Opinions regarding the future of US dollar as World Reserve currency

[Texas Proud]

Most of our debt that the federal reserve owns can be eliminated with a swipe of a pen, and it would not make one iota of a difference.

Social Security debt can be eliminated now and it would not matter at all. It is a pay as you go system now and will always be. The debt owed to SS is imaginary. The money to pay it back, so it can be paid to people, comes from the people.

It's like you owing yourself money. Sure, there is a line item in your books, but the money can't be taken out without getting new money. And that can be taxed, or printed. And it doesn't matter the source of it to the recipient.

Not quite.... sure, some of what you say has an appearance of being legit... the US gvmt can get rid of the debt with the stroke of the pen, but it would make a big difference...

Money only works because people believe it is what people want it to be... a storage of value... if you take that belief away then lots of bad things start to happen...


Also, the debt owed to SS being imaginary is the same as any savings bonds or other US gvmt instrument is imaginary... there are rules to be followed... sure, those rules can be broken, but not without something happening.... if the general fund can say 'we do not want to pay the SS fund'.... then they can also say 'we do not want to pay those savings bonds'....

 

[VFK57]

Not quite.... sure, some of what you say has an appearance of being legit... the US gvmt can get rid of the debt with the stroke of the pen, but it would make a big difference...

Money only works because people believe it is what people want it to be... a storage of value... if you take that belief away then lots of bad things start to happen...


Also, the debt owed to SS being imaginary is the same as any savings bonds or other US gvmt instrument is imaginary... there are rules to be followed... sure, those rules can be broken, but not without something happening.... if the general fund can say 'we do not want to pay the SS fund'.... then they can also say 'we do not want to pay those savings bonds'....

+1, breaking rules will usually lead to a mess.

 

[Danmar]

Let's assume that US hegemony declines and eventually disappears. Would probably take 75-100 years. It's not the end of the world to live in a country that doesn't "rule" the world. There are many happy prosperous people in the world that are not American, eg Canada, UK, Scandinavia, Australia, New Zealand, etc. Relax.

 

[Texas Proud]

Let's assume that US hegemony declines and eventually disappears. Would probably take 75-100 years. It's not the end of the world to live in a country that doesn't "rule" the world. There are many happy prosperous people in the world that are not American, eg Canada, UK, Scandinavia, Australia, New Zealand, etc. Relax.

I agree 100%.... that is one other reason I wonder about the people who talk about needing MRIs and bullets....

Heck, even countries that have experienced hyperinflation have come out OK ish afterwards....

Here is an article...

These 21 Countries Have Experienced Hyperinflation In the Last 25 Years - munKNEE dot.com


A good number of these have turned it around and as I said doing OK... and have not gone under...


I went to look... I have an old 500,000 Turkish lire saved... it was worth something at some point in time (in the 80s... I got it when it was not worth much).... now it is worth 14 cents....

When they introduced their new notes, they took off 6 zeros...

But Turkey seems to be doing pretty good from what we see on TV... not a failed country like some of the African nations....

 

[Senator]

There is a big difference between the US owing the US money, and the US owing a different entity.

We have a debt number that is artificially high. It can go a lot higher and not cause any issues. SS debt can be many trillions higher and it makes no difference.

Not quite.... sure, some of what you say has an appearance of being legit... the US gvmt can get rid of the debt with the stroke of the pen, but it would make a big difference...

Money only works because people believe it is what people want it to be... a storage of value... if you take that belief away then lots of bad things start to happen...


Also, the debt owed to SS being imaginary is the same as any savings bonds or other US gvmt instrument is imaginary... there are rules to be followed... sure, those rules can be broken, but not without something happening.... if the general fund can say 'we do not want to pay the SS fund'.... then they can also say 'we do not want to pay those savings bonds'....

 

[Texas Proud]

There is a big difference between the US owing the US money, and the US owing a different entity.

We have a debt number that is artificially high. It can go a lot higher and not cause any issues. SS debt can be many trillions higher and it makes no difference.

That is true... the amount of investment the SS funds make to the general fund can be as high as it wants to be.... but getting rid of that debt of the general fund with a stoke of a pen is not painless....


As long as the gvmt considers SS to be a separate fund, it is basically like a subsidiary company.... it has its one legal books and needs to follow the rules... it has an asset with the general fund and wants to get that money back at some point in time.... if the general funds says 'hey, SS, just remove that asset from your books and we can call it even'..... well, that means SS checks will not go out at full amounts the next month.... the amount of money coming in now is not enough to pay current benefits...


Edit to add.... just looking at what you wrote... I am saying that it is not the US gvmt owing the US gvmt... it is the US gvmt owing the SS trust fund.... semantics for sure, but a huge difference...

 

[Senator]

That is true... the amount of investment the SS funds make to the general fund can be as high as it wants to be.... but getting rid of that debt of the general fund with a stoke of a pen is not painless....


As long as the gvmt considers SS to be a separate fund, it is basically like a subsidiary company.... it has its one legal books and needs to follow the rules... it has an asset with the general fund and wants to get that money back at some point in time.... if the general funds says 'hey, SS, just remove that asset from your books and we can call it even'..... well, that means SS checks will not go out at full amounts the next month.... the amount of money coming in now is not enough to pay current benefits...


Edit to add.... just looking at what you wrote... I am saying that it is not the US gvmt owing the US gvmt... it is the US gvmt owing the SS trust fund.... semantics for sure, but a huge difference...

I think the way the Government looks at the amount owed to the SS fund, or any internal entity is this...

 

[youbet]

that means SS checks will not go out at full amounts the next month.... the amount of money coming in now is not enough to pay current benefits

And that's our problem, not today's young folks. Time to belly up to the fact we didn't contribute enough and get ready to take less. It would be really, really wrong to expect today's youngsters to continue to carry us. They have their own problems.

 

[marko]

And that's our problem, not today's young folks. Time to belly up to the fact we didn't contribute enough and get ready to take less. It would be really, really wrong to expect today's youngsters to continue to carry us. They have their own problems.

We had our own problems when we were young 'uns too. We carried the older generation. And yes, I contributed the max every year for 30 years.

Sorry, but I fully expect today's youngsters to carry me for the next 25 years.

Having said that, I seriously doubt anything will be done about SS any time soon. Back in '68 when I started working I was told that SS would be long gone by the time I hit FRA.

They might do something but it would impact the younger generation, not those already taking it.

Sorry but I've been hearing this argument for 50 years.

 

[VFK57]

And that's our problem, not today's young folks. Time to belly up to the fact we didn't contribute enough and get ready to take less. It would be really, really wrong to expect today's youngsters to continue to carry us. They have their own problems.

Young folks have problems just because of our short sighted policies during past two decades. We allowed huge numbers of manufacturing jobs to be moved over seas, first of all China. Majority newly created jobs here are in service with much lower pay what hardly can pay taxes and frequently need Government assistance instead while working. As all modern paper currencies are tied to economy strength, we may see higher than normal inflation due to negative balance in trade and less needed dollars at world trade.

 

[Senator]

And that's our problem, not today's young folks. Time to belly up to the fact we didn't contribute enough and get ready to take less. It would be really, really wrong to expect today's youngsters to continue to carry us. They have their own problems.

I am in favor of increasing the payroll tax... Just as the Chief Actuary of the Social Security Administration recommends.

The Social Security Board of Trustees project that changes equivalent to an immediate reduction in benefits of about 13 percent, or an immediate increase in the combined payroll tax rate from 12.4 percent to 14.4 percent, or some combination of these changes, would be sufficient to allow full payment of the scheduled benefits for the next 75 years.
https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html

 

[VFK57]

I am in favor of increasing the payroll tax... Just as the Chief Actuary of the Social Security Administration recommends.

I am not sure to what extend Government use the SS surplus funds, some pundits say the SS would be fine if the Government would keep it's management fully independent.

 

[Senator]

I am not sure to what extend Government use the SS surplus funds, some pundits say the SS would be fine if the Government would keep it's management fully independent.

SS basically goes into the general fund, and all of the SS expenses come out of the general fund. Any left over is spent.

 

[youbet]

Applying FICA to all income (pensions, 401k and IRA withdrawals, divs, disability payments, cap gains, etc.) for life would be a good start.

 

[Texas Proud]

I think that this SS discussion should be moved to a separate thread as it has very little to do with the dollar being the reserve currency....


BUT, I will throw in my 2 cents...

SS was changed a lot back in 1983 (had to look up what year it was).... it increased tax rates and the amount that is taxable... it was supposed to fix SS for the next 75 years...


It did not...


However, it did make all of US pay much more into the system with a promise of us getting the lower benefits that was proposed... now it is time to either pay money from the general fund or raise taxes on the young and make them a promise that cannot be kept.... the problem will go away when the baby boom generation dies off...

 

[MBAustin]

As noted above, the thread topic is the USD as reserve currency. Let's stick with that, please.

 

[galeno]

As a boy, I was taught to "root with my heart and bet with my brain."


As a Central American I find myself ROOTING AGAINST the USA in many instances. But I always BET WITH her.


For me the USD is better than gold.