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.
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.
Interestingly, there seems to be more good will and amiable vibes between EU nationalities than within the US even. Even being enemies for a thousand years, I don't doubt that Swedish and Danish men would go to war for one another, or French and German. It's complicated yes, but the continent is more unified in spirit than it may seem to an outsider.
German here: I'd go to war (and likely will, with how it's looking currently) for any country that shares our values and is an ally or friend, that's being attacked by an evil force such as russia. And that of course includes my french brothers to the west.
80 years ago we were the bad guys, and far more brave people than me, from other countries, stepped up to curb the evil. This time us Germans need to be on the right side.
Thanks German brother :) I think our main issue in Europe is the lack of a common language. It makes it harder to build strong ties and realize how close our values are.
Agreed, there is always this little story to remind us of our unity - at least from the perspective of the draftees/workers back in ww1, where everyone was basically forced to fight each other by the elites
I think you’ll find that threats of violence (which is what your comment is) need to be much more unhinged to be effective deterrents. Remember you’re warning off barbarians (eg us Americans or the Russians), not civilized folk.
If he is, it won't be for very long. The most visible merc was a retired US colonel, he ran off home within weeks, got drunk on the War on The Rocks podcast and revealed the corruption and depravity of the "good guys."
Freedom of speech, democratically elected representatives, protection of minorities, religious freedom, to name a few.
I can already hear people storming out of the woods, ready to write how the EU itself is undemocratic, or how free speech isn't real in western European countries. I disagree with you.
Well, indeed, freedom of speech in the EU isn't freedom of speech as only a certain type of speech is allowed. Conveniently weakly defined "hate speech laws" (even in private conversations!) allow easy political suppression. Or just lawfare through defamation, which is happening in Germany at the moment (4,400 defamation cases by politicians, last year).
Regarding the EU, the only elected representatives don't have the right to choose which laws they will vote for. If it was in a soviet country no one would call it a democracy.
I have many moral problems with that scenario. I used to live in the US a long time ago. The US is sick; there's a mad king at the top who doesn't have the well being of the nation in his interest, and he is driving the world towards war with every passing day while dividing his own people. War with the US isn't a clear cut "good vs evil" situation as the EU vs russia would be, it would be a utter tragedy, not wanted by neither the populace of the EU, nor the US.
That said, yes, I would defend Europe against the US, even though I think that fight would be short, deadly and decisive if it really came down to it.
What a fucked up world we live in, just because idiots voted for a convicted felon.
> War with the US isn't a clear cut "good vs evil" situation as the EU vs russia would be
I don't think EU vs Russia would be a "good vs evil" situation. Russia/US seem pretty similar to me, dictatorship/propaganda with a majority of the population being regular people not in favor of any war, and 30% of indoctrinated people.
You seem to have very little contact to Russians living in Russia or Germany. Their version of "not in favor of any war" is a very strange one – it's more a stance of indifference than disfavor.
I don't know why you believe that a decades-long strict dictatorship like Russia has more democratic support for its "evil" government than a country whose leader was elected just 1 year ago with approximately 50% of the vote.
Russians are lining up to go to war under the promise of money, around 30k a month last time I checked. Americans not so much, in particular not against Europeans. It's different in my view.
Americans don't need money to fight. I was paid $0 with the YPG and had to bankroll my own time. Lots of Americans there. I met a lot of them that didn't even really give a shit about the sides of the war, they just needed to fight something. We're a savage people.
Which historically has worked more for us, than against us.
French here: If we can send French soldiers to fight and die in Mali for years, only to end up with a military junta that prefers the Russian Africakorps, I think we're ready to send our soldiers to die defending a European ally.
Plus, with global warming, this may be the last chance for the Alpine hunters to shine.
I think the people on this continent have a lot more in common than they might first realize. We certainly have our own cultures and language but beyond that I think we all share a certain European heritage, core culture and values.
There's a certain stigma especially in Germany caused by the WW2 and the the leadership has been complacent to rely on Bretton Woods agreement. But as we're seeing now the geopolitics are doing a 180 degree turnaround and given these circumstances I expect sooner or later Europe will collectively understand the utmost importance to com together and to regrow and redevelop the military to support independence and not having to bow down to any master in the East or int he West.
The great minds that - after WWII - built the new Europe had in mind that there should never be war again, which is best realized when former enemies become friends and closer bonds are established at multiple levels: politically, economically, culturally (unions, trading exchanges, visits/open borders/teaching common European values in schools).
There is a strong political and cultural foundation in geographic Europe for the political EU:
some exemplary giants/EU co-architects:
Integrated Italy into Western Europe
Advocated supranational institutions
Paul-Henri Spaak
institutional designer, key role in the Treaties of Rome (1957)
helped design the European Economic Community (EEC)
Advocated supranational institutions
Walter Hallstein
1st President, European Commission.
Built EC into powerful, independent institution
Championed the supremacy of European law
Altiero Spinelli
Wrote the Ventotene Manifesto (while imprisoned by Fascists)
Advocated a federal Europe
Winston Churchill
A paradoxical but crucial figure: called for a “United States of Europe” (1946 speech)
Influenced Europe’s post-war direction despite UK distance
François Mitterrand
Drove Maastricht Treaty with Helmut Kohl
Pushed for the €
Symbolized Franco-German partnership
Helmut Kohl
Franco-German friendship exemplified by Mitterand-Kohl personal friendship
"Architect of modern Europe"
German reunification
Key figure behind the EU and monetary union
It's ironic that the name "U.S.E." (United States of Europe) was first proposed by a Brit, alas a smart one, and I'm sure Sir Winston Churchill would have had the oratory abilities to convince his countrymen that his idea had merit, but he did not live to see it. The Federation of Europe or United States of Europe is the logical end-point of the joint vision of all these foundational leaders.
>Franco-German friendship exemplified by Mitterand-Kohl personal friendship
Ironic to call this a "friendship", when Mitterand along with Thatcher were working behind the scenes with the soviets to sabotage and stop Kohl's reunification of Germany. It was anything but a friendship, but more of a concession.
Politics is full of such examples that look friendly to the public, but hide a lot of sabotage and back stabbings in the background. In fact, the later is the norm in politics.
Not when the competition is a zero sum game over critical resources. This isn't a game of table tennis, it's about competition over dominance.
Friendships are just the media facing image. In reality, if a country can gain an advantage over the other they see as an economic adversary, and has the means to enforce it without repercussions, they'll do it. Then they'll meet up in front of the media, shake hands and gaslight the peasants on how this benefits everyone.
The true friendships in between countries are made over decades/centuries over shared blood, heritage and culture because humans are tribalistic and have own group preference. Forcing friendships via political declarations doesn't work.
Let me explain with examples. If Portugal would get attacked a lot of Spaniards would go fight for Portugal voluntarily because of shared history and culture. But if Bulgaria would get attacked, most Spaniards wouldn't volunteer to go die for Bulgaria, even though they're both EU members.
Austria kept torpedoing Romania's Schengen entry just to extract some monetary concession, not exactly something friends do. So if Austria were to hypothetically get attacked tomorrow, a lot of Romanians would cheer rather than want to go help since karma is a bitch. These kinds of petty squabbles are the norm in the EU.
People aren't gonna want to die or sacrifice themselves for the EU flag since it's an artificial construct, kind of like the corporation they work for, not something they feel a sense of belonging and allegiance to like a specific group of people.
The lowest common denominator, racial ("shared blood", "tribal", and also "culture" in this context) perspective is exceeded time and again, and the ones that do exceed it are the most free, most prosperous, and most powerful - NATO being a clear example, but also all the Pacific alliances around China. The poorest and least safe are the ones that follow your advice, places like Somalia. Or look at the US and NATO ten years ago compared to today.
Most countries can be subdivided seemingly infinitely into groups that could find reasons to fight each other. But humans have other common 'denominators', much higher than that. Spain, the UK, the US, France, China, and many others are unions of subcultures.
You can see so much better in the world. Instead of insisting that evil is inevitable - making you a victim of it - you can work for good. Our ancestors have had great success and made it easy for us to follow.
>the ones that do exceed it are the most free, most prosperous, and most powerful - NATO being a clear example
You're beating it around the bush. Tell me how many Spaniard would voluntarily sign up to die to defend Bulgaria if shit were to hit the fan.
THat's how you measure if strength of alliances stand the test of time, or if they're just worthless pieces of paper from a bygone era of peace and prosperity wrapped up in fake nationalism under a made up flag.
> Or look at the US and NATO ten years ago compared to today.
10 years ago a lot more people in US and NATO countries could more easily afford a house and get a decent paying job with a higher purchasing power. What were you trying to prove with this?
The major benefit of the US Dollar is that you can do things with it. Between export controls, currency controls, laws on foreign ownership, etc, china can pay me all the RMB in the world. I still can’t do a whole lot with it.
This is part of the same reason many people don't use Bitcoin- you can't actually do much with it because retailers don't accept it. But China is definitely thinking about how to fix that problem, and soon they will make it possible to pay directly in CNY in other countries. Once you can buy things with it, the CNY is attractive from a practical perspective. A lot of your stuff is already manufactured in China, once/if using CNY makes your purchase easier then it's going to gain ground on the USD.
Funnily enough you can use Bitcoin at most merchants that use a Square PoS device, which is like 25% of merchants in the US. It just takes time for folks to change their behaviors. And why would they, if they're getting X% cashback on all purchases using their credit cards?
We've witness deflationary forces in computer hw for decades and no one is holding off their purchases. Time is scarce and it ultimately forces consumption because otherwise, what would you be saving for?
Don't need Econ 101 to understand this basic reality.
Well there is a difference between people not buying anything at all and being significantly less than they are now. Consumer goods and services is only the tip of the iceberg.
How much do you think debt would cost and how easy would it be for businesses to get credit?
Combining a deflationary currency with a growing (or at least non static) economy is bad a everyone who has a basic understanding of history prior to the 1930s can see that. Something like bitcoin would be even much worse than the gold standard.
You're forcing business to produce something valuable in real terms instead of nominal terms and you're making that calculation easier to do for economic actors because the measuring stick is now controlled by an algorithm as opposed to charlatans.
Having less of that garbage fiat short-termism is a good thing for society.
Yet having more of endless boom and bust cycles with major economic depressions lasting for years (outcomes of the gold standard was a good idea).
> You're forcing business to produce something valuable in real terms instead of nominal terms
I don't quite understand what does that mean. Pricing goods in oil or grain? (coincidentally either of which would function better as a currency than bitcoin).
Computer hardware isn't trying to be currency. Bitcoin was supposed to be, but hardly anyone who uses Bitcoin these days is using it to buy things--it's used as a store of value or a speculative asset, not a means of transaction.
Paying Chinese companies in RMB isn’t the issue. If I sell something and a Chinese company pays me in RMB, I can’t really do anything with a billion yuan. Can’t buy a company (limitations on foreign ownership), can’t buy property (99-year lease that can be canceled on the whims of the government at any time), can’t buy Chinese debt (terrible yields, very small foreign market access, incredibly opaque laws and accounting), and nobody else in the world wants it so I have no choice but to sell it back to China in exchange for a real currency at whatever horseshit exchange rate they’ve concocted.
It’s worthless money and I don’t see anything out of china that would cause that to change.
Because if I am running a business I just want to be paid in money that I can pay my bills in. I don't want to have the additional task of managing rare earths and electronics inventory. That's not "a bit more work." It's running an entirely different business that I don't know how to run.
I think OP's point is that a "99 year lease" isn't worth very much without a firm guarantee that the least in fact lasts that long. I don't really have an opinion on land leases in the PRC, but it doesn't seem facially unreasonable to suspect that a foreign lease holder's land value wouldn't be a priority for China's leadership during an economic crisis.
This is on full display with the US's Venezuela problem: no one believes the US will hold it, so oil companies don't want to invest because last time exactly this happened - they had everything seized.
Imagine if you'd invested in lithium mining in Afghanistan 15 years ago: you'd likely have paid a lot, made little money, lost employees and then lost it to the Taliban.
I guess this is naive, but can't you use it to buy (or sell it to people who want to buy) Chinese products? It's not like China doesn't have an enormous amount and range of products on offer.
This is actually an interesting point. Wouldn't it be bad for China if the US isn't the reserve currency/the RMB gains a lot more in value relative to the USD? It would proportionally, negatively, affect their export profits, no?
Germany did relatively fine though? Despite the German mark being the second largest reserve currency and their economy being heavily reliant on exports.
Mostly it’s just what I’ve read, I don’t know if it’s true, which is why I asked. If you get less yuan-people-hours per dollar (and materials cost increase for the same reason), you would get less per dollar than previously, I think?
Eventually you hit an inflection point where it’s cheaper to manufacture elsewhere. Which is why China is working Africa, huh?
I mean, you can buy goods and services within china, and you can sell those goods and services. The “horseshit” exchange rate can’t deviate too far from the real value or it incentivises laundering too much. The exchange rate isn’t _that_ bad as a result.
Retailers don't accept crypto not because of the technology so much as the fact it is a capital gains event every time you transfer crypto, which means both the buyer and seller are now forced to keep a log of their gains/losses against the dollar everytime they buy a pack of gum.
Obviously that's extremely impractical and at best you're hiring a 3rd party to streamline that for you. It's a clusterfuck at tax time (edit: stable coin doesn't help here -- you must still report gains on stable coins as it is still a $0 capital gain which is different than no capital gain).
Retailers already dealing with capital gains and with high chargeback rates love it though. For instance, it's usually the cheapest same-day clearing way to buy precious metals online since credit card rates are high (chargeback), ACH takes days, and wires tend to cost $15+ with many banks.
Reticence among retailers predates the capital gains policy of the IRS. The volatility of Bitcoin's value induces excessive exchange risk. However, we don't see capital gains nor exchange risk with stablecoins. I assume that network effects are insufficient to drive retail demand for stablecoin support.
The volatility of bitcoin is why there is capital gains on every trade, it has nothing to do with the IRS's new crypto policy.
If a bitcoin rises or falls by a calculable amount between when you received it vs when you spent a portion of it, you have gains/losses. That has always been required by the IRS to be reported, whether that is a BTC or chicken feathers.
> Reticence among retailers predates the capital gains policy of the IRS. The volatility of Bitcoin's value induces excessive
The IRS policy is irrelevant, the law always required payment of capital gains. It's consistently been the hardest thing about accepting Bitcoin for payment.
You do not need to report a $0 capital gain when using stablecoins. Sure crypto can seem like the wild West with CPAs having different opinions on what little official guidance is out there but that one is simply absurd.
It's more of a payment processor issue than a device issue.
If you are in a country or area with a large Chinese population, you can usually pay easily in RMB with Alipay.
If you use Visa and Mastercard, you are subject to US regulations, sanctions, and embargoes. Many alternative payment processor exist, PIX in Brazil, UPI in India, etc.
There are several systems in the EU: Wero, Bizum, BLIK
It is urgent that Europeans coordinate to ensure the interoperability of these systems and reduce the influence of Visa and Mastercard.
In the event of conflict, this will be the first service to be cut in order to disrupt European countries.
An integrated European payments system should be very high up on the priorities list of the European Commision. I believe every EU country already has its own version of a QR code payment, I don't know why can't they connect "easily" connect them.
It's complicated, there are two types of applications and networks.
1) Direct payment systems via mobile phone, generally designed initially for payments between friends and family. They have been set up in several countries by neobanks, generally based on the Mastercard network (very common among neobanks). A Latvian neobank may expand into the Baltic countries, but is unlikely to succeed in Portugal. These systems are not interoperable with each other.
2) Systems promoted by banking networks, such as Bizum in Spain, which has expanded to the Iberian Peninsula, and Wero, which is supported by BNP Paribas (France, Belgium, Germany). These networks are independent of Mastercard, Visa, etc., but they seek to favor their members and do not seek to become widespread.
Discussions have been ongoing for years to achieve interoperability. The idea for the moment was to let the market structure itself naturally without too much intervention, other than to say “we must move towards interoperability at the European level.” This approach has worked very well for bank transfers, which have become simple, fast, and relatively secure, but it has taken a long time (Europe, consensus, etc.).
You can buy with RMB in a lot of countries outside the West, if they have integrated UnionPay or AliPay into their payment processors.
But more importantly, you can buy a lot of stuff from the factory of the world. Which is why a lot of countries don't mind holding the RMB. Just not enough for it to become a reserve currency, and certainly no one wants it to become the petroyuan.
The euro has been gaining ground ever since the financial crisis in terms of share of currencies held in global foreign exchange reserves. Less than a third of the US dollar, but still a distant second. Nevertheless, I'm still concerned about the Russian invasion of Ukraine, and how intertwined the EU economy is to countries which it has shaky relations with at best.
the yuan has major currency controls. there is a real threat of capital flight destabilization if policies change which is why nobody sane would peg tp the yuan as it is now. that said, countries definitely make bad choices.
I'm afraid you may have misunderstood. The SDR is a time-varying basket of USD, EUR, RMB, GBP, and JPY. At time of writing Afghanis are not part of SDR, even though Afghanistan owns some SDR.
I partially agree. But the EU is in a pretty unstable state as incomplete government structure over a collection of peers. "Unstable" does not mean it's going to fall apart. It means it's going to fall apart or coalesce into a single thing (a new country). Or maybe a little of both (a new country with some fringe members leaving).
It might not be in 5 or 10 years but it's inevitable. It's not going to operate like this for 50, 100 years.
Just run a mental simulation of WW2 playing out except Europe had the EU.
So while I agree the EU is becoming more an more normal and important to the average citizen, there will come a time when it has to either solidify further or break apart, and I think it's basically a crapshoot to predict how that will go now when we have basically zero info.
I wouldn't describe integrating further to the point of becoming more like the US as "unstable". And that's the most likely outcome, which should make the EU more trustworthy as a partner, not less.
I would argue that not only is it not the most likely outcome, but that it's practically impossible. When the colonies united they all spoke the same language and shared the same culture as the descendants of recent British colonists. Furthermore, they had just fought and won a war of independence together. The first presidential election was unanimous with every single electoral vote backing George Washington. Do you think an EU presidential election would play out like that?
Also, when the colonies united, the government they agreed on was by today's standards extremely small and decentralized and there was absolutely no welfare state. Revenue was mostly from tariffs on imports with zero income tax. Merging modern European governments would be a massive undertaking in comparison. And the wealth levels between countries are so lopsided that any such merger would mean massive transfer payments out of the rich countries to the poor. And what about tax rates? Low tax countries will not like this one bit. When the US colonies merged under the constitution, you could very truthfully go to the average citizen of any colony and say "basically you won't even notice any changes." Whereas for the EU, you have to say to the voters "your taxes will go up and we will now be sending $100 billion Euros per year to people in other countries."
Just re taxes: why would anything need to change on that front in the event of federalization of the EU? There already is a union, it already has money, money already flows from richer countries to poorer countries—what would federalization change?
Sure the contexts are different, and you can also look at the federalization of German states as yet another example with a different context, but not all of the factors are unfavorable. For example, the countries of the EU are already more integrated than the colonies were. Plus it's a very different time now, we've had the UN for a long time already, etc.
Also, I was surprised to learn how heterogenous the different regions of the US were from the very beginning, in origin, character and motivations. The Puritans, Quakers, Cavaliers, French nobles and traders etc.
And until the first entitlement programs during the New Deal it made no difference because it was entirely the poor state's problem. Only after the country had been a political union for over 150 years did they have any sort of welfare transfer program. If New Yorkers had been told in the late 1700s that joining the union would mean taxes coming out of their paycheck to send money to people in Georgia, they never would have joined.
I meet a lot of people do enjoy their nation's sovereignty especially as a shield from EU's poor and unpopular decisions that they don't get a vote in, and see the common currency and freedom of movement as just the right amount of integration. Making english an official language would be even better IMHO, but that's about it. I enjoy different countries having different politics and takes on topics, as it would be shit if all EU was a just a homogenous groupthink.
And I've never met anyone who thought the likes of Ursula and Kaja should be trusted with even more power and control over nations.
>I wouldn't describe integrating further to the point of becoming more like the US as "unstable".
More like the US, as-in a country? So also more like Germany, China, South Africa, etc. You are making a false equivalence - being like the US in one extremely non-US specific way does not mean you must be like the US in every other way.
I'm not sure you even understand what I'm saying - this has nothing to do with the US vs. the EU or if the US is reliable.
I was referring to the possibility of the EU becoming a federal union which acts like a country. Yes, like the US and Germany, but unlike China and of South Africa I don't know enough to say.
It doesnt have to be a federal union. Probably a logical step but I didn't prescribe it. Regardless, I dont see how it could persist in its current form through lots of conflict.
Yeah, there are already major opposition parties advocating EU exit in many countries already. Try to centralize further and their support will increase. Contrast that with the US when it unified. George Washington won the election 69-0 in the electoral college. And that's not even getting into any of the other massive problems with EU unification.
> Additionally, we've now seen the EU survive the departure of a major economic power (the UK).
I don’t really understand the impact of Brexit on the euro, as Britain wasn’t on it.
But clearly they were a key part of the EU. It’ll be interesting to see which side regrets the move more.
>In June 2025, 56% of people in Great Britain thought it was the wrong decision
It's not so clear when you consider that 48.1% of the original referendum voters wanted to stay in the EU. I'm honestly very surprised by this poll, 8% change is pretty minimal considering the turmoil the country has gone through since 2016.
How much of this can be explained by older voters dying in the intervening 10 years, I recall that demographic skewed much more heavily Leave in 2016
Half the issue is the definition of ‘voter’. Turn-out is abysmal and polling has been crap in major ways. Calling someone eligible to vote a ‘voter’ is probably only right 50-60% of the time.
Agree, that's a good point. Perhaps many who would have voted remain just didn't think it was a chance it would pass so sort of stayed home because of that.
But only 56% in a poll? Is that enough for another referendum and guarantee rejoin? EU politicians have made it clear, ALL UK opt-outs will be gone if UK rejoins, whether it is UK opt-out regarding budget (like paying billions less in annual EU fees like UK did before), to special fishing rights pre-Brexit, to forced to adopt Euro currency and drop Pound sterling.
Rejoining is seen as politically too risky in the short term. As you observe, the UK would not get back its privileged position, there are probably some bargains to be struck but a track to the Euro currency is almost certainly mandatory and that'd be unpopular because people really like our banknotes for some reason and the Euro deliberately just looks like play money, the illustrations deliberately don't show real structures to avoid associations with the nations where those things were built.
But while "Leaving was a bad idea" isn't enough to seriously push for actual re-entry to the EU it's certainly a good sign for the EU and for the Euro. The EU is a massive bureaucracy, and I think we underestimated how much "a massive bureaucracy" might be the thing we wanted in this role..
I don’t know if you can confidently claim that the vote represented the view of the population at the time.
There was a small pro brexit margin, and loads didn’t vote. I don’t dispute the vote result, I just wondering what the result would have been if there had been higher turnout.
The Yuan is not a freely convertible currency, so not really an option here. The Euro isn't terrible, but it has structural issues in that member states all must take out debt in what is for monetary policy purposes a foreign currency. This generated a debt crisis 10 years ago, which has been papered over, but the structural issues remain unresolved. Also, the Euro has been around now for 25 years. That's not long enough to convince anyone of long term stability.
And to add on (rather than edit my comment), I think the saving grace that keeps USD around for a while longer is the last section of the article, "Deposit dollarization in emerging markets"
A lot of growing economies don't/can't trust their local currency and they overwhelmingly use USD instead of EUR or CNY. As those economies grow the USD gets a boost that will sustain it for a while over the increasing competition of CNY. But this can't sustain it forever and the US is not doing anything to offset the lost ground in global trade and forex reserves.
Sweden just haven’t completed the stabilization and alignment criteria to formally switch over, arguing that it is voluntary.
We had a referendum on the euro back 2003 with a clear mandate to not adopt it and the politicians don’t want to poke the sleeping tiger that is the euro question.
Saudi Arabia was privately discussing de-dollarization way back in summer last year, when the irrational tariffs were imposed, followed by the Israeli-US strikes on Iran. Make of that what you will.
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.
The U.S. is as stable as it gets. It has been one continuous republic and has 250 years of legal stability and a history of paying its debts. It has 4.2% GDP growth, with the largest economy in the world and growing.
Your ruler is no longer following the rules of law, nor the foundational constitution. USA ended with their declaration of dictatorship and the failure of your houses/legislature/military to act against that and defend the Constitution.
I can't see how, since the end of habeas corpus, you can claim legal stability.
Your leader is World renowned for reneging on debts and is demanding bribes for companies to operate.
Isn't borrowing through the roof to pay for things like your stasi?
Daily those stasi are murdering and disappearing people seemingly attempting to foment an excuse to escalate the violence.
I don't know how that knife edge can look anything like stable to you.
It's a very grandoise (or alarmist, depending on your perspective), but this isn't super new. The US has been "unstable" with rulers breaking their own laws domestically and internationally for many decades.
My money is that influence campaigns are active on HN and try to mold the discourse. The whole internet is manipulated to hell, and HN is a prime target, you have a bunch of smart people that probably have oversized influence, how could you NOT try manipulating this place?
This is most certainly happening. A lot of US-critical articles also get flagged to death, even when they have a lot of upvotes and healthy, civilized discussion.
I don't think mostly is true? Obviously it depends a lot on the time of day, but there are also a lot of Europeans on the site. Also, most comments here seem to be critical towards current US policy. So, I think there is quite a lot of manipulation going on, since the downvoting/flagging does not really match the comment section.
I think it's true. There is a significant audience here from other areas but this being an english language forum and one focused on tech means that the US is always going to have a dominant presence[1]. The US dominance also means that the news is highly focused on US events when it wanders out of tech which further reinforced the audience.
1. I believe Canada does have an outsized presence though!
The problem is the AI bubble, without it it is speculated that the US economy might actually be in a recession [2] - effectively, that web of investments, deals, ownerships, purchase contracts and god knows what is nothing more than wash trading that will come crashing down hard.
That is why for the 99%, the economy doesn't "feel" like 4.3% of growth. If you're not in AI directly or at least adjacent (e.g. datacenter or utility construction), you don't feel any of that money.
The U.S. chose to abandon the rules based international order that has made it a bastion of stability since WW2 when they decided they wanted a return to the monroe doctrine and that it was okay to arbitrarily invade countries and take their resources based on the impulses of a single person. The same person outwardly stated, "Considering your Country decided not to give me the Nobel Peace Prize for having stopped 8 Wars PLUS, I no longer feel an obligation to think purely of Peace". If you think this is "as stable as it gets", then we're living on different planets.
There more to stability than continuity of government. Though, that definitely is important.
It’s bad enough that America’s foreign policy lately swings wildly every four years. More recently, it’s been acting aggressive toward allies, and making very strange and unpredictable moves.
The USA’s tariff policies are, frankly, utterly insane. Yes, I do mean the tariffs are irrational and incoherent. The approach to the tariffs has been overly aggressive. They’ve been changing almost daily, at times. Now, tariffs are specifically a thing that must be stable and predictable on a multi-year horizon. This must be, at least, off-putting to other governments, and to any companies wishing to do business in or adjacent to the USA.
Monkeying with the Fed is dangerous and basically unprecedented. This is going to make people nervous because it marks the end of an era of stability in monetary policy. We may be at the start of a new era where interest rates, much like the tariffs, change frequently for bad reasons or for no reason at all. Who can say?
America was never a stable country. That 250 years includes:
* A decade of chaos under the impotent Articles of Confederation.
* The deliberately engineered election of George Washington to create the illusion of political stability, a reign which only ended because George stepped down voluntarily.
* An immediate constitutional crisis the moment a competitive election happened, causing the election of a President and Vice President from opposing political parties (imagine a Harris - Trump presidency). The ensuing chaos resulted in SCOTUS unilaterally declaring itself the final arbiter of the law.
* The Thomas Jefferson presidency, which in many ways is the alpha release of Trump.
* The Civil War, started specifically because the losing faction of slaveholders was angry at losing, and ending with the losing faction losing so hard the counter rolled back into flawless victory. They surrendered, then assassinated the President and got his party to give up on everything he stood for.
* Economy-destroying Smoot-Hawley tariffs, which are basically what Trump is doing now.
* A spectacular near-miss in which the country's business elites attempted to assassinate a Progressive president and only failed because the Marine they selected as their Hitleresque dictator ratted them out.
* Widespread civil unrest deliberately created to force America to reckon with its racist past and undo what the South had managed to convince the North to allow them to do after Reconstruction.
* The Richard Nixon presidency, which in many ways is the beta release of Trump.
* Too many foreign invasions to count.
In the entire history of America I can think of maybe 3 brief moments of political stability that weren't outright engineered fantasies. The two that are relevant to modern times are the 1950s and the 1990s. Both of these were the result of America winning a war of conquest.
There's an excellent and eerily prescient novel that attempts to portray what such a "tipping point" might look like, and when it could arrive: https://en.wikipedia.org/wiki/The_Mandibles
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.
Except they didn't and instead borrowed money for the other country. But more importantly, there seems to be a process in place, where a collective of rational actors makes choices, rather than someone who states he can go to war because he didn't get the Nobel Peace Prize.
(Still disappointed that the winner of the FIFA peace prize wants to go to war /s.)
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".
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.
Yes, though I expect there to be a European block, the US, and a Chinese block. Russia there as a wildcard. I doubt we see Germany in competition with Britain.
The trouble with thinking in terms of blocs is that they don't solve the foundational economic problem: who is the sin-eater who is trusted and willing to run the deficits so that everyone else can run surpluses? Without a clear answer, you just have the same question repeated within and between blocs, so the same beggar-thy-neighbor incentives that exist without blocs exist within and between blocs, so the fighting continues within and between blocs until the question is answered. Blocs don't solve the problem at all.
Russia firmly in that second tier along with better behaved peers that have brighter demographic futures and an actual economy, like India, Indonesia and Brazil.
The interwar era between WWI and WWII is most instructive for what a multipolar currency world looks like. The Pound Sterling still mostly worked before WWI and the Dollar rose in the wake of WWII.
The absence of a currency hegemon caused "Kindleberger problems," named after the economist who described them, and will cause them again. The big issue is that everyone wants to pump exports to pump their real economy, they can't all succeed because the world is a closed system, so they fight. First with tariffs, eventually with guns.
These Kindleberger Problems will get worse until the US gets its shit back together or China assumes the throne. Note that assuming the throne will destroy the export sector that they love so much (Triffin Dilemma), so not only are they not ready today, they don't even clearly want to be ready. Much like the US between WWI and WWII.
Buckle up, because the tariff wars, Great Depression, the economic driving force for the imperialism of Imperial Japan, and other awful things that you've heard of before all fall in the category of "Kindleberger Problems," are all downstream of not having a global currency hegemon, and are likely to rhyme with what comes next.
> 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.
Monetary penalties are different from trust erosion in that they are the test of whether trust can be restored, ie you are acting very unpredictable => I am going to show you I'm paying attention and hit you with a penalty and watch your response. If you continue to show you are unpredictable => I plan an exit so that I don't _have_ to trust you, ie trust erosion.
Ultimately if there's too much unpredictable behavior the pain endured will become higher than the pain of eroding trust... which if trust was truly eroding would be signaled by establishment of monetary systems independent of the US, probably with the International Monetary Fund as a base, backed by at least India, China & Europe.
The difference is emotionally based retaliation vs. reassessing risk. And it's about money, so it's for sure not about emotions. The financial world isn't run on anger and emotions, like the White House.
> 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.
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.
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.
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.
> 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.
> 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.
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.
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.
The 10th amendment limits the federal government to the enumerated powers. So your argument that it "isn't prohibited" isn't how this works. You have to justify it under an enumerated power (which, you might well be able to do, though this is debatable).
I am not a constitutional scholar so a better expert may be able to provide a more sound response but I believe the Commerce Clause is generally accepted to include currency control (and early tests of federalism in the US found that independent state currencies could be restricted by the federal government).
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
To borrow Money on the credit of the United States;
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
...
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
...
To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.
Congress's authority in this area was upheld by the foundational case McCulloch v. Maryland in 1819. The Federal Reserve System was created in 1913 by Congress via the Federal Reserve Act.
There's no serious argument that the Federal Reserve is unconstitutional. People who espouse this are ignorant of the facts and law, or are either quacks or have paid heed to the arguments are quacks.
There's no serious argument that a central bank is unconstitutional facially
is not the same as
There's no serious argument that the Federal Reserve is unconstitutional as applied.
The latter is certainly debatable, especially insofar as the fed (in their own words) claims to operate independently when in fact the constitution delegates the powers you cited to congress and the execution of powers of congress to the executive.
It’s certainly government. The US Congress created it as an agency of the US government, just as it did every other government agency; and the Congress can destroy it. The Congress did not provide for direct political control—elections (and electoral politics) can’t change the Federal Reserve’s decisions (or decision-makers) directly.
There’s indirect control: the elected administration selects people to nominate as governors, who then go on to make the decisions. But they have to choose people who the (elected) Senate will confirm, and there’s not too much the executive can do if they don’t like the decisions their appointed governors go on to make during their 14-year terms.
The question at hand at the moment is whether the executive can unilaterally usurp the agency’s Congressionally-mandated structure and use its power directly.
It’s kind of like how the various Civil Service acts sheltered career civil servants from the constant changes in political winds, so that we can have career professionals in government instead of using public paychecks purely as a prize for the buddies of whoever won the last election. The present administration resents that independence too.
I’d argue that its primary functions are core government functions in a way that passenger rail and postal services are not. Amtrak and USPS sell services at retail (and compete; see i.e. SunRail and UPS). The public aspect of their prerogative is relatively small (I tend to care much more about whether the train is on time than I do who operates, and who owns the tracks, and what the liability cap is; I tend to care about speed and price more often than I care that USPS will go places where FedEx won’t). And the “product” is a set of individual services executed by a big workforce—the higher-ups exist to make sure the services get delivered down the line. Quasi-corporate structures make a lot of sense for that.
Whereas the Fed’s jobs involve setting monetary policy and regulating the financial sector. The “product” is the set of policies the board vote to implement, and the staff exist to gather information and pass it upward to support those decisions (maybe using powers delegated downward to them). Like any other government agency.
What does it mean that the Federal Reserve is "independent within the government"?
The Federal Reserve, like many other central banks, is an independent government agency
The federal reserve calls themselves "within the government" and a government agency. Isn't it fraud (and indeed wire fraud) to falsely represent yourself as a government agency to induce a financial transaction?
Your position is they're not government, but you also talk of them "doing whatever the fed needs to do the job" in response to the fed claiming to be a government agency and within government.
So either you are lying, or the fed is lying, and if the latter your position is that they need to lie to do their job (per your dismissive quip) -- much of which involves transactions of banks drawing on master accounts which are held in part in full faith that they are doing business with a government agency.
If you go by the default constitutional allocations, Congress starts with much tighter control of how the executive operates than it does now. Via passage of laws, Congress over the years has chosen to delegate a lot of responsibility to the executive branch - some for pragmatic management reasons, but some as a trend of historic concentration of power towards the executive. Congress can also delegate to non exec branch bodies like the Fed and other quasi-govermental orgs. Congress has the constitutional purview to take back a lot of that power into it's direct hands instead of allocating it to other bodies if it so chose.
> Via passage of laws, Congress over the years has chosen to delegate a lot of responsibility to the executive branch
Part of the reason for this is that 2-year presidents are more common, they make promises within the first two years and even if they meet them, it can take years for effects to be seen in the general population, so the party loses majority in the midterms and then nothing happens politically for the remaining two years. Congress is often slow and burdensome (for good reason) but it always makes out for a disenfranchised voter base
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.
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.
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.
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.
the fed has been doing a pretty good job for the last 100+ years. I'm not a fan of the 'we'll let's just try it this other way, we haven't in awhile' argumentation.
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.
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.
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.
>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.
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).
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".
I feel like we do generally brush, a little too easily, over the fact that economics is still a theoretical science, of which finance is subsequently the practical and technical implementation. Much like psychology, sometimes we turn out to be right about theories, sometimes we're not.
What else would you expect? If the person writing the advice knew how to reliably beat the market they would be doing that, not writing financial advice.
> 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
The world is reacting to reserve currency being used as a tool to conduct politics and twist arms. Started before Trump. He is just increasing "efficiency"
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.
It seems you are clearly understanding? You are likely just confused because you do not understand that the overarching objectives of the "uni-party" or "deep state" system hold fast, it's just that each political sporty ball team has to play things different and tell different lies in different ways to different cohorts in order to keep the system operating. So, e.g., Biden says we need 300M more immigrants and his team fans cheer because they support it, wile deporting more people than Trump; while Trump tells his team fans that he will deport people and does this whole theatrical ICE stuff to give the impression of deporting people to drive down costs and retain their support, but in fact barely moves the needle on deportations and committing to 600,000 more Chinese students and wanting to "staple citizenships to diplomas" for millions of Indians, etc.
You have to understand that there is the theater of the political sport ball arena where the different sides are set against each other like WWE/Football, etc. but in the background it's just actually all more or less rigged and the truth is written in policy and strategic papers that are implemented over 20+ years, across presidents and their wrangling and herding of their constituents in this charade called "democracy".
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
>> Yes, Canada, you are indeed in danger as well as Mexico.
> No evidence. Unless you're arguing while NAFTA was around this was a way to create a "United America".
Trump recently posted an image on Truth Social of a White House meeting in which a map is displayed, of north america with the US flag superimposed on Canada, Greenland, and Venezuela. [1] He has repeatedly suggested that Canada is the 51st American state. [2]
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.
A crisis prevents people from earning money. No money means nobody buys anything. Nobody buys anything means no company can now sell stuff, so no revenue. Companies start closing down, so there are even more people who cannot earn money.
The government can print money and inject into the system. Some people have money so they continue to buy stuff but maybe at a slower pace or less amount. Things also can get expensive but it is not a total collapse.
one of the big problems of the great depression was banks went bankrupt left right and centre, and took everyone's life savings with them. Also as a lot of banks generally hold mortgages in their portfolio, so when a bank collapses it means that mortgages all get fucky too.
So the mass printing of money meant that banks didn't collapse.
It also meant that a fucktonne of cash went into the hands of the uber rich.
This is one of the reasons safety nets on savings exist in both the USA and in Europe (and probably other places as well about which I'm less informed). Even so, the tacit understanding is that this is more about preventing bank runs than about the practical effects on the currencies involved because it could very well be that that insurance will pay out in money that is worthless.
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.
a sound response to some of the worst fed decision making in US history. they essentially ruined the housing market, priced out a generation of younger buyers, which is now crushing fertility rates, savings, and more
Investment real estate ruined the housing market. All of a sudden housing prices are expected to grow year over year as an investment. As more and more growth expectations were applied to housing, public policy (including zoning) changed to protect those expectations. Is it any surprise that there came a point at which it became too expensive?
Once problem we need to solve is how to unwind housing prices without financially ruining honeowners whose house is their primary/only wealth. Of course this problem is even more severe in areas of the country that are becoming uninhabitable due to changes in climate as it drives down demand.
covid money printing was some of the worst fed decision making in US history. they essentially ruined the housing market, priced out a generation of younger buyers, which is now crushing fertility rates, savings, and more
actually, llmslave, it was a very good decision. It's better to have mild inflation than widespread unemployment. But also, the fed's actions contributed comparatively little to the inflation we experienced. Globally there was a huge drop in supply, which caused prices to jump everywhere, not just in the US.
The government acted as if the pandemic was happening in 1990, when everyone either worked in person all the time, or nothing worked.
Instead, the golden geese of the American economy (the actual golden geese), simply stayed home and worked from their laptop.
This created a situation where people were getting their regular paycheck, plus getting a multitude of stimulus on top of that. There were many making $100k+ salary, not paying rent (rent moratorium), not paying student loans (student loan moratorium), and not going out to do anything, resulting in having huge pools of cash laying around. If you had a mortgage, you got to refi at 3% and dramatically cut your mortgage bill. I won't even get into PPP loans either, everyone knows the story there.
I could write pages and pages about this, but the short of it is, we thought we need a wheelbarrow of money, but technology meant we only needed a jug of money. But we still got the full wheelbarrow.
Its the 'kept printing' that is the problem with the story.
There was a surge and a pull back.
Post-COVID Tightening: After this historic surge, the Federal Reserve began "quantitative tightening" in 2022 to combat inflation, slowing M2 growth to near zero and eventually reversing it.
This was arguably largely offset by the actions of the treasury's increased short duration issuance (>1 Trillion in t-bills) combined with draw-downs of the reverse repo facility[1] instead of from banks. It's difficult to tell exactly how much money winds it's way into the economy without using proxies - for example credit spreads[2] or NFCI[3] which indicate loose conditions, which don't show much evidence of post 2022 QT's impact.
Or in other words the data seems to show the loosening effects were more powerful than the tightening ones. Now that the RRP has been drawn down balance sheet growth will likely occur.
>slowing M2 growth to near zero and eventually reversing it.
The M2 money supply went from 15.4b at the start of 2020 to a peak of 21.7b, before slightly reversing to 20.7b. Then they just continued printing. Now it currently stands at a record high of 22.2b. The dollar is more diluted than ever.
its a tight rope. shrinking the money supply also has downsides.
Summary of the Policy Reversal
Period Policy Action Balance Sheet Impact
June 2022 – Nov 2025 QT (Tightening) Shrank from ~$9T to ~$6.5T
Dec 1, 2025 QT Ends Runoff stops; maturing assets reinvested
Dec 12, 2025 – 2026 Reserve Management Expansion begins via T-bill
purchases
By December 1, 2025, the Fed officially halted QT after reducing its balance sheet by approximately $2.4 trillion. The following factors forced the reversal to expansion:
1. Liquidity Squeeze and Repo Market Stress
As the Fed drained cash from the system, bank reserves fell toward "critical thresholds". This caused stress in the overnight repo market, where banks lend to each other.
Spiking Rates: Key short-term lending rates, such as the Secured Overnight Financing Rate (SOFR), spiked above the Fed’s target range, indicating cash was becoming scarce.
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.
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.
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?
> 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?
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.