I’m not sure the reserve currency is as important as people make it out to be in practice. It’s pretty clear that trade can happen perfectly fine using bilateral swaps as we’ve see happening within BRICS on increasing basis. The dollar is also losing its status as a safe store of value due to geopolitical volatility and its devaluation. We’ve seen central banks increasingly buying up gold recently with prices going through the roof. This is a direct result of countries trying to divest from the dollar.
The reality is that the US is a huge economy, and even when tipping points like covid are reached, the effects will be delayed. However, the damage continues to accumulate, and people are being pushed on ever thinner margins. People don’t have to enter into a state of crisis all at once, it’s a question of quantity transforming into quality. At some point you reach a stat where there just aren’t enough people who are financially solvent to keep the economy functioning.
Meanwhile, the economic war with the rest of the world is indeed driving inflation up, and cost of living is already outpacing wages. As I’ve pointed out earlier, this has been papered over by people using credit to an extent, but that’s also now running out. Hence why there are record credit card, mortgage, and auto defaults happening as we speak.
I’m not going to try to predict when the crash actually happens. There are just too many variables at play. For example, one thing I expect to happen is that the US will cannibalize the vassals such as Europe to bolster its own economy. This could easily buy a few more years. So, it could be a slow burn you’re describing going on for a while yet. However, I don’t see how the crash can be avoided in the long term.
Oh yeah I agree I don’t think it will be avoided long term, I probably just think it will take longer than you probably think is all. And mainly I tie reserve currency to inflation, in that its current strongest property (due to the dollar slowly losing this status) is holding the floodgates of immense inflation back, not necessarily the insane trade leverage it once had
Right, it’s really hard to predict when the house of cards will come crashing down. One thing I’ve learned is that these things do tend to take a long time even after the inflection points are reach just because there’s a lot of momentum in the system.
We can also see how places like Brazil continue to function where majority of the population is immiserated. So, that supports your point that it could be a long while yet. I suspect what’s going to be the key factor is how rapidly the standard of living declines. If it’s gradual then, as you said, it’s entirely possible that people will keep adjusting to new living conditions without any mass opposition forming.
I’m not sure the reserve currency is as important as people make it out to be in practice. It’s pretty clear that trade can happen perfectly fine using bilateral swaps as we’ve see happening within BRICS on increasing basis. The dollar is also losing its status as a safe store of value due to geopolitical volatility and its devaluation. We’ve seen central banks increasingly buying up gold recently with prices going through the roof. This is a direct result of countries trying to divest from the dollar.
The reality is that the US is a huge economy, and even when tipping points like covid are reached, the effects will be delayed. However, the damage continues to accumulate, and people are being pushed on ever thinner margins. People don’t have to enter into a state of crisis all at once, it’s a question of quantity transforming into quality. At some point you reach a stat where there just aren’t enough people who are financially solvent to keep the economy functioning.
Meanwhile, the economic war with the rest of the world is indeed driving inflation up, and cost of living is already outpacing wages. As I’ve pointed out earlier, this has been papered over by people using credit to an extent, but that’s also now running out. Hence why there are record credit card, mortgage, and auto defaults happening as we speak.
The idea of top 20% or so carrying the economy is basically described here, and the risk identified is that the country can descend into civil unrest under these conditions https://elpidio.org/2018/02/12/citigroups-plutonomy-memo-there-are-rich-consumers-and-there-are-the-rest/
I’m not going to try to predict when the crash actually happens. There are just too many variables at play. For example, one thing I expect to happen is that the US will cannibalize the vassals such as Europe to bolster its own economy. This could easily buy a few more years. So, it could be a slow burn you’re describing going on for a while yet. However, I don’t see how the crash can be avoided in the long term.
Oh yeah I agree I don’t think it will be avoided long term, I probably just think it will take longer than you probably think is all. And mainly I tie reserve currency to inflation, in that its current strongest property (due to the dollar slowly losing this status) is holding the floodgates of immense inflation back, not necessarily the insane trade leverage it once had
Right, it’s really hard to predict when the house of cards will come crashing down. One thing I’ve learned is that these things do tend to take a long time even after the inflection points are reach just because there’s a lot of momentum in the system.
We can also see how places like Brazil continue to function where majority of the population is immiserated. So, that supports your point that it could be a long while yet. I suspect what’s going to be the key factor is how rapidly the standard of living declines. If it’s gradual then, as you said, it’s entirely possible that people will keep adjusting to new living conditions without any mass opposition forming.