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Economists at Nordea do see reasons to mull the long-term value of the dollar – not primarily because of cryptocurrencies, but due the country’s economic-political choices and China’s continued rise.

There are reasons to doubt the general value of the dollar over the long-term

“During the winter of 2021 a well-known investor (Michael Burry – made famous by the book and movie The Big Short) even warned of a Weimar-like development. While he might mostly have been talking about his book, increased inflation worries – or rising inflation expectations – could lower monetary capacity.”

“The US monetary capacity could be eroded by growing competition from cryptocurrencies. For instance, unlike the (fiat) currencies we are used to, Bitcoin is designed to be deflationary. No central bank or banking system can create trillions of new Bitcoins. If businesses and households were to decide to (and be allowed to?) increasingly hold cryptocurrencies instead of dollars, the US risks could experience decreased monetary capacity (and in the long term perhaps also fiscal) capacity – perhaps even a vicious cycle between the two?”

“As China’s GDP and role in world trade continue to grow, it seems natural to expect that countries, especially its neighbouring countries, will to a larger and larger extent start to use China’s currency as both invoicing and financing currency. And if demand for China’s currency increases, the appetite for dollars will decrease, which – keeping everything else equal – lead to reduced monetary capacity, which leads to decreased fiscal capacity. And so on.”