Here's my take on this. Simply put, Uncle Sam will not tolerate anyone or any country from disrupting the greenback as the reserve status. If that ever happens, they know the stranglehold they have on the world economy would fast crumble. However, people should note that it's seriously detrimental to fight against the US government. I've witnessed many times how futile that is in my 30 years as a trader.
Marriage kind of works like this. At first it seems like your wife has you by the balls because after being stupid and exchanging wedding vows, you promised not to cheat. So she controls all your options for sex. But of course some guys learn to cheat without remorse, or other guys struggle for years in a sexless marriage. For the lucky ones, it ends in divorce and you're now free once again to fornicate with whomever you want, or can get. So maybe the US is like the woman with a signed wedding contract, but we know its just a matter of time until someone cheats or divorces. And now the power she had over you vanishes into thin air. Everyone might cry that the US has a strong military, but I'd like to think there are many people in the world now that are aware of the systematic war mongering of the US, and with the Ukrainian war being a total farce, I'm not sure how much appetite there is for more wars amongst the US citizens. If the US citizens don't want a war, and wars are the only thing keeping the "wedding contract" enforced, then it seems like every country will be free to fuck whoever they want and no longer have to come begging the US for a bit of action once a month. In other words, the rest of the world can easily move on within just a few years. Its only takes one night of passion with another person to realize that years of being shackled and faithful is a waste of time. I think the only hope the US has is to embrace crypto so that they can be a world leader. But clearly its not going in this direction, and if the rest of the world settles on this new form of technology for trade, the US will be a washed up single mother crying how nobody gives her attention anymore.
But you forget one important thing. The US is a NET IMPORTER, whereas the rest of the world is a NET EXPORTER. The US does NOT need to rely on other countries to get by economically. We can get by on our own domestically. The rest of the world cannot sustain from their domestic markets alone. They must export to get by. That's the real crux when it comes to the US foreign policy and its economic clout. That is the sole reason why the dollar remains as the reserve currency despite all its flaws. And it ain't like those other countries are in a chummy relationship with the US. I'm sure they would love to stab Uncle Sam in the back if they could, but they know they have more to lose than to gain by doing so.
You do understand quite a bit Nice catch on APY vs APR. Yes, fees (rewards aka yields for the yield farmers/AMM's/Liquidity Pool providers). The rewards have to be compounded, i.e. collected and re-deposited to increase the yield farm to achieve 2000% APY Oops before anything else, if Pepe or Eth goes down 90%, your $1M invested into yield farming on this LP will lose 45% of its value. You are taking directional risk on both crypto assets pepe and eth It's not sustainable for a whole year not even sure it's sustainable for a whole month, and it's all dependent on the trading volume, where the rewards are coming from, aka yields So, let's create a scenario you can understand or relate to. You heard that Jump and Jane Street are leaving the US crypto market making operations, I did not read the article but if you research the details, you might discover that it only pertains for their US operations, they are still very active "offshore" with their lucrative crypto market making operations, through their international companies/branches/subsidiaries They do their MM operations in cexes, i.e. Binance dot com, FTX dot com (lol) Coinbase dot com (no more, give up on this because of Operation Chokepoint 2.0) Well, in dexes, someone like me provides the market making through a smart contract. Uniswap is a dex, a smart contract on the blockchain Uniswap charges fees on the trades, Uniswap makes hundreds of millions of $ worth of crypto assets, sometimes exceeding the trading volume of Coinbase But Uniswap does not have inventory of crypto assets for trading/swapping. Liquidity Pool's are the ones that provide the inventory, and Uniswap pays out most of the fees to the LP providers The bigger the TVL total value locked in the liquidity pool, the more the fees are shared among the participants. The fact that I quit the LP when I saw Pepe was going up should have been a clue that 2000% APY is not enough return to make me stay Since you already know the APR, let's say it's 1% interest per day, on a $40k LP pair Pepe-Eth, that's $400/day But Pepe went up 50% in the last 24 hours, which means only the $20,000 in Pepe would have gone up and the LP would be worth $50k, but compare that to holding $40k of Pepe in a wallet, would have gone up by $20k to $60k If the 2000% APY was sufficient reward for the LP's, everyone would join the Liquidity Pool and drive the yields down for the yield farmers Other LP pairs on Uniswap are yielding much less I didn't take a picture of when I was bout to quit the yield farm, but from memory it was around $700, fees are in crypto assets Pepe and Eth, and Pepe went up so the rewards values go up, but when I talk about $, there is really no $ involved, we denominate everything in dexes in crypto assets, the money we value in our cryptos ecosystem Picture below is after a few hours, you can see the rewards accrued and can be claimed and put back in the yield farm Pepe trading volume past 24 hours is over $1B so lots of trading fees generated by cexes and dexes (left side of the picture)
I don't see it this way. Because the US is a net importer, they rely on others taking the little pieces of green paper. Imagine how much worse the standard of living would be if everything started to cost more because the value of the dollar goes down.
I spent part of this weekend going over financial statements and earnings calls for Sonos & Microstrategy. Regardless of what crooked and lying politicians may say about how great the economy is going ("Better than ever!" - Biden), here are the facts... You can see Sonos has been steeply trending toward an obvious recession. Sonos is to speakers what Apple is to everything else in non-staples. Sonos continues report after report to bleed out since inflation has pushed the middle class into poverty. It is not not even profitable now in this 'better than ever economy'. The company is planning to do desperate measures to cut costs and fire employees across the board. And this used to be a profitable up-coming blue-chip. How quickly things change! On the flip side... Microstrategy, which doesn't even create positive cashflow when looking on paper, has had its stock price continue to moon (due to accumulation of BTC on the balance sheets). Even Saylor in the last earnings call has admitted a lot of the BTC/crypto bounce is due to fear of fiat banks and a repeat of TGFC. So, the question is, what happens when/if the banks finally stop wobbling again, will there be a rush OUT of crypto and back into risky equities again? LOL
What you’re both referring to is the balance of payments. When the U.S. net imports, it makes up the difference by borrowing from foreign countries (i.e., selling U.S. treasuries). The net of the two is zero. If foreign countries worry about the USD losing value, they’d be less interested in lending to the U.S., and the lower demand for U.S. treasuries would lead to higher U.S. interest rates and/or there’d be a reduction in the U.S. level of net imports.
Well, isn't that what's happening currently due to America's protectionist posture, especially towards China? But the point is when the dollar goes down, it would be that much harder for other countries to export to USA. And don't you think that's the US government's objective? In the end, who do you think will win, ultimately?
You get the direction of causality backwards. Many countries, especially in East Asia and including giants like Japan, Germany and China, have oriented their economies around exports and see a trade surplus as necessary to support strong domestic employment and stable financial conditions. The US accepts the role of world's biggest debtor because widespread use of the USD is a geopolitical power lever. Plus, there's the old saying "if a man owes you a thousand then he's got a problem, if a man owes you a million then the problem is yours". Stated simply, global USD credit & monetary expansion is a source of demand for goods, and foreigners are required to accept the USD if they want to tap into this demand. It's certainly possible that we could make the tradeoff too painful or risky for them via e.g. persistently high rates of inflation, but there's no sign of that happening at the moment - real USD interest rates are at their highest level in years.