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riggins | 4 years ago

I assume you mean OP?

> The entire world (including the US federal government) has taken a short position on the US dollar

I read this as a prediction of some type of crisis.

Anyway, wrt the US Federal Government, having government debt is not that same as having a short position. For one, the US Fed govt's revenue (i.e. tax collection) is denominated in the same USD as the debt. So if USD goes up, tax collection go up.

discuss

adregan|4 years ago

> I assume you mean OP?

"GP = grand parent, i.e. the post that the post-your're-replying-to was replying to"

Source: https://news.ycombinator.com/item?id=8363625

rsync|4 years ago

"I read this as a prediction of some type of crisis."

I think your parent was suggesting that the behavior of the entire world is effectively a short-dollar position - whether they intended it to be or not.

legulere|4 years ago

> So if USD goes up, tax collection go up

Currencies going up usually leads to a reduction of exports which subsequently leads to an economic downturn, which leads to less taxes.

Apart from that, mass sell offs of government debt leads to increasing interest rates. You can buy that off with quantitative easing but probably that has limits too.