[snovymgodym]

The international value of the dollar as a reserve and trade currency is inherently tied to the behavior of the US Government and the Federal Reserve.

The behavior of the US Government has been very unusual lately, and the independence of the Federal Reserve is actively being challenged.

So draw from that whatever conclusions you wish.

[softwaredoug]

It’s not just that

This is a gradual decline. From 70% in the 90s to 60% today. Today there are more options like the Euro that didn’t exist in the 90s. People can argue over EU economic stability, but it’s there as reasonable option.

[parsimo2010]

As time goes on, fewer people are alive that predate the EU and more people will perceive it as a lasting institution.

Additionally, we've now seen the EU survive the departure of a major economic power (the UK). More people are certainly willing to believe in the stability of the EU now.

Another major currency is the Yuan, and some countries may be as willing to trade in Yuan to improve relations with China, so perhaps we won't see one single reserve currency but two spheres of influence with most countries maintaining reserves of multiple currencies.

[munk-a]

There is a very sudden shift though - those options have existed but not generally been seriously considered. The US was seen as a bastion of stability and while sanctions could drastically impact a country's ability to trade due to the reliance on US currency exchange it has arguably been used relatively scarcely.

The change is that suddenly the US isn't a bastion of stability and having an independent trading currency could ensure more internal stability for other nations.

[qwytw]

> Today there are more options like the Euro that didn’t exist in the 90s

Yet the Euro peaked back in 2009 and has been declining ever since.

At this point its share is not that massively higher than that of the German mark back in the 90s.

[FrustratedMonky]

when do we reach a tipping point for rapid decline?

seems like once it starts falling, it would accelerate.

[storus]

EU can easily pull the plug on Euro as a reserve currency if they confiscate the money of a certain country and give it to another one. That would be the "front fell off" moment for Euro.

[omgJustTest]

Currencies fundamentally relate to some trust.

I believe that the near-term de-dollarization isn't as much trust erosion as it is a tool to provide monetary penalty for behaving in unpredictable ways.

However it will provide incentive to move away from the dollar in the long-term, ie as Fareed Zakaria says "recent actions are accelerating the world to the multipolar future".

[seanhunter]

> Currencies fundamentally relate to some trust.

A quant partner at Goldman said to me once that the thing that's different about currencies relative other normal financial products is whereas you might buy JPMC or oil or a bond because you like JP Morgan or oil or think rates are going to move in a particular direction or whatever whatever, you never just buy the dollar. You are always trading one currency for another eg selling GBP to buy USD. What that means is currencies are always about the value of one currency relative to other currencies.

In that sense they do fundamentally relate to trust and in particular specifically in this case about trust of the US economy and financial system's stability as opposed to other economies and financial systems.

So there have been times (eg during the financial crisis) where people think all currencies are bad but you can't just sell all of them so typically they would sell the other ones for dollars. For me, de-dollarization is about the choice of central reserve banks to hold dollar assets but also about other financial players changing their "default currency denominator" when they're doing this kind of trade.

[tigerlily]

Multipolar? So kind of like Europe before the beginning of World War 1, with major powers all competing with each other?

[dbuxton]

> I believe that the near-term de-dollarization isn't as much trust erosion as it is a tool to provide monetary penalty for behaving in unpredictable ways.

How is that different from trust erosion?

[andix]

> I believe that the near-term de-dollarization isn't as much trust erosion as it is a tool to provide monetary penalty for behaving in unpredictable ways.

Sure, everyone else is also acting based on childish emotions now, not just the US president. It's not about retaliation at all, it's about reducing suddenly very imminent risks.

[thehumanmeat]

The Fed and largely US policy has absolutely no effect on the real reserve currency: https://en.wikipedia.org/wiki/Eurodollar

[alex7o]

Didn't know that was a real term Mike Pondsmith used for cyberpunk

[m00dy]

Few people actually know how Eurodollar system works under the hood.

[bastardoperator]

Unusual? That's one way of putting it. I think unpredictable, erratic and criminal paint a more a realistic picture. The fact we're threatening Greenland is absolutely insane.

If the goal of this administration is to destroy America, they're doing a fine job.

[azepoi]

It's easier to cancel elections during à conflict

[TacticalCoder]

> So draw from that whatever conclusions you wish.

Sure but replaced by what? The abysmal failure that the EUR is? Or a chinese currency?

What other options are there besides either a Chinese currency or the EUR?

Chinese. EUR.

Seen these twho choices, everybody understands why the USD isn't anywhere near losing its dominance status.

[seasongs]

I love the complete lack of argumentations this comment has

[the_real_cher]

Our federal deficit interest rate is like 15% of government expenditures.

The dollar being the reserve currency which leads to demand for the dollar keeps the dollar from deflating.

But as people no longer demand the dollar because they don't want to support a imperialistic government what happens?

[Barrin92]

The US would no longer be able to export the cost of its spending on other countries which is the so called 'extraordinary privilege' of running the world's reserve currency and the US population would feel the consequences of its out of control spending.

Which is to say, that is a fairly traditional way of how empires go the way of the dodo. First losing their financial dominance, which loses them their international power, which then causes internal rupture.

[nonethewiser]

They are related but I think the lack of de-dollarization already shows there are other, more raw mechanics that are operative. Namely, liquidity and lack of alternatives.

[BatteryMountain]

The bro's in the whitehouse is using their mouthpieces to create a volatile market, thus gaming the system with pump & dumps. They are stealing from everyone in a sense.

[jyounker]

This is a pretty astute interpretation.

Here's a write-up of Trump's grift so far: https://www.nytimes.com/interactive/2026/01/20/opinion/edito...

[onlyrealcuzzo]

> The behavior of the US Government has been very unusual lately, and the independence of the Federal Reserve is actively being challenged.

This is mostly due to the behavior of the country being unusual.

The US had grown at a healthy clip for a long time.

Due to the amount of boomers exiting the workforce, and withdrawing rather than adding to their savings - the US is going to be in a very different position for the next 10-20 years before things start to level out.

If something like AI doesn't save us with a pretty sizable productivity boost, we're in for uncharted territory.

[nospice]

> The international value of the dollar as a reserve and trade currency is inherently tied to the behavior of the US Government and the Federal Reserve.

I think this oversimplifies things. The dominance of the dollar emerged chiefly because most of the alternatives were worse, for a combination of military, political, and economic reasons.

There is a positive feedback loop at the core of it, because the US economy benefits greatly from being able to issue foreign debt in their own currency. But that doesn't matter: as long as the US faces little risk of getting invaded by any of its neighbors or defaulting on its obligations, everyone is happy.

What's been changing - and it started long before Trump - is that the US is also increasingly willing to use its control of USD (and thus the Western banking system) to pursue sometimes petty policy goals. This is giving many of our partners second thoughts, not because of the fundamentals of USD but because they imagine finding themselves at odds with the US policymakers at some point down the line.

[mrcwinn]

This is an article about multi-decade trends but you’re associating recent current events with the behavior. Consider reading the article.

[adamc]

I read it as side-stepping Hacker News' tendency to kill comments that get into politics.

[ambicapter]

I've been trying to read more about investing properly recently and this is such an annoying characteristic of most advice you read. Sometimes it's also "well, economic theory says this, and that doesn't follow the behavior of these markets, so decide for yourself".

[zero-sharp]

I'm sorry, but was there a specific point you wanted to make in relation to the first two sentences of the grandparent's post?

[chroma205]

> Are you a financial analyst by any chance, because the "here's a few facts, interpret how that's going to impact the market yourself" is very on-brand.

What do you want him to say?

1. De-dollarization is all Trump’s fault

Or

2. The world is reacting to Trump putting America first

[munk-a]

It isn't prohibited by the constitution and was created as an independent body. You are correct that it wasn't specifically outlined by the constitution but that's an empty statement - the constitution included the allowance of the creation of agencies and laws outside of itself... that's the main power and strength of the constitution.

Your statement was equivalent to saying that Hacker News has no constitutional right to exist - it is equally vapid.

[Pet_Ant]

This is a non-sequitor.

Google has no constitutional right to exist or have accurate search results either. However, it's value depends on the quality of their search results.

People outside the US don't care about the particulars of the US constitution like it's a holy document, but rather the US governance as a whole and whether it's well-ordered, lawful, and predictable.

[mitthrowaway2]

That's true, but the US dollar also doesn't have a constitutional right to be the international reserve currency.

[twh270]

It does exist, and it has been independent, and consequently global markets have priced that in. If that changes, markets will respond accordingly.

[ezst]

What the other said about it being a non sequitur, adding on top of that "constitutional right" is no longer as strong a statement as you think it is considering the kangaroo court that is the SCOTUS nowadays.

[collinmcnulty]

That’s correct, Congress could pass a law removing its independence or eliminating it entirely whenever it so chooses. Until then, it’s independent because that’s how Congress created it using its powers under Article 1 of the Constitution.

[FuckButtons]

It has about 38 trillion reasons exist. if you want to see what national debt looks like for countries without an independent central bank, there are plenty of examples around the world and throughout history. I’m sure the Wikipedia page on failed states would be a good starting point.

[Eji1700]

It does have a strong economic reason to exist and be independent.

[softwaredoug]

While maybe true, the history of direct democratic control of monetary policy is not a pretty one.

[mathgradthrow]

Something tells me you aren't exactly steelmanning your opponents here.

[throwaway5752]

Holders of US debt have no obligation to give a shit about the statutory background of the Fed, and to just make decisions about who is the best fiduciary of their currency.

If holders of US debt goes away, we have immediate inflation to the point where our currency hits trade equilibriums such that we can service our debt. All of your savings are worthless.

[RealityVoid]

Ok? Trump doesn't have a constitutional right to do a bunch of crap but he's doing them anyway. This is the world we live in.

[lovich]

My local town doesn't have a Constitutional right to exist or be independent either.

This has very little to do with the price of tea in China.

Parties outside of the US who don't give a fuck all about the Constitution are involved in keeping us as a reserve currency, and they care that the fed is independent. We have kept it so to keep the economy stable and to reap the benefits of that stability.

[SecretDreams]

> The federal reserve has no constitutional right to exist or be independent.

Do we suddenly care about the constitution again?

[tjwebbnorfolk]

Ah yes, the "sovereign citizen" argument applied to the Fed. You've been wrong for 110 years -- I predict you will remain wrong.

[tencentshill]

Their stability has worked to benefit a lot of rich and powerful people, so I would question the motives of this sect of billionaires who are trying to destabilize it. They must believe they can extract something from the ashes.

[stackghost]

>The federal reserve has no constitutional right to exist or be independent.

Irrelevant.

Actions have consequences, and the natural consequence of the actions of the US administration is that corporations and states that value stability are looking elsewhere than the US Dollar.

Whether or not the Fed has a constitutional right to independence is irrelevant to this situation. If Americans want to cheer while Trump flushes nearly a century of soft power down the toilet that's their prerogative, but the trend of de-dollarization has already begun and it's unlikely to be reversed.

[thatguy0900]

And I sure Trump would be a great steward of our fiscal policy and wouldn't wildly throw the levers back and forth every Friday as his whims change

[mothballed]

I don't know how you can say that about an institution that was formed by people using false identities on Jekyll Island and ramming it through congress as fast as possible because in their own words "if the people found out they would stop them" (paraphrased).

[llmslave]

did you forget about all the money the fed printed during covid?

fed independence is important, but literally irrelevant in the face of rampant money printing

[throwaway173738]

Who signed the front of those checks?

[Aunche]

We were in a lockdown, and Congress voted for multiple trillion dollar stimulus' financed by debt. Refusing to "print money" in those circumstances is just asking for a worse Great Depression.

[altcognito]

Why did the fed raise interest rates? To soak up some of that cash. It was too slow, but this is exactly the sound money policy that everyone expects. You loosen cash (what you mistakenly call printing money), when you need investment, and tighten cash when inflation and risk taking is out of control.

[FrustratedMonky]

was money printing because of a lack of independence, and manipulation by the executive? or the fed trying to keep things afloat.

this president is trying to money print during non-crisis, to ramp up economy to "20% GDP".

why downvote? Trump literally said he wants a GDP that goes to 20% or 100%. Shoot to the moon.

[hopelite]

That is true, but it also goes well beyond that. Much of the "US Gov't behavior" is largely related to trashing and panicked frantic moves because the consequences of its prior and long tailed actions over decades has now not only started bearing rotten fruit, but a previous strategy of world domination through "globalism" has also turned against those who control the Wizard of the USA from behind the curtain.

On the face of it the Greenland situation makes no sense on a national security level regarding a non-existent, fabricated Chinese or Russian threat, nor related to the fantastical grift of the "Golden Dome" that is even more useless against what Russia has recently developed, than it was for things prior to about 3 years ago.

What we are looking at here (you can tell your children that you heard it here first) is a strategic move to essentially take Canada and all of the NA continent, and eventually all of the Americas. Yes, Canada, you are indeed in danger as well as Mexico. I don't see how it could be any other way in the face of current developments; remember Trumps USMCA, i.e., a de facto North American Union?

Biden stated that he wants the USA to have 300 million more "immigrants" before he let in about 15 million in 4 years. Annexing Canada is about 40M by the time we do it, Mexico would add another 150M plus however many people would flood into Mexico to become "Americans". That bring us to a total of around 550 million by the time the North American Union comes around. Perhaps if the UK joins, we will just call it Oceania already.

It does not address the fact that China has 1.4 billion and India another 1.4 billion, but it puts us in contention, especially as Europe has about 700 million by that time if/when the EU absorbs most of Europe.

That also doe not take into account the Wizard of the USA wanting to take over all of South America for positive control eventually… another ~480 million by that time, putting the American Union of Oceania at about 1 Billion, ±100M.

These are real tabletop calculations and how things are seen at the top and discussed amidst cocktails.

[KaiserPro]

I'm struggling to understand what you are trying to say?

That biden wanted to grow the USA to 600 million people?

That trump is also trying to do that?

[stuffn]

This is quite obviously written by someone with no intelligence experience.

> On the face of it the Greenland situation makes no sense on a national security level regarding a non-existent, fabricated Chinese or Russian threat, nor related to the fantastical grift of the "Golden Dome" that is even more useless against what Russia has recently developed, than it was for things prior to about 3 years ago.

Power projection in the arctic is weak. Russia has made multiple tactical movements towards soft projection in the arctic. You have zero idea what submarines are on station. Taking greenland is arguably stupid, boosting it's defense to prevent a Russian incursion is not.

> What we are looking at here (you can tell your children that you heard it here first) is a strategic move to essentially take Canada and all of the NA continent, and eventually all of the Americas. Yes, Canada, you are indeed in danger as well as Mexico. I don't see how it could be any other way in the face of current developments; remember Trumps USMCA, i.e., a de facto North American Union?

No evidence. Unless you're arguing while NAFTA was around this was a way to create a "United America".

> That also doe not take into account the Wizard of the USA wanting to take over all of South America for positive control eventually

No evidence. Most think-tanks have recognized that maintaining positive control of south america would be disastrous. If anything, Maduro and his friends were probably happy the US decided to black bag him. It is well known that whoever was going to attempt control over Venezuela in particular was going to be responsible for spending the money to rebuild it.

> These are real tabletop calculations and how things are seen at the top and discussed amidst cocktails

No.

[scelerat]

When did Biden say the US needs 300M more immigrants?

[GoldenMonkey]

Why is the independence of the Federal Reserve sacrosanct? For one, they should have oversight and they should have accountability.

Not ever passing an audit of any kind. And the FED chairman spending $2.5B on renovations to an office complex. While misleading congress about the kinds of renovations.

There should be less 'independence', if it means zero accountability.

[MattGaiser]

> Why is the independence of the Federal Reserve sacrosanct?

Then the value of the USD is entirely at the whim of whoever is elected and should be priced accordingly.

[elAhmo]

I can't believe you are making an office complex renovation argument.

FED has been instrumental is keeping the monetary policy sane in the recent years, unlike some pushes from the orange person you are taking talking points from.

[darkarmani]

> they should have oversight

Congress provides oversight and accountability of the Fed. The GAO does audits as well. Frank-Dodd provides more windows into the Fed. Why did you think the Fed doesn't have oversight?

> Not ever passing an audit of any kind

It might have been hard for you to find because it is hidden under the "audit" page on their website: https://www.federalreserve.gov/regreform/audit.htm

> Why is the independence of the Federal Reserve sacrosanct?

It's never been completely independent. It's independent from short-term (4 years) political influence. It's audited and has congressional oversight and the President nominates people to the board.

What else do you want? Interest rates set by Presidential tweets?

[jazzyjackson]

It's not sacrosanct, it's just a 14 year term for the Fed chair so that they don't give in to political pressure to be re-appointed.

[dhosek]

Do you realize that you’ve digested a whole bunch of misinformation uncritically?