If an obviously senile narcissistic asshole asked me to invest money in him – I wouldn’t.
Scale that up to the world – and it’s why countries are pulling back from the dollar.
Rey_Dulce on
Ooooh Gulf War, they say? Third time’s a charm.
Boatster_McBoat on
This will resolve itself eventually
Samski877 on
When even central banks are quietly reducing exposure to US debt and China cuts Treasury holdings to an 18 year low, it says a lot about how much global trust in American economic stability and politics has shifted recently.
The dollar isnt collapsing tomorrow, but the world clearly feels less certain that the US will remain as predictable and dominant economically forever.
ghost_n_the_shell on
Good job MAGA. Right into Putins mitts.
luisa65-L on
Turns out that continuously weaponizing the global reserve currency eventually makes everyone else want to diversify their portfolios.
xin4111 on
One of major reasons is their unhealth finance. Chinese local government should pay back a batch of high interest bonds recently, while has lose its major income as real estate crisis. Japanese need to maintain the value of Yen, and its high interest policy also make it suffer more from its huge national debt
yamanagashi on
That’s a bit of a scapegoat reason for Japan though… they’ve been struggling to keep the interest rate to nil (they failed for a year now) and no one is buying Yen anymore so they need to pull out their reserves. This is arguably worse than that stunt in Iran.
random20190826 on
The vicious cycle is very real. As the US deficit increases, debt also increases. As that happens, more and more institutions, even central banks, believe that the US is less and less able to repay the interest on the debt. They sell their holdings or simply let them mature and not buy new ones, which reduces demand and/or increases supply. There is also the problem of very high CPI and even higher PPI, driving up inflation expectations. That drives up treasury yields. Total interest expense is outstanding debt multiplied by average interest rate. Both things are going up, which is why it is now bigger than defence. Eventually, Congress may be forced to raise taxes, not just keep cutting benefits. It will be politically unpopular and slow down the economy, but it may be necessary to avoid even worse outcomes.
Tasty_Virus4715 on
The global bond market has been tanking since well before the war. This seems to broadly be a flight from fiat currencies imo.
11 Comments
I’m tired of all this winning grandpa…
If an obviously senile narcissistic asshole asked me to invest money in him – I wouldn’t.
Scale that up to the world – and it’s why countries are pulling back from the dollar.
Ooooh Gulf War, they say? Third time’s a charm.
This will resolve itself eventually
When even central banks are quietly reducing exposure to US debt and China cuts Treasury holdings to an 18 year low, it says a lot about how much global trust in American economic stability and politics has shifted recently.
The dollar isnt collapsing tomorrow, but the world clearly feels less certain that the US will remain as predictable and dominant economically forever.
Good job MAGA. Right into Putins mitts.
Turns out that continuously weaponizing the global reserve currency eventually makes everyone else want to diversify their portfolios.
One of major reasons is their unhealth finance. Chinese local government should pay back a batch of high interest bonds recently, while has lose its major income as real estate crisis. Japanese need to maintain the value of Yen, and its high interest policy also make it suffer more from its huge national debt
That’s a bit of a scapegoat reason for Japan though… they’ve been struggling to keep the interest rate to nil (they failed for a year now) and no one is buying Yen anymore so they need to pull out their reserves. This is arguably worse than that stunt in Iran.
The vicious cycle is very real. As the US deficit increases, debt also increases. As that happens, more and more institutions, even central banks, believe that the US is less and less able to repay the interest on the debt. They sell their holdings or simply let them mature and not buy new ones, which reduces demand and/or increases supply. There is also the problem of very high CPI and even higher PPI, driving up inflation expectations. That drives up treasury yields. Total interest expense is outstanding debt multiplied by average interest rate. Both things are going up, which is why it is now bigger than defence. Eventually, Congress may be forced to raise taxes, not just keep cutting benefits. It will be politically unpopular and slow down the economy, but it may be necessary to avoid even worse outcomes.
The global bond market has been tanking since well before the war. This seems to broadly be a flight from fiat currencies imo.