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Black

Is XRP a threat to the United States?

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I was reading an article earlier on how the U.S dollar is a global currency, and as such it is used for 43% of cross-border transactions. Central banks need to hold the U.S dollar in reserves to pay. Knowing how controlling the United States is, and how much in debt the country is in; is XRP a threat to the United States, seeing how XRP eliminates the need for banks to hold fiat? How will this affect the "global status" of the USD, and the utility that the USD serves? How easily will the U.S give in to the digital asset, and allow it to steal the value of its currency?

Edited by Black

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It is an interesting point. The US dollar is seen as a stable currency because of the US economy. California alone would be the ranked the fifth largest economy in the world if it became it's own nation, after Germany and before UK. This is why Garlinghouse and Arrington were screaming for regulations the other night.

What if a Californian based company or person makes China the richest nation on the planet because China bought up massive amounts of the new stable world currency and keeps it in a vault. They are already there with Bitcoin which should worry everyone involved.

Edited by mandelbaum

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@Black I have thought a bit about this question, but still dont have it settled in my mind. Here are a few thoughts.

Without Blockchain and digital assets... the USD's time as the global reserve currency would be replaced, one way or another.

There are pros and cons to any country who's domestic currency is used as a global reserve currency... https://en.m.wikipedia.org/wiki/Triffin_dilemma

As you point out, digital assets are not impacted by domestic financial policy blunders. Which I would think is a pro for using a digital asset to settle between domestic currencies. 

It would be better for the US to use a system built and designed by English speakers (rather than Chinese), and built to comply with existing regulations. 

To that point, my biggest uncertainty is around Sanctions Enforcement... there are a few layers here... UNL (I dont want Iran validating my TX), kyc/aml enforced at the End Points (banks & exchanges, improved clarity and an ability to reverse engineer terrorist and money laundering financial schemes, and of course How is the US going to get allies to help enforce Sanctions?

In some sense the US, in particular the younger generation, is going to face the retirement of the USD as global reserve currency. This will limit the US Congress's ability to run fiscal policy deficit (they still can/will) but we will no longer be able to continue exporting our inflation to all the countries forced to hold USD to do international business. 

I've also been thinking about this, but without coming to any significant conclusions. It will be interesting to observe unfold over the years.

 

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     I too have considered what happens when the U.S. can no longer hold the dollar over other countries. I hope that the leaders in the U.S. realize this, so that they don't go and have a hissy fit when they loose world power. Which is happening as the world is loosing respect for the U.S. and its leadership. In the end I hope that the independence of nations from the influence of others will allow its leaders to look how to improve their nations for their people. I would also hope that without U.S. leadership with its hands in the politics of other nations they would then be forced to look introspectively and actually work to fix some major problems with in the United States.

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I agree with this. The USD is on borrowed time in my opinion. JC Collins wrote a great blog post on this subject.  

Ive already read that Russia and China have been divesting USD somewhat. 1) there is a movement to remove USD as global reserve currency and 2) they all own US debt. They don’t want to be holding it once the Dollar potentially fails. 

At the end of the day, I’d prefer it get replaced with something like XRP rather than some other rogue country currency. 

Edited by Xrpforme

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There is no debt-based inflationary currency that is going to serve a better role than a deflationary asset with high and fast liquidity when it comes to bridge or global reserve currencies.

The world has benefited from a relatively stable dollar, but it takes a lot of work and balancing on the part of the Federal Reserve to try to keep that power in check.

More people are working, more opportunities exist for credit and increasing the money supply, which the fed has to try to curb a touch with interest rate hikes.

This sort of balancing act was good for the US for a long time, but as other players in the global economy have gotten stronger we need something a little more decentralized in terms of economic impact. No one wants to be the country that brings on a global recession.

If central banks all over the world commit to digital currencies by 2020, technologies like ILP and cellular banking could remove the need for holding a global reserve.

If the speed and spread of something like the XRPL could go global and achieve human level service, the need for a central reserve currency disappears.

I think the US would be fine with the dollar dropping off as the global reserve currency, so long as the payoff was a network where fiat moved with so little friction that a centralized reserve currency standard was no longer necessary. Particularly if the Fed had rich connectivity to transactions all over the world in seconds - it would provide opportunities for AI to play a role in stabilizing the global economy in real-time.

 

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The USD is in trouble and it will have a devaluing. Not to the point of hyperinflation but it is over-valued and only kept its current value because it’s the Reserve Currency. 

Can XRP replace it as the reserve currency?  Maybe. In the right conditions it just might happen. 

 

Global Finanical crisis part 2 - it will be much worse than 2008. Interest rates cannot be lowered to fuel borrowing.  The US printed a vast amount of money in 2008 so if they do that again they risk hyperinflation.  I think we are headed for stagflation.

https://finance.yahoo.com/news/vulnerability-americas-lower-income-brackets-poses-risk-economy-122920739.html

“As overburdened households are eventually forced to curb consumer spending to service their debt, the economy will slow and defaults will increase, leading banks to pull back on credit — severely if the banks themselves are over leveraged and lack the capacity to absorb credit losses. This is precisely the cycle we experienced in 2008.”

https://www.reuters.com/article/us-usa-fed-recession/markets-may-be-signaling-rising-recession-risk-fed-study-idUSKCN1LC1VO?utm_campaign=trueAnthem%3A+Trending+Content&utm_content=5b84679204d301595da8f79e&utm_medium=trueAnthem&utm_source=facebook

“In light of the evidence on its predictive power for recessions, the recent evolution of the yield curve suggests that recession risk might be rising,” wrote San Francisco Fed research advisers Michael Bauer and Thomas Mertens.”

 

 

Enough countries support a new currency as the standard.

https://www.bloomberg.com/view/articles/2018-09-06/how-the-u-s-has-made-a-weapon-of-the-dollar

“most candidates are reluctant to take on the role of a global reserve currency because of tensions between national and global economy policy. The economist Robert Triffin pointed out that the country whose medium of exchange is the global reserve currency must meet external demand for foreign exchange. This necessitates running large trade deficits, requiring fundamental changes in the mercantilist policies of Germany, Japan and China.”

https://abcnews.go.com/Business/story?id=7168919&page=1

“China is calling for a global currency to replace the dominant dollar, showing a growing assertiveness on revamping the world economy ahead of next week's London summit on the financial crisis.”

https://www.bloomberg.com/news/articles/2018-08-27/eu-looking-to-sidestep-u-s-sanctions-with-payments-system-plan

“German Foreign Minister Heiko Maas also weighed in Monday, saying the EU is working to protect economic ties with Iran and keep payment channels open. Maas reiterated a proposal to make international payments systems like Swift more independent of the U.S.”

https://www.zerohedge.com/news/2018-08-21/germany-calls-global-payment-system-independent-us

“In a stunning vote of "no confidence" in the US monopoly over global payment infrastructure, Germany’s foreign minister Heiko Maas called for the creation of a new payments system independent of the US that would allow Brussels to be independent in its financial operations from Washington and as a means of rescuing the nuclear deal between Iran and the west.”

 

 

And lastly, would the US allow it?  I say yes it would.  Being the global reserve currency has its pros and cons.

https://www.forbes.com/sites/charleswallace1/2018/08/14/are-russia-and-china-trying-to-kill-king-dollar/

“China even blamed the dollar’s international role as one of the causes of the financial crisis in 2008. The problem is that no other currency has stepped forward as a good replacement.”

“As Yale economist Robert Tiffin explained in the 1950s, if a country’s currency is the international reserve currency, then it has no choice but to run a current account deficit. If a replacement is found, as the dollar replaced the British pound in the 1920s, it may be more likely to have trade surpluses – which is what Trump has said he wants.”

 

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from the chatbox earlier, my 2 drops

Quote

zerpdigger Today 1:03 PM

@Black i've thought about this too -- but end of the day Ripple are a US company, so *if* XRP ever became that big and threatened dollar's dominance...

zerpdigger Today 1:03 PM

...then they will indirectly control the company that controls 50% of the entire global bridge currency supply... AND get to claim taxes from them

zerpdigger Today 1:04 PM

...AND be able to set the course for or influence the direction of the technology

zerpdigger Today 1:05 PM

So if anything, I reckon the CIA/NSA are probably all over Ripple having done an analysis and thought... nah they're good, for now

zerpdigger Today 1:06 PM

The US govt would let XRP *appear* to be neutral to sneak it into the world, while retaining great control over much of the supply, so they'd control USD *and* a lot of XRP

zerpdigger Today 1:06 PM

And frankly, as a Brit, critical of the USA as I am, without them, the world would be a terrifying place – America is still a force for good in this world

zerpdigger Today 1:07 PM

Anyway, rant over -- i'm going to a BBQ xx xx

 

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