as the US Navy is the only way global trade actually exists it's not unreasonable to expect that we get something in return and it appears as if we're expecting that business to be conducted in dollars.

Gold might give you more downturns, but there has only been one or two instances in recorded history of hyperinflation happening from a non-fiat system.

I personally would rather know the real value of my net worth than have a government/bank constantly monkeying with the numbers so that people aren't scared and pull their money out, all while the cash they have is continuously worth less and less.

If opec goes away from Petrodollar, the world chaos will ensue..

ac04 said:

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there are many countries actively working towards de-dollarization. the tremendous policy error of stealing russia's FX reserves is only going to pour gasoline on that fire.

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IMO this isn't a serious effort but rather sabre rattling to keep the US engaged in propping up global trade at a time when it's incredibly clear the American taxpayers are tired of doing so. Who exactly can survive in their present form without us?

Two things can be simultaneously true. First the US is doing a poor job of managing the dollar. Second the rest of the world doesn't have a choice.

Definitely Not A Cop said:

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Gold might give you more downturns, but there has only been one or two instances in recorded history of hyperinflation happening from a non-fiat system.

I personally would rather know the real value of my net worth than have a government/bank constantly monkeying with the numbers so that people aren't scared and pull their money out, all while the cash they have is continuously worth less and less.

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This. It's also easy to argue for fiat when you are the most powerful country on the planet. An idea which is basically baked into our current economic thought process. The powers that be don't care if we keep printing money because no one has ever had the resources to call us on it without committing an own goal. You can run that way for a long time when your currency is the reserve currency and your Navy has kept global trade conflict free outside of regional flair ups for the last 75 years.

However, it certainly looks like we are nearing the end of the road with this arrangement. Couple de-globaliazation with the impending adoption of digital CBDC and now is the time to break free from government owning the money or we are doomed to oppression with the click of a button. Of course, I have zero hope that will actually happen.

https://www.amazon.com/Changing-World-Order-Nations-Succeed/dp/B0873ZP8NG/ref=tmm_aud_swatch_0?_encoding=UTF8&qid=1661207758&sr=8-1

ac04 said:

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it is a serious effort and it is ramping up all the time. we have alienated half the world by using USD as a weapon. frankly i think its a bit naive to assume that US dollar hegemony will just continue on indefinitely. biden stealing those FX reserves was a fatal wound. it may take decades to bleed out but there is no going back now.

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So answer the questions I asked earlier today.

1. Who is it and what currency are they moving to? the BRICS nations are all worse at currency management than we are so I'm assuming there's a group of other nations that are moving in this direction.
2. Are they capable of protecting their trade vessels on the open oceans?
3. If 2. is "no" then how will those vessels fare if the US either a) decides not to support what are now openly rival nations or, b) decides to be hostile to those vessels? More specifically how does China (which I assume is on this list) get oil tankers past India if the US is not forcing India to let them pass? Or better still how does China keep the lights on if the US starts sinking oil tankers?

I'm by no means saying that US dollar hegemony will just continue indefinitely and nothing I said even suggests that. What I am saying is that global trade exists ONLY because the US Navy allows it to. Again this isn't about the dollar as a currency it is about the US Navy protecting trade routes that nobody else can protect. No nation that relies on trade either inbound or outbound can afford to alienate the US because no nation can protect their trade vessels. That's just a statement of fact so if you can't trade without our protection why on earth would you stop using the dollar when that could mean you can't even buy the goods you need to survive?

While we're hear explain what currency is stronger than the dollar right now. There are none. We're in uncharted waters here with rapid inflation at home for a currency the entire word depends on and trades in. I'm near certain we agree that this thing cannot go on forever. Nothing does. However, to suggest that the dollar is going to be supplanted prior to complete global economic collapse is just false. Nobody can do what we do and it'll be decades before anyone can. When the dollar is no longer the global reserve global trade will no longer exist. It didn't exist prior to the dollar becoming the reserve and once it all falls apart we'll stop propping it up militarily and the who game will end.

Red Pear Realty said:

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https://www.amazon.com/Changing-World-Order-Nations-Succeed/dp/B0873ZP8NG/ref=tmm_aud_swatch_0?_encoding=UTF8&qid=1661207758&sr=8-1

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Ray has a fantastic video that describes the imperial system in significant detail including why the various empires gained and lost reserve status along the way. It's based on this book so I'm confident the book is equally well done. On the history. Where he's entirely wrong is in a lack of understanding of how today's world is different than the pre-WWII world. The dollar's reserve status is simply different because the world is simply different. Prior to WWII you had a series of largely disconnected euro-centric empires that all had significant navies capable of protecting trade vessels moving in and around their empires. They really didn't trade with each other very often, they effectively all ran in parallel.

That world ended at Bretton Woods when we forced the European nations to all be on the same side in an effort to control the Soviet Union. Post WWII we had the only legit navy in the world and we offered it up as global naval security in exchange for everyone being on our team against the Soviets. 80 years later when history says a rival empire and their currency should be challenging the US and the dollar there simply are no rival nations or currencies. If we took the Navy and the dollars and went home there would be no global trade at which point global reserve is irrelevant because nobody is trading with anyone they don't share a land border with.

Again, Ray shows little understanding of the world as it exists today. Heck at one point he has images in the video that suggest he thinks China is potentially the next power and the yuan the next reserve which is just absurd and I think even he now knows that. There are no rivals.

What is most alarming is that it's clear if you're not in the US we are no longer interested in propping this up. The past five presidents were all elected on something other than foreign affairs. Clinton, W, Obama, Trump and Biden. None of them campaigned on a strong record of foreign affairs and Trump campaigned on increasing our isolation from the rest of the world. We are the least engaged economy in the world as a percent of GDP yet we are the only reason all of this exists. IF we pull the plug then we can worry about the world after the USD but until we do business will be conducted in dollars by all nations that rely on our protection for their trade vessels. That's all nations. They have no other option.

Nothing in Ray's video covering this book suggests he gets all of that so unless there is info in the book that's not in the video then he's missing a huge piece of the puzzle.

The BRICS have already announced their own reserve currency, and Iran is set to join in that party. They also invited Saudi Arabia, which is reportedly considering joining. Around that time, SA and others refused to even have a phone call with Biden. Not a good sign.

https://www.newsweek.com/nato-grows-china-russia-seek-bring-iran-saudi-arabia-fold-1720780?amp=1

https://www.wsj.com/amp/articles/saudi-emirati-leaders-decline-calls-with-biden-during-ukraine-crisis-11646779430

Quote:

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Saudi Crown Prince Mohammed bin Salman and the U.A.E.'s Sheikh Mohammed bin Zayed al Nahyan both declined U.S. requests to speak to Mr. Biden in recent weeks, the officials said, as Saudi and Emirati officials have become more vocal in recent weeks in their criticism of American policy in the Gulf.

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themissinglink said:

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There are significant risks to tying your currency to any commodity, particularly one whose primary use (outside of banking) is jewelry with limited industrial value. The boom and bust cycles of the 1800s and first half of the 1900s aren't exactly a ringing endorsement of commodity-backed money.

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What if i told you USD is the commodity?

LOYAL AG said:

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Red Pear Realty said:

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https://www.amazon.com/Changing-World-Order-Nations-Succeed/dp/B0873ZP8NG/ref=tmm_aud_swatch_0?_encoding=UTF8&qid=1661207758&sr=8-1

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Ray has a fantastic video that describes the imperial system in significant detail including why the various empires gained and lost reserve status along the way. It's based on this book so I'm confident the book is equally well done. On the history. Where he's entirely wrong is in a lack of understanding of how today's world is different than the pre-WWII world. The dollar's reserve status is simply different because the world is simply different. Prior to WWII you had a series of largely disconnected euro-centric empires that all had significant navies capable of protecting trade vessels moving in and around their empires. They really didn't trade with each other very often, they effectively all ran in parallel.

That world ended at Bretton Woods when we forced the European nations to all be on the same side in an effort to control the Soviet Union. Post WWII we had the only legit navy in the world and we offered it up as global naval security in exchange for everyone being on our team against the Soviets. 80 years later when history says a rival empire and their currency should be challenging the US and the dollar there simply are no rival nations or currencies. If we took the Navy and the dollars and went home there would be no global trade at which point global reserve is irrelevant because nobody is trading with anyone they don't share a land border with.

Again, Ray shows little understanding of the world as it exists today. Heck at one point he has images in the video that suggest he thinks China is potentially the next power and the yuan the next reserve which is just absurd and I think even he now knows that. There are no rivals.

What is most alarming is that it's clear if you're not in the US we are no longer interested in propping this up. The past five presidents were all elected on something other than foreign affairs. Clinton, W, Obama, Trump and Biden. None of them campaigned on a strong record of foreign affairs and Trump campaigned on increasing our isolation from the rest of the world. We are the least engaged economy in the world as a percent of GDP yet we are the only reason all of this exists. IF we pull the plug then we can worry about the world after the USD but until we do business will be conducted in dollars by all nations that rely on our protection for their trade vessels. That's all nations. They have no other option.

Nothing in Ray's video covering this book suggests he gets all of that so unless there is info in the book that's not in the video then he's missing a huge piece of the puzzle.

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As a reminder, the last Presidential debate literally didn't have foreign policy as a topic...to your point.

Granted, it was more because Biden is a terrific moron and everyone involved did that to protect him, but it is partly due to the fact that we are deglobalizing.

Red Pear Realty said:

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The BRICS have already announced their own reserve currency, and Iran is set to join in that party. They also invited Saudi Arabia, which is reportedly considering joining. Around that time, SA and others refused to even have a phone call with Biden. Not a good sign.

https://www.newsweek.com/nato-grows-china-russia-seek-bring-iran-saudi-arabia-fold-1720780?amp=1

https://www.wsj.com/amp/articles/saudi-emirati-leaders-decline-calls-with-biden-during-ukraine-crisis-11646779430

Quote:

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Saudi Crown Prince Mohammed bin Salman and the U.A.E.'s Sheikh Mohammed bin Zayed al Nahyan both declined U.S. requests to speak to Mr. Biden in recent weeks, the officials said, as Saudi and Emirati officials have become more vocal in recent weeks in their criticism of American policy in the Gulf.

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I'm aware of those idiots. I was hoping for something that's a serious threat from a group of nations that can actually operate on the world stage without our protection. This group is not in any way relevant to my point that global trade exists because we let it and that when we stop propping it up it will end. None of those nations has the ability to trade with anyone they aren't physically connected to without our protection.

For all of history until WWII deep water trade was the exclusive activity of nations with sufficient naval power to protect their vessels. Today that's not the case as we protect everyone's vessels including these nations in BRICS. nobody in BRICS can do that for themselves never mind their entire organization. This collection of nations cannot replace the dollar because we won't let them and it's laughable that they want to try. That says nothing of the fact that none of them has a currency anybody wants to trade in. Themselves included.

Seriously you have a dying people in Russia, the worlds #1 importer of both food and energy in China (this makes China 100% dependent on us for their survival) the worlds #1 exporters of terrorism in Iran and Saudi Arabia and Brazil. This is ridiculous on its face. I'm far more worried about the Biden Admin's efforts to undercut the American people than I am anything this collection of misfits can cobble together.

But just for fun let's pretend they do actually jettison the petrodollar. Then what? China imports 60%+ of their oil from the Middle East. I'd say there's at least a decent chance us or Japan sink at least one oil tanker destined for China from Iran or Saudi Arabia. Act of war? Sure but short of nukes what is China going to do? They cannot confront us without oil and we are going to starve them of that quickly. Iran and Saudi combined don't have a navy strong enough to control the Persian Gulf never mind defeat the US Navy. Chinas collection of boats can't get to the other side of India which leaves thousands of miles they cannot patrol to their west and the Japanese navy to their east. Cutting them off from food and oil is easy.

Let me be clear. Nothing I've said here is meant to endorse the path the US is on. There are significant headwinds for us but they aren't going to come from BRICS or any other economic block. The threat is internal. The global economy is in significant trouble with looming demographic collapse virtually everywhere and we don't have the people in power to even pretend we know how to navigate what's coming. We don't have an economic model for the next 50 years of global population decline and is almost certainly going to get ugly. Really ugly.

I'm with you that the way the world has treated Biden is embarrassing and reflects poorly on our standing in the world. But don't mistake their rejection of him as president for an ability to replace us as the global power because those aren't the same thing. Nobody is replacing us on the world stage. Its much more likely we exit the world stage and trade becomes regional again. If that happens we'll be better off for it assuming we can get there without significant conflict that distracts us from the task at hand which is rebuilding our manufacturing base in North America.

Again this isn't about the dollar or inflation or global reserve status. Its about physical security of trade vessels and we're the only game in town and if we stop playing there is no global trade and reserve status is irrelevant for decades.