"No reason for dollar to be world's reserve currency"

[DannyElfman]

The days of the dollar as reserve currency are counted. The US are weakened by the ongoing economic depression, excessive military spending and catastrophic foreign policy.

Reserve currencies before the dollar had backing by precious metals in addition to the economic and military dominance of the issueing nation. The USD is not backed by gold (anymore), it's solely dependent on its continued use as a trade currency. Now that the US loose influence and countries showing tendencies to use other currencies for trade, the demise of the reserve status of the USD will occur very fast.

The military spending is something that gives the dollar it's strength.

If a country is invaded/defeated in war then their currency would likely no longer be used. Since the US has military might there is a very low chance that our country could be taken over by some other country's military.

[IIOII]

The military spending is something that gives the dollar it's strength.

Yes, that's almost true. It's not the spending - it's the military power.

If a country is invaded/defeated in war then their currency would likely no longer be used.

Yes, that's also often true.

Since the US has military might there is a very low chance that our country could be taken over by some other country's military.

Yes, even that is true.

But... you form an implicit conclusion in your arguments, that is: Because the US are powerful due to military spending they can't be invaded (like other countries) and therefore their currency will continue to be used (as world reserve currency).

That is not true in general. There are more possible reasons for a currency to loose reserve status than just invasion of the home country by another nation. Actually I predict the main reason for the USD loosing reserve status comes from internal (economic weakness, debt, excessive spending, foreign policy) and not external reasons. The other countries (= the market for the USD) merely react on the weakened empire by rejecting its currency as reserve currency.

[arbitrage001]

The days of the dollar as reserve currency are counted. The US are weakened by the ongoing economic depression, excessive military spending and catastrophic foreign policy.

Reserve currencies before the dollar had backing by precious metals in addition to the economic and military dominance of the issueing nation. The USD is not backed by gold (anymore), it's solely dependent on its continued use as a trade currency. Now that the US loose influence and countries showing tendencies to use other currencies for trade, the demise of the reserve status of the USD will occur very fast.

The military spending is something that gives the dollar it's strength.

If a country is invaded/defeated in war then their currency would likely no longer be used. Since the US has military might there is a very low chance that our country could be taken over by some other country's military.

Problem is the military spending have its limit and US army is no longer an effective fighting force. US has never won any major war after WW2. Iraq and Afghanistan are still a mess.

[Harley997]

The days of the dollar as reserve currency are counted. The US are weakened by the ongoing economic depression, excessive military spending and catastrophic foreign policy.

Reserve currencies before the dollar had backing by precious metals in addition to the economic and military dominance of the issueing nation. The USD is not backed by gold (anymore), it's solely dependent on its continued use as a trade currency. Now that the US loose influence and countries showing tendencies to use other currencies for trade, the demise of the reserve status of the USD will occur very fast.

The military spending is something that gives the dollar it's strength.

If a country is invaded/defeated in war then their currency would likely no longer be used. Since the US has military might there is a very low chance that our country could be taken over by some other country's military.

Problem is the military spending have its limit and US army is no longer an effective fighting force. US has never won any major war after WW2. Iraq and Afghanistan are still a mess.

Except for korea and vietnam the US has won every conflict that it has fought in. Securing the country politically after the fact is a while different game.

[galbros]

The USD will cease at some point to be the world's reserve currency just like the GBP faded before it - another economic power will arise and bring about a new economic order.  Maybe it will be China, but the RMB is far from being freely traded.  Maybe it will be some sort of supra national currency like special drawing rights or the Euro (though even the Euro's survival is doubtful long term).

The dollar's share has gone down but there clearly isn't any clear candidate to replace it yet.  I imagine we'll see a move to a mix of currencies being held and that might actually help with the shift.

The point about there not being any world currency that was not backed by precious metals is a good one.  We really are in uncharted territory.  I often then of the US today as 16th Century Spain - spending riches it really didn't earn - and it eventually will have to collapse.

[GangkisKhan]

The USD will cease at some point to be the world's reserve currency just like the GBP faded before it - another economic power will arise and bring about a new economic order.  Maybe it will be China, but the RMB is far from being freely traded.  Maybe it will be some sort of supra national currency like special drawing rights or the Euro (though even the Euro's survival is doubtful long term).

The dollar's share has gone down but there clearly isn't any clear candidate to replace it yet.  I imagine we'll see a move to a mix of currencies being held and that might actually help with the shift.

The point about there not being any world currency that was not backed by precious metals is a good one.  We really are in uncharted territory.  I often then of the US today as 16th Century Spain - spending riches it really didn't earn - and it eventually will have to collapse.

Think anyone who pay attention to what's going on around the world know US dominance days are numbered. If China do take over, is it going to be better for the rest of the world or worse?

[galbros]

Think anyone who pay attention to what's going on around the world know US dominance days are numbered. If China do take over, is it going to be better for the rest of the world or worse?

While the US takes a lot of verbal abuse its brief span of economic "reign" has been pretty benign.  My guess is when, which may still be a long time from now, it comes to an end, people will appreciate it more.

[validium]

The RMB is definitely going to be the next reserve currency and this might happen sooner than we think. The Chinese have heavily invested in the African continent and this will be on of the factors getting it there.

[DannyElfman]

The RMB is definitely going to be the next reserve currency and this might happen sooner than we think. The Chinese have heavily invested in the African continent and this will be on of the factors getting it there.

China is still developing as an economy and it would be much too soon to use the RMB as a reserve currency. The chinese government also subsidizes their own industries too much for this to be a viable option

[lihuajkl]

The RMB is definitely going to be the next reserve currency and this might happen sooner than we think. The Chinese have heavily invested in the African continent and this will be on of the factors getting it there.

China is still developing as an economy and it would be much too soon to use the RMB as a reserve currency. The chinese government also subsidizes their own industries too much for this to be a viable option

Yes, China have jumped to the second largest economy over Japan based on GDP. Its international transactions take more and more proportion of that in the world. So RMB will be used more widely in the very future. So some countries have already considered RMB as second reserve currency.

[galbros]

The RMB is definitely going to be the next reserve currency and this might happen sooner than we think. The Chinese have heavily invested in the African continent and this will be on of the factors getting it there.

China is still developing as an economy and it would be much too soon to use the RMB as a reserve currency. The chinese government also subsidizes their own industries too much for this to be a viable option

Yes, China have jumped to the second largest economy over Japan based on GDP. Its international transactions take more and more proportion of that in the world. So RMB will be used more widely in the very future. So some countries have already considered RMB as second reserve currency.

Maybe in 25 years but not anytime soon, after all the RMB is not even freely convertible.  DE is right, if you scratch the surface in China you still have a developing country.  A rapidly growing one with good infrastructure but a developing one all the same.

You can't count on the number two argument because many people say China's growth has been fueled by its manipulation of the RMB.

Finally there is the Triffin Paradox where whichever nation provides the reserve currency has to run trade deficits, otherwise how else can other nations obtain that reserve currency?  And that has not been the Chinese path to date.

[chennan]

Bitcoin would pick up the slack from a failing dollar so fast Chuck Norris would take two steps back.

no matter what currency becames the reserve currency, such as the dollar, the trading parties who is not base in the US and receive the dollar as payment have to convert to its own currency when they do balance sheet and calculate profit and loss. Or buyers need to buy dollar priced products. They need to go for exchange to get dollars.It always is fuss. The world currency is needed to tackle this problem. The BTC is the future accepted payment in the world.

[Harley997]

The RMB is definitely going to be the next reserve currency and this might happen sooner than we think. The Chinese have heavily invested in the African continent and this will be on of the factors getting it there.

China is still developing as an economy and it would be much too soon to use the RMB as a reserve currency. The chinese government also subsidizes their own industries too much for this to be a viable option

Yes, China have jumped to the second largest economy over Japan based on GDP. Its international transactions take more and more proportion of that in the world. So RMB will be used more widely in the very future. So some countries have already considered RMB as second reserve currency.

The countries that use the Euro have a larger collective GDP then China does. I would argue that the Euro is more of a secondary world reserve currency then the RMB is today.

The fact that China is know to manipulate markets and has strict capital controls would likely prevent other countries from adopting the RMB from becoming any kind of reserve currency.

[IIOII]

The RMB is definitely going to be the next reserve currency and this might happen sooner than we think. The Chinese have heavily invested in the African continent and this will be on of the factors getting it there.

China is still developing as an economy and it would be much too soon to use the RMB as a reserve currency. The chinese government also subsidizes their own industries too much for this to be a viable option

Yes, China have jumped to the second largest economy over Japan based on GDP. Its international transactions take more and more proportion of that in the world. So RMB will be used more widely in the very future. So some countries have already considered RMB as second reserve currency.

The countries that use the Euro have a larger collective GDP then China does. I would argue that the Euro is more of a secondary world reserve currency then the RMB is today.

The fact that China is know to manipulate markets and has strict capital controls would likely prevent other countries from adopting the RMB from becoming any kind of reserve currency.

I doubt that any fiat currency will replace the USD as reserve currency. It's more likely that it will be commodity money (precious metals) - we already can observe oil-gold trade in a few countries - or even a cryptocurrency. But one can't know for sure yet.

[Harley997]

The RMB is definitely going to be the next reserve currency and this might happen sooner than we think. The Chinese have heavily invested in the African continent and this will be on of the factors getting it there.

China is still developing as an economy and it would be much too soon to use the RMB as a reserve currency. The chinese government also subsidizes their own industries too much for this to be a viable option

Yes, China have jumped to the second largest economy over Japan based on GDP. Its international transactions take more and more proportion of that in the world. So RMB will be used more widely in the very future. So some countries have already considered RMB as second reserve currency.

The countries that use the Euro have a larger collective GDP then China does. I would argue that the Euro is more of a secondary world reserve currency then the RMB is today.

The fact that China is know to manipulate markets and has strict capital controls would likely prevent other countries from adopting the RMB from becoming any kind of reserve currency.

I doubt that any fiat currency will replace the USD as reserve currency. It's more likely that it will be commodity money (precious metals) - we already can observe oil-gold trade in a few countries - or even a cryptocurrency. But one can't know for sure yet.

I would doubt that Oil would ever be a reserve currency as there are too many uses for it that must be done with oil and cannot be done with something else. The problem with gold being a reserve currency is that it is difficult to know for sure that you actually have gold so you will need to somewhat trust the counter-party that you are dealing with.

[Ron~Popeil]

The RMB is definitely going to be the next reserve currency and this might happen sooner than we think. The Chinese have heavily invested in the African continent and this will be on of the factors getting it there.

China is still developing as an economy and it would be much too soon to use the RMB as a reserve currency. The chinese government also subsidizes their own industries too much for this to be a viable option

Yes, China have jumped to the second largest economy over Japan based on GDP. Its international transactions take more and more proportion of that in the world. So RMB will be used more widely in the very future. So some countries have already considered RMB as second reserve currency.

The countries that use the Euro have a larger collective GDP then China does. I would argue that the Euro is more of a secondary world reserve currency then the RMB is today.

The fact that China is know to manipulate markets and has strict capital controls would likely prevent other countries from adopting the RMB from becoming any kind of reserve currency.

Exactly. Chinese currency is even more manipulated and controlled than the dollar or the euro. Changing masters does not free slaves. In this case the new master would be more sinister than the current one. We need a currency that is not controlled by any political entity to be economically free.

[PolarPoint]

I think the world is moving towards a multi reserve currency system. There is no one single currency which stands out above all others any more. A reserve making up of USD, EUR, RMB is an obvious combination.

[InwardContour]

The RMB is definitely going to be the next reserve currency and this might happen sooner than we think. The Chinese have heavily invested in the African continent and this will be on of the factors getting it there.

China is still developing as an economy and it would be much too soon to use the RMB as a reserve currency. The chinese government also subsidizes their own industries too much for this to be a viable option

Yes, China have jumped to the second largest economy over Japan based on GDP. Its international transactions take more and more proportion of that in the world. So RMB will be used more widely in the very future. So some countries have already considered RMB as second reserve currency.

The countries that use the Euro have a larger collective GDP then China does. I would argue that the Euro is more of a secondary world reserve currency then the RMB is today.

The fact that China is know to manipulate markets and has strict capital controls would likely prevent other countries from adopting the RMB from becoming any kind of reserve currency.

Exactly. Chinese currency is even more manipulated and controlled than the dollar or the euro. Changing masters does not free slaves. In this case the new master would be more sinister than the current one. We need a currency that is not controlled by any political entity to be economically free.

But this is exactly why the RMB would not be accepted as a reserve currency. The dollar and euro are somewhat manipulated by their respective central banks, but only in the name of stability. 

[ALToids]

I doubt the rest of the world stage has confidence in China to not manipulate it's currency at it's whim.  As it stands right now most of the EU tends to vote away from China/Russia.

[hollowframe]

The RMB is definitely going to be the next reserve currency and this might happen sooner than we think. The Chinese have heavily invested in the African continent and this will be on of the factors getting it there.

China is still developing as an economy and it would be much too soon to use the RMB as a reserve currency. The chinese government also subsidizes their own industries too much for this to be a viable option

Yes, China have jumped to the second largest economy over Japan based on GDP. Its international transactions take more and more proportion of that in the world. So RMB will be used more widely in the very future. So some countries have already considered RMB as second reserve currency.

The countries that use the Euro have a larger collective GDP then China does. I would argue that the Euro is more of a secondary world reserve currency then the RMB is today.

The fact that China is know to manipulate markets and has strict capital controls would likely prevent other countries from adopting the RMB from becoming any kind of reserve currency.

I doubt that any fiat currency will replace the USD as reserve currency. It's more likely that it will be commodity money (precious metals) - we already can observe oil-gold trade in a few countries - or even a cryptocurrency. But one can't know for sure yet.

Gold may, in theory, replace the USD as a world reserve currency, but I would say it is unlikely as many countries accept the US dollar as a form of payment, and you can go almost anywhere in the world with a US dollar and have it accepted, sometimes with greater certainty then the local currency.