"Oh

 

you are on the internet to much.

The dollars collapse is decades away."

Etc. etc. etc...

Yeah...right...sure.

Missing the point on explosive dollar risks

"?TOKYO – Few professions are better at making straw-horse arguments than the economics trade. The reason: it’s always easier to refute an unserious argument than tackle the biggest questions of the day."

(Applies to cosmology as well as we'll see later on today.)

"The arguments US leading economists Lawrence Summers and Paul Krugman 

(Big fan of Krugman BTW)

are making these days about the rivalry between the Chinese yuan and US dollar are Exhibit A. Take Summers, the former US Treasury secretary, who made headlines this week detailing why the yuan isn’t a threat to the dollar's dominance as reserve currency anytime soon. Trouble is, virtually everyone already knows a currency that isn’t fully convertible or backed by deep capital markets can’t acquire significant reserve status. The reason top economic minds do this, of course, is to avoid the proverbial elephant in the room. In this case, that’s the US national debt racing toward US$32 trillion."

"Dysfunctional politics putting Washington on a path to possible default doesn't help. 

Nor does a US Federal Reserve team losing global confidence with distressing speed."

(The authors point is valid. The three phrases underlined above are reasons enough to believe the dollar will loose its reserve currency status and sooner than were being led to believe. THE YUAN has nothing to do with any of them.)

"The yuan isn't the issue. It's a fragile dollar problem that isn't being treated, nurtured or reenergized at an epochal moment."

"That hasn't stopped the financial world from obsessing over questions with little relevance in 2023"

(Hope that 20 footer doesn't damage the pier honey...while ignoring the 200 foot wave a quarter mile off shore thats gonna wipe everything out.)

"Nobel laureate Krugman, meanwhile, makes a force-of-habit argument. The dollar's dominance - and the power of incumbency - makes it somewhat untouchable as a linchpin of global finance and trade. To him, it would require “exceptional circumstances” for the dollar to be eclipsed in global circles."

(We just had three of the top four bank failures in our countrys history, is that not: “exceptional circumstances”?)

"Yet isn't what's afoot in Washington exactly that, as Congress threatens to renege on US government debt?"

(That too.)

"A dozen years on, (from a different debt ceiling limit debate) this game is a far more precarious one. The trajectory of US debt is one problem. 

(Thats why the FED is gonna pause at 5.25%, (where it thought it would be by the end of the years BTW) not because they have or are solving anything.)

"So is how the Fed's campaign to tame the worst inflation in 40 years is causing collateral damage from Latin America to Africa to Asia."

(Their debt is in $'s. With inflation? It takes them more $ to pay down their debts. It's not just here, it's "Latin America to Africa to Asia" as well.)

"Political chaos in Washington also raises the stakes. In the post-Donald Trump era, legislative polarization has hit a fever pitch - as evidenced by the default debate spooking world markets."

(These are all reasons to assume (and rightly so, that people are just gonna keep moving away from the $ and at an accelerated clip at that.)

"To be fair, Summers and his ilk aren't oblivious to these toxic dynamics. Summers notes that “if the dollar loses its status, it will be because the United States is no longer respected and strong in the world. It will be because we've accumulated a set of untenable debts.”

(Havent we already done all that?)

"Yet this seems far less of an “if” than most top US economists let on. Just ask officials here in japan , which holds the world's largest stockpile of US Treasury securities at about $1.1 trillion. Beijing holds just under $1 trillion of US debt."

(So why aren't they saying so if:

"Summers and his ilk aren't oblivious to these toxic dynamics."

and

"this seems far less of an “if” than most top US economists let on."

?)

"Cumulatively, Asia's top central banks are stuck with nearly $3.5 trillion of US debt at a moment when the US government isn't operating effectively."

"Back in 2011, economists like Brad Setser, a former US Treasury staffer, began stressing that big stockpiles of US debt held by China and other geopolitical rivals represent a growing national security threat."

(What we have been using against others is going to be used against us. The bully is about to be bullied, and when countries start dumping US debt? it will come quick like in a hurry, dont kid yourself.)

"The Trump era did serious damage to global confidence in the dollar. Along with a record $1.8 trillion tax cut, Trump's disastrous handling of Covid-19 necessitated $7.4 trillion of fresh government spending. Equally worrisome were Trump's flirtations with defaulting on US debt to hurt China."

"As strategist John Mauldin at Millennium Wave Advisors notes, “the Biden administration made an error in weaponizing the US dollar and the global payment system. Tha twill force non-US investors and nations to diversify their holdings outside of the traditional safe haven of the US.”

(They only did it (weaponized the $) because they already know how this all ends and it's not good. 

One can argue that your country is being destroyed on purpose:

Consider:

SPR drawdown w war looming in the pacific.

Weaponizing the $ and knowing what that would entail (see above).

Fed actions and their effects globaly.)

"But the coming fight over the debt ceiling could trump all. “A reason to think this time may be different,” says economist Will Denyer at Gavekal Research, “is the make-up of the Republican Party in the House of Representatives. The fractious caucus only elected Kevin McCarthy as speaker in January with a tiny majority after an epic 15 rounds of voting.”

"Hard-line 'small government' Republicans may argue on principle that destroying the government's bond market credibility will make it harder for it to borrow and so help starve the beast.”

"Yet this standoff between Republicans and the White House could trigger what

Treasury Secretary Janet Yellen calls an“economic and financial catastrophe”,

whereby US institutions shoot the reserve currency in the foot, irrespective of the status of the Chinese yuan."

It's the truth:

"it’s always easier to refute an unserious argument than tackle the biggest questions of the day."

Know that:

"the US national debt racing toward US$32 trillion"

"Dysfunctional politics"

and

"a US Federal Reserve team losing global confidence"

have absolutely nothing to do with The Yuan.

Nothing whatsoever.