I do not understand this stuff.
https://t.me/intelslava/58925America After the Decline of the Global Dollar
"One of the more interesting, and unexpected, findings we came across in our work is that the United States is an extreme outlier when it comes to the relationship between its current account deficit and its income level (living standard). We found that in general there is a robust relationship between the current account balance and the income level of a country. This relationship held for both BRICS and developed countries.
This finding confirms the fact that there is a strong case to be made that income levels are at least in part determined by a country’s capacity to grow its exports in line with its GDP – a relationship known in the literature as ‘balance of payments constrained growth (
https://sci-hub.se/10.1057/9781137023957.0008)’.
If this is the correct interpretation, it gives us an opportunity to model what the United States economy might look like in a world where the US dollar is no longer the global reserve currency. This is important because there is increasing evidence that... many countries are preparing to move away from the dollar (
https://americanaffairsjournal.org/2022/03/the-end-of-dollar-hegemony/)...
Currently, the average daily income of the United States is just over $74 despite its current account deficit of around 2.7% of GDP. In what follows we will allow American living standards to fall to their equilibrium level when we allow the impact of the current account to have its impact – that is, if we assume that the US dollar loses its ‘exorbitant privilege’ (as global reserve)...
As the graph above shows, if we allow American living standards to fall to their full equilibrium level, they fall by around 57%...
If we calibrate the model not on the entire sample but rather on the wealthier countries, it shows a decline in American living standards of around 27% if the country was forced to equilibrium by a decline in the US dollar as the global reserve currency.This seems a more sensible model than the 57% decline we saw using the full model in that it drags American living standards down to roughly average European levels."
