What happens if the debt-to-GDP ratio keeps going up, the fed keeps selling more bonds, taxes aren't raised. What if the Fed starts monetizing the debt? What if the interest rates stay persistently high? Can the US actually default on its debt? Could inflation spiral out of control? How would it impact the global economy if the US treasuries were no longer a safe-haven?
The negative impact related to this ideas would be that a major global economy is collapsing. The dollar becoming less stable would be secondary to that. As to the reserve currency component, the global economy would then switch to whatever was the second most stable currency. The big institutions are already holding baskets of dollars, euro, yens, yuans, etc, etc. Mafias and drug kingpins, as well as other cash based economies close to europe already transact in euros instead of dollars.
Just about every thing you hear from yconspiracy theory websites about the crashing economy, debt, inflation, """the fed""", and the petrodollar barely has any truth to it and that teensy morsel of truth is incredibly twisted and vastly overblown.
What if China just naturally grows their economy and overcomes the US, IF? And people switch to the yen? Would that be catastrophical? Not saying that's its the case but what if?
No.
No as it it won't happen? Or no as in it won't be the reserve currency?
No it won’t be catastrophical
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