Quote (ofthevoid @ 11 Apr 2023 20:23)
Dedollarization is happening but i generally think the trend is going to be much slower than people anticipate. Something like 85% of international trade is settled in dollars. That would take many many years to unwind. The other thing to consider is the logical next question, if not dollars then what? There has to be another currency that is as liquid, trustworthy and readably acceptable by all counterparties. That simply doesn't exist today, nor do I think many are eager to switch to renminbi for example. Why would India for example cede so much power to China when they are fast approaching as a global economic powerhouse as well?
Look at the 3 big currencies that have been widely used for international trade and ask yourself which of the 3 you'd rather hold. Yen, Euro or Dollar? IMO it's an easy answer, dollar is still king if you understand some of the issues the other 2 have. Dollar is still going to be around for quiet awhile until it gets replaced by some central bank digital currency.
What's likely to happen and is happening is sovereign treasuries across the globe will simply diversify their holdings. If before they held lets say 70% of FX in USD, now maybe that's cut down to 50%, and that 20% is now a mix of Saudi, Chinese, whatever other currency basket.
I will say at least 40 to 50 years. Even then it is almost impossible to take away the dollar unless the United States collapse completely .
The scary part is , because of the fear of de dollarization. The United States government might do something drastic and trigger a larger conflict that might inevitably end up in a major war.
Another thing that is rather uncomfortable is Lee Kuan Yew's prediction. He already said this 15 to 20 years back, it will take the Chinese about 2 to 3 generation to make their own passenger aircraft.
And here we are....
I think a lot of people in the world did not expect United States decline to be that quick and did not expect the Chinese to rise in such an unprecedented manner.
The idea of America declining is creating a knee jerk reaction which culminated to what we are experiencing right now in regards to the " East " and " West" conflict.
Instead of putting up a dangerous narrative of America " decline " . United States should promote and take a " Reclining " position instead. And when they are doing a reclining position, they should do house keeping and fix serious existing problems they are facing domestically.
And if they do that, within half or one generation, they will be back in business.
But of course, when it comes to pride and dignity and her war like , and control problem. It is less likely they will take that step.
This post was edited by Hamsterbaby on Apr 11 2023 06:48am