India is a developing country. Are you somehow under the impression that the US army will attack a coffee shop in New Delhi if they stop taking US dollars?
Even in those parts of Mexico and Caribbean countries where the economy is heavily dependent on US tourism - and the US dollar will be accepted at retail shops; the price difference between paying in dollars and paying in local currency is going to be against the US dollar, and for any significant transaction, you will be better off paying in the local currency.
More to the point, it is true that a considerable part of international trade is conducted in USD. It is also true that the USA tries very hard to keep it like that (more so through economic sanctions than the military might), but it's hyperbole to state that any country that does not accept USD will get attacked.
For example, India and China buy a non-trivial part of their oil in roubles and have not been attacked - so far.
no but expect the US to start invading weaker countries that depeg from the dollar. the US is, at present, the world's reserve currency. that status is what creates the petrodollar. as countries move towards Russia or China, that hegemony is threatened.
you're aware that barrels of oil are sold in USD and this status is what maintains the American position as the world's reserve currency, right? you're also aware of the wars, coups, and sanctions that have been used over the past 60 years to maintain that position? Venezuela and Iran are the only two countries to have left that standard and we've ratcheted up sanctions on both in response.
Many "countries" don't do business in USD, they do business in their own currency. Why haven't those countries already been invaded if what you're saying is true?
Unlucky for the UK coffee shop that wouldn’t take my USD this morning I guess? Not quite sure what you’re trying to say, if a country doesn’t want to accept usd…they don’t have to
His point is that fiat currencies are issued by, and backed by, the state and the that trust is, ultimately, based on its enforcement capacity - the police/courts/US army rather than convertibility with gold or other hard asserts.
Except a $100 bill is likely accepted. I’ve been to developing countries that will accept local currency, dollars, and euros. I doubt they would accept any pounds, tethers, or other fake electronic currency.
You won't get anywhere with a $100 bill in many developed countries, outside of some very tourist-y areas maybe. At least not in regular shops, of course you can exchange it at a bank. But if you try to order a coffee with US dollars, you won't get one.
Nah. The "term" USD is common, but that's very different from presenting physical US currency to people and trying to get them to accept it.
At least in Australia, I'd be surprised if more than a single digit percentage of the population would be able to tell if the (US) currency someone presents is real vs pretend/monopoly money.
They'd most likely think the person is trying to scam them.
Handling a foreign currency is a lot of overhead, you will only find this accepted in locations where it is quite common for people to not have the local currency. If you're in the middle of Europe you'll have a hard time finding a place that will just accept US dollars outside of some very tourist focused destinations. And even there I'm not sure if it'll work.
The places where I've seen this mostly work was near borders, and it makes sense that you'd accept the neighbour currency there even if it is some overhead. If you can quickly hop over the border you're much less likely to exchange currency before than if you plan a full trip in a different country.
Pounds have reasonable acceptance in Africa, the Middle East and parts of Asia -- many of those countries either used to be part of the British Empire or a neighbour, so there's trade, emigration, etc. Probably the Caribbean too, though I haven't been there.
In most cases e.g. a French tourist would be fine taking euros, but a British tourist can take pounds and not pay to convert to dollars or euros first.
Really? Pls back this up with a citation or example. Name one country in those places or outside of Britain for that matter where british pounds are accepted as currency - today and not 1950
I wrote "reasonable acceptance". You can pay for a taxi, a good quality/touristy restaurant or a safari. You can easily exchange sterling for local currency at banks or currency exchange offices.
Entirely depends on country and business in the country.
I've seen Americans try to pay for taxi's in Thailand with USD, the drivers aren't interested, it's a hassle more than anything. In cambodia on the other hand, yes, they'll take it.
Depends entirely on how stable the local currency is, if it's reasonably stable and well managed then probably they won't be interested.
I am under the impression that pretty much anywhere in the developing world USD will spend. Maybe not in the west, but places that have a weak currency like africa, the middle east, and south america.
Nope I said developing world like Central and South America. Lots of tourists places will accept Euros and dollars as long as the bills are not damaged.
Mexico, Costa Rica, Panama, Nicaragua, Belize, and Colombia are places where I’ve done this personally and lots of Europeans were doing the same.
Friends and family in Costa Rica even advised that local currency wasn’t necessary and suggested bringing crisp bills from my bank.
At least in big cities in Argentina, you can pay with dollars in many places. Some shops like big supermarkets even have a sign that shows their exchange rate. (Note that the official exchange rate is AR$200, but the unofficial one is AR$400. You may get a bad exchange rate in some shops.) For buying clothes it may be more difficult because you must negotiate the exchange rate, and they may only accept only US$100 bills, and only if they look nice and is the new model that has a big face. It may be more difficult to pay the electricity bill in dollars.
(In small towns it may be more difficult, but not impossible, specially if you are nice.)
As a tourist maybe. But try to do it at any place mostly frequented locals in Europe and you will get nowhere. But funny thing. Same does not only apply to USD, but Euros as well. And EU doesn't even have army. And still on my last trip the taxis took the money.
I think the main disconnect is between developing countries (that may have currency stability issues and where folks are more likely to use dollars or euros) and the developed world, where there is no benefit in using USD for regular transactions. Plus a whiff of "F those Americans who act like they own the whole world".
And your specific comment that started this didn't read like you are only argued about developing world. My 2c.
This is a really bad misunderstanding of how governmental monopoly on violence affects the acceptance of its currency.
The USD has value because you need to pay your taxes in USD, and if you don't pay your taxes, the government will take away your freedom. It has nothing to do with people in other countries transacting in that country's local currency.
If it was about taxes people would just hold something else and converted some temporarily to pay their taxes leaving government with currency nobody wants.
It's all about people's trust and willingness to store savings and make loans in a given current.
> If it was about taxes people would just hold something else
Not following this at all. You having to pay tax in USD means you're going to prefer holding USD and being paid in USD as well. Anything else would be strictly inferior, as now you have to worry about doing conversions all the time.
Note that it's mandatory for taxes to be withheld with each paycheck, and those withheld taxes must be paid in, you guessed it, USD, so you must be paid in USD as well.
> You having to pay tax in USD means you're going to prefer holding USD and being paid in USD as well.
Huge part of the world have to pay taxes in their local currencies and yet prefers storing savings in USD.
> Anything else would be strictly inferior, as now you have to worry about doing conversions all the time.
You weight it against other pros and cons. Even US billionairs do not store their savings in USD cash, and don't seem to mind "conversions all the time".
Petrodollar is just a term. It does not mean that the contracts are in US Dollar. The measurement is in NOK.
"In Consideration of the assignment described under Article 2.1 above, Buyer shall pay to Seller a post tax amount of NOK [zz] ([zz]), ref. Article 5."
Isn't it the same for USDC? USDC is not a traditional cryptocurrency, its issued by a US organization, so I guess this organization would in the same way be protected by USA army, and indirectly USDC as well?
Even in those parts of Mexico and Caribbean countries where the economy is heavily dependent on US tourism - and the US dollar will be accepted at retail shops; the price difference between paying in dollars and paying in local currency is going to be against the US dollar, and for any significant transaction, you will be better off paying in the local currency.
More to the point, it is true that a considerable part of international trade is conducted in USD. It is also true that the USA tries very hard to keep it like that (more so through economic sanctions than the military might), but it's hyperbole to state that any country that does not accept USD will get attacked.
For example, India and China buy a non-trivial part of their oil in roubles and have not been attacked - so far.