Being a reserve currency puts a gun to your economy's head. It creates an asymmetry where domestic production of material goods has to jump a gap created by favorable exchange rates in PPP terms. Its great for the day to day life style of your citizens, as other economy's do indeed pay tribute, in a sense, to their consumption of goods produced overseas. However, being paid to do nothing becomes a real problem when the checks stop coming. We're basically the national equivalent of a middle manager who's forgotten all the skills that got him there, and we can voluntarily move back down and start to work in earnest again, or wait to get laid off with no severance.

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cmcaleer an hour ago | parent | next [-]

It's as much a gun to adversaries' heads if they hold lots of your bonds (China used to hold over $1T in USTs) so they would have an interest in not having that blow up by not annoying the US so much they refuse to pay foreign bonds.

It's also kind of neat as a financial MAD instrument, because China obviously can't just get everyone to go into their brokerage and market sell a trillion in USTs so they get a lever to pressure the US with but they can't go nuclear without also vaporising their own value. So it works as a melting ice block on which diplomacy is forced on both sides.

The death of the UST as a reserve instrument would be a catastrophically bad loss, the only silver lining is that the melting ice block might still be enough by the end of this admin that the new admin might have enough to stand on to rebuild it should they realise the value of it.

	▲	BobbyJo an hour ago \| parent \| next [-]
		> It's as much a gun to adversaries' heads if they hold lots of your bonds (China used to hold over $1T in USTs) There is a complicated dynamic at play to consider there. Treasuries and the strength of the dollar only matter to wrt international trade, for both China and the US. You have to ask yourself if the value of the dollar went to 0 for that use case, who would be in a worse position, the one that sells dollars to support consumption, or the one that buys them as a tool for trade with 3rd parties?
	▲	fakedang an hour ago \| parent \| prev [-]
		> by not annoying the US so much they refuse to pay foreign bonds. The problem with this is that a country can only refuse to pay their foreign bonds once. But the buyer can always dump them and scoop them up later for cheap when shit hits the fan.

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fnordpiglet 2 hours ago | parent | prev [-]

As someone who lives a day to day life, I’m pretty happy for things that are good for my day to day life. Some abstract quasi moralistic reason that things should be tougher so we compete harder feels a little out of touch. I’d note that it’s not the case the US produces nothing, or that it’s lost its capacity to innovate. Effectively most technology, especially software, but hardware as well, is concentrated in the US. Some aspects of the heavy manufacturing and assembly line happens elsewhere but I’d level the middle manager more at the EU.

No, we are taking our advantages and lighting them on fire for no obvious reason. Backing into a rationale doesn’t make it rational. Its Christian nationalism fueling raging narcissism made malignant due to senility. Theres no experts, no adults, no experienced people - they’ve all be fired and replaced with sycophantic photogenic personalities. This is not good, there is no upside, it’s Nero hosting UFC while the empire burns.

The only out I see is nature helping end this or a total seismic change in Congress and removal from office. Then rebuilding can start and maybe there’s something to salvage. But I doubt it, and I expect the next generations will exist in the rubble of the colosseum.

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fc417fc802 an hour ago | parent | next [-]

I'm not going to take a side in the broader discussion here, however your response fails to engage with what was previously written.

> Some abstract quasi moralistic reason

What was presented was neither abstract nor moralistic. The argument was one of driving towards a cliff and taking preemptive action before reaching it.

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theossuary 38 minutes ago | parent [-]

No, it was driving towards a cliff and deciding to jump out of the car instead of pressing the breaks. If you're costing at work, worried about being laid off some day, the last thing you do is just quit; you job hunt and try to change habits. Pretending like we have to feel immense pain to strengthen the economy is the quasi moralistic reasoning of a moron

	▲	BobbyJo 4 minutes ago \| parent [-]
		You're making a lot of abstract and quasi moralistic arguments for someone with such a distaste for them.

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BobbyJo an hour ago | parent | prev [-]

> Some abstract quasi moralistic reason that things should be tougher so we compete harder feels a little out of touch.

I don't see how any of those descriptions fit what I've said. Also, note, things should indeed not be tougher. A consequence of our economy being so focused on financialization of overseas productivity is that the wealth created from that activity tends to be much more concentrated than that produced from manufacturing, at least historically. Though, who knows if that would hold if onshoring took off in earnest.

> I’d note that it’s not the case the US produces nothing, or that it’s lost its capacity to innovate

Never said either of those things. I only stated that it makes domestic production harder/less profitable. Though, I'd also like to point out that that the largest companies in our economy are wholly dependent on the output of an island with grave geopolitical risks hanging over its head. China could collapse our economy overnight due to unchecked offshoring. That's not quasi, abstract, or moralistic, just a state we've created.

> No, we are taking our advantages and lighting them on fire for no obvious reason. Backing into a rationale doesn’t make it rational. Its Christian nationalism fueling raging narcissism made malignant due to senility.

I mean, I have named several, and all of which were put forth prior to Trump's term starting. I'm not a fan of Trump, but it would seem to me you are creating a narrative for yourself that doesn't fit history.

> Theres no experts, no adults, no experienced people - they’ve all be fired and replaced with sycophantic photogenic personalities.

I think Bessent is pretty good.

> This is not good, there is no upside, it’s Nero hosting UFC while the empire burns. The only out I see is nature helping end this or a total seismic change in Congress and removal from office. Then rebuilding can start and maybe there’s something to salvage. But I doubt it, and I expect the next generations will exist in the rubble of the colosseum.

Idk about rubble, but corruption does need to be curbed IMO. The current administration has not been good for the rule of law, in spirit. I do think some level of that is unavoidable however, as the judicial branch and executive branches have been sucking power from the legislature for going on 50 years, which also needs correcting.