Our consumer economy just shrank by 30% or more. We've used up all our credit. We were spending beyond our means. And now our consumption will shrink. What's this do to king dollar?
Probably not much if every other economy responds in exactly the same way.
It's too early to say; what matters more is what a recovery, if any, looks like. The US has a history of enduring greater short-term pain but bouncing back faster.
People have been talking about unsustainable US debt for decades. The market can stay irrational longer than you can stay solvent.
It's very early days, and this is a recession unlike any other, so it's hard to say what will happen, because this type of recession has not occurred in modern history.
The US will ensure global dollar hegemony is maintained(1). Just ask some of the countries - Libya, Iraq, Venezuela - that tried to move away from king dollar how that went.
If you are lucky the US applies economic pressure. If you are disliked enough, things have a tendency to get downright kinetic.
> And now our consumption will shrink. What's this do to king dollar?
Every time we consume we're exporting those little green pieces of paper, you know?
Shrinking consumption actually props up the dollar, because we're giving out less, and the rest of the world, with dollar denominated debt and liabilities, has bills to pay.
China was in recession/depression before shutting down their entire economy for almost 2 months and have barely recovered. They suffered a supply shock. And now because the entire worlds demand has declined, China is now suffering from demand shock. And foreign manufacturers are now FLEEING which adds to massive loss of permanent jobs. That’s on top of a debt overload and they don’t control the worlds main currency
Japan and Germany were close to recession before the virus hit. Plus they are mainly exporters. Plus automobile is their big export...which now the demand has collapsed around the world.
Do you have a source about the claim that manufacturing leaving china? I could find US companies leaving the country because US policies — not covid-19.
