The End of the USD? Not Likely
When a point of view is wrong for 30 year, is it still worth listening to?
It seems when it comes to the US dollar, we are told any day now. What am I referring to? Naturally, this is the end of the USD. It is decades in the making.
Or so we are told.
Unfortunately, this is a false narrative. As stated, this is something espoused for decades, driven by hatred or false narrative.
The End of the USD? Not Likely
Everything is going to displace the dollar. Didn't you get the memo.
We have to declare the US dollar as the most hated currency in history. From the gold bugs to Europeans, it is panned widely. In fact, the Europeans were so confident in their superiority that, when starting the EU, it was declared that the economic zone would compete with the United States.
As far as the currency, the euro was going to end the US dollar's dominance. Here is the headline from an article in 1998.
How did that turn out?
The EU is in total decline. We are seeing the end to Marxist utopia they hoped to create. The debt levels are such that the only way out is default. Macron fancies himself Napoleon, leading Europe to a great victory over Russia. This will lead to WW3.
When the bullets start flying (or missiles), the US dollar will be where everyone runs. Rarely do you hear the talking heads on television, economist or not, mentioning international capital flows. How many times did you notice CNBC mentioning capital controls?
These are all important concepts that get overlooked.
Capital flow is also why the US equity markets can go up, especially the DJIA, as the global economy is tanking. The DOW reflects international capital flows better than the other two exchanges. Institutions tend to move large sums into the large cap stocks while take a rather conservative approach. They are not going to buy up large sums of Meta or Tesla.
Get Out Of the 1920s
Unless one understands the banking system, one really doesn't understand money. It is not governments that run things nor central banks. Most of the legal tender under fractional reserve banking is created by the commercial banks since we do not use cash for many transactions.
This means ledger based money.
Of course, outside physical cash, it is all a ledger. It has been that was for 70 years. The offshore dollar system started around 1955, making the central banking system obsolete.
Today, we have cryptocurrency. Again, we have a lot of confusion. Most of the "currency" are really crypto-assets. Bitcoin, Ethereum, and a host of other coins (tokens) are assets. They do not serve as a viable medium of exchange.
The only currency comes in the form of stablecoins. These have the parameters required. Most of this is due to the US dollar which, not surprisingly, is the dominant stablecoin.
All of this means we are dealing in a digital world. Here is where the key to success changes. In this realm, network effects are the dominating force. When it comes to currency, guess what totally dominates?
Of course, we have to keep in mind that currency changes. In the offshore dollar system, it is not legal tender that dominates. Instead, it is T-bills. These are card blanche. Then we have the banknotes from the central bank, something that went out with the Mosaic browser. Finally, we have the "digital" dollars from the commercial banking system, which is ledger (like crypto) run by those institutions.
A banknote or any other form of physical cash is akin to snail mail. We are in the internet age. Trying to rebuild the pony express is not a viable solution going forward. In fact, we are looking at a situation where the present structure, commercial banks being responsible for the money supply, is simply to slow and archaic.
This is where crypto enters. My guess is stablecoins, mostly USD denominated, will be the next wave. Government will try to force asset backing but "dark" stablecoins (algorithmic or synthetic) will likely gain in usage over time.
Here we are looking at the dollar no longer being a currency but, rather, a measurement.
Posted Using INLEO
Completely agree, USD is not going anywhere and it is not going to be replaced with euro or any other currency any time soon.
Repeated predictions about the end of the US dollar over many decades haven’t come true yet, which shows how complex the global financial system is and how strong the dollar remains at international economic networks and investments.
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STOP
The US dollar's resilience is truly remarkable! Decades of doomsday predictions have only proven its staying power. While the financial landscape evolves with digital currencies and stablecoins, the dollar remains the global benchmark. Perhaps the real question isn't when the dollar will fall, but how it will continue adapting to our changing world. After all, even in the digital age, the dollar keeps finding new ways to stay relevant.
It's funny to me that you have all this smart talk about money markets, yet do not acknowledge the fact that when people talk about the dollar being 'replaced', they don't mean dollars will disappear. They mean the dollar will be replaced as the world's reserve currency, and that is already happening.
The moment the first small country invested in Bitcoin as a reserve currency, the days of the dollar's dominance have been numbered. The only question left is...
What will replace it?
Hated but still the powerful currency in the world.
Presently now, USD is still strong and still fighting against all odds to fall but I don't see it holding on for long in the future
Replacing the USD could be possible in the future as crypto gains more adoption and acceptance. However, it won't be a day's job.
Meanwhile the US is trying to stay ahead of the curve in crypto adoption, that can make the USD relevant for much longer.
1998 is a long way and the dollar still standing. Even if the fiat dollar would be replaced with advancement is crypto, USD is still in lead
Crypto is going to advance the US dollar. Stablecoins will be the medium of exchange. Most of these will be USD denominated.