World reserve currency status follows the leader in manufacturing and trade. Maintaining dollar hegemony was never going to be feasible after de-industrialization, but short-sighted decisions like weaponizing SWIFT have accelerated its decline. As the dollar is gradually shunted out of world trade, the US will be less able to export its inflation abroad. The implications won’t be pretty.
Yes, letting the Ukraine related sanctions chronically fester is a tremendous strategic error.
The benefits of leverage are dramatically maximized and reinforced by using them as little as possible, on the fewest targets as possible, for the shortest intervals possible, to obtain the most decisive results as possible.
Helping an ally interminably not lose on the battlefield, is also a leverage destroying strategic error. There goes significant deterrence.
And to triple down, the US has expanded its sanctions (er, tariffs) to all its enemies (uh, trading partners), giving everyone strong signals that no relief is coming, other than to back away from the US.
Leverage that took a couple centuries to achieve is hemorrhaging.
You're so defeatist. The US could turn things around and in fact, is. The problem with China is that you can't trust anything there--their bonds are garbage, their equities, same.
The issue is, the current administration seems to be hell bent on speed running the course to a similar destination. The overt attempts to politicize the Fed and key govt institutions has sown the seeds to distrust in US govt data and monetary policy.
Whether we water and fertilize the seeds, or let them dry and wither will decide the level of credibility we get in the future.
Strong institutions are absolutely critical for long term economic success. Enforcement of the rule of law, accurate data and credible monetary policy are the bedrock on which long term economic prosperity is built. Right now, we seem to be taking a jackhammer to that foundation.
Illuminating article. And if the yuan bonds information is real, it won't even take 4 years for a lot of global finance to move away from the dollar.
It might be tough for the US to accept the higher cost of global resources (and thus become a poorer country) but maybe this gradual decline in dollars status is what the administration hopes is the best case.
Maybe like the UK but the problem with the US is that the US is a violent country. Lower standard of living is likely to cause violence. UK literally just lost all the colonial wealth but came together to build itself again.
In many ways, the US is a spiral descent culture while the UK lost is all and ascended again but to lower levels.
World reserve currency status follows the leader in manufacturing and trade. Maintaining dollar hegemony was never going to be feasible after de-industrialization, but short-sighted decisions like weaponizing SWIFT have accelerated its decline. As the dollar is gradually shunted out of world trade, the US will be less able to export its inflation abroad. The implications won’t be pretty.
Yes, letting the Ukraine related sanctions chronically fester is a tremendous strategic error.
The benefits of leverage are dramatically maximized and reinforced by using them as little as possible, on the fewest targets as possible, for the shortest intervals possible, to obtain the most decisive results as possible.
Helping an ally interminably not lose on the battlefield, is also a leverage destroying strategic error. There goes significant deterrence.
And to triple down, the US has expanded its sanctions (er, tariffs) to all its enemies (uh, trading partners), giving everyone strong signals that no relief is coming, other than to back away from the US.
Leverage that took a couple centuries to achieve is hemorrhaging.
And we are living in a Kurt Vonnegut novel.
You're so defeatist. The US could turn things around and in fact, is. The problem with China is that you can't trust anything there--their bonds are garbage, their equities, same.
The issue is, the current administration seems to be hell bent on speed running the course to a similar destination. The overt attempts to politicize the Fed and key govt institutions has sown the seeds to distrust in US govt data and monetary policy.
Whether we water and fertilize the seeds, or let them dry and wither will decide the level of credibility we get in the future.
Strong institutions are absolutely critical for long term economic success. Enforcement of the rule of law, accurate data and credible monetary policy are the bedrock on which long term economic prosperity is built. Right now, we seem to be taking a jackhammer to that foundation.
https://archive.ph/7Zeti
Whenever the economist writes a thesis, bet the other way
Illuminating article. And if the yuan bonds information is real, it won't even take 4 years for a lot of global finance to move away from the dollar.
It might be tough for the US to accept the higher cost of global resources (and thus become a poorer country) but maybe this gradual decline in dollars status is what the administration hopes is the best case.
Kinda like the UK.
Lots of similarities, almost like you could predict it by reading history
Maybe like the UK but the problem with the US is that the US is a violent country. Lower standard of living is likely to cause violence. UK literally just lost all the colonial wealth but came together to build itself again.
In many ways, the US is a spiral descent culture while the UK lost is all and ascended again but to lower levels.
Oh, the joys of isolationism.
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