How do we know that this demand for dollar assets is irrational? Because the returns the foreign sector gets from the US is too low in comparison to their own investment opportunities domestically.
I like your general analysis. But must pick a nit here. In any market, you don’t have irrational players at scale. I would say assets in the rest of the world are nominally over valued and at high risk of devaluation. Rest of the world overly concentrates there wealth in real estate without equivalent property tax structure to the usa. This is at risk from new property taxes (already proposed in China), and people simply moving around (electronically if not physically, though both are risks). if I was a land holder in China or india, me diversifying by buying us assets would make a lot of sense. And a rich person in the usa, it is even more risky to own land in China and india (outright disallowed, also at risk for new property taxes, etc).
The usa will be fine as long as the top 5% of the worlds merit and Capital gravitates towards the usa. i would simply pay attention to the Uber wealthy (musk, bezos, gates, page etc). When they start relocating together into the same place, Pay attention. Right now they are mostly in the usa, with some minor presence from page in New Zealand and Singapore, and maybe London.
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I like your general analysis. But must pick a nit here. In any market, you don’t have irrational players at scale. I would say assets in the rest of the world are nominally over valued and at high risk of devaluation. Rest of the world overly concentrates there wealth in real estate without equivalent property tax structure to the usa. This is at risk from new property taxes (already proposed in China), and people simply moving around (electronically if not physically, though both are risks). if I was a land holder in China or india, me diversifying by buying us assets would make a lot of sense. And a rich person in the usa, it is even more risky to own land in China and india (outright disallowed, also at risk for new property taxes, etc).
The usa will be fine as long as the top 5% of the worlds merit and Capital gravitates towards the usa. i would simply pay attention to the Uber wealthy (musk, bezos, gates, page etc). When they start relocating together into the same place, Pay attention. Right now they are mostly in the usa, with some minor presence from page in New Zealand and Singapore, and maybe London.