Dollar seen as risky currency status alert

[Cameroni]

1 hour ago, jas007 said:

Under the current system, that's what has to happen, or the system collapses.  Money is loaned into existence and the expectation is that the bonds will pay interest, and that interest can come from only one place: more borrowing, more money printing. And then there's the issue of the world reserve currency.  The US can't maintain the dollar as the world reserve currency without accepting more and more debt, and deficit and balance of trade problems.  And so those "problems" are always there.  It's just a matter of degree.  In normal times, new money usually stays in the banking system and may be used for banks to bolster their reserves..  Credit markets also create money, but usually, there's some mechanism at work to limit that from becoming excessive. 

 

In short, it was a system designed to destroy the currency and transfer wealth to the banks,, a scam that has been ongoing since 1913, when the Fed was created.

 

Yah, that sums it up. And given the USA's national debt, and the future lower demand for American debt, money printing by the Fed is certain to continue. So inflation will continue.

[Cameroni]

39 minutes ago, RayC said:

 

That may be the case but it ignores the demand side of things. The US's major exports are Aircraft parts (gliders, balloons, and powered aircraft) ($10.8B), Refined Petroleum ($9.27B), Crude Petroleum ($9.26B), Petroleum Gas ($7.14B), and Commodities not elsewhere specified ($5.04B). 

 

I would have thought that the demand for Aircraft parts was relatively inelastic? If so, devaluing the dollar might result in a reduction in revenue in dollar terms. The demand for petrol and gas is related to economic activity which will suffer as a result of Trump's existing measures. In addition, the reaction of OPEC needs to be considered.

 

Moreover, Europe and others are not about to increase their imports of US agricultural produce unless the US meets the required sanitary and phytosanitary standards.

 

So in summary, it is quite conceivable that Trump will be successful in devaluing the dollar. It is a lot more debatable that his actions will increase US exporters' revenue or have any wider benefit.

 

At the moment indeed the US exports of aircraft, agricultural products and commodities do not figure uppermost in Trump's thinking. Trumps agenda is to rebuild America's manufacturing base from the bottom up, so the lower dollar should help those new manufacturing sectors that Trump hopes to revive. It is clear that he is not happy with the US merely making aircraft and weaponry for export. In a way Trump wants to chinafy the US.

 

It does ignore the demand side a bit. Just as China is finding out that there is finite demand in the world markets for the avalanche of Chinese products, the demand for US products will be finite as well. The thing is many countries now WANT to buy American products just to avoid tariffs in the future. Even China. Their complaint is there' s nothing to buy right now. So in a way tariffs themselves will benefit US exports.

[placeholder]

3 minutes ago, Cameroni said:

 

Exactly right, because many central banks followed the US lead in printing money and making cheap loans available.

 

Japan didn't, and had much lower inflation. What a shock.

Rapid growth of money supply

Money supply is increasing very rapidly in Japan. According to the latest money stock statistics published by the Bank of Japan, M2 has increased by 9.2 percent, and M3 by 7.6 percent, over the same month previous year.

https://www.jcer.or.jp/english/covid-19-and-money-supply

 

Also, Japans population is aging and falling. So there's less consumption to drive prices.

 

In addition, in the wake of Covid 19 Japan subsidized  a lot of consumption with payments to providers. So the inflation rate was actually higher than it appeared to be.

[morrobay]

Quote from Stalin: "The way to destroy a country is to destroy its currency ".  Sounds like treason to me.

 

[RayC]

27 minutes ago, Cameroni said:

 

At the moment indeed the US exports of aircraft, agricultural products and commodities do not figure uppermost in Trump's thinking. Trumps agenda is to rebuild America's manufacturing base from the bottom up, so the lower dollar should help those new manufacturing sectors that Trump hopes to revive. It is clear that he is not happy with the US merely making aircraft and weaponry for export. In a way Trump wants to chinafy the US.

 

It does ignore the demand side a bit. Just as China is finding out that there is finite demand in the world markets for the avalanche of Chinese products, the demand for US products will be finite as well. The thing is many countries now WANT to buy American products just to avoid tariffs in the future. Even China. Their complaint is there' s nothing to buy right now. So in a way tariffs themselves will benefit US exports.

 

What are these manufacturing sectors? Cheap electrical products? Textiles? I wouldn't have thought that the return of these industries is top of the wish list of either US captains of industry or the US worker.

 

There may well be some truth in saying that some countries now want to buy US products in order to avoid future tariffs, however, one major problem is that the US doesn't have the products to sell, or more accurately products where there is sufficient demand.

 

For example, I doubt that Vietnam has much pent-up demand for more Harleys, and spare Boeing parts or beef infused with anti-biotics. Perhaps the average Vietnamese consumer would be interested in buying more US-made, branded clothes and the latest iPhone, but I doubt very much whether they could afford these products.

[rough diamond]

51 minutes ago, Cameroni said:

 

Yah, that sums it up. And given the USA's national debt, and the future lower demand for American debt, money printing by the Fed is certain to continue. So inflation will continue.

How does that equate to the spiralling US debt which will only get worse when he imposes his tax reductions for the benefit of himself and his rich cronies?

[placeholder]

5 minutes ago, RayC said:

 

What are these manufacturing sectors? Cheap electrical products? Textiles? I wouldn't have thought that the return of these industries is top of the wish list of either US captains of industry or the US worker.

 

There may well be some truth in saying that some countries now want to buy US products in order to avoid future tariffs, however, one major problem is that the US doesn't have the products to sell, or more accurately products where there is sufficient demand.

 

For example, I doubt that Vietnam has much pent-up demand for more Harleys, and spare Boeing parts or beef infused with anti-biotics. Perhaps the average Vietnamese consumer would be interested in buying more US-made, branded clothes and the latest iPhone, but I doubt very much whether they could afford these products.

There's this simpleminded belief that the imbalance in trade of goods is due to tariffs.

[jas007]

15 minutes ago, rough diamond said:

How does that equate to the spiralling US debt which will only get worse when he imposes his tax reductions for the benefit of himself and his rich cronies?

It will get worse, whether or not Trump gets his tax reductions.  The tax reductions will add to the problem, for sure, but the debt will spiral put of control in any event.  

 

As the dollar weakens and the borrowing increases, bond yields will rise along with interest owned on the national debt.  So the interest burden will increase the debt at an even faster pace.  At a point, additional borrowing becomes less and less beneficial, meaning they have to borrow even more to keep up.  The system eventually spirals out of control.

 

And to add insult to injury, much of the nation's debt has been financed short term, recently.  Rather than trying using long bonds, they've been financing the deficit with shorter term debt.  Debt that is more sensitive to interest rate fluctuations.  A lot of that debt will have to be refinanced sometime soon, and, if present trends continue, at even higher rates.  

 

Long story short:  the present system cannot work much longer without some big changes. 

[Cameroni]

1 hour ago, RayC said:

 

What are these manufacturing sectors? Cheap electrical products? Textiles? I wouldn't have thought that the return of these industries is top of the wish list of either US captains of industry or the US worker.

 

There may well be some truth in saying that some countries now want to buy US products in order to avoid future tariffs, however, one major problem is that the US doesn't have the products to sell, or more accurately products where there is sufficient demand.

 

For example, I doubt that Vietnam has much pent-up demand for more Harleys, and spare Boeing parts or beef infused with anti-biotics. Perhaps the average Vietnamese consumer would be interested in buying more US-made, branded clothes and the latest iPhone, but I doubt very much whether they could afford these products.

 

Firstly the key industrial sectors, the ones necessary for war:

 

"autos, shipbuilding, pharmaceuticals, transport equipment, technology products, machine tools, and basic and fabricated metals

 

But also new emerging sectors necessary for war:

 

"bio-manufacturing, batteries, and microelectronics to support defense needs"

 

https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-president-donald-j-trump-declares-national-emergency-to-increase-our-competitive-edge-protect-our-sovereignty-and-strengthen-our-national-and-economic-security/

 

Yes, the most attractive thing for now is Soybean feed for pigs and cows. A sad state US manufacturing is in. Trump has a point.

[Dan O]

4 hours ago, JensenZ said:

 You've lost the plot. This thread is about the USD and whether it's failing or not. I showed hard facts. You're offering lots of blah, blah. 

You showed a chart and  blamed dems for flucuations rather than trump in one breath and then claimed it was just normal fluctuations.

 

Every fluctuation has a cause and this time its Trump and his actions but you refuse to admit facts. You then deflected and blamed me for being a sore dem short term investor. I never said anything about investing so you are full of crap and are the one with nothing but air.  

 

[RayC]

1 hour ago, Cameroni said:

 

Firstly the key industrial sectors, the ones necessary for war:

 

"autos, shipbuilding, pharmaceuticals, transport equipment, technology products, machine tools, and basic and fabricated metals

 

But also new emerging sectors necessary for war:

 

"bio-manufacturing, batteries, and microelectronics to support defense needs"

 

https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-president-donald-j-trump-declares-national-emergency-to-increase-our-competitive-edge-protect-our-sovereignty-and-strengthen-our-national-and-economic-security/

 

Yes, the most attractive thing for now is Soybean feed for pigs and cows. A sad state US manufacturing is in. Trump has a point.

 

It may well be a good idea for the US to source and build defence and security related products domestically if they can but - given that the US enjoys a large trading surplus in defence related products - it is difficult to see how this is going to boost the US economy if other nations follow suit. The exact opposite may occur.

 

I had not seen the official text regarding the tariff policy, so thanks for posting it. Having read it, the policy has even less justification than I originally thought.

 

Unsurprisingly, the statement is selective in its' use of data. For example, the text states that, "The United States imposes a 2.5% tariff on passenger vehicle imports ... while the European Union (imposes) (10%)." No doubt true but it does rather gloss over the fact that before these latest developments, the average US tariff rate on all EU imports was 1.47%, while the tariff on all US exports to the EU averaged 1.35%. 

 

https://www.bruegel.org/analysis/economic-impact-trumps-tariffs-europe-initial-assessment)

 

Some of the other 'justifications' are quite simply bizarre. The statement laments the fact that " ... U.S. companies .... pay over $200 billion per year in value-added taxes (VAT) to foreign governments—a “double-whammy” on U.S. companies who pay the tax at the European border, while European companies don’t pay tax to the United States on the income from their exports to the U.S." Firstly - with very few exemptions - VAT is applied to ALL goods in the EU irrespective of their source and where the company is domiciled. EU businesses also pay VAT. It is NOT a tariff. Secondly, the clue is in the name, it is a tax on the added value with the cost ultimately falling on the consumer. It is akin to a sales tax in the US. Thirdly, the fact that the US government chooses not to use VAT amongst its' arsenal of taxes is neither here nor there.

 

There are numerous other example of this type of nonsense which I could point to in the statement, but the preceding paragraphs should offer ample evidence of the absurdity of the 'justification' for this tariff policy.

[soalbundy]

On 4/18/2025 at 2:27 PM, 3NUMBAS said:

https://www.chathamhouse.org/2025/04/us-dollars-role-international-monetary-system-now-dangerously-flux
 

The US dollar’s role in the international monetary system is now dangerously in flux

The argument that the erosion of the dollar’s global status could benefit the US is gaining traction in Washington. That move would be a needless act of self-harm.

Self harm is what he does best

[BritManToo]

On 4/18/2025 at 3:14 PM, black tabby12345 said:

Some prefer EUR, some might GBP, AUD etc (certainly not Russian Rouble, N/Korean Won).

AUD is the weakest western currency in the world, dropped 33% in the last 10 years against the Baht.

No idea why because it has lots of land, farming and minerals.

 

GBP has only dropped 12% in that same time.

No idea why either, would have thought it would have dropped much more.

[Dan O]

12 hours ago, Cameroni said:

 

At the moment indeed the US exports of aircraft, agricultural products and commodities do not figure uppermost in Trump's thinking. Trumps agenda is to rebuild America's manufacturing base from the bottom up, so the lower dollar should help those new manufacturing sectors that Trump hopes to revive. It is clear that he is not happy with the US merely making aircraft and weaponry for export. In a way Trump wants to chinafy the US.

 

It does ignore the demand side a bit. Just as China is finding out that there is finite demand in the world markets for the avalanche of Chinese products, the demand for US products will be finite as well. The thing is many countries now WANT to buy American products just to avoid tariffs in the future. Even China. Their complaint is there' s nothing to buy right now. So in a way tariffs themselves will benefit US exports.

Can you list the "many countries" that want to buy US made products ? What US made products are they rushing to buy? Exactly where are these high demand products being made in the US in sufficient quantities currently?  I'm sure many posters are interested in this information.

[BritManToo]

6 minutes ago, Dan O said:

Can you list the "many countries" that want to buy US made products ? What US made products are they rushing to buy? Exactly where are these high demand products being made in the US in sufficient quantities currently?  I'm sure many posters are interested in this information.

Value of a currency isn't based on manufacturing.

If it were, Cambodia, Vietnam, India and China would be the top dogs.

[placeholder]

8 minutes ago, Dan O said:

Can you list the "many countries" that want to buy US made products ? What US made products are they rushing to buy? Exactly where are these high demand products being made in the US in sufficient quantities currently?  I'm sure many posters are interested in this information.

Well, the USA runs a big surplus in services.

[sandyf]

16 hours ago, placeholder said:

It may still have officially been a reserve currency, but it wasn't the reserve currency. After the war, the UK economy was in no shape to sustain sterling as the reserve currency.

It wasn't as clear cut as many would want to make out. It wasn't until the early 60s that global dollar reserves reached the 50% mark. It was about the same time that the "Triffin Dilemma" came to light slowing down the rise of the USD and also confirming the inability of Sterling to maintain its position. The most definitive marker was probably Nixon in 1971.

What was envisaged after the war and what transpired are not quite the same, the transition from Sterling to USD for various reasons was messy and drawn out.  

[sandyf]

16 hours ago, jas007 said:

The Bretton Woods Conference in 1944 established the US dollar as the world reserve currency.

The reality is it didn't happen as envisaged.

[sandyf]

16 hours ago, FlorC said:

You looked in the wrong place. This is about the USD not Sterling.

Your words.

"Three decades later, the dollar officially became the world’s reserve currency"

 

Three decades from 1914 would be 1944 and Sterling was the reserve currency.

[Cameroni]

9 hours ago, RayC said:

 

It may well be a good idea for the US to source and build defence and security related products domestically if they can but - given that the US enjoys a large trading surplus in defence related products - it is difficult to see how this is going to boost the US economy if other nations follow suit. The exact opposite may occur.

 

I had not seen the official text regarding the tariff policy, so thanks for posting it. Having read it, the policy has even less justification than I originally thought.

 

Unsurprisingly, the statement is selective in its' use of data. For example, the text states that, "The United States imposes a 2.5% tariff on passenger vehicle imports ... while the European Union (imposes) (10%)." No doubt true but it does rather gloss over the fact that before these latest developments, the average US tariff rate on all EU imports was 1.47%, while the tariff on all US exports to the EU averaged 1.35%. 

 

https://www.bruegel.org/analysis/economic-impact-trumps-tariffs-europe-initial-assessment)

 

Some of the other 'justifications' are quite simply bizarre. The statement laments the fact that " ... U.S. companies .... pay over $200 billion per year in value-added taxes (VAT) to foreign governments—a “double-whammy” on U.S. companies who pay the tax at the European border, while European companies don’t pay tax to the United States on the income from their exports to the U.S." Firstly - with very few exemptions - VAT is applied to ALL goods in the EU irrespective of their source and where the company is domiciled. EU businesses also pay VAT. It is NOT a tariff. Secondly, the clue is in the name, it is a tax on the added value with the cost ultimately falling on the consumer. It is akin to a sales tax in the US. Thirdly, the fact that the US government chooses not to use VAT amongst its' arsenal of taxes is neither here nor there.

 

There are numerous other example of this type of nonsense which I could point to in the statement, but the preceding paragraphs should offer ample evidence of the absurdity of the 'justification' for this tariff policy.

 

Well, of course the industry sectors mentioned in the White House press release have dual significance, they would benefit denfense, but rebuilding a manufacturing base in autos, shipbuilding, pharmaceuticals, machine tools, basic and fabricated metals etc, would also benefit the peacetime economy, always assuming there are buyers of course. With these US tariffs there probably would be, as even China is scrambling to see what US products it can buy to keep the trade deficit down with the US. Many nations will do that just to escape tariffs in the future, so tariffs have effects over and above money infllow.

 

I am a bit confused by this press announcement myself, since it mentions pharmaceuticals, but the US is already a world leader in pharma, with 6 of the top 10 pharma companies being American, including the very largest ones. But I guess the others are obvious candidates for improvement, autos in particular. The demise of Chrysler was heartbreaking to see. But then the same is happening in Japan, with Nissan now going to the wall, Sweden had it with Saab, and of course all of the UK's car companies went down or were bought by the Chinese too. No doubt there will be more pain in the auto industry thanks to the Chinese EVs.

 

Yes, it's true that all European companies pay VAT too, but the US does not levy this tax on European companies, so you can see how Americans view it as unfair.complication of doing business in Europe.

[jas007]

18 minutes ago, sandyf said:

The reality is it didn't happen as envisaged.

But it did.  What fantasy world do you live in?  The Bretton Woods agreement in 1944 established the US dollar as the world reserve currency, and, between nations, the dollar was freely convertible into gold. But the US mindset was for more, more, more.  And so next on the agenda was the Korean War and then the Vietnam war.  Big money spent that began to flood the world with dollars.  Other nations, but France under de Gaulle in particular, became uncomfortable with their US dollar holdings and began converting those dollars into gold. The US gold reserves were being drained.  Nixon could read the writing on the wall, and in 1971 closed the gold window, effectively defaulting on the Bretton Woods agreement and establishing the era of fiat currencies. 

 

Around the same time, Kissinger made an agreement with the Saudis that they would buy and hold US Treasury bonds and price oil only in dollars in return for military protection, and the rest is history.  

 

That system is now falling apart, but the process will take a number of years, as dollars are in use around the world for various purposes. 

[jas007]

44 minutes ago, sandyf said:

It wasn't as clear cut as many would want to make out. It wasn't until the early 60s that global dollar reserves reached the 50% mark. It was about the same time that the "Triffin Dilemma" came to light slowing down the rise of the USD and also confirming the inability of Sterling to maintain its position. The most definitive marker was probably Nixon in 1971.

What was envisaged after the war and what transpired are not quite the same, the transition from Sterling to USD for various reasons was messy and drawn out.  

So your argument is that, strictly as a function of global dollar reserves, the US dollar gradually outpaced the pound following WWI until it achieved dominance in the early 60s  Fine.  The decline of the pound was a bit complicated for various reasons, but the Bretton Woods agreement itself did establish the system that continued until Nixon controlled the gold window in 1971.  That was my point.  

[Wrwest]

On 4/18/2025 at 2:35 PM, SunnyinBangrak said:

Paperhand msm consumers are free to dump $US and buy favored currencies like the Zimbabwean $ if they are sufficiently hateful of their country and President.

Don't take it personally, its just business ... international business which trump cannot control ...

[morrobay]

Warren Buffett on de dollarization, Not. And there are billions of reasons he could be right. https://watcher.guru/news/de-dollarization-warren-buffett-predicts-the-us-dollars-future

[jas007]

5 minutes ago, morrobay said:

Warren Buffett on de dollarization, Not. And there are billions of reasons he could be right. https://watcher.guru/news/de-dollarization-warren-buffett-predicts-the-us-dollars-future

But for the advent of the Central Bank Digital Currency, he could be right, although I'm not sure about the 50 year duration.  It could be more like 10.  The dollar is in use around the world and that can't stop overnight.  For example, thousands of oblong term financing agreements are in place that must be settled in US dollars.  And there are some countries that will be reluctant to move away from the dollar, at least immediately.

 

Anyway, the Trump team seems to be planning on a CBDC sometime soon, so that could change everything.  How long until that happens?  Will it be implemented in phases?  Who knows? 

[spidermike007]

Absolutely correct, a ridiculously unstable dimwit is making some very bizarre and unwise decisions and people should be very, very scared. 

[Cameroni]

19 hours ago, SMIAI said:

Cameroni has been on YouTube again and is now faking it, talking about 4D chess and a "new Bretton Woods accord".

No. Bretton Woods is a LOCATION in New Hampshire. Unless they are all going to meet there, it's not going to be a Bretton Woods anything.

The system/agreement only held whilst the US$ was convertible to Gold. A gold standard. The USA(Nixon) dropped that in 1971, so that was the end of that. Followed by the Jamaica Accords.

Is Cameroni suggesting that Trump wants to go back to a gold standard of monetary policy?

I suggest that Cameroni doesn't know the first thing he is writing about. Rather, he saw something on YouTube and is now playing Chinese Whispers.

 

 

SMAI does amuse one, as SMIAI's ignorance is so staggering. So much stupidity in a few lines. 

 

Of course the key aspect of Bretton-Woods was not that it is a location in New Hampshire, but well done for googling that. SMAI has been on Google again. No, the key thing about Bretton-Woods was that it established a new financial order, replacing the previous one that was dominated by the UK. 

 

Obviously when I said that Trump aims for a new Breton Woods, I did not mean that the conference will be in New Hampshire, it will probably be at Mar a Lago, nor anything related to Gold. What I meant was that Trump is seeking to establish a new financial world order. In this new financial world order the Dollar will be devalued but will STILL be the world reserve currency. That is the aim. Quite a tricky one to pull off, but it could be done.

 

The benefit will of course be that America's exports will become cheaper and more successful whilst the US retains the reserve currency priveleges.

 

Bretton Woods's provisions held LONG AFTER the gold standard was abandoned by Nixon, as usual SMIAI's ignorance is embarassing and very obvious.

 

Clearly Trump does not want to go back to the gold standard. Trump wants to devalue the dollar while still keeping the Dollar as the reserve currency. He probably also wants some things like VAT abolished. It's all in the paper by Bessent & Co, the former hedge fund manager who worked with Soros and lectured at Yale university on economics. You can see how Trump's policies are so good.

 

 

[black tabby12345]

Dollar seen as risky currency

 

Isn't it exactly what DT wants?

If USA no longer wants to be involved in the trade with others, Why Not Vice Versa?

The more Isolationists policy he stresses, the more countries start to distance themselves from USD.

Makes a perfect sense.

 

In terms of BRICS' ex-USD move, Thailand is also taking part in it.

Not the full member, but as the "partner".

 

Member states of BRICS - Wikipedia

 

 

[Dan O]

2 hours ago, BritManToo said:

Value of a currency isn't based on manufacturing.

If it were, Cambodia, Vietnam, India and China would be the top dogs.

I never spoke to that issue 

[Dan O]

2 hours ago, placeholder said:

Well, the USA runs a big surplus in services.

Yep and that's the bulk of what we can currently do. Mfr is woefully short to react the way Trump implies we can