Is the UK a harbinger of things to come? As US empire fades, how long can it continue to engage in Zimbabwean style printing currency to fund the US-centric military empire ? And what happens when the music stops? US debt seems unsustainable. And if the mad orange 😡 gets back in could all bets be off?
.and can the US defend it's privilage marginly by encouraging/subsidising contries to dollarise? eg Argentia, any-English-speaking-Caribbean-island, any sub-Saharan place which isn't Nigeria or S Africa
Thank you for this and your other article. Could the Euro become the next reserve currency? I know old habits die hard but both parties in the US seem hellbent on increasing debt, either through tax cuts, government/arms spending or both, and at some point won’t folks say enough? Or the semi annual federal government budget standoff ends up with a US fed shutdown for a prolonged period of time people are bound to look for alternatives. And crypto ain’t it. As an American , there are so many weaknesses in our system it’s a little scary to think the world relies on our currency 🤪.
Well, the euro as a global reserve currency sounds like the joke of the day.
they can't even agree on a common fiscal policy, common defense budgets, etc.
Unless we get the United States of Europe, I think there is no chance for the Euro to become anything more than the world's second largest trading currency.
The term "exorbitant privilege" is tossed around a lot, but it is unusual (and interesting) to see someone attempt to put some numbers on it. In this case it would seem the US has had more favorable trend in recent decades, but the elasticities in the 2 countries are now broadly comparable.
'low tax policies and US style tax cuts to boost growth'. That 'growth' tends to trickle - or perhaps better 'stream' - down exactly there where the decision to cut taxes / rates was made.
While US citizens have 'enjoyed' lower taxes for decades they have for, let's say the bottom 60%, not been enough to make up for decreasing real wages (while not even discussing the state of US public infrastructure, safety, education etc). So that gap since the 80s has been filled by taking on household debt (a new and welcome reliable income stream for lenders).
It's perhaps not surprising that the two 'a tax cut as a magic potion' shamans, pardon, nations, have produced the two most significant electoral shifts since 2016...
Although the progressive (or reactionary? Time will tell) 'victims' of those voting outcomes like to contribute both to malign foreign intervention and till this day some (Krugman c.s.) ridicule citizens who aren't satisfied with a Democrat's economy. Recently they upped the rhetoric identifying raging white rurals - 80% of Trump's voters were suburban but let facts not spoil the fun. It's election time you know.
Yet while progressives fume, the FT writes 'The world's largest food and drinks companies have said that poorer consumers in the US are cutting their spending in the face of persistent price rises, in a sign that the lowest earners are bearing the brunt of sticky US inflation.'
Bloomberg ''There are two Americas in 2024: the one for people with jobs, homes and stock portfolios, and the one for everyone else.'
Employers rejoice, the quit rate is back at pre covid levels.
As always i have a fine and original solution, underwritten by SETTLED science:
Let the Brits (experiments best take place on islands) reintroduce their whips to lash each other smarter, to look younger, and live longer. The - again SETTLED - advice is to begin whipping from age 3:
Since the BBC nowadays presents a 13C temperature in orange (to accomodate the colorblind...) and a 20C day since a few years is officially a 'heat day' (Metoffice) i suggest the Brits start whipping each other senseless daily. Since the enemy (stupidity) has a head start (although i do not believe the enemy really occupies the head - anymore).
Yep, the U.S. is in the sweet spot, with its dominant currency, plus incredible natural resources, good demography, and a giant internal market.
The UK has... nothing of the above, for starters. (Nota bene, it used to have natural gas and access to a giant internal market, what happened?)
Is the UK a harbinger of things to come? As US empire fades, how long can it continue to engage in Zimbabwean style printing currency to fund the US-centric military empire ? And what happens when the music stops? US debt seems unsustainable. And if the mad orange 😡 gets back in could all bets be off?
The problem is that it will take decades to replace the Dollar as the world's reserve currency (see here: https://klementoninvesting.substack.com/p/the-renminbi-is-getting-more-important?utm_source=publication-search). And as long as the US printsthe world's reserve currency, they can go on printing money to their hearts' contnet.
.and can the US defend it's privilage marginly by encouraging/subsidising contries to dollarise? eg Argentia, any-English-speaking-Caribbean-island, any sub-Saharan place which isn't Nigeria or S Africa
Thank you for this and your other article. Could the Euro become the next reserve currency? I know old habits die hard but both parties in the US seem hellbent on increasing debt, either through tax cuts, government/arms spending or both, and at some point won’t folks say enough? Or the semi annual federal government budget standoff ends up with a US fed shutdown for a prolonged period of time people are bound to look for alternatives. And crypto ain’t it. As an American , there are so many weaknesses in our system it’s a little scary to think the world relies on our currency 🤪.
Well, the euro as a global reserve currency sounds like the joke of the day.
they can't even agree on a common fiscal policy, common defense budgets, etc.
Unless we get the United States of Europe, I think there is no chance for the Euro to become anything more than the world's second largest trading currency.
The UK since over tha last 100 years is proof that a nation can:
1. Lose reserve currency status
2. Give up a collosal empire-wide market
....and still end up with the citiizens far, far better off financially/health/standard of living wise etc (choose your pick on how to measure this)
Yes, but how much better/richer would we be with a reserve currency and global market access? What is the correct benchmark?
The term "exorbitant privilege" is tossed around a lot, but it is unusual (and interesting) to see someone attempt to put some numbers on it. In this case it would seem the US has had more favorable trend in recent decades, but the elasticities in the 2 countries are now broadly comparable.
'low tax policies and US style tax cuts to boost growth'. That 'growth' tends to trickle - or perhaps better 'stream' - down exactly there where the decision to cut taxes / rates was made.
While US citizens have 'enjoyed' lower taxes for decades they have for, let's say the bottom 60%, not been enough to make up for decreasing real wages (while not even discussing the state of US public infrastructure, safety, education etc). So that gap since the 80s has been filled by taking on household debt (a new and welcome reliable income stream for lenders).
It's perhaps not surprising that the two 'a tax cut as a magic potion' shamans, pardon, nations, have produced the two most significant electoral shifts since 2016...
Although the progressive (or reactionary? Time will tell) 'victims' of those voting outcomes like to contribute both to malign foreign intervention and till this day some (Krugman c.s.) ridicule citizens who aren't satisfied with a Democrat's economy. Recently they upped the rhetoric identifying raging white rurals - 80% of Trump's voters were suburban but let facts not spoil the fun. It's election time you know.
Yet while progressives fume, the FT writes 'The world's largest food and drinks companies have said that poorer consumers in the US are cutting their spending in the face of persistent price rises, in a sign that the lowest earners are bearing the brunt of sticky US inflation.'
Bloomberg ''There are two Americas in 2024: the one for people with jobs, homes and stock portfolios, and the one for everyone else.'
Employers rejoice, the quit rate is back at pre covid levels.
As always i have a fine and original solution, underwritten by SETTLED science:
Let the Brits (experiments best take place on islands) reintroduce their whips to lash each other smarter, to look younger, and live longer. The - again SETTLED - advice is to begin whipping from age 3:
https://today.duke.edu/2019/10/new-zealand-study-connects-walking-speed-brain-health-45-year-olds
Since the BBC nowadays presents a 13C temperature in orange (to accomodate the colorblind...) and a 20C day since a few years is officially a 'heat day' (Metoffice) i suggest the Brits start whipping each other senseless daily. Since the enemy (stupidity) has a head start (although i do not believe the enemy really occupies the head - anymore).
Agree trickle-down doesn't work at all. Never has, never will: https://klementoninvesting.substack.com/p/trickle-me-elmo?utm_source=publication-search