[baxtr]

> This can stop in a rapid phase shift once people realize that USD is not such a safe asset any more.

Why would they think it is not a safe asset and if so what would they do instead with it? Also: Why do you think this shift would be rapid like in a phase shift?

[zbyforgotpass]

The number one scenario - inflation starts, Feds raises rates, debt service costs raise => debt grows even more and at some point people realize that it cannot be paid back without too much inflation.

Reinforcement in raised rates => depression and stock market crash => investors stop using US equities and real estate as value store.

And Feds needs to raise rates - because of negative effective funds rate (https://www.lynalden.com/wp-content/uploads/newsletter-2022-...) - this is also something that people might not perceive for a long time - but then suddenly see it.

[baxtr]

That might be a probable scenario. What's the probability for this in the next 5 years? 10%?

Also, again my question: What would people buy instead?

[ericd]

Property? Gold? Industrial commodities? Mining rights? Used cars? Bitcoin? Farmland? Other hard assets? Arguably that’s already been happening, with the global melt-up in asset values across the board.

[zby]

Now - why rapid - in general because it will be a bank run. People now assume that the dollars they have in the banks (and in notes) can buy them a part of the world economy - when they realize that this part shrunk they'll try to sell dollars and buy something else - adding to the dollar decline.

I don't know - most probably it will still be much slower than bitcoin maximalists imagine (see for example https://noahpinion.substack.com/p/inflation-is-up-but-the-in...). Maybe it will be like going bankrupt: “Gradually, then suddenly.”