The End of "USD" as the World's Reserve Currency

[mindrust]

Not happening.

The demand for USD is not going down, only up and the recent events (covid19) drove the demand even higher. (people buying toilet paper and other shit via USD, not crypto or gold)

Because the demand goes up, to keep FIAT inflated, they print even more.

You may wonder, this has to end at some point. I'd say yes but not soon because neither crypto nor gold can replace FIAT.

On the other hand If USD goes down, everything else will follow it. (GBP, EUR, JPY, CNY etc.) That means the total collapse of the world financial system. In a time like that, let alone crypto, even gold may not survive.

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[bittraffic]

Not yet happening though. USD is used everywhere, we even use it to trade in crypto. If COVID is going to really end its domination, it will take years and years. But as China keeps growing I would bet for Yuan since the Chinese are the most aggressive in making their fiat to be used. Most of the countries are going to import products from China, we all know we need yuan for that to take place. 

[LogitechMouse]

What are your thoughts? Will COVID-19 destroy the US' economy, leading to the rise of another reserve currency (especially when the US is the #1 country with coronavirus cases)? Or will the USD still thrive?

It already destroyed their economy as to my perspective.

When they used Quantitative Easing, they already started to destroy their economy. For sure this move by the US Government will have a big impact for them for a long time. Now with the question if there will be another reserve currency that will arise. I don't think that it will happen though. Take note that Trump is their President but he is also a businessman and he knows anything about money. I know for sure that he will make a plan to be #1 again in terms or economy.

[Wexnident]

Give up in praying that the US economy would collapse from just this. They've pretty much been at the top and I'm pretty sure rarely does other comes close to them. They have quite a big of a breathing space imo, and even if we do say that the US economy is desperate right now cause of the COVID, they'd probably pull something out to fix the problem. They pretty much hold too much power that a setback like this doesn't seem likely to affect them much. Sure, on the surface it may seem like it's actually being destroyed, but who knows, maybe that's what they want us to see. Sides, if the US dollar was to collapse, it wouldn't come from a sudden bout or in an immediate impact, it'd be gradual, slowly and surely and at that point in time, even if the US wants to act, they can't. They'd probably just hold the last edges of the ropes before thoroughly collapsing and being changed by another country as the top.

[exstasie]

On the other hand If USD goes down, everything else will follow it. (GBP, EUR, JPY, CNY etc.) That means the total collapse of the world financial system. In a time like that, let alone crypto, even gold may not survive.

That could actually be very bullish for gold and crypto. It may sound crazy now, but consider how much value is stored in reserve currencies. If there was a true systemic collapse in fiat currencies, that value has to go somewhere. A return to commodity money makes more sense than anything else.

I see a depression being bearish for BTC for the same reasons they are bearish for stocks and commodities, primarily deflation. A total currency collapse is a whole different thing.

[mindrust]

On the other hand If USD goes down, everything else will follow it. (GBP, EUR, JPY, CNY etc.) That means the total collapse of the world financial system. In a time like that, let alone crypto, even gold may not survive.

That could actually be very bullish for gold and crypto. It may sound crazy now, but consider how much value is stored in reserve currencies. If there was a true systemic collapse in fiat currencies, that value has to go somewhere. A return to commodity money makes more sense than anything else.

I see a depression being bearish for BTC for the same reasons they are bearish for stocks and commodities, primarily deflation. A total currency collapse is a whole different thing.

Definitely not in the short or mid term and I am still not convinced it will be bullish for crypto&gold in the long term. Is it possible for the long term? Maybe. The odds are not zero.

The value has to go somewhere but where? Let's see the possibilities:

1-I'd say gold at first but what good it is if you cannot spend it? It is impossible to spend physical gold. Try to get a burger from the mcdonalds and lets see how it goes. Gold has zero real life usage as a currency.

2-Crypto has better odds there when it comes to usability but what crypto lacks is, "trust" which gold has ultimately. People are not gonna immediately trust these new anonymous magic internet currencies especially when shady stable currencies like tether is around. (also it is still not clear how bitcoin is going to handle world demand as a currency. layer2 looks promising but...)

You may say, well they are already trusting the FED you can't get more stupid than that but it is adopted. That stupidity became the system itself.

3- The value goes to toilet paper which actually makes the most sense. By toilet paper I mean anything that has a real life use. Dry food, paper, water, land etc.

[sheenshane]

IMO, It's possible that Yuan may replace USD after the covid19 pandemic where all nation's economy is suffering due to the global economic recession since as of the moment we are still in recession and only a few just started to open their economy and first of these was China. While we are still in recession China already started to recover and the US is still in a battle to defeat the pandemic and that makes China become ahead of us.

Though China may be ahead for the meantime US will be able to cope up for they're the most powerful country in terms of military and etc, as soon as the US defeated the pandemic rest assure they will do an intensive action in all aspects including their economy and will prove again that they are still the strongest.

[abhiseshakana]

The main legitimacy of the dominance of the American currency in the world is MILITARY POWER.

Do you think that US military power will remain as strong as it is now with 30% unemployment rate that will stay like that for months? Who will pay for this? Printing has it's limits. When USD supply will increase 10-20% annualy countries will start to move money from dollar to other assets/currencies. That's why i posted that it will take up to 2 years for things to speed up. That's just my thoughts. I'm interested in yours.

China's top military officials and Indian defense intelligence observers analyzed that the strength of the American war declined sharply because COVID-19 was only 30%. Several countries took military action together to test the readiness of America when contracting a pandemic. China deployed to the South China Sea, Iran maneuvered in the Strait of Hormuz, Russia took action in Vladivostok, and no less North Korea. Many American aircraft carriers, US NAVY, are currently unable to sail anchor at sea in the Pacific due to Corona.

The American principle as the winner of the war is "the winner takes all" and according to George F Kennan's statement that "we want to keep it that way forever" in which America controls the world's wealth, whether it is through warfare combat or non-combat warfare.

So far, many have seen the corona phenomenon as China VS America. Though the two countries are only a proxy of the shadow people who are behind them. If you feel the current situation the globalist shadow in control compared to the orthodox shadow. It's about who is actually in control. America became a superpower by design from the shadow group. The American military will remain strong especially if Trump wins in the second round. Economists at war will be implemented as when America entered into world war two, which brought America to become a world superpower and dominate the military, politics, hegemony, economy, currency, and technology.

If Joe Biden wins, it means that globalists will get a red carpet and a 7 billion soul vaccination program and a world control agenda with big data will be easier. The globalists want decoupling from fossil fuels to renewable energy such as batteries, the grand plan protocol has been implemented by China. The shape of the world will be different and the epicenter of the world will change.

The American military will remain dominant as long as America is still used as a proxy, the military is the guarantor of the country's sovereignty and has a high deterrent effect in all fields. For information, America made the space warfare program.

[Chrystora123]

"The US can print a lot of money, not inflation. Why? Because other people need US dollars, not just the country".  the whole world of trade life (oil and export/import transactions) has been controlled by the US Dollar, it is difficult to change it because it has been running for decades.  it takes cohesiveness from all over the world to bring down the US Dollar and that is impossible because America's friendly countries will definitely not want to do this.  The US Dollar will not end..

snip..

Chinese Yuan will not be able to replace the US Dollar..  since the beginning they always spread their falsehood is actually an artificial strong country, China pretends to be strong when in fact fragile, some time ago they announced their economy is growing, my question is whether this is true when export/import stop they even claim to experience economic growth..

[NotATether]

If the world replaces the USD as its reserve currency, things might change drastically for the global economy. My guess is that either the Yuan or the Euro will become the successor of the USD in the future.

How can you possibly come to that conclusion when Europe and China are/were being hammered by the pandemic as well?

[Sanugarid]

Not happening.

The demand for USD is not going down, only up and the recent events (covid19) drove the demand even higher. (people buying toilet paper and other shit via USD, not crypto or gold)

Because the demand goes up, to keep FIAT inflated, they print even more.

You may wonder, this has to end at some point. I'd say yes but not soon because neither crypto nor gold can replace FIAT.

Most people don't realize that the USD excessive printing is just a way of devaluing it so people would spend rather than hold because of the decreasing value, this is an old way on which most people don't know coz they think that money is easy to earn. At some point the demand for USD has been down, this is why I think the USD will be at the top of fiat currencies just like bitcoin on the other world.

On the other hand If USD goes down, everything else will follow it. (GBP, EUR, JPY, CNY etc.) That means the total collapse of the world financial system. In a time like that, let alone crypto, even gold may not survive.

But yeah if USD goes down deep, the most probably currency after it will be these, (GBP, EUR, JPY, CNY etc.), but I highly believe on CNY among these paper notes.

[bitgolden]

As long as USA still stands as world's biggest power even against China, we are not going to have anything like this at all. USA is just too powerful and I feel like there is really nothing we could do to make them stop being this powerful neither, only they can drop from that position, we can't make them drop from their position. They have way too many companies that have too much power all around the world.

You would think having trillions of dollars in debt to whole world would mean the end of dollars but the reality is they also have trillions of dollars investment all around the world as well, so when other nations even try to get better, that equals USA making more profit from those nations as well, so they can never be done by other countries getting better.

[mindrust]

"The US can print a lot of money, not inflation. Why? Because other people need US dollars, not just the country".  the whole world of trade life (oil and export/import transactions) has been controlled by the US Dollar, it is difficult to change it because it has been running for decades.

Exactly this.

The part with China is true too.

China needs USD more than their native currency CNY. The truth is everybody needs USD. Everything is being priced with USD. Countries borrow USD, loan USD. All books are kept in USD.

And people say USD will collapse. Sure thing.

It is not impossible but like I said, USD collapsing means we all are going down with it. Nobody can survive a mess like this.

[exstasie]

That could actually be very bullish for gold and crypto. It may sound crazy now, but consider how much value is stored in reserve currencies. If there was a true systemic collapse in fiat currencies, that value has to go somewhere. A return to commodity money makes more sense than anything else.

I see a depression being bearish for BTC for the same reasons they are bearish for stocks and commodities, primarily deflation. A total currency collapse is a whole different thing.

Definitely not in the short or mid term and I am still not convinced it will be bullish for crypto&gold in the long term. Is it possible for the long term? Maybe. The odds are not zero.

The value has to go somewhere but where? Let's see the possibilities:

1-I'd say gold at first but what good it is if you cannot spend it? It is impossible to spend physical gold. Try to get a burger from the mcdonalds and lets see how it goes. Gold has zero real life usage as a currency.

2-Crypto has better odds there when it comes to usability but what crypto lacks is, "trust" which gold has ultimately.

Confidence in fiat money (not necessarily third party trust) would collapse. Physical gold is obviously out of the question, but gold-backed or silver-backed notes are not. I don't see gold (or BTC) becoming global reserve currencies, but I do seem them potentially becoming global reserve assets.

While I don't think we'll see a return to an actual gold standard for sovereign currencies, it's possible we'll see a hybrid system develop where currencies are linked to baskets of assets held in central bank reserves. That seems like the most obvious knee jerk response to a collapse of free floating fiat.

BTC is quickly becoming accepted as a legitimate asset class alongside gold. It could someday fit into the above paradigm. Whether it does largely depends on when such a collapse occurs. Tomorrow vs. 20 years from now would make a world of difference.

3- The value goes to toilet paper which actually makes the most sense. By toilet paper I mean anything that has a real life use. Dry food, paper, water, land etc.

In the immediate term, that's what will probably happen. It would be chaotic and the market would primarily be concerned with basic needs. Eventually a new monetary system would rise from the ashes though.

[stompix]

China's top military officials and Indian defense intelligence observers analyzed that the strength of the American war declined sharply because COVID-19 was only 30%. Several countries took military action together to test the readiness of America when contracting a pandemic. China deployed to the South China Sea, Iran maneuvered in the Strait of Hormuz, Russia took action in Vladivostok, and no less North Korea. Many American aircraft carriers, US NAVY, are currently unable to sail anchor at sea in the Pacific due to Corona.

Unfortunately for US haters, this scenario is happening only in their head!
Even Coronavirus Couldn’t Stop the 2nd US Carrier Visit to Vietnam

IMO, It's possible that Yuan may replace USD after the covid19 pandemic where all nation's economy is suffering due to the global economic recession since as of the moment we are still in recession and only a few just started to open their economy and first of these was China. While we are still in recession China already started to recover and the US is still in a battle to defeat the pandemic and that makes China become ahead of us.

And, they opened and? They are manufacturing stuff for?
For Europe and the US who are still almost closed down and don't want anything?

This is the same bs the communist were feeding us before in the 80s, we were producing tons of things, every factory was breaking records after records, but nobody was buying our crap and we were dirt poor but we were producing things.
China’s manufacturing weaker in April as virus hurts exports

China became the first major economy to reopen factories in March after the ruling Communist Party declared victory over the outbreak. But the United States, Europe and other major markets have yet to lift controls that are keeping consumers from spending.

A monthly purchasing managers’ index issued by business magazine Caixin slipped to 49.4 from March’s 50.1 on a 100-point scale on which scores below 50 indicate activity is contracting. A separate survey by the Chinese statistics bureau and an official industry group sank to 50.8 from the previous month’s 52.

The official survey’s sub-index for export orders plunged by 12.9 points to 33.5.
Both surveys showed employment weakening.

You don't have to be a genius to understand that you can produce 2000 pairs of socks next month, that doesn't mean you're a successful business until you manage to find somebody to sell to at a profit! You've opened your hotel, does it mean you will get $ as you used to? No, you need to have the same number of guests as before first!
The global economy is not as simple as that, lower demand in economies worth 30 trillion a year might hammer manufacturers in east Asia to bankruptcy, there is no winner here.

[voron7477]

The current financial system demonstrated its inefficiency in 2008, but USD is still a reserve currency. Why should Covid-crisis be much different? The entire world is entering the recession too. It isn't the  dollar apologetic polemic, it's a fact that there isn't a worthy alternative to replace it.
I've also read some analytics about the possibility of returning to the gold standard. If it actually happens, it will stop the dollar from free fall and made it the better reserve currency.

[mindrust]

The current financial system demonstrated its inefficiency in 2008, but USD is still a reserve currency. Why should Covid-crisis be much different? The entire world is entering the recession too. It isn't the  dollar apologetic polemic, it's a fact that there isn't a worthy alternative to replace it.
I've also read some analytics about the possibility of returning to the gold standard. If it actually happens, it will stop the dollar from free fall and made it the better reserve currency.

There is indeed not a better alternative but gold standard isn't making a comeback neither.

If we go back to the gold standard these are the possibilities:

1-They'll refuse to audit their assets. > instant red flag

2- They'll let it to be audited but they'll cheat by hiring their own guys. You won't be able to see the gold yourself. > may go smooth for a while. tether is doing it already with btc/usd
(Seeing don't mean shit anyway, you need random samples from the bars)

3- Everything will go smoothly but then, gold will be banned completely except for the industrial usage. > didn't work before

USA already went with the 3rd option before and it didn't work.

Why did they choose the 3rd? Because they knew the first 2 options were straight outta dumb.

[YellowFeveRs]

I think it’s a very interesting discussion what the US should do next as to how to stop the USD from going into a free fall.
It’s understandable that they want to print money to help the economy but printing money is never the solution cause it always causes inflation which is a bigger problem in the long run hen the recession will cause if you do nothing. I like to compare it with monopoly when you are playing and you cheat by taking some more money out of the bank at first nobody will notice and the game will continue like normal but later on in the game it will get obvious that there is way to much money in the game cause money keeps being added each time you pass start, I like to see this as the normal inflation, the inflation that everyone can handle and makes it possible for the economy to work but when somebody cheats by stealing some money out of the bank, or in this case by printing a whole bunch of money, it shifts the playing field in favor of the person who cheated. This can cause big problems in the long run as the money from the other players becomes less valuable. What I’d like you to take away from this is if the US government keeps printing money like it has been doing the last couple of months there is a big chance that is following in the footsteps of the Venezuelan economy only this time it’s not just one country which is going down but the world wide economy as economic markets are now so much connected that everything has consequences for everything.

[SvonioneFromMangoCoinz]

As a result of the COVID-19 pandemic, we're entering a recession in the world's economy. The US and some other countries are printing money like crazy, leading towards the inflation of national currencies in such a short time. For long, the US has been the leading economy where many countries rely on the USD as the reserve currency in the world. But all of this may soon change, as people are starting to lose trust in The FED. As the US economy plummets, the world will be looking for another substitute of the USD as the reserve currency for the global economy. Depending on how long the outbreak lasts in the mainstream world, the process of the USD's collapse will be either a slow or speedy one.

What are your thoughts? Will COVID-19 destroy the US' economy, leading to the rise of another reserve currency (especially when the US is the #1 country with coronavirus cases)? Or will the USD still thrive?

Americans participate in crypto quite a lot but the government does not like it. That is why many projects and exchanges often embargo Americans trading or investing in their projects.
Although the Corona virus epidemic is devastating the United States, I still believe that the USD is still at its peak. Everything will soon return to normal, Trump is a very good president of the economy, he will revive the whole economy.

[Tchulkaturin]

Leading economy (most likely China together with Russia if we will not see global military conflict before) will choose new reserve currency (and settlement currency for markets like OIL).

I agree that it comes down to oil settlements. At a minimum, a reserve currency needs to
1. be stable and of relatively high value
2. have enough supply for the entire world
3. have enough liquidity for the entire world

Right now, the US dollar doesn't have enough of any of these things.
1. It hasn't been backed by anything real since 1971. People say the dollar is backed in oil sales, but commodity sales are not legitimate backing for any currency. Backing is like collateral for debt. In fact, one of the reasons the US dropped the gold standard is because lending nations knew the US did not have enough gold to cover its debts after the Vietnam War. Using the dollar to settle oil deals creates ongoing demand for it, but it does not provide real collateral. So the idea to back the dollar in oil sales was never legitimate, especially now that we've seen negative oil prices for the first time. On a side note, I bet the US never does pay the majority of its debt. Several years ago, when Christine LaGarde was still with the IMF, she made a comment (in reference to Greece) to the effect that most of this debt is never going to be repaid. I'm not sure how they intend to settle the massive amounts of sovereign debt out there right now, but I sure hope it doesn't involve the use of militaries.
2. There is a huge supply of dollars, but there are still dollar shortages internationally, right now at least. Smaller currencies are collapsing and need dollars to get them through this period. If nations aren't able to acquire the numbers of dollars they need, they will begin to lose faith in it and try to find something else. If enough of them start trying to find an alternative to the dollar, they will eventually succeed.
3. The current liquidity problems have been going on since about 2007 (maybe a little earlier). If you look at the Fed's Total Assets chart, you'll see that it did not return to normal after the Recession officially ended, and lately it appears to be spinning out of control. Quantitative Easing, in the amounts needed, would diminish the value of the dollar. Too much more liquidity would lead to less stability. I like the Weimar Republic photo in the comment I responded to because it appears to be the path the US is taking, possibly on track for one century later, almost to the day.

Then why is the dollar still the reserve currency? Because there is no alternative. The high demand is keeping it stable for the time being, like a self-fulfilling prophecy. No other nation or entity has a currency that could take the dollar's place. In my personal opinion, the world does not have any real reserve currency right now at all, and they are simply using the dollar as a default for lack of anything more suitable. Interest rates may go negative, or even if they stay where they are, the incentive for nations to use the dollar is already diminishing.

The biggest problem for the US is that it is trying to run a global currency and a domestic currency with both the global and domestic economies hanging from thin threads. And while all of that is going on, it is now subsidizing a collapsed bond market. All the so-called Fallen Angels that have been downgraded to junk are valued in the trillions of dollars. The dollar is also political power as it is used to enforce sanctions. So there is the political facet of the whole thing too. All of this is too much for a central bank to manage. It isn't possible to juggle all of that with the few tools the Fed has. I think the US domestic economy will be the thing that goes into freefall as they try to prop up the others.