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Illustration: Sarah Grillo/Axios
As the longest U.S. government shutdown on record drags into its 27th day, questions are again rising about the dollar's status as the world's reserve funding currency.
This isn't a new idea. China’s central bank in 2009 called for a global move away from the dollar after the market turbulence caused by the U.S.-induced global financial crisis. The People’s Bank of China renewed those calls in 2013 after that year's U.S. government shutdown.
What they're saying: "There's a disconnect there, increasingly so, as the U.S. is less dominant in terms of the total economic pie in the world," John Hardy, head of FX strategy at Saxo Bank in Copenhagen, told me in June.
Movement away from the dollar also has been taking place organically over the last few years. The most recent IMF data shows the dollar's share of currency reserves is at the lowest level in nearly 5 years, and has fallen for 8 of the last 10 quarters — though the dollar still accounts for more than 60% of global reserves.
Between the lines: However, the dollar's recent strength and President Trump's unpredictable and often market-moving antics have driven the issue back to the forefront. It's been 75 years since the Bretton Woods Agreement that made the dollar the world's funding currency, and drastic action could make moving away from the greenback a priority for some of the world's central bankers.
More Carney: "For example, emerging-market economies' share of global activity is now 60%, but their share of global financial assets lags behind at around one-third.”
A true legend, and a man who personally saved me thousands of dollars, passed away on Wednesday. The legendary Jack Bogle, who founded Vanguard Group and created the world's first index fund, died at the age of 89.
Be smart: "Invest as efficiently as you can, using low-cost funds that can be bought and held for a lifetime. Don't go chasing past performance, but buy broad stock index and bond index funds, with your bond percentage roughly equaling your age," he told Reuters in 2012. "Most of all, you have to be disciplined and you have to save, even if you hate our current financial system. Because if you don't save, then you're guaranteed to end up with nothing."
Photo by Miguel Candela/SOPA Images/LightRocket via Getty Images
Nordstrom, one of the few retail market bright spots in 2018, announced earnings and guidance on Wednesday that were unimpressive.
There may be more disappointment in store for luxury retailers, according to Goldman Sachs economist Daan Struyven.
The bottom line: "While the share of equities owned by the wealthiest households has risen over the last three decades, equity holdings have more than tripled as a share of disposable income at the aggregate level and have also risen substantially for middle and upper-middle wealth groups. Therefore, a 1% move in stock prices now has a much larger impact on wealth levels for most groups."
Buying a house is a terrible investment. That said, a new paper from the Federal Reserve posits the reason young people are buying less than in generations past is not that they're smarter and savvier, but that they are more indebted.
What they're saying: "We estimate that roughly 20 percent of the decline in homeownership among young adults can be attributed to their increased student loan debts since 2005.
Yes, but: The Fed argued that student loan debt was an important but not "central cause" of the reduction in home buying. Researchers largely put the onus on tighter bank lending standards.
The bigger picture: The Fed also focused on additional harms from increased student debt.
What it means: The GEPU Index is a GDP-weighted average of national economy (E), policy (P) and uncertainty (U) indexes for 20 countries, including Australia, Brazil, China, Germany, Japan and the U.S.
America’s leading economic establishment has penned a Wall Street Journal op-ed in support of taxing carbon dioxide emissions, eliminating other regulations and returning the resulting money to consumers in the form of a recurring dividend check, Axios' Amy Harder writes.
Why it matters: The increasing consensus among economists that the best thing to do with any money raised with a carbon tax is to return it to Americans is a significant policy marker as Washington debates to what degree, if at all, it will address Earth’s rising temperatures.
Details: All 4 living former Federal Reserve chairs, nearly 30 Nobel economists and all but 1 former chair of the White House’s Council of Economic Advisers have signed onto a statement laying out their support for a carbon-tax policy — one that has been gaining support from Big Oil companies, environmental groups and others across the political spectrum.
But, but, but: Despite economic agreement behind a carbon tax, the politics around it have long been toxic in Washington, and elsewhere too. Voters in Washington state, one of the most progressive in the nation, rejected a ballot measure pricing CO2 emissions after a $30 million campaign by oil companies.
Days without a factual error: 2