[wahern]

And yet despite all the hemming and hawing the squabbling Euro area has de facto better fiscal policy than a United States firmly under the control of a single party.

The Euro area had a 2017 deficit of 0.9% of GDP, as compared to the U.S.'s 3.5%. And this is during a boom in the U.S.

https://ec.europa.eu/eurostat/documents/2995521/8824490/2-23...

The Euro isn't a better vehicle than the USD today, but it could easily become one. Not because the Euro improves but because USD will become less stable and attractive and the only realistic alternative is the Euro. Or maybe we end up with a more diversified system. Either way USD loses.

[cuddlypsycho]

> The Euro isn't a better vehicle than the USD today, but it could easily become one.

Get back to me when Saudi Arabia starts selling oil exclusively in Euros, or better yet, once European union surpasses the US in the number of aircraft carrier strike groups. You don't seem to understand the concept of a "foreign reserve currency" if you think Euro has a chance against USD. There is more chance of physical gold replacing USD as an inter-nation trade/reserve rather than Euro!

[wahern]

Russia is the greatest producer of oil, or at least neck-and-neck with Saudi Arabia. Plenty of other top producers wouldn't mind switching away from a USD-denominated market, including Iran and China. Exclude the U.S. from the list of top producers and you may even have a majority of producers who would prefer a different system.

The U.S. is the world's reserve currency because everybody trades with the U.S. and the U.S. has run a current account deficit consistently since 1950, and with most of the world. That means everybody is holding USD and thus you can sell something to anybody else without needing sufficient imports from that buyer to cover the transaction. (Countries can't just buy USD willy-nilly; they need to find someone willing to trade USD for their local currency, which requires exporting some good or service.)

But that can change. Indeed, politicians are hell bent on changing it. And the global economy is exploding, meaning the U.S. won't be able to remain the center of the global commercial universe even if it wanted to.

[ksec]

I wonder why the world doesn't have a currency that is somewhat 50% backed by Gold.