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43 sats \ 5 replies \ @siggy47 2 Mar 2023 \ on: Daily discussion thread
My relatives who are "normal investors" are excited because the US 2 year yield is hitting 5%. They look at it as being able to get a good return on their money without the risks of investing in the stock market. They still see US treasuries as the safest investment in the world.
They don't seem to fully comprehend that earning 5% when inflation is at best 6.5% means you're losing buying power. They also miss that raising treasury yields means the world is losing faith in the US dollar.
Once your portfolio gets relatively large, having a close to risk-free option at 5% is extremely good.
Even the long time fav dividend stock "O" is paying less, and that's with a floating stock price.
There is no replacement for USD on the global stage remotely close in the short term.
even if bitcoin were to raise up, it would take years until countries remotely begin to using it for trade by default because of volatility alone, so a 2 year scale it's extremely risk-off to be buying treasuries
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Good analysis, and you're probably right, but there are some legitimate cracks in the dollar armour:
- Sanctions, removing nations from SWIFT, etc, resulting in some loss of confidence
- Nordtream Pipeline. If european countries accept Semour Hersh's theory, things could get dicey.
- There are a growing number of countries reducing use of dollar for either idealogical or practical reasons: Russia, Belarus, China, India,Iran, Saudi Arabia, Iraq, Japan, to name a few.
I agree it's probably too early, but we might be wrong.
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I think the only real challenge would be if China were to continue its growth for the next decades or so.
1 and 2 are not really an issues imo.
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Doesn't matter because there is only one real competitor for SWIFT, and it's the CIPS from China, which is extremely shit and good luck convincing nations move from the west's approved payment system to china's approved payment system. Global trade is about making nations work together to build, and using it to deter bad behaviour. Even Swiss froze Russia asset, which is just as big if not more.
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Mistrust between US and EU aren't rare, but this wouldn't be an issue because mistrust and corruption between BRICS nations are definitely even larger.
This is also why anti-west also go for the "XYZ is just a lapdog for the US", they want to use the public to break the alliance, not understanding countries reaches decisions after discussion as an alliance.
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They have been trained well. Itnis easier to teach someone new than to retrain brainwashed minds.
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Feel the pain there. It's hard to help people see that what they are investing in is a carefully stacked house of cards.
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