A dollar crash is virtually inevitable, Asia expert Stephen Roach warns

[JustAnotherPerson]

the debt on itself is not the indicator of the total economy. To get the whole picture between these two giants u have to look at the domestic credit to get the total debt picture of a country. China doesn’t take debt from other countries to keep the yuan stable so it keeps borrowing from the central bank that is basically where the domestic credit comes to play

China
External debt : around $2 trillion
Domestic credit (household,corporate,central govt) : $32 trillion
Total debt: $33 trillion
Or 327% Gdp



US
National debt : 22 trillion
Corporate : $10 trillion
Household: $14 trillion
Total : $46 trillion
Or 209% of GDP

the other thing fascinating of the China’s debt it paid for $150 billion in interest

US only paid $350 billion on a $22 trillion loan.

Basically China will as much interest on a $10 trillion vs US on a $22 trillion loan which increases their purchasing power about 2X

You are not even close.

The total debt of the U.S is really 77 trillion dollars or 350% of GDP.
You just forgot the U.S have a financial sector too because what you think the stock market is being finance to, debt.

Can the dollar crash? I could be IF somehow people think that the currency have no value at all you know like Venezuela. But there is Trillions of debt in dollars, a sudden dollar collapse could create the financial crisis of the century and not even China wants that.
Can the dollar fade away with time? probably, with all the sanctions that the Neocons are imposing and with the dollar losing value with time, it could create the scenario that nations and companies will trade more in other currencies rather than the dollar.

 

[Mk-313]

You are not even close.
View attachment 643922
The total debt of the U.S is really 77 trillion dollars or 350% of GDP.
You just forgot the U.S have a financial sector too because what you think the stock market is being finance to, debt.

Can the dollar crash? I could be IF somehow people think that the currency have no value at all you know like Venezuela. But there is Trillions of debt in dollars, a sudden dollar collapse could create the financial crisis of the century and not even China wants that.
Can the dollar fade away with time? probably, with all the sanctions that the Neocons are imposing and with the dollar losing value with time, it could create the scenario that nations and companies will trade more in other currencies rather than the dollar.

Dude you’re very clueless and don’t even know what ur talking so I’ll clear it for you


National debt and domestic credit refers to The debt of the government and the loan made by the central government. These two indicators gauges the strain on the government and the central government which directly affects the value of the dollar and the interest rate a govt had to pay

govt debt: $22 trillion
net domestic: $22 trillion
Total around $44trillion

what u posted is the total liabilities of the entire US. And if that’s the case you measure it against the assets which for US is $277 trillion . In essence US balance sheet shows $200 trillion of equity

and no, currency crashes do not work like that. Oh if people stop believingit. Currency values are backed by the Government which is backed by the tax revenue they collect which is backed by their economy as a gdp grows and it stays healthy

As economies grows new value is added to counter that new value , more paper money is printed to avoid deflation. If ur economy does not grow for example and u print more money relative to it the dollar will go down. That’s just an example how currency works


For Venezuela. It wasn’t like people woke up one day and went like yeah today we’re gona stop believing in Venezuelan currency smh. Venezuela entire govt revenue was based on oil. Which crashed by 70%. So economy contracted govt revenue shrunk by 70%. Which in essence lowered the backing of their currency by the govt at the same time , they now have more paper money relative to the value added by the economy. They then on top of that kept printing paper money and that kept lowering the value of their currency . Then on top of that foreign traders started speculative attacks on their currency which leeched out the little value they had. And that’s how a currency crash

 

[JustAnotherPerson]

Dude you’re very clueless and don’t even know what ur talking so I’ll clear it for you


National debt and domestic credit refers to The debt of the government and the loan made by the central government. These two indicators gauges the strain on the government and the central government which directly affects the value of the dollar and the interest rate a govt had to pay

govt debt: $22 trillion
net domestic: $22 trillion
Total around $44trillion

View attachment 643941

what u posted is the total liabilities of the entire US. And if that’s the case you measure it against the assets which for US is $277 trillion . In essence US balance sheet shows $200 trillion of equity

and no, currency crashes do not work like that. Oh if people stop believingit. Currency values are backed by the Government which is backed by the tax revenue they collect which is backed by their economy as a gdp grows and it stays healthy

As economies grows new value is added to counter that new value , more paper money is printed to avoid deflation. If ur economy does not grow for example and u print more money relative to it the dollar will go down. That’s just an example how currency works


For Venezuela. It wasn’t like people woke up one day and went like yeah today we’re gona stop believing in Venezuelan currency smh. Venezuela entire govt revenue was based on oil. Which crashed by 70%. So economy contracted govt revenue shrunk by 70%. Which in essence lowered the backing of their currency by the govt at the same time , they now have more paper money relative to the value added by the economy. They then on top of that kept printing paper money and that kept lowering the value of their currency . Then on top of that foreign traders started speculative attacks on their currency which leeched out the little value they had. And that’s how a currency crash

What you posted was China TOTAL debt and that include Financial institutions because that is were that number come from and is mostly issue in yuans not dollars so in terms of debt to GDP, debatable if PPP or nominal.
What i posted was US total debt including debt by financial institutions.
But is true that the value of assets is higher than the debt and the same hold for China.
That scenario that you are describing could become the same scenario in the U.S but with a combination of a Stock bubble, a bad economic recovery and with the FED pumping trillions with a T to the stocks, some people could start asking themselves if the currency that they are holding had any value at all. What is the value of this currency if you just can throw limitless amount of it to something the resembling a casino, if that scenario occur people will flee to ANYTHING that they believe is a safe haven and that includes gold. I am not saying that will happen, i am just saying that is a possibility.

 

[Mk-313]

What you posted was China TOTAL debt and that include Financial institutions because that is were that number come from and is mostly issue in yuans nor dollars so in terms of debt to GDP debatable if PPP or nominal.
What i posted was US total debt including debt by financial institutions.
But is true that the value of assets is higher than the debt and the same hold for China.
That scenario that you are describing could become the same scenario in the U.S but with a combination of a Stock bubble, a bad economic recovery and with the FED pumping trillions with a T to the stocks, some people could start asking themselves if the currency that they are holding had any value at all. What is the value of this currency if you just can throw limitless amount of it to something the resembling a casino, if that scenario occur people will flee to ANYTHING that they believe is a safe haven and that includes gold. I am not saying that will happen, i am just saying that is a possibility.

Nope, what I posted was China domestic credit .

see the link below
https://www.google.com/amp/s/www.ceicdata.com/en/indicator/china/domestic-credit/amp

it is $32 trillion

The reason why it’s so high is China to keep gdp growth up keep lending a lot to builders since measurement of gdp includes government loans issued to the economy. That’s why there are countless stories of China’s “ghost towns” because they built so much and much of the population couldn’t afford.

that’s also why China’s economy contracted from a 10-11% growth to 6% pre corona

-the second reason is it’s central government doesn’t issue treasuries like US does And borrow from outside, it keeps borrowing from its central bank.

On top of that experts estimate another $5 trillion lent to local governments that are off the books. But it remains a matter of speculation so can’t count it

 

[JustAnotherPerson]

Nope, what I posted was China domestic credit .

see the link below
https://www.google.com/amp/s/www.ceicdata.com/en/indicator/china/domestic-credit/amp

it is $32 trillion

The reason why it’s so high is China to keep gdp growth up keep lending a lot to builders since measurement of gdp includes government loans issued to the economy. That’s why there are countless stories of China’s “ghost towns” because they built so much and much of the population couldn’t afford.

that’s also why China’s economy contracted from a 10-11% growth to 6% pre corona

-the second reason is it’s central government doesn’t issue treasuries like US does And borrow from outside, it keeps borrowing from its central bank.

On top of that experts estimate another $5 trillion lent to local governments that are off the books. But it remains a matter of speculation so can’t count it

50 gov, 150 corp, 50 household of nominal GDP.
If we disclosed like the way you did is about 250% of nominal GDP which is the number i see in the FED data.
The nominal GDP of China in 2019 is like 15 Trillion * 2.5 is like 35 Trillion. but that is not the 350% of nominal GDP that you posted, that could be the case if include financial institutions, just like America.
This site says that US total credit is just 22 trillion? But that is just government debt and doesn't include corporate and household.

 

[fallstuff]

50 gov, 150 corp, 50 household of nominal GDP.
If we disclosed like the way you did is about 250% of nominal GDP which is the number i see in the FED data.
The nominal GDP of China in 2019 is like 15 Trillion * 2.5 is like 35 Trillion. but that is not the 350% of nominal GDP that you posted, that could be the case if include financial institutions, just like America.
This site says that US total credit is just 22 trillion? But that is just government debt and doesn't include corporate and household.

Its no longer $22 trillion anymore.

 

[Mk-313]

50 gov, 150 corp, 50 household of nominal GDP.
If we disclosed like the way you did is about 250% of nominal GDP which is the number i see in the FED data.
The nominal GDP of China in 2019 is like 15 Trillion * 2.5 is like 35 Trillion. but that is not the 350% of nominal GDP that you posted, that could be the case if include financial institutions, just like America.
This site says that US total credit is just 22 trillion? But that is just government debt and doesn't include corporate and household.

your right, I was still pegging China’s economy at 10-12 trillion. I hadn’t checked their nominal gdp in a while

 

[JustAnotherPerson]

And the total non financial debt in the United State According to the FED is
74% corporate
76% household
107% government
That is a total of 257% of GDP not 209% if you add financial liabilities you get the Total debt.

 

[Mk-313]

And the total non financial debt in the United State According to the FED is
74% corporate
76% household
107% government
That is a total of 257% of GDP not 209% if you add financial liabilities you get the Total debt.

again, youre confusing it now. i mentioned the net domestic credit and government debt as it relates to the economy and the value of the dollar. i already posted the LCU of the US from world bank which is around $22 trillion and $22 as national debt which comes to about 209%

The debt you just posted at 257% in equivalency of total debt of china would be 317% of GDP. this is an excerpt from south china morning news.
https://www.scmp.com/economy/china-...ina-debt-how-big-it-who-owns-it-and-what-next

My mistake had been not checking china current nominal gdp so thats why my percentage was off

 

[JustAnotherPerson]

again, youre confusing it now. i mentioned the net domestic credit and government debt as it relates to the economy and the value of the dollar. i already posted the LCU of the US from world bank which is around $22 trillion and $22 as national debt which comes to about 209%

The debt you just posted at 257% in equivalency of total debt of china would be 317% of GDP. this is an excerpt from south china morning news.
https://www.scmp.com/economy/china-...ina-debt-how-big-it-who-owns-it-and-what-next
View attachment 643965

My mistake had been not checking china current nominal gdp so thats why my percentage was off

That is total debt of nominal GDP including financial institutions.

 

[Beast]

Sensationalism. Not gonna happen anytime soon. The USD is too dominant and there is no replacement in sight. It is possible that the Yuan and Euro may get more traction but even in two decades, the USD will still form the majority of payments. It is not going to go down from 90% to 0% overnight.

It is already losing steam. Even Australia and UK , so called allies of US change to rmb for settlement of trade with China.

https://www.gtreview.com/news/globa...mb-deal-on-contour-as-new-banks-join-network/

Turkish , a country not so friendly to China also switch to rmb as they hate US more.

https://www.globaltimes.cn/content/1192282.shtml

If this trend continue, US dominant in global will go down fast. Russia, Iran might join in and fully trade with China in rmb. That will be another catalyst. If EU decide to settle massive of their trade with China in rmb. US dollar will go down for sure.

Nothing is forever.

 

[Mk-313]

That is total debt of nominal GDP including financial institutions.

sigh.....

Net domestic credit includes debt by the central government to three insitutitons + Government debt
1- debt to corporate (your financial debt)
2- debt to government by the central bank
3- debt to households

this determine the stability of the government/economy/currency
---------------------------------------------------------------

What you posted earlier was including the debt that comemrcial banks lend to each other where most of your "financial sector" lending happens

this includes all the debt that you posted
-----------------------------------------------------------------------

what you posted even before that was a measure of assets/liabilities of US

this includes if you want to buy the entire united states and everything init. what is the total asset/liabilites of everything this in the US

It is already losing steam. Even Australia and UK , so called allies of US change to rmb for settlement of trade with China.

https://www.gtreview.com/news/globa...mb-deal-on-contour-as-new-banks-join-network/

Turkish , a country not so friendly to China also switch to rmb as they hate US more.

https://www.globaltimes.cn/content/1192282.shtml

If this trend continue, US dominant in global will go down fast. Russia, Iran might join in and fully trade with China in rmb. That will be another catalyst. If EU decide to settle massive of their trade with China in rmb. US dollar will go down for sure.

Nothing is forever.

wont happen until few things are done

-Rnb and Euro would have to be as stable/strong (imputes less risk) as the US and offer more interest than the treasuries while being as safe as treasuries for other countries to switch to that currency and hold your currency as reserve

- they must convince other to dump their entire reserves of the USD and letgo the debts/reserve the amounted to the held USD currency . USD accounts for 60% of all used currency notes

- they must put Rnb or Euro as the currency to which other currencies are pegged

-the army must be the strongest one in the world. to forego the risk that the country which holds the tender to the reserve currency cannot be invaded

- they must introduced an alternative to the current banking system e.g wires/credit cards/ visa/ACH because US holds that right of system. thats why most of the time they put sanctions. and thats why they can also prosecute individuals who are outsider of their borders. e.g FIFA which has no links in US but US was still able to prosecute them because they used their banking system for the bribes etc

It is already losing steam. Even Australia and UK , so called allies of US change to rmb for settlement of trade with China.

https://www.gtreview.com/news/globa...mb-deal-on-contour-as-new-banks-join-network/

Turkish , a country not so friendly to China also switch to rmb as they hate US more.

https://www.globaltimes.cn/content/1192282.shtml

If this trend continue, US dominant in global will go down fast. Russia, Iran might join in and fully trade with China in rmb. That will be another catalyst. If EU decide to settle massive of their trade with China in rmb. US dollar will go down for sure.

Nothing is forever.

Also the BRICS tried in 2014 but becasue the world didnt accept thier alternative to the USD

 

[JustAnotherPerson]

It is already losing steam. Even Australia and UK , so called allies of US change to rmb for settlement of trade with China.

https://www.gtreview.com/news/globa...mb-deal-on-contour-as-new-banks-join-network/

Turkish , a country not so friendly to China also switch to rmb as they hate US more.

https://www.globaltimes.cn/content/1192282.shtml

If this trend continue, US dominant in global will go down fast. Russia, Iran might join in and fully trade with China in rmb. That will be another catalyst. If EU decide to settle massive of their trade with China in rmb. US dollar will go down for sure.

Nothing is forever.

Well that is not a collapse but a more gradually change in currency preferences because the overuse by the United State of sanctions.
A collapse will be catastrophic.

 

[AViet]

Sensationalism. Not gonna happen anytime soon. The USD is too dominant and there is no replacement in sight. It is possible that the Yuan and Euro may get more traction but even in two decades, the USD will still form the majority of payments. It is not going to go down from 90% to 0% overnight.

Not anytime soon but may be faster than most of us can believe, especially if in PISA test, the US continues to rank at 35th and China continues to rank 1st, if annual number of WIPO patents filling gap between China and the US continues to expand, if International Math Olympiad US team continue to be basically an ethnic Chinese team, if US science and technology, especially AI arena, continue to be dominated by ethnic Chinese.

The world in 21th century (and I believe in 22 and 23 centuries too) will be rather dominated by knowledge, not natural resource and therefore, China has a very clear advantage over the US.

 

[Mista]

Sensationalism. Not gonna happen anytime soon. The USD is too dominant and there is no replacement in sight. It is possible that the Yuan and Euro may get more traction but even in two decades, the USD will still form the majority of payments. It is not going to go down from 90% to 0% overnight.

Yeah. The debt issue is not unique to the US; the Eurozone, China, and Japan all have their own debt problems, just different sectors in the economy. There's no solid replacement at the moment.

But I hold a contrary opinion. A declining usage of the USD will actually be good for the US domestic economy in the long term as it will finally fix their chronic current account deficit and ameliorate their inequality issue. That is why in the Plaza Accord the US wanted the USD to depreciate against the Japanese Yen and the German Mark, the USD is just too strong and it's hurting their competitiveness.

Maybe a declining usage of the USD also entails that the US will lose her geopolitical leverage through USD sanctions, but I think that is of no loss for ordinary Americans.

A hypothetical crash is probably just a 10% or 20% devaluation of the USD against major currencies, aligning the dollar more towards what its economic fundamentals would indicate. It's not becoming like Zimbabwean dollar lol.

https://carnegieendowment.org/chinafinancialmarkets/78496