USD strength comes from military. Just as it was the case with all other currencies in the past. Do you see anyone challenging the US in a conflict? China won’t even invade Taiwan because they are afraid. ‘Nuff said.
If the PRC were to do it, I would imagine you would try to do it under the Trump administration as he is anti-interventionist and sees the world as a series of regional fiefdoms led by the strongest regional player--Asia, to him, is China's region. This is in sharp contrast to every prior US administration and with the Biden administration in particular coming out with the strongest rhetoric regarding any potential invasion.
The action on Iran proves otherwise, especially since his entire anti-interventionist wing was squealing that World War III would start if he did bomb the nuclear sites.
Those around the president have been pretty clear that the US will defend Taiwan until the US is capable of its own supply of leading edge semi conductors. Taiwan is very easy to defend with the harsh ocean separating them, especially since North Korea gives the US an excuse to plant massive amounts of long range missiles in SK.
There are no surprises when attacks start in the era of real time world video satellites.
I think the limited actions in Iran are not at all comparable to the commitment and risks involved in directly defending Taiwan from invasion or naval / aerial blockade. With that said, I do think that the US is likely to intervene in some capacity regardless of admin, but slightly less so with the current admin.
I am pretty sure the US is investing hard into naval drones. There's a reason Russia cannot use it's naval fleet in Ukraine as cheap torpedos and drones destroy ships.
Ships are basically sitting ducks if they are within range of drones. I am surprised better anti drone weaponry hasn’t been deployed. I would think bird shot cannons would be highly effective.
There's been a spike in news articles on the invasion the last couple of weeks. Given that the US appears to not hold on to any alliances or assurances, and ~~incontinent~~ incompetent in chief is on the helm, it seems that they've the perfect opportunity. Europe's busy with Russia, US is busy with itself, so honestly, why not?
Because it might not work out so well for them? Let's not kid ourselves, this would be an invasion by sea against an opponent who's prepared for many years, has a modern defense force, and has explicitly designed a defense protocol to inflict as much damage as possible. This is not Russia stepping over fields they already encircle that are governed by a dysfunctional government. And it's not Isreal being allowed to bomb impoverished children with impunity either. And neither of those scenarios have worked out splendidly for them either.
A state's security doctrine, in compressed form, needs to be "assume the worst".
Slightly less compressed, it should be "When a nearby state keeps saying they own you, then take the credible threat seriously and pretty much pretend they're going to act on that, even if you think it would be stupid of them to do that, because history is full of examples of states doing this kind of thing. Prepare accordingly".
What will you buy instead? The point is that the dollar is strong not purely because the American economy has been (and continues to be) the largest on the planet, but also because it is not currently possible to topple the US since its global activities are tied strongly to its military.
The only realistic options that exist at the moment are going back to the gold standard (not viable for most countries) or shifting to the yen (which is tied to the dollar as Japan is the largest holder of treasuries).
treasuries are overwhelmingly impacted by federal reserve policy, not sure why you think trump would have much to do with it. if you compare US vs european treasuries since 2016 it's sort of a wash - the european ones are barely outperforming US ones, but the US ones consistently had better yields. and the big impact on US treasuries was interest rate changes, something trump has no say in
There's a sitting POTUS that wants to devalue the dollar, in order to stimulate domestic production, and exports.
"But what about the stuff that the factories import, to produce anything?" one might ask. Well, Trump wants no such imports - he wants the people selling stuff to the US, to relocate to the US.
Note: I'm not in favor for what Trump tries to do, but it explains why there's so little concern for the dropping dollar.
Its not about concern (the dollar dropping while Trump is putting on tariffs is very concerning, it should be appreciating) its more about the fact that the dollar value seems to be influenced by things other than military strength.
It lost 15% because Trump is undermining the US? What’s there to explain? Does US still have its military? Yes. Do you think currencies stay completely stagnant over even one week? It’s driven by a myriad of market forces.
Yes thats the point I was trying to make. The strength of the USD derives itself in large parts from the fundamental trust markets have in US institutions not from the strength of its military.
I know what you’re saying but it’s not some fiat blind trust. There’s a big reason why the US can print with impunity. EUR cannot, even though people may trust EU more over the near-term. It’s all tied to military.
The military is one required pillar of US dollar hegemony. It's not a sufficient pillar and the current administration is working hard at destroying other required pillars.
US Treasury bonds will be less attractive, because foreign investors will lose trust in the US economy
