I mean, alternatives already exist to the SWIFT network: CIPS (China), SFMS (India), even the INSTEX (Europe) system is in place if a European system were needed quickly.
Insofar as "where the money goes," the sovereign bond market is huge, and if the milkshake theory is to be believed, finding and alternative is just a coordination problem that could be effectively solved by a few large actors.
If the traditional theory is to be believed, downgrades from ratings agencies should simply facilitate the movement of folks leaving treasuries as a risk-free rate. This does introduce currency risk (though it existed already), but we may simply move to baskets of securities of we don't end up on a single currency to carry bonds in general. There is also the "store of value" vs "transactional" aspects to currencies, and the dollar may become more and more transactional and less useful as a store of value and/or collateral. If that's the case, I wouldn't be surprised if there were not more "asset inflation" if that's even a useful term.
I agree with you that it should be slowly and then all at once, because if the US is going to default or debase, nobody wants to be the greater fool.
> Insofar as "where the money goes," the sovereign bond market is huge, and if the milkshake theory is to be believed, finding and alternative is just a coordination problem that could be effectively solved by a few large actors.
If I have trillions of Treasuries then it's gonna be hard for me to move them to basically any other sovereign bond market. The only one that even conceptually works is the euro, but that's split across multiple sovereigns.
Insofar as "where the money goes," the sovereign bond market is huge, and if the milkshake theory is to be believed, finding and alternative is just a coordination problem that could be effectively solved by a few large actors.
If the traditional theory is to be believed, downgrades from ratings agencies should simply facilitate the movement of folks leaving treasuries as a risk-free rate. This does introduce currency risk (though it existed already), but we may simply move to baskets of securities of we don't end up on a single currency to carry bonds in general. There is also the "store of value" vs "transactional" aspects to currencies, and the dollar may become more and more transactional and less useful as a store of value and/or collateral. If that's the case, I wouldn't be surprised if there were not more "asset inflation" if that's even a useful term.
I agree with you that it should be slowly and then all at once, because if the US is going to default or debase, nobody wants to be the greater fool.