Oh but it can. That part’s true. Why? No lifespan.
Humans can expect 79 yrs.
Govt lives indefinitely. It can always repay someday or not.
Most fed debt is amongst itself. Govt programs borrowing from other govt programs. It all adds in together for the total.
But besides that the Dollar is the Reserve Currency. What’s going to replace it anytime soon?
I’d say the Yen maybe? Euro? Backed by our Saudi oil, so what if we also owe debt. Others also owe us.
It’s not how I’d set things up. But it’s where we’re at.
Yes but at the time, cash was still king. Since then we’ve been moving towards a cash-free planet, where money can be the useful fiction it always was.
It’s simply impossible to have currency backed by tangibles anymore. That’s why we haven’t. It can’t be done.
It can correlate to tangibles of course. Oil barrels are tangible and “virtually” married to the dollar.
But they don’t have to be. That’s the big difference between then and now.
Ah yes! Fiat. I need to learn more about this. It’s one of my empty spots in my learning. I know the gist of it and talk about it but mostly because that’s our system so I know it that way.
But I never really studied it. I think I shall.
I’ve studied microeconomics in the past but barely dipped my toes into macro, mostly because you have to get the”school” right to understand them properly. I guess it’s time I figured out my school.
“you might not have studied it but you’re intuitively grasping it… verbatim.”
Logic + reason, plus I did long term investing once (was for short term but I treated my investments “as if” I’d hold onto them through the end of time, figuring I’d catch the slow growth averages that survive temporary fluctuations).
It was a good strategy, marked me as a “contrarian”.
(moving average is your best friend).
I think, too, a lot of my thinking is in this vein:
A govt with unlimited lifespan has the one asset us mere mortals and even corporations lack: TIME.
Corporations can theoretically last forever too but they are more dependent upon day-to-day fluctuations than govts are.
So I’d place the negative feedback loop in the govt, not corporations. Big shock absorber, allowing for stability, dependability and trust.
It’s not a nice list although the sarcasm is a bit of a buffer against promotion much as how Cracked informs or TheOnion through its sarcasm. Not an ideal start but it’s help as it has a lot of key players listed.
I know what you’re saying. You’re almost at it. But it’s not govt debt spending that is eroding dollar confidence: It’s the wonky administration. Uncertain, emotional driven leadership, tariff wars, these are eroding confidence in US stability.
We’re busy sucking our own while beating ourselves up as a country — why would anyone want us as trading partners?
So: consumer confidence and investment together. That side is easily manipulated by economics pundits to media to public relations. So that’s the “actions of the investors” and feelies of the peeps.
On the other side, you want to do “currency value”.
Sounds good but: How do you suggest producing the metric of “currency value”?
Remember: The dollar currency value is as it is because it is a Reserve Currency, along with the Euro and renminbi .
What backs the dollar?
U.S. Treasury Bonds.
What draws from US Treasury Bonds?
Pension funds and large institutional investors.
What could collapse the US Treasury Bonds and then the Dollar and then destabilize it as a reserve currency?
People and institutions cashing them out.
If by average citizens you mean commercial real estate investment and residential building overspeculation?
The house I grew up in in NJ was built in 1927 as were many, right in that building boom.
Had a similar, smaller thing happen here in Naples, FL, just before 2008 crash.
Overvaluation, massive building by wealthy real estate speculators and when it crashed, it left shells that took years to get finished.
yet you keep pointing to average citizens who were stupid as the main cause. I’m giving you alternatives to that singular notion.
Tangible anecdote: Property next door was bought at $85,000 by a big company that bought up tons of lots at high prices. They must’ve lost a shit ton (the $100 was token sale to auction house)
We picked it up at internet auction for $9500.
What was happening in 2004? What happened in 2007/2008?
Now to answer my own question to you: I would most definitely call big real estate investors “average citizens”.
They have no extra insight just extra investment funds and a greater ability to create much larger debt in the process.
Common error in US thinking is: “if a man has $, he’s smart”. For the US it’s logical as we’re capitalists and always have been. (even our attempts at socialist-type programs are uniquely American because they always include capitalism within). We can hardly think any other way.
But it’s more basic. “if a man has $, a man has $”. That’s it.
The wealthy can hide their loses much better. The average income can pretend a little by acquiring a little private debt or the just above poverty might manage to pretend by Rent-A-Center but the wealthy’s ability to hide their loses is not due to higher intelligence. It’s because they have more vehicles available to do so that the middle to low income do not have available.
If you want to know “why do poor people have big screen TV’s?” ask why wealthy people create debt and leverage debt with more debt for their lifestyles?
It’s all the same.