Just a couple of questions for the economists among you.
We have all been reading about Russia's veilled threat at dumping US debt - and it got me to thinking. What would be the effect on the US (over the medium term) of (say) Russia and China slowly getting rid of their US treasuries ? What would be the practical effect ? Presumably the cost of the bonds (to the purchaser) would go down whilst the cost to the US treasury would go up in interest payments. Is this how it works ?
And secondly, and kind of related to the above - the BRICS countries (or so it has been rumoured) are considering dumping the dollar as their reserve currency. China it seems are stocking up on gold. What is going on here ? And what would be the effect on the dollar/US economy if they did use a new reserve currency ? Dollar devaluation and (hyper) inflation ?
And last but not least - what would be the effect of all this on BTC (assuming of course BRICS were not to adopt BTC as the new reserve currency - and it seems pretty unlikely that they would, even if it would be perfect for the job) ?? Could a dollar collapse send US citizens straight into the arms of bitcoin perhaps ?
We have all been reading about Russia's veilled threat at dumping US debt - and it got me to thinking. What would be the effect on the US (over the medium term) of (say) Russia and China slowly getting rid of their US treasuries ? What would be the practical effect ? Presumably the cost of the bonds (to the purchaser) would go down whilst the cost to the US treasury would go up in interest payments. Is this how it works ?
And secondly, and kind of related to the above - the BRICS countries (or so it has been rumoured) are considering dumping the dollar as their reserve currency. China it seems are stocking up on gold. What is going on here ? And what would be the effect on the dollar/US economy if they did use a new reserve currency ? Dollar devaluation and (hyper) inflation ?
And last but not least - what would be the effect of all this on BTC (assuming of course BRICS were not to adopt BTC as the new reserve currency - and it seems pretty unlikely that they would, even if it would be perfect for the job) ?? Could a dollar collapse send US citizens straight into the arms of bitcoin perhaps ?
1. Dumping U.S. debt would either cause interest rates to go up or the value of the dollar to go down, depending on what the Fed does. If the Fed buys the dumped debt, then it will have to increase the money supply causing the value of the dollar to drop, otherwise interest rates will increase until the demand can match the new supply.
2. Dumping dollars will lower the dollar's value because of increased supply with lower demand.
3. A drop in the value of the dollar will increase the demand for other currencies, including Bitcoin. Their values will rise.
+1, well explained!
Plus, don't forget the mother of all money, which is gold...!
