01-14-2018, 02:51 PM
(01-13-2018, 09:09 AM)Kinser79 Wrote:(01-13-2018, 07:41 AM)David Horn Wrote: The USD is as powerful as it is because it's reliable. Everyone needs a reserve currency to have for trade and a store of value. Eventually, it may be the Renmimbi rather than the USD, but not now or soon.
The reserve of choice for the past several thousand years has been gold and suplimented with silver. The use of a fiat currency as reserves is an adoration of those economic norms. If the Chinese manage to make RMB fully convertable to gold the USD will lose that "reliability" over night. But then again fiat currencies are reliable in only one thing...failing eventually.
There aren't enough precious metals in the world to act effectively as a reserve. Currencies -- all currencies -- act as transactional lubricants and short term stores of value. Note: they are not intended to provide long term store of value, because that defeats their function as trade enablers. In fact, they need to decline in value slowly over time: fast enough to motivate trade but slowly enough to maintain discipline.
You were into MMT, that takes this idea to its extreme, yet now you pretend it's toxic or something. The truth is in the middle, as it usually is.
Intelligence is not knowledge and knowledge is not wisdom, but they all play well together.