littlebadboy
Well-Known Member
Thoughts?
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I'm assuming this tread is about Brazil's president wanting the BRICS countries to develop a new shared currency and move away from the US dollar.Someone give me a tl;dr.
It’s the same ol’ BRIC stuff, but South Africa is now is now part of the group. Maybe I’ve been living under a rock, but apparently South Africa has been considered part of BRICS for over ten years and this is the first I’ve heard of it.Someone give me a tl;dr.
I mean, they're welcome to try, but if we've learned anything from the Euro is that not even the Eurozone countries all wanted to use the Euro, and the dollar is still the financial reserve currency of the world. If the BRICs want their own currency, sure, whatever. They'll still trade internationally in USD.I'm assuming this tread is about Brazil's president wanting the BRICS countries to develop a new shared currency and move away from the US dollar.
I mean, they're welcome to try, but if we've learned anything from the Euro is that not even the Eurozone countries all wanted to use the Euro, and the dollar is still the financial reserve currency of the world. If the BRICs want their own currency, sure, whatever. They'll still trade internationally in USD.
...provided McCarthy doesn't do something stupid like lose control of his caucus and prompt a Treasury default, of course.
I'm not an economist, but to my understanding, currency needs to be backed up with Treasury such as gold, oil, etc. I worry because these countries are rich in resources to back up their currency. Do you guys think America has some hidden valuable resources to back up our dollar?
The US dollar is backed by the full faith and credit of the US government and nothing more. In other words, it is fiat currency - it’s value is not pegged to the value of a commodity, it is simply worth what people believe it is worth based on their belief in the issuer (e.g., the US government in this case).I'm not an economist, but to my understanding, currency needs to be backed up with Treasury such as gold, oil, etc. I worry because these countries are rich in resources to back up their currency. Do you guys think America has some hidden valuable resources to back up our dollar?
Yeah, there was a really cool story about how Brazil used the basic social agreement that money has value to literally trick people into eliminating inflation. I found a link. SUPER good read:Currencies do not need to be backed up by tangible assets. I’d argue that pegging your currency to something like gold or oil is actually a disadvantage as you don’t have control over the value of that asset. What happens when an untapped vein of gold is discovered? Or the demand for oil drops?
Currencies are just a medium for exchange. The idea that they have to be backed by something tangible is fairly outdated at this point. Ultimately we made it all up to facilitate trade and a functional society.
Yeah, there was a really cool story about how Brazil used the basic social agreement that money has value to literally trick people into eliminating inflation. I found a link. SUPER good read:
I AM an economist, and while others have already beat me to it, the US Dollar is backed by "the full faith and credit of the US Government," which as it happens is a pretty valuable resource. It's also one with a pretty stable value, unlike say the price of oil, which over the past 5 years has range from $123.70 to -$37.63 a barrel, or gold, which has ranged from $1174.16 to $2,063.54 an ounce, looking at Bloomberg spot prices.I'm not an economist, but to my understanding, currency needs to be backed up with Treasury such as gold, oil, etc. I worry because these countries are rich in resources to back up their currency. Do you guys think America has some hidden valuable resources to back up our dollar?
Thanks for sharing your knowledge.I AM an economist, and while others have already beat me to it, the US Dollar is backed by "the full faith and credit of the US Government," which as it happens is a pretty valuable resource. It's also one with a pretty stable value, unlike say the price of oil, which over the past 5 years has range from $123.70 to -$37.63 a barrel, or gold, which has ranged from $1174.16 to $2,063.54 an ounce, looking at Bloomberg spot prices.
In fact, the relative stability of the dollar relative to the two pegs you just proposed is a pretty good argument for fiat currencies, when you get right down to it.
(And, while we're at it, this is a non-consensus and probably unpopular hot take, but the USD has always been a fiat currency, when you get right down to it. The USD was technically gold-backed until 1971, but even then since most currency in circulation was paper, contained no gold, and needed to be redeemed for gold at a banking institution, receiving a paper bill in payment for goods and services required you to have "full faith and credit" that the US Treasury would actually follow through on that pledge.)
The only threat to the USD would be a large enough group of countries deciding to trade amongst themselves in something other than USD, knocking the dollar off as the reserve currency of international trade. The Euro didn't do that, and I can't see the BRICs having nearly the weight as the EU. It's about demand, more than resources. Everyone wants dollars.Thanks for sharing your knowledge.
So, considering that these BRICS countries may have actual resources to back up their proposed currency and other considerations, in your opinion, will this be a threat to the US$?
Does he really have any say at this point after agreeing that a single House member can force a vote to remove him as speaker? At this point, the nut jobs (MTG, Gaetz, Boebert, etc.) have him by the balls (If he actually has any).with the possible exception of an unforced error if McCarthy can't get his head out of his ass and forces a default over the debt ceiling