This is a gradual decline. From 70% in the 90s to 60% today. Today there are more options like the Euro that didn’t exist in the 90s. People can argue over EU economic stability, but it’s there as reasonable option.
As time goes on, fewer people are alive that predate the EU and more people will perceive it as a lasting institution.
Additionally, we've now seen the EU survive the departure of a major economic power (the UK). More people are certainly willing to believe in the stability of the EU now.
Another major currency is the Yuan, and some countries may be as willing to trade in Yuan to improve relations with China, so perhaps we won't see one single reserve currency but two spheres of influence with most countries maintaining reserves of multiple currencies.
Interestingly, there seems to be more good will and amiable vibes between EU nationalities than within the US even. Even being enemies for a thousand years, I don't doubt that Swedish and Danish men would go to war for one another, or French and German. It's complicated yes, but the continent is more unified in spirit than it may seem to an outsider.
French here: If we can send French soldiers to fight and die in Mali for years, only to end up with a military junta that prefers the Russian Africakorps, I think we're ready to send our soldiers to die defending a European ally.
Plus, with global warming, this may be the last chance for the Alpine hunters to shine.
German here: I'd go to war (and likely will, with how it's looking currently) for any country that shares our values and is an ally or friend, that's being attacked by an evil force such as russia. And that of course includes my french brothers to the west.
I have many moral problems with that scenario. I used to live in the US a long time ago. The US is sick; there's a mad king at the top who doesn't have the well being of the nation in his interest, and he is driving the world towards war with every passing day while dividing his own people. War with the US isn't a clear cut "good vs evil" situation as the EU vs russia would be, it would be a utter tragedy, not wanted by neither the populace of the EU, nor the US.
That said, yes, I would defend Europe against the US, even though I think that fight would be short, deadly and decisive if it really came down to it.
What a fucked up world we live in, just because idiots voted for a convicted felon.
The great minds that - after WWII - built the new Europe had in mind that there should never be war again, which is best realized when former enemies become friends and closer bonds are established at multiple levels: politically, economically, culturally (unions, trading exchanges, visits/open borders/teaching common European values in schools).
There is a strong political and cultural foundation in geographic Europe for the political EU:
some exemplary giants/EU co-architects:
Integrated Italy into Western Europe
Advocated supranational institutions
Paul-Henri Spaak
institutional designer, key role in the Treaties of Rome (1957)
helped design the European Economic Community (EEC)
Advocated supranational institutions
Walter Hallstein
1st President, European Commission.
Built EC into powerful, independent institution
Championed the supremacy of European law
Altiero Spinelli
Wrote the Ventotene Manifesto (while imprisoned by Fascists)
Advocated a federal Europe
Winston Churchill
A paradoxical but crucial figure: called for a “United States of Europe” (1946 speech)
Influenced Europe’s post-war direction despite UK distance
François Mitterrand
Drove Maastricht Treaty with Helmut Kohl
Pushed for the €
Symbolized Franco-German partnership
Helmut Kohl
Franco-German friendship exemplified by Mitterand-Kohl personal friendship
"Architect of modern Europe"
German reunification
Key figure behind the EU and monetary union
It's ironic that the name "U.S.E." (United States of Europe) was first proposed by a Brit, alas a smart one, and I'm sure Sir Winston Churchill would have had the oratory abilities to convince his countrymen that his idea had merit, but he did not live to see it. The Federation of Europe or United States of Europe is the logical end-point of the joint vision of all these foundational leaders.
>Franco-German friendship exemplified by Mitterand-Kohl personal friendship
Ironic to call this a "friendship", when Mitterand along with Thatcher were working behind the scenes with the soviets to sabotage and stop Kohl's reunification of Germany. It was anything but a friendship, but more of a concession.
Politics is full of such examples that look friendly to the public, but hide a lot of sabotage and back stabbings in the background. In fact, the later is the norm in politics.
The major benefit of the US Dollar is that you can do things with it. Between export controls, currency controls, laws on foreign ownership, etc, china can pay me all the RMB in the world. I still can’t do a whole lot with it.
This is part of the same reason many people don't use Bitcoin- you can't actually do much with it because retailers don't accept it. But China is definitely thinking about how to fix that problem, and soon they will make it possible to pay directly in CNY in other countries. Once you can buy things with it, the CNY is attractive from a practical perspective. A lot of your stuff is already manufactured in China, once/if using CNY makes your purchase easier then it's going to gain ground on the USD.
Funnily enough you can use Bitcoin at most merchants that use a Square PoS device, which is like 25% of merchants in the US. It just takes time for folks to change their behaviors. And why would they, if they're getting X% cashback on all purchases using their credit cards?
Paying Chinese companies in RMB isn’t the issue. If I sell something and a Chinese company pays me in RMB, I can’t really do anything with a billion yuan. Can’t buy a company (limitations on foreign ownership), can’t buy property (99-year lease that can be canceled on the whims of the government at any time), can’t buy Chinese debt (terrible yields, very small foreign market access, incredibly opaque laws and accounting), and nobody else in the world wants it so I have no choice but to sell it back to China in exchange for a real currency at whatever horseshit exchange rate they’ve concocted.
It’s worthless money and I don’t see anything out of china that would cause that to change.
Because if I am running a business I just want to be paid in money that I can pay my bills in. I don't want to have the additional task of managing rare earths and electronics inventory. That's not "a bit more work." It's running an entirely different business that I don't know how to run.
I think OP's point is that a "99 year lease" isn't worth very much without a firm guarantee that the least in fact lasts that long. I don't really have an opinion on land leases in the PRC, but it doesn't seem facially unreasonable to suspect that a foreign lease holder's land value wouldn't be a priority for China's leadership during an economic crisis.
I guess this is naive, but can't you use it to buy (or sell it to people who want to buy) Chinese products? It's not like China doesn't have an enormous amount and range of products on offer.
I mean, you can buy goods and services within china, and you can sell those goods and services. The “horseshit” exchange rate can’t deviate too far from the real value or it incentivises laundering too much. The exchange rate isn’t _that_ bad as a result.
Retailers don't accept crypto not because of the technology so much as the fact it is a capital gains event every time you transfer crypto, which means both the buyer and seller are now forced to keep a log of their gains/losses against the dollar everytime they buy a pack of gum.
Obviously that's extremely impractical and at best you're hiring a 3rd party to streamline that for you. It's a clusterfuck at tax time (edit: stable coin doesn't help here -- you must still report gains on stable coins as it is still a $0 capital gain which is different than no capital gain).
Retailers already dealing with capital gains and with high chargeback rates love it though. For instance, it's usually the cheapest same-day clearing way to buy precious metals online since credit card rates are high (chargeback), ACH takes days, and wires tend to cost $15+ with many banks.
Reticence among retailers predates the capital gains policy of the IRS. The volatility of Bitcoin's value induces excessive exchange risk. However, we don't see capital gains nor exchange risk with stablecoins. I assume that network effects are insufficient to drive retail demand for stablecoin support.
The volatility of bitcoin is why there is capital gains on every trade, it has nothing to do with the IRS's new crypto policy.
If a bitcoin rises or falls by a calculable amount between when you received it vs when you spent a portion of it, you have gains/losses. That has always been required by the IRS to be reported, whether that is a BTC or chicken feathers.
> Reticence among retailers predates the capital gains policy of the IRS. The volatility of Bitcoin's value induces excessive
The IRS policy is irrelevant, the law always required payment of capital gains. It's consistently been the hardest thing about accepting Bitcoin for payment.
You do not need to report a $0 capital gain when using stablecoins. Sure crypto can seem like the wild West with CPAs having different opinions on what little official guidance is out there but that one is simply absurd.
You can buy with RMB in a lot of countries outside the West, if they have integrated UnionPay or AliPay into their payment processors.
But more importantly, you can buy a lot of stuff from the factory of the world. Which is why a lot of countries don't mind holding the RMB. Just not enough for it to become a reserve currency, and certainly no one wants it to become the petroyuan.
The euro has been gaining ground ever since the financial crisis in terms of share of currencies held in global foreign exchange reserves. Less than a third of the US dollar, but still a distant second. Nevertheless, I'm still concerned about the Russian invasion of Ukraine, and how intertwined the EU economy is to countries which it has shaky relations with at best.
The Yuan is not a freely convertible currency, so not really an option here. The Euro isn't terrible, but it has structural issues in that member states all must take out debt in what is for monetary policy purposes a foreign currency. This generated a debt crisis 10 years ago, which has been papered over, but the structural issues remain unresolved. Also, the Euro has been around now for 25 years. That's not long enough to convince anyone of long term stability.
I partially agree. But the EU is in a pretty unstable state as incomplete government structure over a collection of peers. "Unstable" does not mean it's going to fall apart. It means it's going to fall apart or coalesce into a single thing (a new country). Or maybe a little of both (a new country with some fringe members leaving).
It might not be in 5 or 10 years but it's inevitable. It's not going to operate like this for 50, 100 years.
Just run a mental simulation of WW2 playing out except Europe had the EU.
So while I agree the EU is becoming more an more normal and important to the average citizen, there will come a time when it has to either solidify further or break apart, and I think it's basically a crapshoot to predict how that will go now when we have basically zero info.
I wouldn't describe integrating further to the point of becoming more like the US as "unstable". And that's the most likely outcome, which should make the EU more trustworthy as a partner, not less.
What does that mean exactly? I meet a lot of people do enjoy their nation's sovereignty especially as a shield from EU's poor and unpopular decisions that they don't get a vote in, and see the common currency and freedom of movement as just the right amount of integration. I've never met anyone who thought the likes of Ursula and Kaja should be trusted with even more power and control.
>to the point of becoming more like the US as "unstable"
Except it would be more like Yugoslavia than the US.
>I wouldn't describe integrating further to the point of becoming more like the US as "unstable".
More like the US, as-in a country? So also more like Germany, China, South Africa, etc. You are making a false equivalence - being like the US in one extremely non-US specific way does not mean you must be like the US in every other way.
I'm not sure you even understand what I'm saying - this has nothing to do with the US vs. the EU or if the US is reliable.
the yuan has major currency controls. there is a real threat of capital flight destabilization if policies change which is why nobody sane would peg tp the yuan as it is now. that said, countries definitely make bad choices.
Saudi Arabia was privately discussing de-dollarization way back in summer last year, when the irrational tariffs were imposed, followed by the Israeli-US strikes on Iran. Make of that what you will.
> Additionally, we've now seen the EU survive the departure of a major economic power (the UK).
I don’t really understand the impact of Brexit on the euro, as Britain wasn’t on it.
But clearly they were a key part of the EU. It’ll be interesting to see which side regrets the move more.
>In June 2025, 56% of people in Great Britain thought it was the wrong decision
It's not so clear when you consider that 48.1% of the original referendum voters wanted to stay in the EU. I'm honestly very surprised by this poll, 8% change is pretty minimal considering the turmoil the country has gone through since 2016.
How much of this can be explained by older voters dying in the intervening 10 years, I recall that demographic skewed much more heavily Leave in 2016
Half the issue is the definition of ‘voter’. Turn-out is abysmal and polling has been crap in major ways. Calling someone eligible to vote a ‘voter’ is probably only right 50-60% of the time.
But only 56% in a poll? Is that enough for another referendum and guarantee rejoin? EU politicians have made it clear, ALL UK opt-outs will be gone if UK rejoins, whether it is UK opt-out regarding budget (like paying billions less in annual EU fees like UK did before), to special fishing rights pre-Brexit, to forced to adopt Euro currency and drop Pound sterling.
Rejoining is seen as politically too risky in the short term. As you observe, the UK would not get back its privileged position, there are probably some bargains to be struck but a track to the Euro currency is almost certainly mandatory and that'd be unpopular because people really like our banknotes for some reason and the Euro deliberately just looks like play money, the illustrations deliberately don't show real structures to avoid associations with the nations where those things were built.
But while "Leaving was a bad idea" isn't enough to seriously push for actual re-entry to the EU it's certainly a good sign for the EU and for the Euro. The EU is a massive bureaucracy, and I think we underestimated how much "a massive bureaucracy" might be the thing we wanted in this role..
And to add on (rather than edit my comment), I think the saving grace that keeps USD around for a while longer is the last section of the article, "Deposit dollarization in emerging markets"
A lot of growing economies don't/can't trust their local currency and they overwhelmingly use USD instead of EUR or CNY. As those economies grow the USD gets a boost that will sustain it for a while over the increasing competition of CNY. But this can't sustain it forever and the US is not doing anything to offset the lost ground in global trade and forex reserves.
Sweden just haven’t completed the stabilization and alignment criteria to formally switch over, arguing that it is voluntary.
We had a referendum on the euro back 2003 with a clear mandate to not adopt it and the politicians don’t want to poke the sleeping tiger that is the euro question.
There is a very sudden shift though - those options have existed but not generally been seriously considered. The US was seen as a bastion of stability and while sanctions could drastically impact a country's ability to trade due to the reliance on US currency exchange it has arguably been used relatively scarcely.
The change is that suddenly the US isn't a bastion of stability and having an independent trading currency could ensure more internal stability for other nations.
The U.S. is as stable as it gets. It has been one continuous republic and has 250 years of legal stability and a history of paying its debts. It has 4.2% GDP growth, with the largest economy in the world and growing.
Your ruler is no longer following the rules of law, nor the foundational constitution. USA ended with their declaration of dictatorship and the failure of your houses/legislature/military to act against that and defend the Constitution.
I can't see how, since the end of habeas corpus, you can claim legal stability.
Your leader is World renowned for reneging on debts and is demanding bribes for companies to operate.
Isn't borrowing through the roof to pay for things like your stasi?
Daily those stasi are murdering and disappearing people seemingly attempting to foment an excuse to escalate the violence.
I don't know how that knife edge can look anything like stable to you.
It's a very grandoise (or alarmist, depending on your perspective), but this isn't super new. The US has been "unstable" with rulers breaking their own laws domestically and internationally for many decades.
My money is that influence campaigns are active on HN and try to mold the discourse. The whole internet is manipulated to hell, and HN is a prime target, you have a bunch of smart people that probably have oversized influence, how could you NOT try manipulating this place?
This is most certainly happening. A lot of US-critical articles also get flagged to death, even when they have a lot of upvotes and healthy, civilized discussion.
I don't think mostly is true? Obviously it depends a lot on the time of day, but there are also a lot of Europeans on the site. Also, most comments here seem to be critical towards current US policy. So, I think there is quite a lot of manipulation going on, since the downvoting/flagging does not really match the comment section.
I think it's true. There is a significant audience here from other areas but this being an english language forum and one focused on tech means that the US is always going to have a dominant presence[1]. The US dominance also means that the news is highly focused on US events when it wanders out of tech which further reinforced the audience.
1. I believe Canada does have an outsized presence though!
The problem is the AI bubble, without it it is speculated that the US economy might actually be in a recession [2] - effectively, that web of investments, deals, ownerships, purchase contracts and god knows what is nothing more than wash trading that will come crashing down hard.
That is why for the 99%, the economy doesn't "feel" like 4.3% of growth. If you're not in AI directly or at least adjacent (e.g. datacenter or utility construction), you don't feel any of that money.
There more to stability than continuity of government. Though, that definitely is important.
It’s bad enough that America’s foreign policy lately swings wildly every four years. More recently, it’s been acting aggressive toward allies, and making very strange and unpredictable moves.
The USA’s tariff policies are, frankly, utterly insane. Yes, I do mean the tariffs are irrational and incoherent. The approach to the tariffs has been overly aggressive. They’ve been changing almost daily, at times. Now, tariffs are specifically a thing that must be stable and predictable on a multi-year horizon. This must be, at least, off-putting to other governments, and to any companies wishing to do business in or adjacent to the USA.
Monkeying with the Fed is dangerous and basically unprecedented. This is going to make people nervous because it marks the end of an era of stability in monetary policy. We may be at the start of a new era where interest rates, much like the tariffs, change frequently for bad reasons or for no reason at all. Who can say?
The U.S. chose to abandon the rules based international order that has made it a bastion of stability since WW2 when they decided they wanted a return to the monroe doctrine and that it was okay to arbitrarily invade countries and take their resources based on the impulses of a single person. The same person outwardly stated, "Considering your Country decided not to give me the Nobel Peace Prize for having stopped 8 Wars PLUS, I no longer feel an obligation to think purely of Peace". If you think this is "as stable as it gets", then we're living on different planets.
America was never a stable country. That 250 years includes:
* A decade of chaos under the impotent Articles of Confederation.
* The deliberately engineered election of George Washington to create the illusion of political stability, a reign which only ended because George stepped down voluntarily.
* An immediate constitutional crisis the moment a competitive election happened, causing the election of a President and Vice President from opposing political parties (imagine a Harris - Trump presidency). The ensuing chaos resulted in SCOTUS unilaterally declaring itself the final arbiter of the law.
* The Thomas Jefferson presidency, which in many ways is the alpha release of Trump.
* The Civil War, started specifically because the losing faction of slaveholders was angry at losing, and ending with the losing faction losing so hard the counter rolled back into flawless victory. They surrendered, then assassinated the President and got his party to give up on everything he stood for.
* Economy-destroying Smoot-Hawley tariffs, which are basically what Trump is doing now.
* A spectacular near-miss in which the country's business elites attempted to assassinate a Progressive president and only failed because the Marine they selected as their Hitleresque dictator ratted them out.
* Widespread civil unrest deliberately created to force America to reckon with its racist past and undo what the South had managed to convince the North to allow them to do after Reconstruction.
* The Richard Nixon presidency, which in many ways is the beta release of Trump.
* Too many foreign invasions to count.
In the entire history of America I can think of maybe 3 brief moments of political stability that weren't outright engineered fantasies. The two that are relevant to modern times are the 1950s and the 1990s. Both of these were the result of America winning a war of conquest.
There's an excellent and eerily prescient novel that attempts to portray what such a "tipping point" might look like, and when it could arrive: https://en.wikipedia.org/wiki/The_Mandibles
EU can easily pull the plug on Euro as a reserve currency if they confiscate the money of a certain country and give it to another one. That would be the "front fell off" moment for Euro.
Except they didn't and instead borrowed money for the other country. But more importantly, there seems to be a process in place, where a collective of rational actors makes choices, rather than someone who states he can go to war because he didn't get the Nobel Peace Prize.
(Still disappointed that the winner of the FIFA peace prize wants to go to war /s.)
I believe that the near-term de-dollarization isn't as much trust erosion as it is a tool to provide monetary penalty for behaving in unpredictable ways.
However it will provide incentive to move away from the dollar in the long-term, ie as Fareed Zakaria says "recent actions are accelerating the world to the multipolar future".
A quant partner at Goldman said to me once that the thing that's different about currencies relative other normal financial products is whereas you might buy JPMC or oil or a bond because you like JP Morgan or oil or think rates are going to move in a particular direction or whatever whatever, you never just buy the dollar. You are always trading one currency for another eg selling GBP to buy USD. What that means is currencies are always about the value of one currency relative to other currencies.
In that sense they do fundamentally relate to trust and in particular specifically in this case about trust of the US economy and financial system's stability as opposed to other economies and financial systems.
So there have been times (eg during the financial crisis) where people think all currencies are bad but you can't just sell all of them so typically they would sell the other ones for dollars. For me, de-dollarization is about the choice of central reserve banks to hold dollar assets but also about other financial players changing their "default currency denominator" when they're doing this kind of trade.
> I believe that the near-term de-dollarization isn't as much trust erosion as it is a tool to provide monetary penalty for behaving in unpredictable ways.
Sure, everyone else is also acting based on childish emotions now, not just the US president. It's not about retaliation at all, it's about reducing suddenly very imminent risks.
Yes, though I expect there to be a European block, the US, and a Chinese block. Russia there as a wildcard. I doubt we see Germany in competition with Britain.
The trouble with thinking in terms of blocs is that they don't solve the foundational economic problem: who is the sin-eater who is trusted and willing to run the deficits so that everyone else can run surpluses? Without a clear answer, you just have the same question repeated within and between blocs, so the same beggar-thy-neighbor incentives that exist without blocs exist within and between blocs, so the fighting continues within and between blocs until the question is answered. Blocs don't solve the problem at all.
Russia firmly in that second tier along with better behaved peers that have brighter demographic futures and an actual economy, like India, Indonesia and Brazil.
The interwar era between WWI and WWII is most instructive for what a multipolar currency world looks like. The Pound Sterling still mostly worked before WWI and the Dollar rose in the wake of WWII.
This did/will cause "Kindleberger problems," named after the economist who described them. The big issue is that everyone wants to pump exports to pump their real economy, they can't all succeed because the world is a closed system, so they fight. First with tariffs, eventually with guns.
These Kindleberger Problems will get worse until the US gets its shit together or China assumes the throne. Note that assuming the throne will destroy the export sector that they love so much (Triffin Dilemma), so not only are they not ready today, they don't even clearly want to be ready. Much like the US between WWI and WWII.
Buckle up, because the tariff wars, Great Depression, the economic driving force for the imperialism of Imperial Japan, and other awful things that you've heard of before all fall in the category of "Kindleberger Problems," are all downstream of not having a global currency hegemon, and are likely to rhyme with what comes next.
> I believe that the near-term de-dollarization isn't as much trust erosion as it is a tool to provide monetary penalty for behaving in unpredictable ways.
The difference is emotionally based retaliation vs. reassessing risk. And it's about money, so it's for sure not about emotions. The financial world isn't run on anger and emotions, like the White House.
The Fed and US policy absolutely have an effect on the dollar's status as a reserve currency.
The value of the US dollar against other currencies influences its demand, and at the end, international trade and global trust are what move the needle.
Why is the independence of the Federal Reserve sacrosanct? For one, they should have oversight and they should have accountability.
Not ever passing an audit of any kind. And the FED chairman spending $2.5B on renovations to an office complex. While misleading congress about the kinds of renovations.
There should be less 'independence', if it means zero accountability.
I can't believe you are making an office complex renovation argument.
FED has been instrumental is keeping the monetary policy sane in the recent years, unlike some pushes from the orange person you are taking talking points from.
They are related but I think the lack of de-dollarization already shows there are other, more raw mechanics that are operative. Namely, liquidity and lack of alternatives.
> The international value of the dollar as a reserve and trade currency is inherently tied to the behavior of the US Government and the Federal Reserve.
I think this oversimplifies things. The dominance of the dollar emerged chiefly because most of the alternatives were worse, for a combination of military, political, and economic reasons.
There is a positive feedback loop at the core of it, because the US economy benefits greatly from being able to issue foreign debt in their own currency. But that doesn't matter: as long as the US faces little risk of getting invaded by any of its neighbors or defaulting on its obligations, everyone is happy.
What's been changing - and it started long before Trump - is that the US is also increasingly willing to use its control of USD (and thus the Western banking system) to pursue sometimes petty policy goals. This is giving many of our partners second thoughts, not because of the fundamentals of USD but because they imagine finding themselves at odds with the US policymakers at some point down the line.
> The behavior of the US Government has been very unusual lately, and the independence of the Federal Reserve is actively being challenged.
This is mostly due to the behavior of the country being unusual.
The US had grown at a healthy clip for a long time.
Due to the amount of boomers exiting the workforce, and withdrawing rather than adding to their savings - the US is going to be in a very different position for the next 10-20 years before things start to level out.
If something like AI doesn't save us with a pretty sizable productivity boost, we're in for uncharted territory.
The bro's in the whitehouse is using their mouthpieces to create a volatile market, thus gaming the system with pump & dumps. They are stealing from everyone in a sense.
The US would no longer be able to export the cost of its spending on other countries which is the so called 'extraordinary privilege' of running the world's reserve currency and the US population would feel the consequences of its out of control spending.
Which is to say, that is a fairly traditional way of how empires go the way of the dodo. First losing their financial dominance, which loses them their international power, which then causes internal rupture.
We were in a lockdown, and Congress voted for multiple trillion dollar stimulus' financed by debt. Refusing to "print money" in those circumstances is just asking for a worse Great Depression.
A crisis prevents people from earning money. No money means nobody buys anything. Nobody buys anything means no company can now sell stuff, so no revenue. Companies start closing down, so there are even more people who cannot earn money.
The government can print money and inject into the system. Some people have money so they continue to buy stuff but maybe at a slower pace or less amount. Things also can get expensive but it is not a total collapse.
one of the big problems of the great depression was banks went bankrupt left right and centre, and took everyone's life savings with them. Also as a lot of banks generally hold mortgages in their portfolio, so when a bank collapses it means that mortgages all get fucky too.
So the mass printing of money meant that banks didn't collapse.
It also meant that a fucktonne of cash went into the hands of the uber rich.
This is one of the reasons safety nets on savings exist in both the USA and in Europe (and probably other places as well about which I'm less informed). Even so, the tacit understanding is that this is more about preventing bank runs than about the practical effects on the currencies involved because it could very well be that that insurance will pay out in money that is worthless.
Why did the fed raise interest rates? To soak up some of that cash. It was too slow, but this is exactly the sound money policy that everyone expects. You loosen cash (what you mistakenly call printing money), when you need investment, and tighten cash when inflation and risk taking is out of control.
a sound response to some of the worst fed decision making in US history. they essentially ruined the housing market, priced out a generation of younger buyers, which is now crushing fertility rates, savings, and more
covid money printing was some of the worst fed decision making in US history. they essentially ruined the housing market, priced out a generation of younger buyers, which is now crushing fertility rates, savings, and more
actually, llmslave, it was a very good decision. It's better to have mild inflation than widespread unemployment. But also, the fed's actions contributed comparatively little to the inflation we experienced. Globally there was a huge drop in supply, which caused prices to jump everywhere, not just in the US.
The government acted as if the pandemic was happening in 1990, when everyone either worked in person all the time, or nothing worked.
Instead, the golden geese of the American economy (the actual golden geese), simply stayed home and worked from their laptop.
This created a situation where people were getting their regular paycheck, plus getting a multitude of stimulus on top of that. There were many making $100k+ salary, not paying rent (rent moratorium), not paying student loans (student loan moratorium), and not going out to do anything, resulting in having huge pools of cash laying around. If you had a mortgage, you got to refi at 3% and dramatically cut your mortgage bill. I won't even get into PPP loans either, everyone knows the story there.
I could write pages and pages about this, but the short of it is, we thought we need a wheelbarrow of money, but technology meant we only needed a jug of money. But we still got the full wheelbarrow.
Its the 'kept printing' that is the problem with the story.
There was a surge and a pull back.
Post-COVID Tightening: After this historic surge, the Federal Reserve began "quantitative tightening" in 2022 to combat inflation, slowing M2 growth to near zero and eventually reversing it.
This was arguably largely offset by the actions of the treasury's increased short duration issuance (>1 Trillion in t-bills) combined with draw-downs of the reverse repo facility[1] instead of from banks. It's difficult to tell exactly how much money winds it's way into the economy without using proxies - for example credit spreads[2] or NFCI[3] which indicate loose conditions, which don't show much evidence of post 2022 QT's impact.
Or in other words the data seems to show the loosening effects were more powerful than the tightening ones. Now that the RRP has been drawn down balance sheet growth will likely occur.
>slowing M2 growth to near zero and eventually reversing it.
The M2 money supply went from 15.4b at the start of 2020 to a peak of 21.7b, before slightly reversing to 20.7b. Then they just continued printing. Now it currently stands at a record high of 22.2b. The dollar is more diluted than ever.
That is true, but it also goes well beyond that. Much of the "US Gov't behavior" is largely related to trashing and panicked frantic moves because the consequences of its prior and long tailed actions over decades has now not only started bearing rotten fruit, but a previous strategy of world domination through "globalism" has also turned against those who control the Wizard of the USA from behind the curtain.
On the face of it the Greenland situation makes no sense on a national security level regarding a non-existent, fabricated Chinese or Russian threat, nor related to the fantastical grift of the "Golden Dome" that is even more useless against what Russia has recently developed, than it was for things prior to about 3 years ago.
What we are looking at here (you can tell your children that you heard it here first) is a strategic move to essentially take Canada and all of the NA continent, and eventually all of the Americas. Yes, Canada, you are indeed in danger as well as Mexico. I don't see how it could be any other way in the face of current developments; remember Trumps USMCA, i.e., a de facto North American Union?
Biden stated that he wants the USA to have 300 million more "immigrants" before he let in about 15 million in 4 years. Annexing Canada is about 40M by the time we do it, Mexico would add another 150M plus however many people would flood into Mexico to become "Americans". That bring us to a total of around 550 million by the time the North American Union comes around. Perhaps if the UK joins, we will just call it Oceania already.
It does not address the fact that China has 1.4 billion and India another 1.4 billion, but it puts us in contention, especially as Europe has about 700 million by that time if/when the EU absorbs most of Europe.
That also doe not take into account the Wizard of the USA wanting to take over all of South America for positive control eventually… another ~480 million by that time, putting the American Union of Oceania at about 1 Billion, ±100M.
These are real tabletop calculations and how things are seen at the top and discussed amidst cocktails.
This is quite obviously written by someone with no intelligence experience.
> On the face of it the Greenland situation makes no sense on a national security level regarding a non-existent, fabricated Chinese or Russian threat, nor related to the fantastical grift of the "Golden Dome" that is even more useless against what Russia has recently developed, than it was for things prior to about 3 years ago.
Power projection in the arctic is weak. Russia has made multiple tactical movements towards soft projection in the arctic. You have zero idea what submarines are on station. Taking greenland is arguably stupid, boosting it's defense to prevent a Russian incursion is not.
> What we are looking at here (you can tell your children that you heard it here first) is a strategic move to essentially take Canada and all of the NA continent, and eventually all of the Americas. Yes, Canada, you are indeed in danger as well as Mexico. I don't see how it could be any other way in the face of current developments; remember Trumps USMCA, i.e., a de facto North American Union?
No evidence. Unless you're arguing while NAFTA was around this was a way to create a "United America".
> That also doe not take into account the Wizard of the USA wanting to take over all of South America for positive control eventually
No evidence. Most think-tanks have recognized that maintaining positive control of south america would be disastrous. If anything, Maduro and his friends were probably happy the US decided to black bag him. It is well known that whoever was going to attempt control over Venezuela in particular was going to be responsible for spending the money to rebuild it.
> These are real tabletop calculations and how things are seen at the top and discussed amidst cocktails
It isn't prohibited by the constitution and was created as an independent body. You are correct that it wasn't specifically outlined by the constitution but that's an empty statement - the constitution included the allowance of the creation of agencies and laws outside of itself... that's the main power and strength of the constitution.
Your statement was equivalent to saying that Hacker News has no constitutional right to exist - it is equally vapid.
The 10th amendment limits the federal government to the enumerated powers. So your argument that it "isn't prohibited" isn't how this works. You have to justify it under an enumerated power (which, you might well be able to do, though this is debatable).
I am not a constitutional scholar so a better expert may be able to provide a more sound response but I believe the Commerce Clause is generally accepted to include currency control (and early tests of federalism in the US found that independent state currencies could be restricted by the federal government).
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
To borrow Money on the credit of the United States;
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
...
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
...
To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.
Congress's authority in this area was upheld by the foundational case McCulloch v. Maryland in 1819. The Federal Reserve System was created in 1913 by Congress via the Federal Reserve Act.
There's no serious argument that the Federal Reserve is unconstitutional. People who espouse this are ignorant of the facts and law, or are either quacks or have paid heed to the arguments are quacks.
It’s certainly government. The US Congress created it as an agency of the US government, just as it did every other government agency; and the Congress can destroy it. The Congress did not provide for direct political control—elections (and electoral politics) can’t change the Federal Reserve’s decisions (or decision-makers) directly.
There’s indirect control: the elected administration selects people to nominate as governors, who then go on to make the decisions. But they have to choose people who the (elected) Senate will confirm, and there’s not too much the executive can do if they don’t like the decisions their appointed governors go on to make during their 14-year terms.
The question at hand at the moment is whether the executive can unilaterally usurp the agency’s Congressionally-mandated structure and use its power directly.
It’s kind of like how the various Civil Service acts sheltered career civil servants from the constant changes in political winds, so that we can have career professionals in government instead of using public paychecks purely as a prize for the buddies of whoever won the last election. The present administration resents that independence too.
I’d argue that its primary functions are core government functions in a way that passenger rail and postal services are not. Amtrak and USPS sell services at retail (and compete; see i.e. SunRail and UPS). The public aspect of their prerogative is relatively small (I tend to care much more about whether the train is on time than I do who operates, and who owns the tracks, and what the liability cap is; I tend to care about speed and price more often than I care that USPS will go places where FedEx won’t). And the “product” is a set of individual services executed by a big workforce—the higher-ups exist to make sure the services get delivered down the line. Quasi-corporate structures make a lot of sense for that.
Whereas the Fed’s jobs involve setting monetary policy and regulating the financial sector. The “product” is the set of policies the board vote to implement, and the staff exist to gather information and pass it upward to support those decisions (maybe using powers delegated downward to them). Like any other government agency.
What does it mean that the Federal Reserve is "independent within the government"?
The Federal Reserve, like many other central banks, is an independent government agency
The federal reserve calls themselves "within the government" and a government agency. Isn't it fraud (and indeed wire fraud) to falsely represent yourself as a government agency to induce a financial transaction?
If you go by the default constitutional allocations, Congress starts with much tighter control of how the executive operates than it does now. Via passage of laws, Congress over the years has chosen to delegate a lot of responsibility to the executive branch - some for pragmatic management reasons, but some as a trend of historic concentration of power towards the executive. Congress can also delegate to non exec branch bodies like the Fed and other quasi-govermental orgs. Congress has the constitutional purview to take back a lot of that power into it's direct hands instead of allocating it to other bodies if it so chose.
> Via passage of laws, Congress over the years has chosen to delegate a lot of responsibility to the executive branch
Part of the reason for this is that 2-year presidents are more common, they make promises within the first two years and even if they meet them, it can take years for effects to be seen in the general population, so the party loses majority in the midterms and then nothing happens politically for the remaining two years. Congress is often slow and burdensome (for good reason) but it always makes out for a disenfranchised voter base
Google has no constitutional right to exist or have accurate search results either. However, it's value depends on the quality of their search results.
People outside the US don't care about the particulars of the US constitution like it's a holy document, but rather the US governance as a whole and whether it's well-ordered, lawful, and predictable.
What the other said about it being a non sequitur, adding on top of that "constitutional right" is no longer as strong a statement as you think it is considering the kangaroo court that is the SCOTUS nowadays.
That’s correct, Congress could pass a law removing its independence or eliminating it entirely whenever it so chooses. Until then, it’s independent because that’s how Congress created it using its powers under Article 1 of the Constitution.
It has about 38 trillion reasons exist. if you want to see what national debt looks like for countries without an independent central bank, there are plenty of examples around the world and throughout history. I’m sure the Wikipedia page on failed states would be a good starting point.
the fed has been doing a pretty good job for the last 100+ years. I'm not a fan of the 'we'll let's just try it this other way, we haven't in awhile' argumentation.
Holders of US debt have no obligation to give a shit about the statutory background of the Fed, and to just make decisions about who is the best fiduciary of their currency.
If holders of US debt goes away, we have immediate inflation to the point where our currency hits trade equilibriums such that we can service our debt. All of your savings are worthless.
My local town doesn't have a Constitutional right to exist or be independent either.
This has very little to do with the price of tea in China.
Parties outside of the US who don't give a fuck all about the Constitution are involved in keeping us as a reserve currency, and they care that the fed is independent. We have kept it so to keep the economy stable and to reap the benefits of that stability.
Their stability has worked to benefit a lot of rich and powerful people, so I would question the motives of this sect of billionaires who are trying to destabilize it. They must believe they can extract something from the ashes.
>The federal reserve has no constitutional right to exist or be independent.
Irrelevant.
Actions have consequences, and the natural consequence of the actions of the US administration is that corporations and states that value stability are looking elsewhere than the US Dollar.
Whether or not the Fed has a constitutional right to independence is irrelevant to this situation. If Americans want to cheer while Trump flushes nearly a century of soft power down the toilet that's their prerogative, but the trend of de-dollarization has already begun and it's unlikely to be reversed.
I don't know how you can say that about an institution that was formed by people using false identities on Jekyll Island and ramming it through congress as fast as possible because in their own words "if the people found out they would stop them" (paraphrased).
Are you a financial analyst by any chance, because the "here's a few facts, interpret how that's going to impact the market yourself" is very on-brand.
I've been trying to read more about investing properly recently and this is such an annoying characteristic of most advice you read. Sometimes it's also "well, economic theory says this, and that doesn't follow the behavior of these markets, so decide for yourself".
I feel like we do generally brush, a little too easily, over the fact that economics is still a theoretical science, of which finance is subsequently the practical and technical implementation. Much like psychology, sometimes we turn out to be right about theories, sometimes we're not.
What else would you expect? If the person writing the advice knew how to reliably beat the market they would be doing that, not writing financial advice.
> Are you a financial analyst by any chance, because the "here's a few facts, interpret how that's going to impact the market yourself" is very on-brand.
What do you want him to say?
1. De-dollarization is all Trump’s fault
Or
2. The world is reacting to Trump putting America first
The world is reacting to reserve currency being used as a tool to conduct politics and twist arms. Started before Trump. He is just increasing "efficiency"
It's no secret that our current US administration is envious of China. So in no small part they probably want to model the US Dollar after the Renminbi. Drop the value internationally to incentivize American exports, and manipulate the hell out of it. (Hence why they have dropped inflation as a political issue - some in the administration are essentially rooting for inflation to get much, much worse).
It should go without saying that this would be shortsighted - China made it work because they were able to take advantage of a strong international market denominated in USD. The US cannot destroy our own common market and currency and expect to take advantage of it.
Furthermore, we know what a de-dollarized world looks like - imperialism. If you need to secure oil/mineral/food for your economy but you need expensive foreign currencies to acquire it, it suddenly becomes much more economically appealing to take the resources.
> probably want to model the US Dollar after the Renminbi.
I don't see that. Given trump's history, he thinks that going back to tariffs will allow massive tax cuts. As he trades in real estate, tariffs are inconsequential for him
He supports tariffs for the exact same reason Bernie Sanders does. There is a reason so many bernie bros jumped to camp Trump in 2016 when (globalist) Hillary won the nomination.
There is no secret or conspiracy going on here. Trump is a populist president and is unsurprisingly doing populist things, elected because of his populist stances. At this point you have to have stabbed your eyes out and shoved spikes in your ears to not know that all he does it gush about bringing back 1950's factory worker dad.
For us individually. For us collectively it was a horrible thing. We lost the means and incentive to produce anything durable, including a healthy, educated, sustainable society.
Yeah, I've heard this interpretation before that this is the US trying to wean itself off the resource curse bestowed by a strong dollar. I think it's a fun idea, but there is no reason or strategy to this, I'm afraid. Just stupid people doing what they do best, doing stupid things.
I agree, the whole thing is stupid. But, when you don't have a healthy, educated society, they wind up being easily conned into electing stupid greedy people. So it seems that the resource curse may lead inevitably to systemic failure. Good times make weak men.
I know it's pretty common shorthand to describe American post-war interventions as "Imperialism". But Imperialism before Bretton-Woods was a very specific and intentional international policy - literally conquering and/or colonizing land to secure resources. Which is a bit different than America's "spheres of influence" thing today.
The two are very linked - the tacit agreement of the postwar order was for America to use its might to expand a common market on behalf of the shared benefit of NATO members. But the collapse of today's "American empire" does not mean the end of empires. If anything, the opposite: instead of one common international market, we will return to a 19th century scramble for land.
Well, that's just it. America has not so brazenly claimed territory for such selfish reasons in well over 100 years. Which is proof enough that America is pulling up the ladder on Pax Americana.
> Nobody is cheering for inflation to get worse, they are celebrating it being held down to 2.7% after higher inflation a few years ago.
Trump is actively fighting the federal reserve to drop the interest rate to 0%. Members of his team regularly do interviews where they say "it's going to get worse before it gets better". Inflation is being held down despite this administration's best efforts.
> The U.S. is a net exporter of oil and food and self-sufficent for majority of its mineral needs as well.
And has been for a while. But the current conservative rhetoric is specifically about bringing manufacturing jobs back.
> There is no need for U.S. to crash its currency to incentivize domestic production, it can just impose tariffs on imports to do so.
I don't think autarky is this administration's only stated goal. They specifically see an export-led economy as being more important or even "legitimate" and are pushing for other countries to import our goods. Devaluing currency is a strong way to incentivize exports and China's currency manipulations were the key to their rise as a manufacturing power.
This is how you grow a sclerotic, internationally-uncompetitive domestic industry. See: shipbuilding.
Where tariffs work is as a nursery policy. Give firms a safe haven to grow in. Then let competition hone them. South Korea has pioneered this playbook; China copied it. We were sort of doing it, but the current administration blew up our nascent new energy industry.
It's also debatable how important tariffs even are for "infant industries". In most situations, if you ever remove the tariffs, the native industry is just as likely if not more likely to die out to any serious foreign competition.
For South Korea and China, tariffs were not a very key part of their industrial policy. Which is not to say that the government didn't have a massive hand in the success of their native industries. Case in point: shipbuilding for South Korea. The government was key in securing the capital investment in the massive drydocks the entire world depends on.
In the late teens, China was dominating all of these industries.
Under policies of the Biden administration, these industries were growing domestically in the US and we were increasing our share of the global market.
Over the last year those domestic industries have been destroyed. They are barely surviving and have stopped rapidly expanding. All gains made against China's dominance in these technologies has been lost, and then some.
The problem with tariffs is really just trumps complete instability. Why would anyone invest in domestic manufactoring when Trump wildly flip flops on all tariff policy using it as a diplomatic punishment and reward system? Especially when his tariffs in general are legally questionable at best and the other half of us politics are against them just in principal. Imagine investing millions in a domestic factory and then trump gets a personalized jet from some random nation so the tariffs you were depending on for your profit margin are gone. Or Trump loses the midterms and now tariffs as a policy are gone. Unless Trump both becomes a dictator and sets the tariffs in stone without changing them too much, or democrats come out in wide support of tariffs themselves, I don't see how you could use them to invest your money.
Also, anything they build inside the US becomes an economic hostage for a Trump to use for further rounds of extortion.
So it's not just that the policies are (A) foolish and (B) changed on a whim and (C) have no long-term foundation and (D) are changed for corrupt reasons... but also, (E) the corrupt person "making deals" is a fundamentally dishonest and incapable of honoring them.
Many of us see it, but many others seem to be embracing it and trying to hasten it for reasons unknown. They pine for the glory days of post-WWII US hegemony but are actively undoing the institutions that were instrumental in US economic and political power at that time. They have no coherent world view, they are severely confused, but unfortunately numerous.
Well people pushing for this have a world view.
They see a bipolar world with China dominating Asia,
US dominating it's hemisphere and Europe fending for itself.
They also have major crypto holdings so instability of both major currencies benefits them financially.
I actually have a greater disgust for those who see it but don't act. I think this line from an incredibly relevant book is precisely this:
> "Your ‘little men,’ your Nazi friends, were not against National Socialism in principle. Men like me, who were, are the greater offenders, not because we knew better (that would be too much to say) but because we sensed better.
Those who act on behalf of evil are not free from guilt, of course. But the truly damned are those who sense better but look the other way. They walk in the footsteps of the millions who tacitly supported the last time this evil took hold of the world, by not acting.
I think it's fair to say that neither ideology is free from evil, and choosing the "lesser evil" is still choosing evil. Every good or well-meaning movement I've seen has been taken over once it reaches a certain size.
"What happened here was the gradual habituation of the people, little by little, to being governed by surprise"
Wow, seems on point.
Wow
"kept us so busy with continuous changes and ‘crises’ and so fascinated, yes, fascinated, by the machinations of the ‘national enemies,’ without and within, that we had no time to think about these dreadful things that were growing, little by little, all around us."
Not so fast, though. A state can be a "killer", or a "giver", or both, to gain followers and sell its currency to other states. The US was both back in the 40s as well as the late 80s when Germany and USSR crumbled. So hail to Pax Americana.
However, the US is more of a "killer" nowadays. The "killer" is usually more efficient than the "giver", because people value their life more than their wallet. So that's why I think she still has some time left. I don't blame it on Trump though. Being a "giver" is a lot more trouble than being a "killer", and I think the US elites gradually rolled back from the role of "giver" since many years ago. Trump is just here to remind other states that the US can and will be a very efficient killer.
And this is probably the most dangerous time for other states because she cannot afford to lose.
>The US was both back in the 40s as well as the late 80s when Germany and USSR crumbled. So hail to Pax Americana.
This is the historical equivalent of selective memory, and only really applies to a tiny slice of the planet - western Europe.
A lot happened in the world between 1945 and 1989. Outside of Europe and Japan, most people would probably not be so sympathetic of the US actions during those times. An abridged list:
* Iran 1953 - US and UK overthrow democratically elected PM, install brutal dictator
* Guatemala 1954 - US via CIA overthrows democratically elected president, install brutal dictator
* Brazil 1964, Chile 1973, Argentina 1976 - US supports brutal dictatorships replacing democratically elected governments
* Iran/Iraq 1980s - US funds both sides in the war
The number of Trump apologists lunatics who do not seem to understand what MAD was about is staggering.
Industrial scale warfare isn't some secret forgotten by accident.
The current American power-trip fantasy delusion is rightfully scaring the shit out of people, and the scary thing is the people who aren't scared.
It's reaching the point that I think the best thing is for Germany to detonate a nuke between the US and Greenland just to wake up the idiots who think it would be unreasonably difficult.
Germany is a non-nuclear-weapon state. Our bombs are there yes, but if you use one of our bombs without our approval there will be hell to pay. An invasion of Greenland will be all but guaranteed. Whether Germany will retain its military the next day is questionable.
Maybe, maybe not. We're currently the Soviet Union in the 1970s. Gerontocratic. Sclerotic. Hyped up on a new mythology. And economically uncompetitive on several levels, with the future (then computers, now elecrification) sweeping past us to our applause.
Unlike the Soviets, however, we can see it happening and debate it. If '26 and '28 change course, the damage will still be done. But the America Empire is still young. And Trump's stupidest policies–the tariffs, fighting the Fed, Greenland and raising a Gestapo–don't have the support of most Americans. That leaves hope for reform through electoral pressure.
It will take work. But it's as incorrect to assume indefinite American hegemony as it is to preëmptively concede the game.
My outsider's POV: the fact that there's a Gestapo-analogue in place already tells me that an electoral solution alone is almost certainly no longer sufficient (or at least, unlikely to be effective) at this point.
The Democrats have also had very weak messaging ahead of the midterms. Like, pathetically weak in the current context.
This is to say nothing of the hypothetical where the US makes moves against allies' territories before the midterms.
I'd agree with most of what you said, but there is no "raising a Gestapo". ICE has existed for 25 years. And the laws that give it permission to act haven't changed. It has gradually grown over the decades but what it fundamentally does has not.
What's new is finally the federal government pushing back against locales that refuse to allow local police to cooperate with federal law enforcement by means of massive influxes of federal officers to offset the lack of local support.
Also ICE has widespread support for what they are actually doing. Only when you ask manipulative questions that presume something is happening that isn't, do you get poll results that support a widespread dislike for ICE.
There are also many Americans who have always desired de-dollarization, since the dollar has been the foundation of our imperial system and abuses of state power. Say what you will about how dated a gold standard is, but it forces immediate fiscal responsibility upon governments; fiat currencies defer responsibility, turning it into a Sword of Damocles that catastrophically falls upon future generations. You trade geopolitical dominance now for guaranteed future withering. Of course, fiscal responsibility and the rejection of imperial ambition were core principles of the Anti-Federalists, Democratic-Republicans, and Whigs. It's baked into our history and tradition to not want to be the unilateral arbiters of a global trade and alliance system.
> Say what you will about how dated a gold standard is, but it forces immediate fiscal responsibility upon governments
We were on metal standards for millenia. Governments routinely spent beyond their means, including for imperial aims. This is like four centuries of Roman history.
Yes, but there were practical limits to currency debasement when the currency was a physical commodity with intrinsic value. People notice when their coins start getting filled with lead, and there were serious political repercussions for it. You cant just conjure a trillion gold/silver coins out of nothing like you can with fiat, and the ability to do so is 100% guaranteed to be abused.
What @cheeseomlit said, plus: During the Age of Exploration/Colonization, competing European powers each minted metal currencies and couldn't reasonably debase their metals without immediately being out-competed (which is why the trusted purity of Spanish gold and silver coinage slowly dominated). The primary mode of failure for those empires was bankruptcy via war. The impossibly high cost of fielding armies around the globe was laid bare during that era. Paper money lets us (funnily enough) paper those costs over and live with the illusion that it's all a free lunch. But what we're actually doing today is debasement, and eating, vociferously, all of the deflationary efficiency gains won by 20th century technological progress.
Saying “we gotta get Greenland” when the people in Greenland say they don’t want to join the US. Then refusing to rule out using force. If you want to say that no exact act of treachery has been committed, then substitute “treacherous words”, which also harms alliances.
Invading ones allies has been treacherous for millenia. If you want to be pedantic, you can say the U.S. President is openly threatening treachery, and showing as part of his character an affinity for it.
This is about way more than a few tariffs. Think Venezuela, think madman jizzing over the idea of invading greenland, or just throwing tantrums on an international scale.
But Iraq, Afghanistan, Grenada, Panama, Vietnam ... were not a problem?
Ahistorical BS, I am sorry. As if Trump is a radical departure of NORMS. Euros were chanting HO HO HO CHI MIN in 1968 in the streets of Berlin and Paris.
There is a long tradition of anti-American feelings outside the US, like with any hegemon.
The global left had to build walls to keep their people IN, crush them with tanks, from Prague to Berlin to Beijing. So there is that.
HN turning so left is weird to watch, I guess a reflection of PG's stances and moderation/group votes. Well, money does not give a fig.
We're not going to debate the measuring stick when the stick itself is incapable of measuring the outcome.
In none of those scenarios provided did a sitting US president come close to insinuating acquisition of land by "hook or crook" - either agree with us or we take it.
The closest modern discussion that comes to mind is the PRC saying they could militarily "walk in and take the whole this afternoon" in regard to Hong Kong.
Thatcher, for all her wrongs, provided a salient response:
"There is nothing I could do to stop you, but the eyes of the world would now know what China is like."
The US has shown the world what we're like with the current administration.
I believe Saddam Hussein would disagree with you, if he could.
Just bonkers how basic history is getting rewritten.
"The great satan USA" has been a slogan since the 1960s. The US dropped napalm and agent orange on Vietnamese civilians en masse - Lyndon B Johnson was what, a good guy?
Indeed. People are actively trying to repair something which cannot be fixed. Now that the US century is over, the only way forward is for the US to use present military power as a cudgel.
Given that the multipolar world is nigh, the only path forward is through. If America and her erstwhile allies are no longer aligned, then any attempt by America to repair this is doomed. Consequently, Trump’s approach is the only way forward.
This is a self fulfilling prophecy. It may only be over because the administration is actively trying to create the multi-polar world. It could absolutely be fixed by Congress re-asserting its power.
Something that is “already over” cannot be “un-over”. That’s not how “is already over” works. It means it’s done, finito, not a prophecy but a historical fact. We have to move on. And that means less interference in internal European affairs like Ukraine-Russia and more protection of our interests like consolidation of power over the Atlantic, the Arctic, and the Americas.
> Consequently, Trump’s approach is the only way forward.
It's the DoD.
Prior to Trump's actions, the American-led "world order" seemed to work, even if we couldn't get China to agree to a "Bretton Woods 2.0".
Biden tried diplomacy with the EU. He tried to get them to agree to a renewed US-led world order, but it wasn't working. The EU decided to play the US and China against each other to improve its own standing, which is why the US is now moving away from the EU.
I think the US could seriously pull out of NATO and leave the EU to fend off Russia by itself. It'll have to start spending enormous tax dollars on defense and war.
Meanwhile, if the world is truly becoming multi-polar, then the US wants to consolidate power in its own hemisphere. This is why there's all the rhetoric and action on Venezuela, Cuba, Greenland, Canada, etc. The US will keep Chinese ports, basing, and trade completely out and secure the trade routes for when the Arctic opens up. It recently changed control over the Panama Canal, and the DoD is dead serious about taking Greenland and maintaining complete hemispheric control.
With whatever energy the US has left, it will dedicate to Asia. It will strengthen alliances and project power there instead of dealing with Europe.
The world is going to be a much more violent place without hegemony. Free trade doesn't exist in that type of world. The US realizes this and is playing 50 years ahead. None of the nice words matter when the energy, trade, and economic lines are redrawn.
People like to say the US is led by lawyers and China is led by scientists and engineers. This is wrong. The US is led by war generals and intelligence. The career DoD folks are the ones impressing upon the administration to make these moves.
To be clear: I hate this. I loved the world I grew up in. I think we're headed for a violent world that could easily erupt into war. I don't like it.
> I think the US could seriously pull out of NATO and leave the EU to fend off Russia by itself. It'll have to start spending enormous tax dollars on defense and war.
Disagree. If US pulls out of NATO, most likely scenario is EU continue to concede to Russia. I think EU will concede on Greenland too, but likely won't do it without any military action (unclear whether that will trigger nuclear escalation and how that can end).
> Biden tried diplomacy with the EU. He tried to get them to agree to a renewed US-led world order, but it wasn't working.
Can you elaborate on that? It seems to me it "wasn't working" mostly in the sense that Trump got elected again.
> The EU decided to play the US and China against each other to improve its own standing, which is why the US is now moving away from the EU.
Seems like confusing cause and effect. The EU is drifting away from the US towards China because the US pushed them away.
> The world is going to be a much more violent place without hegemony. Free trade doesn't exist in that type of world. The US realizes this and is playing 50 years ahead. None of the nice words matter when the energy, trade, and economic lines are redrawn.
This is happening largely because of the US, although they stand to lose by replacing a world order that benefits them with a world order that benefits China and Russia. Well maybe the US will become sufficiently like China and Russia that they can benefit too. But even with a gradual loss of hegemony there was nothing inevitable about a transition to the law of the jungle and it's doubtful that the net result will be positive for the US.
> People like to say the US is led by lawyers and China is led by scientists and engineers. This is wrong. The US is led by war generals and intelligence.
I think the relevant distinction is that the US is democratic while China is authoritarian. But the current US government wants to be authoritarian.
> The career DoD folks are the ones impressing upon the administration to make these moves.
Again a reversal of cause and effect? I doubt old career DoD folks like the current developments. But the current government might give a bigger role to the war generals.
> The EU decided to play the US and China against each other to improve its own standing, which is why the US is now moving away from the EU.
This is sanewashig this whole thing. The fact is, the US is moving away from the EU because Trump doesn't like democracies. It's that simple. You have a large percentage of your population in what is essentially a cult and you have givem them the reigns.
If the US can't build strong coalitions with Europe, it wants to spend its energy elsewhere.
Even pop-geopolitik wonk Peter Zeihan was pointing this out during Covid. I can't find his videos, but this has been top of mind for a lot of people for a very long time. These are anti-Trump people, too.
Multipolarity means instability, violence, fights over resources, fights over trade. Post-WWII was unusually (relatively) stable.
The US can turtle up, just like it did before WWII. It doesn't share a land border with any other major powers, unlike European and Asian countries. It commands the two oceans on its sides (and soon Arctic), and doesn't need anyone else - this was the US' defense posture since its founding.
Honestly, the idea of Trump making geopolitically informed decisions is so out of the realm of my perception of reality I don't even know how to engage with you. Trump is a narcissistic idiot that you voted into power. Your geopolitical direction is dictated by his narcissistic whims. "National security reasons Greenland" or "EU collaboration with China" or whatever is exactly what I initially said - sane washing a lunatic.
I am not saying you're stupid or misinformed, I'm saying you're missing the point. Understanding what Trump wants doesn't require you to understand geopolitics, it requires you know clinical psychiatry.
What do you expect (e.g.) Norway to do except disentangle, when their PM sends this text and gets back this response? And note that Finland's president (Alex there) has been one of the big proponents of continuing to engage with Trump. So, honest question, what should Finland, Norway, etc, do?
Trump absolutely drives this. You're deluded if you think this whole thing comes from the DOD. He is in effect a king at this point and he rules by posting in social media.
Except all of that will be for naught because the US is making the fatal mistake of doubling down on oil and coal. It's pointless to play 50 years ahead if you won't make it even the next 20.
The reverse is true: people who say things like "The US century is over" almost always dislike the US or wish its global influence would decline. Their commentary is wishful thinking.
There is some probability that US global influence does significantly decline but I wouldn't hold my breath.
Not true. Some, like myself, love the idea of the shining city on the hill, although we often find the behavior of the actual city less than shining.
I would like for the US to continue being a beacon of freedom where people can come and build great lives.
But that is not the direction we are going, and one might reasonably forecast that no country can maintain indefinite dominance. Paul Kennedy wrote "The Rise and Fall of the Great Powers" almost 40 years ago. Regression to the mean and all that, but also, great powers tend to overstep.
> Not true. Some, like myself, love the idea of the shining city on the hill, although we often find the behavior of the actual city less than shining.
Your first sentence says "not true". Your second sentence says "true".
Your dislike of the current US regime/behavior causes you to forcast the decline of US influence. I'm not saying you should like current US behavior, just that there isn't good evidence for any decline.
These things are hard to predict. The most likely situation is not decline: it is continuity, where the US retains its global influence for the time being.
Ignores the totally exceptional nature of some of the US changes/instabilities of this administration. I say "not true" because that is my read of where things are going, regardless of preferences.
Yep, and nobody ever goes on these types of threads and says the EU is collapsing, even though there's demonstrable evidence that things are not going great for the EU (the UK left, there is virtually zero economic dynamism or tech investment, Russia has seized 1/3 of Ukraine who was trying to join the EU, and the continent has no money, no navies and terrible demographics to compete globally in the next century). People gloss over issues about the EU because it aligns more closely with their political beliefs.
Does your data include 2025? Because it was the only year with any international pushback at all, so we shouldn't expect the previous trend to stay unperturbed.
You're also forgetting BRICs and the EU's efforts to create their own banking systems that would make it easier to do trade and finances without the dollar as an intermediary. The dollar being the reserve currency is going to be come more sudden once mass adoption of those platforms takes hold. Who can blame them with how the US is behaving
The US dollar being used less across the world has both negative and positive consequences for the US and USG. This is the Triffin Dilemma, and dates back to the 1960s; the USD's dominance over-values the currency relative to other currencies, which hurts exports and thus domestic manufacturing. It also conflicts USG/UST priorities between making decisions that are best for the US people, versus best for international customers of the dollar. Triffin covered this at length in his address to the Joint Economic Committee of Congress in 1959, but in short, the USD acting as world reserve currency creates demand for the dollar, which the US has to be able to supply, which pre-1971 meant extreme strain on her gold supply, and post-1971 means greater monetary inflation.
I remember studying pre-WWI history, and particularly how carefully Bismarck arranged German foreign policy like he was the diplomatic equivalent of Bobby Fischer. Everything was situated perfectly and Germany was totally content.
Then along came the absolute moron Wilhelm, and he managed to Leroy Jenkins Germany's beautifully arranged relationships into an aggressive, tactless nightmare where all Germany's allies were turned into enemies, and everything turned out exactly like you'd expect.
As the saying goes, history doesn't repeat but it often rhymes.
China is intentionally undermining the dollar in order to try to make the Yuan the world currency[1,2,3]. My current hypothesis is that the growth in the _price_ of the US Stock market (eg S&P 500) is actually devaluation of the dollar. Compared to real money (Gold) the S&P500 is down over the past 10 years. [4]
I don’t think that’s feasible because China’s capital markets aren’t secure for foreign investors and never will be unless China changes the very thing that they want to be. They’d have to open their markets, be open to direct foreign investment, no more China-only ownership of companies, and no more artificial devaluation of the Yuan.
Also the US capital market is huge. Surprisingly huge, even, and there is very little that can change that for the foreseeable future.
They already allow this somewhat. Tesla's Gigafactory in Shanghai is fully owned by Tesla, and is the first wholly foreign-owned car manufacturing plant in China, operating without a required local joint venture partner.
Does using the Renminbi require investing in securities?
It's a very different thing to trust that China will maintain the value of its currency, than to trust that investment in Chinese companies will remain liquid and not be arbitrarily cut to a price of zero.
I'm not saying you're wrong, but I also don't fully understand the need to have grander access to capital markets. Perhaps access to the equivalent of US Treasury auctions?
Yes, it would be a big change. But if Europe needs to bring out the Anti-Coercion Instrument against the US, an economic weapon it invented to be used against China, the world is in a very different place in belief of what could be safe.
If China signals that it is changing its attitude on its currency, that it wants to be the reserve currency and establish a consumer economy, it wouldn't take much for people to shift these days. Nobody needs to adopt the Renminbi 100% right away, they can transition to multiple currencies for a while as a hedge against the US, and the situation will evolve. Dedollarization won't happen in a month or a year, it will be a multi-year process once it kicks off. But once it kicks off, it will be because of such a loss of confidence in the US that it probably won't be possible to stop it.
> I'm not saying you're wrong, but I also don't fully understand the need to have grander access to capital markets.
Well if you use the renminbi or yuan as just a medium of exchange, well, why bother when you already have the dollar?
To answer your question better, what is the point of access to capital markets of a country and how does that stabilize or strengthen its currency, or make it more highly sought after?
That is an excellent point! My intuition is that the yuan could be viewed as more reliable than the dollar, when the dollar is propped up precisely on the good will that gets destroyed by threatening invasion of allies. China does threaten plenty of invasions, but not in Europe or most of the rest of the world yet.
Reliable how? How would you obtain the currency, and what would you do with it?
> when the dollar is propped up precisely on the good will
The dollar isn't valuable because of good will. Central banks in Europe, or Japan, or elsewhere don't hold dollars because they want to be nice to the United States. They hold them because the United States is incredibly wealthy, has incredibly deep capital markets, high liquidity, and because the dollar is a great medium of exchange.
Unless China wants it to happen, it won't have the reserve currency. It would require big changes in China's part to make it happen. I fully agree with you that they wouldn't open up things like equities markets in a way that could be trusted by outsiders. But I do think they could open up access to the currency.
Right, but what I'm arguing is that the currency isn't going to be that valuable without doing things like opening their markets to outside investors. You could just go with the Euro even if you didn't like the dollar.
That's the thing I keep coming back to. What are the specific features of the currency that make it more valuable than the other reserve currencies that exist today? I don't think China is willing to do what they would need to do add those features, because it requires CCP to loosen control and they can't do that.
If China "democratized" it would unlock a ton of potential and go on to dominate the globe. But doing that requires untenable changes for the CCP so it won't happen.
Plus everyone is going to be mad and distrustful once they invade Taiwan.
not even P/E ratios resetting back to historic norms? Or have we finally entered a new age where highly elevated P/E are a permanent feature of markets?
If this is the complaint the dollar is safe. And international holders of dollars aren't idiots. They hold Treasuries, which more or less preserve their purchasing power. (Nobody outside the poor, who have to, and nutters, who don't know better, hold cash as an asset. It's so thoroughly assumed that in finance, cash refers to cash and cash equivalents.)
I keep wondering what would happen if China and the EU came together and agreed to move all trade to the Euro as a pushback of all the current insanity. I don't think the Yuan can ever be the global trade currency given China's current structure.
Makes it look like the US peaked at Sep 2000 and has been downhill ever since. Doesn't track at all with GDP which has almost doubled since 2000. I.e. it doesn't track with growth, but does track with dollar index somewhat, which makes sense because it's tracking a dollar value intermediate when considering "how much gold it takes to buy S&P 500", which means it really ends up tracking something else entirely.
> Compared to real money (Gold) the S&P500 is down over the past 10 years. [4]
Isn't this the real chart to look at for that? Completely different story when you select max on the timeline.
Personally I am about $10M USD poorer for listening to people on the internet. I wish people would not spread falsities about finance that can actually ruin lives. (Albeit to be fair, the trend is towards conservative advice...my life was uniquely affected in terms of limiting upside, so I am at least grateful that most online posts work very hard to limit downside.)
A goat or a sheep cost roughly the same in gold today as it cost 2000 years ago during the Roman Empire. Gold is the only “real money” in the sense that it is the only stable measure of the value of basic needs over centuries.
A goat costs exactly (not roughly) the same in goats today as it cost 2000 years ago. So by that measure a goat is the only stable measure of the value of basic needs over centuries.
Related is the PM of Canada’s speech at Davos today. I don’t think that I have heard such a blunt assessment of the past and future from a politician, ever.
For those who are not bothering to read this,the article essentially states that de-dollarization is happening in pockets (e.g., reserves down to ~58-60%, Treasuries foreign ownership at 30%), but the dollar's core dominance persists.
What would replace it? I guess the options are Yuan, Gold, Oil or maybe BRICS in the future, none of which are safe, stable, and liquid.
Your linked page doesn't actually appear to render any sort of compelling argument for this.
In fact - the entire argument seems to more accurately hinge the conditional left off the main saying, so the full description is:
"Bad money drives out good if they exchange for the same price."
But that requires a legal structure that enforces the disparity, and the summary of the whole thing basically boils down to:
---
If given the choice of what money to accept, people will accept the money they believe to be of highest long-term value and not accept what they believe to be of low long-term value. If not given the choice and required to accept all money, good and bad, they will tend to keep the money of greater perceived value in their own possession and pass the bad money to others.
---
But if anything - this is exactly an argument for the value of soft power to the US, because we can't enforce how other nations transact, except through soft power.
The harsh reality is that a federated state system with a very weak governing body economically and politically is extremely unlikely to be the global trade currency.
Let's what-if a scenario where the Fed is made subservient to the President and the President wants the dials turned to 11, let the next guy deal with the consequences.
The dollar isn't indestructible. If not the Euro, what?
the BRICS Unit was proposed to resolve the "Triffin dilemma", which is that the structural deficit necessary to maintain reserve status inevitably erodes trust in the currency over time. China's economy also relies on exports which would not be helped by reserve status. which is to say an eventual replacement may not be the yuan or any other single currency
It’s dumb because it requires uninterrupted access to an incredibly complex system. The cognitive dissonance of people who see bitcoin as resilient is hilarious.
It has at least one fatal flaw: the math it is based on. I feel like it won't be too long before a few major weaknesses are found and bitcoin will lose all security.
Bitcoin has been running since 2009 with plenty of incentive for hackers to find flaws in it and they haven't found any. It uses standard cryptography that is used by all our computer systems. If a flaw exists it's not just bitcoin that will be damaged but everything we use.
> If it can't be _your_ currency let it at least be a currency no other nation controls
At that point just hoard resources. Holding a bunch of Bitcoin in a crisis is useless for a country if no other country will buy them off you in exchange for tradeable hard currency.
"just hoard resources" really has nothing to do with a world currency to replace the dollar, which is what we are talking about here. In a crisis you can't eat dollars, gold, oil, or bitcoin, so yeah, you kinda have a point, but an orthogonal one.
You are right. My point is that if you have international trade of even mild complexity, having a currency is very convenient so trade will end up being denominated in one. No reason it can't be some crypto that is not backed by any nation.
> No reason it can't be some crypto that is not backed by any nation
There is a great reason: a state-backed currency should always be accepted by that state. If the world is in crisis, you may wind up stuck with your Bitcoins.
Is it a conspiracy theory that Bitcoin was developed by the US military as a hedge against US dollar hyperinflation? I've heard that argument made somewhere but maybe it was just a rumor to try to legitimize Bitcoin?
OK, how do I know that gold is pure and real? What if you live on the other side of the world and I want to buy that gold from you?
And there isn't any "hope" involved in bitcoin transactions. Connecting to the peer to peer network is super simple (way, way easier than creating a brokerage or bank account, and no ID or approval is required). Miners will pick up your transaction (and yes fees will help speed that up, as with any financial transaction) and it will be included in a block. Bitcoin has been doing this non-stop, flawlessly since 2009.
Bitcoin doesn't really solve the trust issue, because it covers half the transaction. If I send you a bunch of bitcoin in exchange for oil, how do I ensure the oil shows up?
There are fixes to that problem, of course, but it's not bitcoin itself that's the solution.
OP was literally comparing payments in gold and in crypto. For which kind of transactions? I admit, it was unspecified, and it might have read too much into it.
By it sure does sound simpler to type some numbers that to cut up pieces of metal.
If the goal is to make US goods attractive to other countries and to decrease our trade deficit (not saying I agree with this goal), either the dollar has to become fundamentally weaker or the goods have to become more valuable. The latter feels more difficult than the former at this point. However, the side effects of a weaker dollar may not be worth weakening it.
> decrease our trade deficit (not saying I agree with this goal), either the dollar
A direct link exists between a nation's status as the world's primary reserve currency and its tendency to run persistent trade deficits.
This relationship is often described by the Triffin Dilemma, a paradox where the global demand for the reserve currency necessitates that the issuing country consistently supplies the world with its currency, primarily through importing more than it exports.
The flip side is if you weaken the dollar by appearing unstable and displaying hostility to your main trade partners, you get the drawbacks of the weaker currency (reduced purchasing power) without commensurate improvement in the attractiveness of goods to other countries. Some devaluations are more strategic than others.
But the broligarchs don't need purchasing power. All their wealth is in assets, leveraged many times over. Currency collapse is the best that can happen to them.
This is the most important comment here. The US rebuilt nations' economies after World War II by printing dollars and buying goods from those countries. In return, the dollar became the world reserve currency and did not suffer massive inflation despite printing so much of it. It's a supply and demand thing, just like any good or service. There was a ton of demand for the dollar, so printing more (increasing supply) did not crash the "price" of the dollar (inflation is the price/value of the dollar decreasing). We printed a ton of dollars during covid but it didn't result in hyperinflation like what happens with, say, Iran or South American currencies because the demand for dollars was still so very high.
It depends on how this happens. Labor would still be more expensive here than developing economies. We could easily just end up with a weaker dollar and floundering manufacturing, which means more inflation.
Blackrock released a document you can download that outlines their 2026 outlook. A key point there was: "We go underweight long-term US Treasuries." A sign of bearishness on USD due to fiscal policy.
Just last week, I was accused on HN of "not knowing what I'm talking about" when sharing data showing, and my interpretation of, a declining US dollar globally.
It is so obvious in the context of globalization: countries seeking power will chip away at fiscal dominance of others with a thousand cuts. Why wouldn't they? Especially after years of getting bullied.
So many people are so dependent on this reality that I think it's going to happen long before any Americans accept it has happened.
Yes, people are in denial about these things. I'm still salty for the time I posted I believe the covid money printing will lead to inflation and I was down-voted for it.
Similarly I was downvoted for pointing out that the developed markets index returns (30%) doubled US market returns (15%) over the last year. Simultaneously the value of the dollar has dropped 10%. I simply stated that we’re seeing capital flight from the US. Ray Dalio said the same thing this morning.
And if you look at pricing as a proxy for capital flows, SMMD which is Russell 3000 minus S&P500 has had a heck of a run in 3 months. IMO People are retreating the mag7
I hadn’t noticed that , that is interesting. Makes sense to me. That’s not good for the S&P considering that ten stocks make up 40% of the index.
And since the wealth effect is really the only thing keeping the US out of a recession, if the MAG7 fail then we’re looking at serious economic problems.
The dollar has lost 13% vs the South African Rand in the past year. Thats an interesting metric for me given how South Africa has decoupled from the US in favor of China and Russia, with a strong anti-Israel stance. And also taking into consideration how the country is still struggling with crime, corruption and uncertainty.
It’s doing to be interesting to see how this plays out as the producers and makers of the world unite, and the EU turns away from the US.
>given how South Africa has decoupled from the US in favor of China and Russia
That's the party line & there have been some eye catching military exercises and statements to this effect, but daily life is still very much western aligned. It exports a ton of ore to china and imports a bunch of things from there certainly...but that's kinda just every country these days isn't it.
But is the exchange rate really the right metric for the "weakening" due to de-dollarization? Especially since world states decoupling from the US would try avoiding both transactions which gain them USD and which require paying USD?
Is the US dollar losing its dominance? The answer is both A) yes and B) it doesn't matter.
Yes, US dollar is losing a bit of power and influence. This is likely to continue.
Making inferences about the US global dominance based on this fact is misguided. US global dominance is as strong as ever and, if anything, getting stronger. US has very successfully managed to move the game a level above currency, to direct governance via financial, legal, political and military means. It has made any meaningful competitors either entirely irrelevant (e.g. Russia), pretty well aligned (e.g. India) or pretty well contained (e.g. China) It's blue skies ahead.
I appreciate that this figure is showing that the relative scarcity of gold compared to oil increasing, but I'm not sure what it's saying, or is interesting beyond that? Is this reflecting a global shift towards natural gas rather than oil, or reflecting investors are particularly nervous since covid, for example?
Obviously, you can't drawn any hard conclusions, but I was wondering what the OP was thinking narratively when posting.
It's a small relief to have emerging markets holding dollars. Hopefully their economies will continue to grow and that could be a long term benefit to offset the slow de-dollarization across the rest of the world. It would be in US interest to invest into those emerging markets.
Gold front-runs monetary policy, meaning central banks and people use it as a hedge against currency devaluation or other uncertainty (e.g. the U.S. Federal Reserve being taken over by the executive)
Now look at the gold chart over this past year. Yeah, people are uneasy and we're likely to see a lot of printing.
I can't figure out what in that article is supposed to be a good thing, and the article doesn't seem to hold an opinion of that sort.
My first question is: good for whom? Second question is: how? It's definitely good for holders of whatever replaces the dollar, but it's disastrous for everybody in the US, as far as I can tell.
Current Trade with US is a small percentage of the reserve. It's the trade with everybody else and trust that it will hold value for all the future trade is where it matters.
The USD's status as a reserve currency is directly linked to it's trade deficit with the rest of the world. Because all other entities (individuals, corporations, organizations) want to keep their wealth in USD, there's a strong incentive to sell (goods, services, infrastructure) to the US and obtain USD in return. Conversely, there's a strong disincentive to buy from the US because goods have to be paid for with USD, which means parting with the very currency one is trying to accrue.
One of the most effective ways to ease the trade deficit is to reduce USD's status as a reserve currency.
A large amount of the debt is owed to the US population. I doubt that the debt trap is that large of an existential problem, but having trade alliances break down is much more of a big deal.
The former IMF chief Kenneth Rogoff has been talking about this and appeared on NYT Ezra Klein's podcast that I highly recommend[0]. He also talks about China and the role of the dollar at the end with Dwarkesh Patel[1]. A lot of the discussion I see here is adressed by him.
Title needs to be updated when the 1 July 2025 date. For a moment I thought JPM put it out in sort of a response to criminal charges against Jerome Powell, fed chair. It’s probably unprecedented? Wild times.
Is World in immediate trouble? I see three posts discussing collapse of US currency and market on homepage, and this site actively avoids anything political.
You had a year of flip-flopping on tariffs, and a lot of noise. Serious threats are coming out just now, and may get cut abruptly closer to November. It's going to be a while before this presidency gets reflected by the market.
India pays one 1.4 GW nuclear power plant in yuan and they start talking about global de-dollarization as if people can't think in proportions anymore?
The ultimate check and balance was always supposed to be the US consumer. It seems any major disruption to purchasing power will result in a backlash large enough to undo any policy and administration.
I’d still bet that any sudden movements in this direction will be checked
More and more of the people actually spending money in the economy are concentrating in the top 10%. They don't NEED the millions of everyday consumers to maintain the status quo.
I wouldn't count on the people that elected trump, twice (!), to come to their senses. The American voter cannot be trusted to do what is right for the country.
What world do you guys live in? The dollar is not held by some mythical rules and polices. It has it's status because of aircraft carriers and 30000+ fighter jets US has. No other country is even remotely close to that level of offensive military power.
The event has been in motion with every action from the administration just cementing it more. Forget about the dollar’s dominance, at this point I am not forked that he will usher in ww3, or at the very least a war between Europe as the US seems very likely
How do people hold yuan? I was surprised at the lack of ETFs in this space. There's of course a lot of Chinese equity ETFs. There used to be a pure currency ETF but it was liquidated a couple years back. CBON seems like a good way to get exposure via bonds, but its AUM is quite low.
Curious how HN is using this information to plan your investing approach. Does the typical approach, broad market globally diversified still hold assuming dedollarization?
The issue is that there isn't a great alternative.
The euro is difficult to manage because of the diffuse control, pound an even smaller economy, RMB just not global enough (and tough argument to see that happening), gold/bitcoin/whatever not the same inherent stability.
Indeed the dollar weakening, but nothing really to take it's place.
Literally cryptocurrencies are the single greatest alternative ever made. Opt out of the system where the government can just print money into thin air and old guys drawing dots on a plot set interest rates in closed meetings. If you want to hedge USD exposure just buy a Bitcoin ETF or if you really can't stomach cryptocurrencies b/c you don't want to be ostracized from the orange site, buy Gold. We are not going back to the way the world was and if you have all your money in USD realize you are on a leaking boat.
It is entirely possible to manage funds in crypto for growth and move some amount into more liquid USD denominated assets or MMFs when you need liquidity.
Honest question: isn't it just a matter of time before US dollar loses its dominance, given that US has been losing its manufacturing business? I mean, can people really keep investing in the US market if they need less and less stuff produced by the US?
A weak dollar is good for manufacturing and a strong dollar is bad for it. China tightly controls to the Yuan to purposely keep it's value low to benefit it's manufacturing. The current US administration wants to something similar for the US to boost manufacturing.
I think that's foolish and backwards thinking. The US doesn't really need more manufacturing; it had relatively low unemployment, a healthy economy, etc. The US is a service country. Apple is one of the richest companies in the world and does none of it's manufacturing in the US. Why wouldn't people invest in Apple?
> Why is manufacturing so special? As opposed to something like software?
I assume that dollar will be strong if people want to buy stuff from the US, which requires using the US currency. Software indeed is a strong sector. I'm just not sure (as due to my ignorance) if they compensate sufficiently the trade deficit. For instance, if advertisers use Instagram in Europe, they wouldn't need the US dollar to pay for the service, right? If there's no virtual export happens, I'd assume there won't be any need for the US currency either.
> Also, manufacturing in the US is growing not shrinking. For a long time.
What about market share? I remember that the US had more than 65% of the manufacturing marketshare 25 years ago. Actually, I'm more concerned about the long-term national security and prosperity of the US, and I think they are tied to a robust manufacturing sector. But that's different topic.
If The US goes to war against China, we are screwed, because we outsourced our manufacturing to China. We cannot quickly ramp up our manufacture of ships, tanks, aircraft or ammunition. Not only do we lack manufacturing capacity, the entire supply chain is in China / Asia.
In addition, China leads in the critical technologies need for drone oriented warfare, like we are seeing in Ukraine.
In particular, the pentagon has so many suppliers in China. Oh, the KPIs (key pharmaceutical ingredients) are produced by China too. We even had shortage of saline solution when China was having a supply crunch. So when a conflict, let alone a war, broke out with China, what do we do? We ask China to supply us the war logistics?
A fun story, China has the best automated seafood processing factories that meet all kinds of regulations in the world. It's cheaper, a lot cheaper, for Japan and Alaska to send their seafood to China to process, and then sell back to the domestic market. And it has nothing to do with cheap labor but deep R&D of China. So, when war broke out, many people won't be able to enjoy cheap seafood either.
I don't understand how people can ignore a simple fact (is it Milton who pointed that out?): Manufacturing is a "doing" business, not a "knowing" business. Our expertise is forged on the shop floor, not dreamed up in a boardroom, and certainly not bought through outsourcing. There is so much tacit knowledge that manufacturing capability is a living system. It lives in the collective experience of the workforce and the rhythm of the line, not in static documents.
Oh maybe this is the time to quota Thomas Joseph Dunning: With adequate profit, capital is very bold. A certain 10 per cent. will ensure its employment anywhere; 20 per cent. certain will produce eagerness; 50 per cent., positive audacity; 100 per cent. will make it ready to trample on all human laws; 300 per cent., and there is not a crime at which it will scruple, nor a risk it will not run, even to the chance of its owner being hanged.
Software can leave your country in a fraction of a second. Manufacturing is infrastructure. This is also basic. Manufacturing in the US is shrinking, comparatively with other countries that actually make things. People just think they can just play with numbers, categories and dollar values to hide it.
The US has been playing a currency game since 1980 to make up for the loss of the free money it got for reconstructing Europe and Japan, and using that money to buy things from impoverished workers in China. And as China got on its feet through careful planning and management, it moved to India, Pakistan, Mexico, Indonesia, the Philippines, anywhere that was willing to stomp on its workers and pollute its air and water.
Now China has gotten to the point that it is a viable alternative to the US, so the US can't unilaterally set terms anymore for its suppliers. It's dumping US treasuries. It's competing for natural resources in countries that the US just tried to topple and steal their natural resources through sieges that ironically served to cut the US's legs from under them, giving China a huge discount. The game is up.
China going from nowhere to the greatest economy on the planet in 50 years is what happens when you manage and cultivate manufacturing. US real estate and an economy run on luxury consumption is what you get when you outsource manufacturing and play word games to cover it up. We literally can't tariff China significantly, they could crush our economy just by embargoing us like we freely embargo everyone else. That's the power of a manufacturing base. We might want to fix our bridges, too.
Case in point, it's news that Canada leaned toward partnering with China when having dispute with the US, but it would be a joke 20 years ago. It's a humiliation that the US brought upon itself: you can't produce things that people need, then don't blame that people will have leverage in other places.
It's not going to be replaced any time soon, there's no realistic replacement at the moment, but there is a slow movement away from it. We've already seen a stampede into gold from central banks. And pimco have said they're going to relocate funds out of dollar debt.
After the nonsense with Greenland no one really wants to give anymore financial power to the US so we'll see more assets kept in local currency or different reserves currencies like the Euro, Yen, Sterling, or ChF.
Up until about a month ago, I’d have argued it’s overblown. However, I think this time it’s a real possibility and perhaps even certain. This country is absolutely going down the toilet and China is using this opportunity to strengthen its position. Things will get far worse as the economy rolls over this year and AI bubble pops. It’s a perfect storm.
The reason de-dollarization should be concerning to US citizens and many don't understand is that having the dollar as a reserve currency is a huge asset to the US. The US has control over how many dollars are created and where they are spent. If countries are willing to sell to us for dollars, then the world becomes a friendly market for raw materials and products to be vacuumed up here.
Losing the dollar as a reserve currency is losing the empire.
The article is written by JP Morgan which is a little odd but even stranger is they mention of all places China as being a great investment place to put your money, when in reality they can literally take your money away from you and nationalize your business under their current laws.
I'm glad you're one of the few to call this out. JPM has hedged its bets against American interests and holds a ton of crypto. Of course they'd put out an article like this
De-dollarization is one of those things economists love to talk about.
The chance of the dollar losing its reserve currency status is slim-to-none. No matter how bizarre the US is, nobody trusts the Chinese Communist Party (CPP). And although the US can manipulate the value of the dollar, its tools are limited compared to the CPP.
Plus, the US is still the only country that's willing and able to prop up the world financial system with no immediate benefit (see Argentina). The US can and will intervene when necessary. And as history has shown, the Euro Zone can't really make decisions quickly and effectively. How many times has the Euro been on the verge of collapse in the last 20 years? And is proximity to Russia is, well, risky.
In any case there is no currency big enough to take the dollar's spot at this point in time. Trillions of dollars flow through the financial system every day.
It's far from slim - it's very likely USD and EUR hegemony will be challenged. Western financial systems are ultimately and inherently discriminatory towards any non-western countries. Where for westerners using those systems enjoy reliability and predictability, the same systems implicitly (and recently, more explicitly) punish non-westerners with excessive compliance and scrutiny. So, basically, if you're from a non-western country, good luck not having your money confiscated or fronzen at some point - and this applies both on state-level and individual level. Of course sensible countries will seek alternatives and will create ways to bypass this elitist bullshit. The whole thing is literally nothing else but inertia at this point and over time both USD and EUR systems are destined to become merely regional.
I'm hopeful that any loss in dominance translates directly to economic pain for all Americans. Nothing will rose those sleepwalking through the rise of fascism faster than not being able to make ends meet.
I'm not sure that is true at all. I think the sleepwalkers are just as likely to blame immigrants, foreigners, <insert out group> and continue to hand the current regime more power.
I usually read piaeces like this as bullish for the US .. the truth is .. neither the author nor anyone else can really call how this plays out .. but what is clear (and f***g obvious) is that there’s still no country as economically dynamic or creative as the US .. and if not the dollar .. then what realistically takes its place ... the euro, RMB, rupee? None come close yet in terms of depth, liquidity, or trust ... these type of de dollarization makes for an interesting news cycle and discussion, but it’s a super long road from theory to reality ..
But what I do worry about are the long term consequences of US behavior. Even the largest empires aren't on top forever (even before Trump, China was investing heavily in tech and has made significant inroads. India is developing, too. Who knows?). There may be no country as economically powerful today, but tomorrow is a new day. These shifts don't happen in the short term, but over decades, this could be a big problem for the US if our approach continues this way.
A business goes bankrupt slowly, then all at once. I worry that we are speed running the "slowly" part of our journey.
I'm surprised that people are so surprised by this. Funds operate with risk management models and practices. As the US becomes more unstable, politically, these will weigh in on how much money people keep in US markets. US threats to annex Canada and invade greenland. US kidnapping foreign heads of state. Actively using federal agents as shock troops against blue cities. All of this has true economic impact, either real in terms of losses but also USD as a stable currency run by legitimate people.
Would they implement capital flight controls? if you invest in the US, can you get your money out? No one knows but it seems increasingly less likely. Red lines are being crossed weekly.
The country is heading towards a decline into a developing world style authoritarian dictatorship.
so nobody read the article and instead regurgitated pre-existing sentiment, while forgetting the golden rule of journalism:
if an article ends in a question mark, the answer is no.
> the greenback dominated 88% of traded FX volumes — close to record highs — while the Chinese yuan (CNY) made up just 7%, according to data from the Bank for International Settlements (BIS).
> Likewise, there is little sign of USD erosion in trade invoicing. “The share of USD and EUR has held steady over the past two decades at around 40–50%.
there is currently no other alternative to meet the global liquidity demands
Well the real question: Is the US losing interest in reserve dominance?
Contrary to popular opinion, IMO PRC doesn't want reserve currency trade off (triffin / trade deficits etc). What PRC wants is to secure her own interests with RMB, which is mostly happening, energy contracts, lots of bilateral trade happening in RMB now. What PRC also wants is to make maintaining reserve USD onerous, i.e. high rates, high debt servicing... which already indirectly limits US in real ways like reduced defense acquisitions in last few years.
PRC wants USD exorbitant privilege to be just exorbitant.
Then US incentivized to dump system (etc debasing) which will fuck over global USD users and tank US reputation even more. A lot of US actions make sense when you realize Trump doesn't want to deal with an increasingly unprofitable global utility. PRC doesn't want to step in to build new pipelines, they want to see US (mis)manage existing US owned plumbing that everyone is using so poorly it fucks up things at home and for everyone else, meanwhile PRC has comfy off the grid setup for herself and her guests.
Have people completely missed the stable coin move that will ensure there is a massive continuing market for USD. The prognosis is 2 trillion USD around 2028. Thats a lot of bonds that will need to be purchased to back the coin.
I don't think there is a single concrete goal, when you look at how flabbergastingly stupid most of the oligarchs are (just scroll through Elon Musk's most recent posts) it's hard to imagine there being any real master plan. It's a bunch of dumb assholes that were raised with infinite money and where nobody ever told them no.
If you've ever had the unfortunate opportunity to interact with your average CEO at a mid-level business it's the same thing but on a much smaller scale. They can't fail, only be failed.
uhm, they need to proof thier article "This increased demand has in turn partly driven the current bull market in gold, with prices forecast to climb toward $4,000/oz by mid-2026."
The biggest problem of all social sciences is that they measure only what can be measured or is easier to measure. Sorry for the redundancy, but they don't see what is hard to see and, therefore, think it doesn't exist.
I suspect there might be a lot of "de-dollarization" going on in realms that might not be easy to measure. To be specific: it is interesting that crypto-currencies have emerged as the currency of choice for illegal activities.
The export driven economies like China or the EU rely on the dollar to weaken their own currencies for competitive trade. Without it, natural FX mechanisms would naturally begin to appreciate their currencies and make their exports uncompetitive.
>"The export driven economies like China or the EU rely on the dollar to weaken their own currencies for competitive trade"
I have about zero clue how finances really work but it looks to me as the statement is only true if the dollar is the predominant currency for international trade. This looks to be slowly changing for various reasons.
>This looks to be slowly changing for various reasons.
Well, not really, because obviously that deprecation via buying government treasuries is balanced by the appreciation in the other currencies. But if everybody (large enough to matter) dosen't want their currency to appreciate, if somebody buys Japanese bonds for example to weaken their own currency, then Japan will buy somebody else's treasuries to offset the increase in Yen, and if we go to the long chain of musical chairs of people offsetting each other's behaviours, it just leads back to the USA as the only ones both large enough and willing to take in those capital inflows.
That's not a interpretation mind you, that's a description of what central banks are doing right now. If that has to change, you need somebody willing to take the mantle of the absorber of global deficits, and nobody wants to do that.
The most important thing to understand is where the value of the US dollar comes from. It's the US military. More generally speaking, it's US foreign policy. The US military is the force that enables foreign policy.
Understand this and you'll avoid falling into various traps and conspiracy theories. For example, there are people who believe that the US invasion of Iraq was caused by Iraq wanting to sell oil in euros instead of dollars.
This is a nonsen theory because every oil transaction could be denominated in euros tomorrow and it wouldn't change anything. The same demand for US dollars would still exist so people would simply convert to euros, buy oil then convert back.
This same understanding debunks the "threat" of a BRICS alliance.
The real problem, if you can call it that, is we have an administration who is both incredibly inept AND intent on destroying the post-WW2 world order. Wealth inequality is getting so bad and the deficit is so bad. Worse, nobody expects either to improve anytime soon. I'm not saying the budget needs to be in balance. It doesn't. A country doesn't work like a business when you can print your own money. But at some point, crippling public debt (in terms of GDP) will devalue the dollar.
Put another way: the illusion of "safety" is at risk. It's just a question of when the vibes shift.
Your first paragraph is close to correct, but have you thought of the difference between supportive vs coercive power?
If the Russian army is the force that enables Russian foreign policy, they why do some people in Ukraine think that they don't want to do things the Russian way?
Likewise, I wonder how helpful the US military will be at forcing our former allies to do things they don't want to do?
If Trump announces some toady lunatic to run the Fed, watch out below, because the dollar is going to crash. I know I have moved a bunch of money into international stocks and currency and I suspect when the right leaning crowd finally catches on it will be a stampede.
India will be chairing BRICS this year. And Trump decided to fuck with the wrong country, especially when India-US relations were at its peak. This year will mark the beginning of the end of USD as a global reserve.
There's one of these articles it feels like every month. And as usual, Betteridge's Law of Headlines is at play here.
There's no replacing the US dollar until a better option comes along. You need a currency that's open (which rules out Yuan), a currency that is backed up by a strong government (which rules out places like Russia, India, Japan, and the UK), and you'd want something that isn't subject to the same geopolitical rules as the US dollar (which rules out the Euro).
Trump is a populist president who sees the value of US exports (on the back of blue collar work) being more important than global dollar dominance. This plays hand in hand with his championing of tariffs (foreign goods become more expensive) and hostility towards immigrants (apply upwards pressure on domestic wages).
If you cannot see this, or cannot believe it, you should probably check if you are in a ideological bubble.
Is the world going to de-dollarize though? Probably not, shy of an EU independence, which is about as likely as Europeans adopting an American work culture. Although, I won't rule out the possibility of the EU moving it's eggs to China's basket either. What a world that would be, a Sino-Euro axis and an North American axis. Whew
I think they already are -- it's just not going to happen all at once overnight. The shift has happened already and the consequences will take decades to come forward. But it's still possible that the US will do something to reverse course and everyone will be happy to not have to think about finding an alternative to the US dollar.
The EU is not going to move into China's basket, not if you mean using the yuan as a reserve currency. There's too much political risk - the value is at the control of political decisions by the CCP.
The EU is going to have to (very painfully) grow legs then.
The fact that the US provided the majority of weaponry, and half the money to Ukraine should have been shocking wake up call to every European. But instead the vibe seems to be "Americans are so dumb to live the way they do".
> Trump is a populist president who sees the value of US exports (on the back of blue collar work) being more important than global dollar dominance. This plays hand in hand with his championing of tariffs (foreign goods become more expensive) and hostility towards immigrants (apply upwards pressure on domestic wages).
It has nothing really to do with populism. It's the US's only rational option. You can't just run trade deficits forever, no matter what the people who make money from trade deficits tell you. A parasite that gets so big that it disables the host is a dead parasite.
People act like this is the how the US always worked. We just started this with Reagan, and every moment since then has seen the rise of finance, the victory of unproductive capital and speculation, and the decline in domestic manufacturing and standard of living that you would expect.
There's never been a moment where there's been anything to point at for a finance capitalist to feel vindicated that his success would lead to the US's greater good, so he resorts to claiming that it is simply impossible to be any other way. At best this is sunk cost fallacy, but at worst, it's just propagandistic gaslighting from a bunch of people who don't have any connection or loyalty to anyone in the US, don't care when it's people suffer, don't care how its children will live, and will just leave if their houses start to feel insecure. There's your populism.
I agree with your assessment, but Europe is in unique trouble that the rest of the world has no need to relate to. The US will simply have Europeans jailed or killed who steer Europe counter to US interests. Right now the US is on a slow road to peace with Russia, while trying to cultivate and maximize European animosity and estrangement from Russia. The world in which the US is mocked in Europe by NATO (a device to carry out US interests) for trying to appease Russia is a world that no one but a realist could have predicted.
Everybody else will de-dollarize, and the US will threaten Europe and the UK with tariffs if they don't peg the Euro and pound to the dollar. The US will be trading freely with Russia and China, while sanctioning Europeans for buying energy from Russia and bribing European governments to harass Chinese companies.
Well, yeah. Because there hasn't been any significant fluctuation in exchange rates. You can also see the decline in the velocity of money that's offsetting the increase in the money supply metrics (numbers checked on FRED). It's very clear that we haven't had unprecedented inflation. So the burden of proof is on you... why would the increase in the money supply matter when all metrics are saying otherwise?
It assuredly did. For example, the first Trump administration is responsible for ~25% of the current money supply, with the second Trump term only contributing about 6%.
How exactly is QE related to all this bullshit? You’re going to need some sources before you start randomly claiming that QE is leading to the collapse of NATO.
Yes, of fucking course it is. The US elected a convicted con artist who is incontrovertibly violating human rights law, breaking treaties with allies, militarily threatening neighbors, and in general making a global outcast of themselves.
The US is making an absolute mockery over the honor and responsibility granted to in the post-WW2 world. It has sophisticated rivals that are predictably and effectively making use of the self-inflicted crisis. So far the ruling class of the US has been happy enough to let this go, and has been too busy making rocket ships, fake computer currencies, and large estates in south Florida to deal with real world problems.
If you are in the US, buy some gold or a house so your savings aren't destroyed - utterly predictably - by the man who declared Chapter 11 bankrupcy at least 6 times.
> The US is making an absolute mockery over the honor and responsibility etc.
The US was a rather empire without many scruples before WW2 and after it. It engaged in genocide in Vietnam, and was complicit in several others, including the ongoing one in Gaza - which was sanctioned, funded and facilitated first and foremost by the Biden-Harris administration.
So, without detracting from Trump's crimes and jingoist rhetoric and action, his deviation from US foreign policy tradition is not as far as one might imagine.
I'm afraid I completely disagree with you and am not interested in arguing further than this.
Vietnam, Korea, Iraq, Gaza, and so many others are atrocities but they are well understood by anyone with a casual understanding of 20th century geopolitics.
Anything you could list is awful but still respected the norms and rules that exist between nation states. There is not a high bar for these things, but some people within a specific flavor of the Republican party reject these rules and norms. By a quirk of history they were able to gain power. I could describe this in more technical and impressive sounding language, but "FAFO, and we are in the find-out stage" goes by many names and is accurate.
USD remains and will remain dominant. Trillions in dollar denominated debt and derivatives, insurance products and assets exist globally. No other country willing to run prolonged & massive deficits required for a reserve currency. No other country, of sufficient size, has as predictable legal and regulatory dispute resolution environment. No other country currently has capabilities to protect overseas shipping - a key component of global trade.
USD dominance isn't going anywhere despite hurt feelings over Trump or US policies.
Obama during affordable healthcare act discovered they were very dependent on other countries. This was very visible during covid and the 'supply chain' breakdown.
Obama started a process, Biden and Trump are in lockstep. They've reduced this issue by about 1/3rd by 2024. Trumps' tariffs are almost certainly going to be upheld by the supreme court.
This has led to a reshoring boom and trillions of new investment in the usa. Estimates seem to suggest only a marginal improvement of about 3%, so roughly another 20% improvement.
But fixing the very broken trade balances for the USA has long term benefit but it will result in a strong USD, but weaker reserve currency. Obviously the USA is rapidly moving away from bretton woods and being the world police.
They will drop below 50%, but nobody else is there to pick up the reserve currency crown. They get all the benefits of seignoiorage and very little of the downsides for decades.
Their dominance is over but they clearly saw that the cost-benefit was not worth continuing into the future.
Meanwhile, since they stop being the world police and reshored the important things. They dont care about the stability of global trade. Instead their super carrier groups will move to poke their nose only in their own business. You're going to see a fast shift from the usa being hated to being loved over the next 10-20 years.
The behavior of the US Government has been very unusual lately, and the independence of the Federal Reserve is actively being challenged.
So draw from that whatever conclusions you wish.
This is a gradual decline. From 70% in the 90s to 60% today. Today there are more options like the Euro that didn’t exist in the 90s. People can argue over EU economic stability, but it’s there as reasonable option.
Additionally, we've now seen the EU survive the departure of a major economic power (the UK). More people are certainly willing to believe in the stability of the EU now.
Another major currency is the Yuan, and some countries may be as willing to trade in Yuan to improve relations with China, so perhaps we won't see one single reserve currency but two spheres of influence with most countries maintaining reserves of multiple currencies.
Plus, with global warming, this may be the last chance for the Alpine hunters to shine.
That said, yes, I would defend Europe against the US, even though I think that fight would be short, deadly and decisive if it really came down to it.
What a fucked up world we live in, just because idiots voted for a convicted felon.
There is a strong political and cultural foundation in geographic Europe for the political EU: some exemplary giants/EU co-architects:
Jean Monnet/Robert Schuman
European Coal and Steel Community (ECSC) Schuman Declaration (1950) [It is only right that the R. Schuman Roundabout https://en.wikipedia.org/wiki/Robert_Schuman_Roundabout Rue houses the European quarter in Brussels.]
Konrad Adenauer
Promoted reconciliation with France pro-European
Alcide De Gasperi
Integrated Italy into Western Europe Advocated supranational institutions
Paul-Henri Spaak
institutional designer, key role in the Treaties of Rome (1957) helped design the European Economic Community (EEC) Advocated supranational institutions
Walter Hallstein
1st President, European Commission. Built EC into powerful, independent institution Championed the supremacy of European law
Altiero Spinelli
Wrote the Ventotene Manifesto (while imprisoned by Fascists) Advocated a federal Europe
Winston Churchill
A paradoxical but crucial figure: called for a “United States of Europe” (1946 speech) Influenced Europe’s post-war direction despite UK distance
François Mitterrand
Drove Maastricht Treaty with Helmut Kohl Pushed for the € Symbolized Franco-German partnership
Helmut Kohl
Franco-German friendship exemplified by Mitterand-Kohl personal friendship "Architect of modern Europe" German reunification Key figure behind the EU and monetary union
It's ironic that the name "U.S.E." (United States of Europe) was first proposed by a Brit, alas a smart one, and I'm sure Sir Winston Churchill would have had the oratory abilities to convince his countrymen that his idea had merit, but he did not live to see it. The Federation of Europe or United States of Europe is the logical end-point of the joint vision of all these foundational leaders.
Ironic to call this a "friendship", when Mitterand along with Thatcher were working behind the scenes with the soviets to sabotage and stop Kohl's reunification of Germany. It was anything but a friendship, but more of a concession.
Politics is full of such examples that look friendly to the public, but hide a lot of sabotage and back stabbings in the background. In fact, the later is the norm in politics.
Is it? CNY seems to be about the same as CHF:
* https://en.wikipedia.org/wiki/Template:Most_traded_currencie...
In a similar range as AUD and CAD.
https://www.atlanticcouncil.org/blogs/econographics/what-to-...
It’s worthless money and I don’t see anything out of china that would cause that to change.
Also, it's not like a 99-year lease has no value. That's your entire lifetime+.
This is quickly going away[1].
[1] https://www.nortonrosefulbright.com/en/knowledge/publication...
The Chinese government spend a lot of money keeping the value of the RMB low.
Obviously that's extremely impractical and at best you're hiring a 3rd party to streamline that for you. It's a clusterfuck at tax time (edit: stable coin doesn't help here -- you must still report gains on stable coins as it is still a $0 capital gain which is different than no capital gain).
Retailers already dealing with capital gains and with high chargeback rates love it though. For instance, it's usually the cheapest same-day clearing way to buy precious metals online since credit card rates are high (chargeback), ACH takes days, and wires tend to cost $15+ with many banks.
If a bitcoin rises or falls by a calculable amount between when you received it vs when you spent a portion of it, you have gains/losses. That has always been required by the IRS to be reported, whether that is a BTC or chicken feathers.
The IRS policy is irrelevant, the law always required payment of capital gains. It's consistently been the hardest thing about accepting Bitcoin for payment.
Foreign currency payments are largely exempted.
But more importantly, you can buy a lot of stuff from the factory of the world. Which is why a lot of countries don't mind holding the RMB. Just not enough for it to become a reserve currency, and certainly no one wants it to become the petroyuan.
It might not be in 5 or 10 years but it's inevitable. It's not going to operate like this for 50, 100 years.
Just run a mental simulation of WW2 playing out except Europe had the EU.
So while I agree the EU is becoming more an more normal and important to the average citizen, there will come a time when it has to either solidify further or break apart, and I think it's basically a crapshoot to predict how that will go now when we have basically zero info.
What does that mean exactly? I meet a lot of people do enjoy their nation's sovereignty especially as a shield from EU's poor and unpopular decisions that they don't get a vote in, and see the common currency and freedom of movement as just the right amount of integration. I've never met anyone who thought the likes of Ursula and Kaja should be trusted with even more power and control.
>to the point of becoming more like the US as "unstable"
Except it would be more like Yugoslavia than the US.
More like the US, as-in a country? So also more like Germany, China, South Africa, etc. You are making a false equivalence - being like the US in one extremely non-US specific way does not mean you must be like the US in every other way.
I'm not sure you even understand what I'm saying - this has nothing to do with the US vs. the EU or if the US is reliable.
The recent electoral success of AfD in Germany and the National Front in France seem to point in the other direction.
https://www.imf.org/en/topics/special-drawing-right
I don’t really understand the impact of Brexit on the euro, as Britain wasn’t on it. But clearly they were a key part of the EU. It’ll be interesting to see which side regrets the move more.
In June 2025, 56% of people in Great Britain thought it was the wrong decision:
https://www.statista.com/statistics/987347/brexit-opinion-po...
It's hard to imagine this number would be going down after recent events like USA suddenly threatening arbitrary new tariffs on the UK.
It's not so clear when you consider that 48.1% of the original referendum voters wanted to stay in the EU. I'm honestly very surprised by this poll, 8% change is pretty minimal considering the turmoil the country has gone through since 2016.
How much of this can be explained by older voters dying in the intervening 10 years, I recall that demographic skewed much more heavily Leave in 2016
https://commonslibrary.parliament.uk/general-election-2024-t...
How many thought it was the right decision at the time?
https://en.wikipedia.org/wiki/2016_United_Kingdom_European_U...
Remain was 48% so it's actually not that large of a swing in total. It's not like it was 5% remain and now it would be 56% or something.
But it does indicate if the referendum was taking place today it might swing the other way.
Perception is hard to measure objectively, but the UK does not feel like it’s on an upswing when compared to last time I was there.
But while "Leaving was a bad idea" isn't enough to seriously push for actual re-entry to the EU it's certainly a good sign for the EU and for the Euro. The EU is a massive bureaucracy, and I think we underestimated how much "a massive bureaucracy" might be the thing we wanted in this role..
Just curious, what privileges did it have? I can think of keeping it currency only.
A lot of growing economies don't/can't trust their local currency and they overwhelmingly use USD instead of EUR or CNY. As those economies grow the USD gets a boost that will sustain it for a while over the increasing competition of CNY. But this can't sustain it forever and the US is not doing anything to offset the lost ground in global trade and forex reserves.
Sweden just haven’t completed the stabilization and alignment criteria to formally switch over, arguing that it is voluntary.
We had a referendum on the euro back 2003 with a clear mandate to not adopt it and the politicians don’t want to poke the sleeping tiger that is the euro question.
The change is that suddenly the US isn't a bastion of stability and having an independent trading currency could ensure more internal stability for other nations.
I can't see how, since the end of habeas corpus, you can claim legal stability.
Your leader is World renowned for reneging on debts and is demanding bribes for companies to operate.
Isn't borrowing through the roof to pay for things like your stasi?
Daily those stasi are murdering and disappearing people seemingly attempting to foment an excuse to escalate the violence.
I don't know how that knife edge can look anything like stable to you.
It's unfortunate the same division tactics the US has been facing are working elsewhere too, however.
I don't think mostly is true? Obviously it depends a lot on the time of day, but there are also a lot of Europeans on the site. Also, most comments here seem to be critical towards current US policy. So, I think there is quite a lot of manipulation going on, since the downvoting/flagging does not really match the comment section.
1. I believe Canada does have an outsized presence though!
The excitement being blown out of proportion is hyperlocal. The system grinds on.
Past returns are not indicative of future performance
Source?
I live in the US and I have lived in countries with 4-5 gdp growth
https://www.nbcnews.com/business/economy/us-economy-grew-thi...
Between Q1/2/3, US growth has been about 1.6%.
Wait until the whole year figures come out.
It's very unlikely the US doesn't have strong GDP numbers for 2025.
K-shaped economy and all that
The problem is the AI bubble, without it it is speculated that the US economy might actually be in a recession [2] - effectively, that web of investments, deals, ownerships, purchase contracts and god knows what is nothing more than wash trading that will come crashing down hard.
That is why for the 99%, the economy doesn't "feel" like 4.3% of growth. If you're not in AI directly or at least adjacent (e.g. datacenter or utility construction), you don't feel any of that money.
[1] https://tradingeconomics.com/united-states/gdp-growth
[2] https://www.cnbc.com/2025/10/14/ai-infrastructure-boom-masks...
It’s bad enough that America’s foreign policy lately swings wildly every four years. More recently, it’s been acting aggressive toward allies, and making very strange and unpredictable moves.
The USA’s tariff policies are, frankly, utterly insane. Yes, I do mean the tariffs are irrational and incoherent. The approach to the tariffs has been overly aggressive. They’ve been changing almost daily, at times. Now, tariffs are specifically a thing that must be stable and predictable on a multi-year horizon. This must be, at least, off-putting to other governments, and to any companies wishing to do business in or adjacent to the USA.
Monkeying with the Fed is dangerous and basically unprecedented. This is going to make people nervous because it marks the end of an era of stability in monetary policy. We may be at the start of a new era where interest rates, much like the tariffs, change frequently for bad reasons or for no reason at all. Who can say?
And THAT is the problem.
America was never a stable country. That 250 years includes:
* A decade of chaos under the impotent Articles of Confederation.
* The deliberately engineered election of George Washington to create the illusion of political stability, a reign which only ended because George stepped down voluntarily.
* An immediate constitutional crisis the moment a competitive election happened, causing the election of a President and Vice President from opposing political parties (imagine a Harris - Trump presidency). The ensuing chaos resulted in SCOTUS unilaterally declaring itself the final arbiter of the law.
* The Thomas Jefferson presidency, which in many ways is the alpha release of Trump.
* The Civil War, started specifically because the losing faction of slaveholders was angry at losing, and ending with the losing faction losing so hard the counter rolled back into flawless victory. They surrendered, then assassinated the President and got his party to give up on everything he stood for.
* Economy-destroying Smoot-Hawley tariffs, which are basically what Trump is doing now.
* A spectacular near-miss in which the country's business elites attempted to assassinate a Progressive president and only failed because the Marine they selected as their Hitleresque dictator ratted them out.
* Widespread civil unrest deliberately created to force America to reckon with its racist past and undo what the South had managed to convince the North to allow them to do after Reconstruction.
* The Richard Nixon presidency, which in many ways is the beta release of Trump.
* Too many foreign invasions to count.
In the entire history of America I can think of maybe 3 brief moments of political stability that weren't outright engineered fantasies. The two that are relevant to modern times are the 1950s and the 1990s. Both of these were the result of America winning a war of conquest.
seems like once it starts falling, it would accelerate.
(Still disappointed that the winner of the FIFA peace prize wants to go to war /s.)
Venezuela? Hello?
Greenland?
I believe that the near-term de-dollarization isn't as much trust erosion as it is a tool to provide monetary penalty for behaving in unpredictable ways.
However it will provide incentive to move away from the dollar in the long-term, ie as Fareed Zakaria says "recent actions are accelerating the world to the multipolar future".
A quant partner at Goldman said to me once that the thing that's different about currencies relative other normal financial products is whereas you might buy JPMC or oil or a bond because you like JP Morgan or oil or think rates are going to move in a particular direction or whatever whatever, you never just buy the dollar. You are always trading one currency for another eg selling GBP to buy USD. What that means is currencies are always about the value of one currency relative to other currencies.
In that sense they do fundamentally relate to trust and in particular specifically in this case about trust of the US economy and financial system's stability as opposed to other economies and financial systems.
So there have been times (eg during the financial crisis) where people think all currencies are bad but you can't just sell all of them so typically they would sell the other ones for dollars. For me, de-dollarization is about the choice of central reserve banks to hold dollar assets but also about other financial players changing their "default currency denominator" when they're doing this kind of trade.
Sure, everyone else is also acting based on childish emotions now, not just the US president. It's not about retaliation at all, it's about reducing suddenly very imminent risks.
This did/will cause "Kindleberger problems," named after the economist who described them. The big issue is that everyone wants to pump exports to pump their real economy, they can't all succeed because the world is a closed system, so they fight. First with tariffs, eventually with guns.
These Kindleberger Problems will get worse until the US gets its shit together or China assumes the throne. Note that assuming the throne will destroy the export sector that they love so much (Triffin Dilemma), so not only are they not ready today, they don't even clearly want to be ready. Much like the US between WWI and WWII.
Buckle up, because the tariff wars, Great Depression, the economic driving force for the imperialism of Imperial Japan, and other awful things that you've heard of before all fall in the category of "Kindleberger Problems," are all downstream of not having a global currency hegemon, and are likely to rhyme with what comes next.
How is that different from trust erosion?
The value of the US dollar against other currencies influences its demand, and at the end, international trade and global trust are what move the needle.
Not ever passing an audit of any kind. And the FED chairman spending $2.5B on renovations to an office complex. While misleading congress about the kinds of renovations.
There should be less 'independence', if it means zero accountability.
FED has been instrumental is keeping the monetary policy sane in the recent years, unlike some pushes from the orange person you are taking talking points from.
Then the value of the USD is entirely at the whim of whoever is elected and should be priced accordingly.
I think this oversimplifies things. The dominance of the dollar emerged chiefly because most of the alternatives were worse, for a combination of military, political, and economic reasons.
There is a positive feedback loop at the core of it, because the US economy benefits greatly from being able to issue foreign debt in their own currency. But that doesn't matter: as long as the US faces little risk of getting invaded by any of its neighbors or defaulting on its obligations, everyone is happy.
What's been changing - and it started long before Trump - is that the US is also increasingly willing to use its control of USD (and thus the Western banking system) to pursue sometimes petty policy goals. This is giving many of our partners second thoughts, not because of the fundamentals of USD but because they imagine finding themselves at odds with the US policymakers at some point down the line.
This is mostly due to the behavior of the country being unusual.
The US had grown at a healthy clip for a long time.
Due to the amount of boomers exiting the workforce, and withdrawing rather than adding to their savings - the US is going to be in a very different position for the next 10-20 years before things start to level out.
If something like AI doesn't save us with a pretty sizable productivity boost, we're in for uncharted territory.
The dollar being the reserve currency which leads to demand for the dollar keeps the dollar from deflating.
But as people no longer demand the dollar because they don't want to support a imperialistic government what happens?
Which is to say, that is a fairly traditional way of how empires go the way of the dodo. First losing their financial dominance, which loses them their international power, which then causes internal rupture.
fed independence is important, but literally irrelevant in the face of rampant money printing
The government can print money and inject into the system. Some people have money so they continue to buy stuff but maybe at a slower pace or less amount. Things also can get expensive but it is not a total collapse.
So the mass printing of money meant that banks didn't collapse.
It also meant that a fucktonne of cash went into the hands of the uber rich.
* housing market was already quite bad before covid (see sibling comment)
* Savings rates have hovered around 5% for almost 25+ years - https://fred.stlouisfed.org/series/PSAVERT
https://www.sciencedirect.com/science/article/abs/pii/S00941...
this president is trying to money print during non-crisis, to ramp up economy to "20% GDP".
why downvote? Trump literally said he wants a GDP that goes to 20% or 100%. Shoot to the moon.
what would have been the correct actions in that situation?
really the government should tax in good times.
and
spend in bad times.
and be a counter weight to private sector
Instead, the golden geese of the American economy (the actual golden geese), simply stayed home and worked from their laptop.
This created a situation where people were getting their regular paycheck, plus getting a multitude of stimulus on top of that. There were many making $100k+ salary, not paying rent (rent moratorium), not paying student loans (student loan moratorium), and not going out to do anything, resulting in having huge pools of cash laying around. If you had a mortgage, you got to refi at 3% and dramatically cut your mortgage bill. I won't even get into PPP loans either, everyone knows the story there.
I could write pages and pages about this, but the short of it is, we thought we need a wheelbarrow of money, but technology meant we only needed a jug of money. But we still got the full wheelbarrow.
There was a surge and a pull back.
Post-COVID Tightening: After this historic surge, the Federal Reserve began "quantitative tightening" in 2022 to combat inflation, slowing M2 growth to near zero and eventually reversing it.
Or in other words the data seems to show the loosening effects were more powerful than the tightening ones. Now that the RRP has been drawn down balance sheet growth will likely occur.
[1] https://fred.stlouisfed.org/series/RRPONTSYD
[2] https://fred.stlouisfed.org/series/BAMLH0A0HYM2
[3]https://www.chicagofed.org/research/data/nfci/current-data
The M2 money supply went from 15.4b at the start of 2020 to a peak of 21.7b, before slightly reversing to 20.7b. Then they just continued printing. Now it currently stands at a record high of 22.2b. The dollar is more diluted than ever.
https://fred.stlouisfed.org/series/M2SL
On the face of it the Greenland situation makes no sense on a national security level regarding a non-existent, fabricated Chinese or Russian threat, nor related to the fantastical grift of the "Golden Dome" that is even more useless against what Russia has recently developed, than it was for things prior to about 3 years ago.
What we are looking at here (you can tell your children that you heard it here first) is a strategic move to essentially take Canada and all of the NA continent, and eventually all of the Americas. Yes, Canada, you are indeed in danger as well as Mexico. I don't see how it could be any other way in the face of current developments; remember Trumps USMCA, i.e., a de facto North American Union?
Biden stated that he wants the USA to have 300 million more "immigrants" before he let in about 15 million in 4 years. Annexing Canada is about 40M by the time we do it, Mexico would add another 150M plus however many people would flood into Mexico to become "Americans". That bring us to a total of around 550 million by the time the North American Union comes around. Perhaps if the UK joins, we will just call it Oceania already.
It does not address the fact that China has 1.4 billion and India another 1.4 billion, but it puts us in contention, especially as Europe has about 700 million by that time if/when the EU absorbs most of Europe.
That also doe not take into account the Wizard of the USA wanting to take over all of South America for positive control eventually… another ~480 million by that time, putting the American Union of Oceania at about 1 Billion, ±100M.
These are real tabletop calculations and how things are seen at the top and discussed amidst cocktails.
That biden wanted to grow the USA to 600 million people?
That trump is also trying to do that?
> On the face of it the Greenland situation makes no sense on a national security level regarding a non-existent, fabricated Chinese or Russian threat, nor related to the fantastical grift of the "Golden Dome" that is even more useless against what Russia has recently developed, than it was for things prior to about 3 years ago.
Power projection in the arctic is weak. Russia has made multiple tactical movements towards soft projection in the arctic. You have zero idea what submarines are on station. Taking greenland is arguably stupid, boosting it's defense to prevent a Russian incursion is not.
> What we are looking at here (you can tell your children that you heard it here first) is a strategic move to essentially take Canada and all of the NA continent, and eventually all of the Americas. Yes, Canada, you are indeed in danger as well as Mexico. I don't see how it could be any other way in the face of current developments; remember Trumps USMCA, i.e., a de facto North American Union?
No evidence. Unless you're arguing while NAFTA was around this was a way to create a "United America".
> That also doe not take into account the Wizard of the USA wanting to take over all of South America for positive control eventually
No evidence. Most think-tanks have recognized that maintaining positive control of south america would be disastrous. If anything, Maduro and his friends were probably happy the US decided to black bag him. It is well known that whoever was going to attempt control over Venezuela in particular was going to be responsible for spending the money to rebuild it.
> These are real tabletop calculations and how things are seen at the top and discussed amidst cocktails
No.
Your statement was equivalent to saying that Hacker News has no constitutional right to exist - it is equally vapid.
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
To borrow Money on the credit of the United States;
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
...
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
...
To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.
Congress's authority in this area was upheld by the foundational case McCulloch v. Maryland in 1819. The Federal Reserve System was created in 1913 by Congress via the Federal Reserve Act.
There's no serious argument that the Federal Reserve is unconstitutional. People who espouse this are ignorant of the facts and law, or are either quacks or have paid heed to the arguments are quacks.
federal reserve is not government... that's kinda the entire point)
its why current US admin is being so butthurt about it, it's not under its control.
There’s indirect control: the elected administration selects people to nominate as governors, who then go on to make the decisions. But they have to choose people who the (elected) Senate will confirm, and there’s not too much the executive can do if they don’t like the decisions their appointed governors go on to make during their 14-year terms.
The question at hand at the moment is whether the executive can unilaterally usurp the agency’s Congressionally-mandated structure and use its power directly.
It’s kind of like how the various Civil Service acts sheltered career civil servants from the constant changes in political winds, so that we can have career professionals in government instead of using public paychecks purely as a prize for the buddies of whoever won the last election. The present administration resents that independence too.
Whereas the Fed’s jobs involve setting monetary policy and regulating the financial sector. The “product” is the set of policies the board vote to implement, and the staff exist to gather information and pass it upward to support those decisions (maybe using powers delegated downward to them). Like any other government agency.
https://www.federalreserve.gov/faqs/about_12799.htm
Hmm what transaction it induces?
You'll need to check the law that created the Fed. Maybe it makes sure that doing whatever the fed needs to do the job is not a crime
Part of the reason for this is that 2-year presidents are more common, they make promises within the first two years and even if they meet them, it can take years for effects to be seen in the general population, so the party loses majority in the midterms and then nothing happens politically for the remaining two years. Congress is often slow and burdensome (for good reason) but it always makes out for a disenfranchised voter base
Google has no constitutional right to exist or have accurate search results either. However, it's value depends on the quality of their search results.
People outside the US don't care about the particulars of the US constitution like it's a holy document, but rather the US governance as a whole and whether it's well-ordered, lawful, and predictable.
If holders of US debt goes away, we have immediate inflation to the point where our currency hits trade equilibriums such that we can service our debt. All of your savings are worthless.
This has very little to do with the price of tea in China.
Parties outside of the US who don't give a fuck all about the Constitution are involved in keeping us as a reserve currency, and they care that the fed is independent. We have kept it so to keep the economy stable and to reap the benefits of that stability.
Do we suddenly care about the constitution again?
Irrelevant.
Actions have consequences, and the natural consequence of the actions of the US administration is that corporations and states that value stability are looking elsewhere than the US Dollar.
Whether or not the Fed has a constitutional right to independence is irrelevant to this situation. If Americans want to cheer while Trump flushes nearly a century of soft power down the toilet that's their prerogative, but the trend of de-dollarization has already begun and it's unlikely to be reversed.
What do you want him to say?
1. De-dollarization is all Trump’s fault
Or
2. The world is reacting to Trump putting America first
It should go without saying that this would be shortsighted - China made it work because they were able to take advantage of a strong international market denominated in USD. The US cannot destroy our own common market and currency and expect to take advantage of it.
Furthermore, we know what a de-dollarized world looks like - imperialism. If you need to secure oil/mineral/food for your economy but you need expensive foreign currencies to acquire it, it suddenly becomes much more economically appealing to take the resources.
I don't see that. Given trump's history, he thinks that going back to tariffs will allow massive tax cuts. As he trades in real estate, tariffs are inconsequential for him
He supports tariffs for the exact same reason Bernie Sanders does. There is a reason so many bernie bros jumped to camp Trump in 2016 when (globalist) Hillary won the nomination.
There is no secret or conspiracy going on here. Trump is a populist president and is unsurprisingly doing populist things, elected because of his populist stances. At this point you have to have stabbed your eyes out and shoved spikes in your ears to not know that all he does it gush about bringing back 1950's factory worker dad.
The point of an economy is not to make a profit or collect currency. The point of an economy is to provide ourselves with goods and services.
Focusing all of our efforts on making things so that we can send them to other countries in exchange for pieces of paper is backwards.
Is this some kind of joke? Or is it only imperialism when other countries besides the US do it?
The two are very linked - the tacit agreement of the postwar order was for America to use its might to expand a common market on behalf of the shared benefit of NATO members. But the collapse of today's "American empire" does not mean the end of empires. If anything, the opposite: instead of one common international market, we will return to a 19th century scramble for land.
The U.S. is a net exporter of oil and food and self-sufficent for majority of its mineral needs as well.
There is no need for U.S. to crash its currency to incentivize domestic production, it can just impose tariffs on imports to do so.
Trump is actively fighting the federal reserve to drop the interest rate to 0%. Members of his team regularly do interviews where they say "it's going to get worse before it gets better". Inflation is being held down despite this administration's best efforts.
> The U.S. is a net exporter of oil and food and self-sufficent for majority of its mineral needs as well.
And has been for a while. But the current conservative rhetoric is specifically about bringing manufacturing jobs back.
> There is no need for U.S. to crash its currency to incentivize domestic production, it can just impose tariffs on imports to do so.
I don't think autarky is this administration's only stated goal. They specifically see an export-led economy as being more important or even "legitimate" and are pushing for other countries to import our goods. Devaluing currency is a strong way to incentivize exports and China's currency manipulations were the key to their rise as a manufacturing power.
This is how you grow a sclerotic, internationally-uncompetitive domestic industry. See: shipbuilding.
Where tariffs work is as a nursery policy. Give firms a safe haven to grow in. Then let competition hone them. South Korea has pioneered this playbook; China copied it. We were sort of doing it, but the current administration blew up our nascent new energy industry.
For South Korea and China, tariffs were not a very key part of their industrial policy. Which is not to say that the government didn't have a massive hand in the success of their native industries. Case in point: shipbuilding for South Korea. The government was key in securing the capital investment in the massive drydocks the entire world depends on.
Which industry is that?
In the late teens, China was dominating all of these industries.
Under policies of the Biden administration, these industries were growing domestically in the US and we were increasing our share of the global market.
Over the last year those domestic industries have been destroyed. They are barely surviving and have stopped rapidly expanding. All gains made against China's dominance in these technologies has been lost, and then some.
So it's not just that the policies are (A) foolish and (B) changed on a whim and (C) have no long-term foundation and (D) are changed for corrupt reasons... but also, (E) the corrupt person "making deals" is a fundamentally dishonest and incapable of honoring them.
Is it not? Quoting myself:
>> are actively undoing the institutions that were instrumental in US economic and political power at that time.
Who is undoing those institutions? That'd be the current administration.
> "Your ‘little men,’ your Nazi friends, were not against National Socialism in principle. Men like me, who were, are the greater offenders, not because we knew better (that would be too much to say) but because we sensed better.
Those who act on behalf of evil are not free from guilt, of course. But the truly damned are those who sense better but look the other way. They walk in the footsteps of the millions who tacitly supported the last time this evil took hold of the world, by not acting.
This entire book, but especially this exerpt, is a must read: https://press.uchicago.edu/Misc/Chicago/511928.htm
Wow, seems on point.
Wow
"kept us so busy with continuous changes and ‘crises’ and so fascinated, yes, fascinated, by the machinations of the ‘national enemies,’ without and within, that we had no time to think about these dreadful things that were growing, little by little, all around us."
https://ibb.co/qMynfBBW
However, the US is more of a "killer" nowadays. The "killer" is usually more efficient than the "giver", because people value their life more than their wallet. So that's why I think she still has some time left. I don't blame it on Trump though. Being a "giver" is a lot more trouble than being a "killer", and I think the US elites gradually rolled back from the role of "giver" since many years ago. Trump is just here to remind other states that the US can and will be a very efficient killer.
And this is probably the most dangerous time for other states because she cannot afford to lose.
This is the historical equivalent of selective memory, and only really applies to a tiny slice of the planet - western Europe.
A lot happened in the world between 1945 and 1989. Outside of Europe and Japan, most people would probably not be so sympathetic of the US actions during those times. An abridged list:
* Iran 1953 - US and UK overthrow democratically elected PM, install brutal dictator
* Guatemala 1954 - US via CIA overthrows democratically elected president, install brutal dictator
* Brazil 1964, Chile 1973, Argentina 1976 - US supports brutal dictatorships replacing democratically elected governments
* Iran/Iraq 1980s - US funds both sides in the war
etc. This is a very resumed list.
Industrial scale warfare isn't some secret forgotten by accident.
The current American power-trip fantasy delusion is rightfully scaring the shit out of people, and the scary thing is the people who aren't scared.
It's reaching the point that I think the best thing is for Germany to detonate a nuke between the US and Greenland just to wake up the idiots who think it would be unreasonably difficult.
Maybe, maybe not. We're currently the Soviet Union in the 1970s. Gerontocratic. Sclerotic. Hyped up on a new mythology. And economically uncompetitive on several levels, with the future (then computers, now elecrification) sweeping past us to our applause.
Unlike the Soviets, however, we can see it happening and debate it. If '26 and '28 change course, the damage will still be done. But the America Empire is still young. And Trump's stupidest policies–the tariffs, fighting the Fed, Greenland and raising a Gestapo–don't have the support of most Americans. That leaves hope for reform through electoral pressure.
It will take work. But it's as incorrect to assume indefinite American hegemony as it is to preëmptively concede the game.
The Democrats have also had very weak messaging ahead of the midterms. Like, pathetically weak in the current context.
This is to say nothing of the hypothetical where the US makes moves against allies' territories before the midterms.
What's new is finally the federal government pushing back against locales that refuse to allow local police to cooperate with federal law enforcement by means of massive influxes of federal officers to offset the lack of local support.
Also ICE has widespread support for what they are actually doing. Only when you ask manipulative questions that presume something is happening that isn't, do you get poll results that support a widespread dislike for ICE.
Minnesota would like to have a chat with you.
About 40-50% are in support, so the parent's accurate. That roughly matches the political divide across the states.
We were on metal standards for millenia. Governments routinely spent beyond their means, including for imperial aims. This is like four centuries of Roman history.
Invading ones allies has been treacherous for millenia. If you want to be pedantic, you can say the U.S. President is openly threatening treachery, and showing as part of his character an affinity for it.
Ahistorical BS, I am sorry. As if Trump is a radical departure of NORMS. Euros were chanting HO HO HO CHI MIN in 1968 in the streets of Berlin and Paris.
There is a long tradition of anti-American feelings outside the US, like with any hegemon.
The global left had to build walls to keep their people IN, crush them with tanks, from Prague to Berlin to Beijing. So there is that.
HN turning so left is weird to watch, I guess a reflection of PG's stances and moderation/group votes. Well, money does not give a fig.
if you don't think Trump is a departure from norms you aren't paying enough attention
We're not going to debate the measuring stick when the stick itself is incapable of measuring the outcome.
In none of those scenarios provided did a sitting US president come close to insinuating acquisition of land by "hook or crook" - either agree with us or we take it.
The closest modern discussion that comes to mind is the PRC saying they could militarily "walk in and take the whole this afternoon" in regard to Hong Kong.
Thatcher, for all her wrongs, provided a salient response:
"There is nothing I could do to stop you, but the eyes of the world would now know what China is like."
The US has shown the world what we're like with the current administration.
Just bonkers how basic history is getting rewritten.
"The great satan USA" has been a slogan since the 1960s. The US dropped napalm and agent orange on Vietnamese civilians en masse - Lyndon B Johnson was what, a good guy?
What on earth are people learning about today?
It is an egregious violation of the Constitution, which specifically says that only Congress can impose taxes.
Given that the multipolar world is nigh, the only path forward is through. If America and her erstwhile allies are no longer aligned, then any attempt by America to repair this is doomed. Consequently, Trump’s approach is the only way forward.
What makes us think this is possible?
It may not be possible for a nuclear powered empire to fall without the death of billions.
Mankind is in uncharted territory.
Even Russia never fully fell after the USSR collapsed. Whoever kept the nuclear weapons continued to be a first tier power.
Nothing in human history compares to the present question of how the current empires fall. And if they can even do so safely.
It's the DoD.
Prior to Trump's actions, the American-led "world order" seemed to work, even if we couldn't get China to agree to a "Bretton Woods 2.0".
Biden tried diplomacy with the EU. He tried to get them to agree to a renewed US-led world order, but it wasn't working. The EU decided to play the US and China against each other to improve its own standing, which is why the US is now moving away from the EU.
I think the US could seriously pull out of NATO and leave the EU to fend off Russia by itself. It'll have to start spending enormous tax dollars on defense and war.
Meanwhile, if the world is truly becoming multi-polar, then the US wants to consolidate power in its own hemisphere. This is why there's all the rhetoric and action on Venezuela, Cuba, Greenland, Canada, etc. The US will keep Chinese ports, basing, and trade completely out and secure the trade routes for when the Arctic opens up. It recently changed control over the Panama Canal, and the DoD is dead serious about taking Greenland and maintaining complete hemispheric control.
With whatever energy the US has left, it will dedicate to Asia. It will strengthen alliances and project power there instead of dealing with Europe.
The world is going to be a much more violent place without hegemony. Free trade doesn't exist in that type of world. The US realizes this and is playing 50 years ahead. None of the nice words matter when the energy, trade, and economic lines are redrawn.
People like to say the US is led by lawyers and China is led by scientists and engineers. This is wrong. The US is led by war generals and intelligence. The career DoD folks are the ones impressing upon the administration to make these moves.
To be clear: I hate this. I loved the world I grew up in. I think we're headed for a violent world that could easily erupt into war. I don't like it.
How so? What actions did the EU take?
You don't think the declaration of himself as dictator and the immediate threats against EU allies might have changed EU attitudes at all?
Disagree. If US pulls out of NATO, most likely scenario is EU continue to concede to Russia. I think EU will concede on Greenland too, but likely won't do it without any military action (unclear whether that will trigger nuclear escalation and how that can end).
Can you elaborate on that? It seems to me it "wasn't working" mostly in the sense that Trump got elected again.
> The EU decided to play the US and China against each other to improve its own standing, which is why the US is now moving away from the EU.
Seems like confusing cause and effect. The EU is drifting away from the US towards China because the US pushed them away.
> The world is going to be a much more violent place without hegemony. Free trade doesn't exist in that type of world. The US realizes this and is playing 50 years ahead. None of the nice words matter when the energy, trade, and economic lines are redrawn.
This is happening largely because of the US, although they stand to lose by replacing a world order that benefits them with a world order that benefits China and Russia. Well maybe the US will become sufficiently like China and Russia that they can benefit too. But even with a gradual loss of hegemony there was nothing inevitable about a transition to the law of the jungle and it's doubtful that the net result will be positive for the US.
> People like to say the US is led by lawyers and China is led by scientists and engineers. This is wrong. The US is led by war generals and intelligence.
I think the relevant distinction is that the US is democratic while China is authoritarian. But the current US government wants to be authoritarian.
> The career DoD folks are the ones impressing upon the administration to make these moves.
Again a reversal of cause and effect? I doubt old career DoD folks like the current developments. But the current government might give a bigger role to the war generals.
This is sanewashig this whole thing. The fact is, the US is moving away from the EU because Trump doesn't like democracies. It's that simple. You have a large percentage of your population in what is essentially a cult and you have givem them the reigns.
This was being called back during the Biden admin and before Trump even ran again.
Back during the Obama admin, even!
https://www.atlanticcouncil.org/blogs/new-atlanticist/no-piv...
https://www.gisreportsonline.com/r/us-pivot-asia/
https://www.project-syndicate.org/commentary/europe-biggest-...
If the US can't build strong coalitions with Europe, it wants to spend its energy elsewhere.
Even pop-geopolitik wonk Peter Zeihan was pointing this out during Covid. I can't find his videos, but this has been top of mind for a lot of people for a very long time. These are anti-Trump people, too.
Multipolarity means instability, violence, fights over resources, fights over trade. Post-WWII was unusually (relatively) stable.
The US can turtle up, just like it did before WWII. It doesn't share a land border with any other major powers, unlike European and Asian countries. It commands the two oceans on its sides (and soon Arctic), and doesn't need anyone else - this was the US' defense posture since its founding.
But, anyway, good luck. You'll need it.
These are military decisions. These are 50-year plans.
Here I was 10 months ago and two years ago saying the same thing:
https://news.ycombinator.com/item?id=43505524
https://news.ycombinator.com/item?id=36896699
Trump was told and encouraged to want this by the little birdies at the DoD.
https://archive.ph/rjEtm
Mankind has never seen the collapse of a nuclear powered empire.
Sadly, it may not be possible for a nuclear powered empire to fall without the death of billions...
Mankind is in uncharted territory.
Even Russia never fully fell after the USSR collapsed. Whoever kept the nuclear weapons continued to be a first tier power.
Nothing in human history compares to the present question of how the current empires fall, and if they can even do so safely.
Very sobering times ahead.
Open your history book and read about what happened in 1991.
There is some probability that US global influence does significantly decline but I wouldn't hold my breath.
I would like for the US to continue being a beacon of freedom where people can come and build great lives.
But that is not the direction we are going, and one might reasonably forecast that no country can maintain indefinite dominance. Paul Kennedy wrote "The Rise and Fall of the Great Powers" almost 40 years ago. Regression to the mean and all that, but also, great powers tend to overstep.
Your first sentence says "not true". Your second sentence says "true".
Your dislike of the current US regime/behavior causes you to forcast the decline of US influence. I'm not saying you should like current US behavior, just that there isn't good evidence for any decline.
These things are hard to predict. The most likely situation is not decline: it is continuity, where the US retains its global influence for the time being.
The EU was never in the role, so it's not relevant to that discussion.
Also, whether someone likes that development or not is entirely irrelevant to the discussion.
Getting all these obvious things wrong, in your comment and in the siblings, shows that emotions run a bit too high for clear thinking.
The dollar's portion of global forex reserves has fallen from over 70% in the late 1990s to around 60%.
The Supreme Court's ruling on Fed independency is to be watched.
One of these exists. The other is bluster.
The US dollar being used less across the world has both negative and positive consequences for the US and USG. This is the Triffin Dilemma, and dates back to the 1960s; the USD's dominance over-values the currency relative to other currencies, which hurts exports and thus domestic manufacturing. It also conflicts USG/UST priorities between making decisions that are best for the US people, versus best for international customers of the dollar. Triffin covered this at length in his address to the Joint Economic Committee of Congress in 1959, but in short, the USD acting as world reserve currency creates demand for the dollar, which the US has to be able to supply, which pre-1971 meant extreme strain on her gold supply, and post-1971 means greater monetary inflation.
Edit: to the downvoters, did I lie?
Then along came the absolute moron Wilhelm, and he managed to Leroy Jenkins Germany's beautifully arranged relationships into an aggressive, tactless nightmare where all Germany's allies were turned into enemies, and everything turned out exactly like you'd expect.
As the saying goes, history doesn't repeat but it often rhymes.
1 - https://www.reddit.com/r/economy/comments/1o2s6qp/yuan_has_s...
2 - https://www.economist.com/china/2025/09/10/china-is-ditching... ( https://archive.is/aNRmm )
3 - https://www.amazon.com/dp/B006JAM3UU/ "Currency Wars" by James Rickards (2011)
[4] - https://www.macrotrends.net/1437/sp500-to-gold-ratio-chart
Also the US capital market is huge. Surprisingly huge, even, and there is very little that can change that for the foreseeable future.
They already allow this somewhat. Tesla's Gigafactory in Shanghai is fully owned by Tesla, and is the first wholly foreign-owned car manufacturing plant in China, operating without a required local joint venture partner.
It's a very different thing to trust that China will maintain the value of its currency, than to trust that investment in Chinese companies will remain liquid and not be arbitrarily cut to a price of zero.
I'm not saying you're wrong, but I also don't fully understand the need to have grander access to capital markets. Perhaps access to the equivalent of US Treasury auctions?
That's why do many Chinese people buy assets in the Anglo world; assets are much better protected here
If China signals that it is changing its attitude on its currency, that it wants to be the reserve currency and establish a consumer economy, it wouldn't take much for people to shift these days. Nobody needs to adopt the Renminbi 100% right away, they can transition to multiple currencies for a while as a hedge against the US, and the situation will evolve. Dedollarization won't happen in a month or a year, it will be a multi-year process once it kicks off. But once it kicks off, it will be because of such a loss of confidence in the US that it probably won't be possible to stop it.
Well if you use the renminbi or yuan as just a medium of exchange, well, why bother when you already have the dollar?
To answer your question better, what is the point of access to capital markets of a country and how does that stabilize or strengthen its currency, or make it more highly sought after?
> when the dollar is propped up precisely on the good will
The dollar isn't valuable because of good will. Central banks in Europe, or Japan, or elsewhere don't hold dollars because they want to be nice to the United States. They hold them because the United States is incredibly wealthy, has incredibly deep capital markets, high liquidity, and because the dollar is a great medium of exchange.
That's the thing I keep coming back to. What are the specific features of the currency that make it more valuable than the other reserve currencies that exist today? I don't think China is willing to do what they would need to do add those features, because it requires CCP to loosen control and they can't do that.
If China "democratized" it would unlock a ton of potential and go on to dominate the globe. But doing that requires untenable changes for the CCP so it won't happen.
Plus everyone is going to be mad and distrustful once they invade Taiwan.
The constant devaluation makes it unappealing.
> My current hypothesis is that the growth in the _price_ of the US Stock market (eg S&P 500) is actually devaluation of the dollar.
I generally agree. But economic orthodoxy says 'Inflation is only 2%', despite precovid, it seemed more like 4%.
If this is the complaint the dollar is safe. And international holders of dollars aren't idiots. They hold Treasuries, which more or less preserve their purchasing power. (Nobody outside the poor, who have to, and nutters, who don't know better, hold cash as an asset. It's so thoroughly assumed that in finance, cash refers to cash and cash equivalents.)
You mean devaluation is causing the growth of SP500, or the other way around?
It's kinda like saying during "My bread appreciated!" during hyper inflation.
IMO we're in one of the cases where "Number go up" is actually bad.
There's such large fluctuations though, especially compared to the S&P 500 in USD [5] or even TFA's USD shares of FX reserves.
[5] https://www.macrotrends.net/2324/sp-500-historical-chart-dat...
https://www.macrotrends.net/1437/sp500-to-gold-ratio-chart
Makes it look like the US peaked at Sep 2000 and has been downhill ever since. Doesn't track at all with GDP which has almost doubled since 2000. I.e. it doesn't track with growth, but does track with dollar index somewhat, which makes sense because it's tracking a dollar value intermediate when considering "how much gold it takes to buy S&P 500", which means it really ends up tracking something else entirely.
> Compared to real money (Gold) the S&P500 is down over the past 10 years. [4]
Isn't this the real chart to look at for that? Completely different story when you select max on the timeline.
https://www.perplexity.ai/finance/%5EGSPC?comparing=GCUSD
Personally I am about $10M USD poorer for listening to people on the internet. I wish people would not spread falsities about finance that can actually ruin lives. (Albeit to be fair, the trend is towards conservative advice...my life was uniquely affected in terms of limiting upside, so I am at least grateful that most online posts work very hard to limit downside.)
https://chatgpt.com/share/696fb3e8-91d4-800a-9b2b-32eacdadeb...
Times they are a-changing.
I can't say that anyone is going to find that very convincing, even if it's a compelling idea to consider gold inflation over the centuries.
"Define real money"
I think everyone can agree if you specify your definition.
This may be a historically significant speech.
https://www.youtube.com/live/dE981Z_TaVo?t=100
What would replace it? I guess the options are Yuan, Gold, Oil or maybe BRICS in the future, none of which are safe, stable, and liquid.
[0] https://en.wikipedia.org/wiki/Gresham%27s_law
In fact - the entire argument seems to more accurately hinge the conditional left off the main saying, so the full description is:
"Bad money drives out good if they exchange for the same price."
But that requires a legal structure that enforces the disparity, and the summary of the whole thing basically boils down to:
---
If given the choice of what money to accept, people will accept the money they believe to be of highest long-term value and not accept what they believe to be of low long-term value. If not given the choice and required to accept all money, good and bad, they will tend to keep the money of greater perceived value in their own possession and pass the bad money to others.
---
But if anything - this is exactly an argument for the value of soft power to the US, because we can't enforce how other nations transact, except through soft power.
The dollar isn't indestructible. If not the Euro, what?
1. https://en.wikipedia.org/wiki/Bancor
- easy to verify/impossible to forge (as opposed to gold and paper currency)
- fixed supply (as opposed to paper currency, oil, and even gold)
- easy to transfer from one party to another (as opposed to gold, oil, and physical cash)
At that point just hoard resources. Holding a bunch of Bitcoin in a crisis is useless for a country if no other country will buy them off you in exchange for tradeable hard currency.
There is a great reason: a state-backed currency should always be accepted by that state. If the world is in crisis, you may wind up stuck with your Bitcoins.
I agree that you need the currency to be accepted by the state for good local trade support. But that was not the point.
"Let me just set up my P2P connection to the Bitcoin network and pay mining fees and hope a miner validates the block"
vs
"Here's a bar of gold mate"
Sure, real easy
And there isn't any "hope" involved in bitcoin transactions. Connecting to the peer to peer network is super simple (way, way easier than creating a brokerage or bank account, and no ID or approval is required). Miners will pick up your transaction (and yes fees will help speed that up, as with any financial transaction) and it will be included in a block. Bitcoin has been doing this non-stop, flawlessly since 2009.
There are fixes to that problem, of course, but it's not bitcoin itself that's the solution.
Yeah, super convenient. Well worth it. I'll just go with gold bars on me to the market to buy lettuce.
By it sure does sound simpler to type some numbers that to cut up pieces of metal.
And if you feel like something long (pdf): https://www.atlanticcouncil.org/wp-content/uploads/2025/05/A...
A direct link exists between a nation's status as the world's primary reserve currency and its tendency to run persistent trade deficits.
This relationship is often described by the Triffin Dilemma, a paradox where the global demand for the reserve currency necessitates that the issuing country consistently supplies the world with its currency, primarily through importing more than it exports.
It's like watching the fall of Rome.. on TV
https://www.blackrock.com/corporate/insights/blackrock-inves...
It is so obvious in the context of globalization: countries seeking power will chip away at fiscal dominance of others with a thousand cuts. Why wouldn't they? Especially after years of getting bullied.
So many people are so dependent on this reality that I think it's going to happen long before any Americans accept it has happened.
And since the wealth effect is really the only thing keeping the US out of a recession, if the MAG7 fail then we’re looking at serious economic problems.
It’s doing to be interesting to see how this plays out as the producers and makers of the world unite, and the EU turns away from the US.
That's the party line & there have been some eye catching military exercises and statements to this effect, but daily life is still very much western aligned. It exports a ton of ore to china and imports a bunch of things from there certainly...but that's kinda just every country these days isn't it.
Yes, US dollar is losing a bit of power and influence. This is likely to continue.
Making inferences about the US global dominance based on this fact is misguided. US global dominance is as strong as ever and, if anything, getting stronger. US has very successfully managed to move the game a level above currency, to direct governance via financial, legal, political and military means. It has made any meaningful competitors either entirely irrelevant (e.g. Russia), pretty well aligned (e.g. India) or pretty well contained (e.g. China) It's blue skies ahead.
The US has a strong military but its dominance position is declining rapidly. It’s going around threatening the whole world.
It’s failing to effectively address their problem with China and Russia.
Domestically, 60% of Americans live paycheck to paycheck, you have ICE running around and Medicaid being slashed to afford that.
All the leaves are brown…
This is going to disappear if USD is no longer the dominant currency.
https://www.macrotrends.net/1380/gold-to-oil-ratio-historica...
Obviously, you can't drawn any hard conclusions, but I was wondering what the OP was thinking narratively when posting.
Now look at the gold chart over this past year. Yeah, people are uneasy and we're likely to see a lot of printing.
https://www.lynalden.com/fraying-petrodollar-system/
My first question is: good for whom? Second question is: how? It's definitely good for holders of whatever replaces the dollar, but it's disastrous for everybody in the US, as far as I can tell.
Also. Any attack to the independence of the federal reserve damages whee vale of the dollar
One of the most effective ways to ease the trade deficit is to reduce USD's status as a reserve currency.
I suspect were about to see that pivot
Trouble will really come when the US tries to get out of its ridiculous debt trap. What will they do, wave a wand and their debt goes away?
[0] - https://www.youtube.com/watch?v=pT2cohNt6a4 [1] - https://www.youtube.com/watch?v=P2b4TjQa4gk
I’d still bet that any sudden movements in this direction will be checked
That assumes it can be undone. Reversing course and hoping the damage done heals isn't a sure bet. Especially with timing delays.
There is definitely real risk here
Actual answer? In global real estate. So… they don’t or “it’s complicated”.
It does risk missing out on AI though (or AI crash depending on your perspective).
The euro is difficult to manage because of the diffuse control, pound an even smaller economy, RMB just not global enough (and tough argument to see that happening), gold/bitcoin/whatever not the same inherent stability.
Indeed the dollar weakening, but nothing really to take it's place.
It is entirely possible to manage funds in crypto for growth and move some amount into more liquid USD denominated assets or MMFs when you need liquidity.
I think that's foolish and backwards thinking. The US doesn't really need more manufacturing; it had relatively low unemployment, a healthy economy, etc. The US is a service country. Apple is one of the richest companies in the world and does none of it's manufacturing in the US. Why wouldn't people invest in Apple?
Also, manufacturing in the US is growing not shrinking. For a long time.
I assume that dollar will be strong if people want to buy stuff from the US, which requires using the US currency. Software indeed is a strong sector. I'm just not sure (as due to my ignorance) if they compensate sufficiently the trade deficit. For instance, if advertisers use Instagram in Europe, they wouldn't need the US dollar to pay for the service, right? If there's no virtual export happens, I'd assume there won't be any need for the US currency either.
> Also, manufacturing in the US is growing not shrinking. For a long time.
What about market share? I remember that the US had more than 65% of the manufacturing marketshare 25 years ago. Actually, I'm more concerned about the long-term national security and prosperity of the US, and I think they are tied to a robust manufacturing sector. But that's different topic.
In addition, China leads in the critical technologies need for drone oriented warfare, like we are seeing in Ukraine.
A fun story, China has the best automated seafood processing factories that meet all kinds of regulations in the world. It's cheaper, a lot cheaper, for Japan and Alaska to send their seafood to China to process, and then sell back to the domestic market. And it has nothing to do with cheap labor but deep R&D of China. So, when war broke out, many people won't be able to enjoy cheap seafood either.
I don't understand how people can ignore a simple fact (is it Milton who pointed that out?): Manufacturing is a "doing" business, not a "knowing" business. Our expertise is forged on the shop floor, not dreamed up in a boardroom, and certainly not bought through outsourcing. There is so much tacit knowledge that manufacturing capability is a living system. It lives in the collective experience of the workforce and the rhythm of the line, not in static documents.
Oh maybe this is the time to quota Thomas Joseph Dunning: With adequate profit, capital is very bold. A certain 10 per cent. will ensure its employment anywhere; 20 per cent. certain will produce eagerness; 50 per cent., positive audacity; 100 per cent. will make it ready to trample on all human laws; 300 per cent., and there is not a crime at which it will scruple, nor a risk it will not run, even to the chance of its owner being hanged.
Well, at least up to 2024...
I think when people run the next number, there will be a surprise there.
The US has been playing a currency game since 1980 to make up for the loss of the free money it got for reconstructing Europe and Japan, and using that money to buy things from impoverished workers in China. And as China got on its feet through careful planning and management, it moved to India, Pakistan, Mexico, Indonesia, the Philippines, anywhere that was willing to stomp on its workers and pollute its air and water.
Now China has gotten to the point that it is a viable alternative to the US, so the US can't unilaterally set terms anymore for its suppliers. It's dumping US treasuries. It's competing for natural resources in countries that the US just tried to topple and steal their natural resources through sieges that ironically served to cut the US's legs from under them, giving China a huge discount. The game is up.
China going from nowhere to the greatest economy on the planet in 50 years is what happens when you manage and cultivate manufacturing. US real estate and an economy run on luxury consumption is what you get when you outsource manufacturing and play word games to cover it up. We literally can't tariff China significantly, they could crush our economy just by embargoing us like we freely embargo everyone else. That's the power of a manufacturing base. We might want to fix our bridges, too.
After the nonsense with Greenland no one really wants to give anymore financial power to the US so we'll see more assets kept in local currency or different reserves currencies like the Euro, Yen, Sterling, or ChF.
Losing the dollar as a reserve currency is losing the empire.
• Despite a smaller share of global trade and output, the dollar still dominates in transactions like trade invoicing.
• Dedollarization is advancing in central bank reserves, with USD share at a two decade low.
• Foreign ownership of US Treasuries has declined for 15 years, signaling reduced external reliance on the dollar.
• The shift is most visible in commodities, where an increasing share of energy is priced in non USD contracts.
The chance of the dollar losing its reserve currency status is slim-to-none. No matter how bizarre the US is, nobody trusts the Chinese Communist Party (CPP). And although the US can manipulate the value of the dollar, its tools are limited compared to the CPP.
Plus, the US is still the only country that's willing and able to prop up the world financial system with no immediate benefit (see Argentina). The US can and will intervene when necessary. And as history has shown, the Euro Zone can't really make decisions quickly and effectively. How many times has the Euro been on the verge of collapse in the last 20 years? And is proximity to Russia is, well, risky.
In any case there is no currency big enough to take the dollar's spot at this point in time. Trillions of dollars flow through the financial system every day.
But what I do worry about are the long term consequences of US behavior. Even the largest empires aren't on top forever (even before Trump, China was investing heavily in tech and has made significant inroads. India is developing, too. Who knows?). There may be no country as economically powerful today, but tomorrow is a new day. These shifts don't happen in the short term, but over decades, this could be a big problem for the US if our approach continues this way.
A business goes bankrupt slowly, then all at once. I worry that we are speed running the "slowly" part of our journey.
Would they implement capital flight controls? if you invest in the US, can you get your money out? No one knows but it seems increasingly less likely. Red lines are being crossed weekly.
The country is heading towards a decline into a developing world style authoritarian dictatorship.
if an article ends in a question mark, the answer is no.
> the greenback dominated 88% of traded FX volumes — close to record highs — while the Chinese yuan (CNY) made up just 7%, according to data from the Bank for International Settlements (BIS).
> Likewise, there is little sign of USD erosion in trade invoicing. “The share of USD and EUR has held steady over the past two decades at around 40–50%.
there is currently no other alternative to meet the global liquidity demands
Contrary to popular opinion, IMO PRC doesn't want reserve currency trade off (triffin / trade deficits etc). What PRC wants is to secure her own interests with RMB, which is mostly happening, energy contracts, lots of bilateral trade happening in RMB now. What PRC also wants is to make maintaining reserve USD onerous, i.e. high rates, high debt servicing... which already indirectly limits US in real ways like reduced defense acquisitions in last few years.
PRC wants USD exorbitant privilege to be just exorbitant.
Then US incentivized to dump system (etc debasing) which will fuck over global USD users and tank US reputation even more. A lot of US actions make sense when you realize Trump doesn't want to deal with an increasingly unprofitable global utility. PRC doesn't want to step in to build new pipelines, they want to see US (mis)manage existing US owned plumbing that everyone is using so poorly it fucks up things at home and for everyone else, meanwhile PRC has comfy off the grid setup for herself and her guests.
I mean, it sure looks like the goal.
If you've ever had the unfortunate opportunity to interact with your average CEO at a mid-level business it's the same thing but on a much smaller scale. They can't fail, only be failed.
The aggressiveness might be related to that.
https://www.them.us/story/testosterone-parties-silicon-valle... https://stand.ie/stand-newsroom/political-power-testosterone
I suspect there might be a lot of "de-dollarization" going on in realms that might not be easy to measure. To be specific: it is interesting that crypto-currencies have emerged as the currency of choice for illegal activities.
So a 100bn deficit out of 800bn total US imports.
The deficit is there, but it's not nearly as lopsided as some reporting would have you believe.
I have about zero clue how finances really work but it looks to me as the statement is only true if the dollar is the predominant currency for international trade. This looks to be slowly changing for various reasons.
Well, not really, because obviously that deprecation via buying government treasuries is balanced by the appreciation in the other currencies. But if everybody (large enough to matter) dosen't want their currency to appreciate, if somebody buys Japanese bonds for example to weaken their own currency, then Japan will buy somebody else's treasuries to offset the increase in Yen, and if we go to the long chain of musical chairs of people offsetting each other's behaviours, it just leads back to the USA as the only ones both large enough and willing to take in those capital inflows.
That's not a interpretation mind you, that's a description of what central banks are doing right now. If that has to change, you need somebody willing to take the mantle of the absorber of global deficits, and nobody wants to do that.
Understand this and you'll avoid falling into various traps and conspiracy theories. For example, there are people who believe that the US invasion of Iraq was caused by Iraq wanting to sell oil in euros instead of dollars.
This is a nonsen theory because every oil transaction could be denominated in euros tomorrow and it wouldn't change anything. The same demand for US dollars would still exist so people would simply convert to euros, buy oil then convert back.
This same understanding debunks the "threat" of a BRICS alliance.
The real problem, if you can call it that, is we have an administration who is both incredibly inept AND intent on destroying the post-WW2 world order. Wealth inequality is getting so bad and the deficit is so bad. Worse, nobody expects either to improve anytime soon. I'm not saying the budget needs to be in balance. It doesn't. A country doesn't work like a business when you can print your own money. But at some point, crippling public debt (in terms of GDP) will devalue the dollar.
Put another way: the illusion of "safety" is at risk. It's just a question of when the vibes shift.
If the Russian army is the force that enables Russian foreign policy, they why do some people in Ukraine think that they don't want to do things the Russian way?
Likewise, I wonder how helpful the US military will be at forcing our former allies to do things they don't want to do?
There's no replacing the US dollar until a better option comes along. You need a currency that's open (which rules out Yuan), a currency that is backed up by a strong government (which rules out places like Russia, India, Japan, and the UK), and you'd want something that isn't subject to the same geopolitical rules as the US dollar (which rules out the Euro).
If you cannot see this, or cannot believe it, you should probably check if you are in a ideological bubble.
Is the world going to de-dollarize though? Probably not, shy of an EU independence, which is about as likely as Europeans adopting an American work culture. Although, I won't rule out the possibility of the EU moving it's eggs to China's basket either. What a world that would be, a Sino-Euro axis and an North American axis. Whew
I think they already are -- it's just not going to happen all at once overnight. The shift has happened already and the consequences will take decades to come forward. But it's still possible that the US will do something to reverse course and everyone will be happy to not have to think about finding an alternative to the US dollar.
The fact that the US provided the majority of weaponry, and half the money to Ukraine should have been shocking wake up call to every European. But instead the vibe seems to be "Americans are so dumb to live the way they do".
It has nothing really to do with populism. It's the US's only rational option. You can't just run trade deficits forever, no matter what the people who make money from trade deficits tell you. A parasite that gets so big that it disables the host is a dead parasite.
People act like this is the how the US always worked. We just started this with Reagan, and every moment since then has seen the rise of finance, the victory of unproductive capital and speculation, and the decline in domestic manufacturing and standard of living that you would expect.
There's never been a moment where there's been anything to point at for a finance capitalist to feel vindicated that his success would lead to the US's greater good, so he resorts to claiming that it is simply impossible to be any other way. At best this is sunk cost fallacy, but at worst, it's just propagandistic gaslighting from a bunch of people who don't have any connection or loyalty to anyone in the US, don't care when it's people suffer, don't care how its children will live, and will just leave if their houses start to feel insecure. There's your populism.
I agree with your assessment, but Europe is in unique trouble that the rest of the world has no need to relate to. The US will simply have Europeans jailed or killed who steer Europe counter to US interests. Right now the US is on a slow road to peace with Russia, while trying to cultivate and maximize European animosity and estrangement from Russia. The world in which the US is mocked in Europe by NATO (a device to carry out US interests) for trying to appease Russia is a world that no one but a realist could have predicted.
Everybody else will de-dollarize, and the US will threaten Europe and the UK with tariffs if they don't peg the Euro and pound to the dollar. The US will be trading freely with Russia and China, while sanctioning Europeans for buying energy from Russia and bribing European governments to harass Chinese companies.
It's time.
Who is so stupid, racist and ignorant shouldn't be the world leader.
At this point we have the EU with the dollar and values and real freedom and don't forget the Chinese.
They might control there people and also do other shitty things but they are at least doing this for their people
The US is making an absolute mockery over the honor and responsibility granted to in the post-WW2 world. It has sophisticated rivals that are predictably and effectively making use of the self-inflicted crisis. So far the ruling class of the US has been happy enough to let this go, and has been too busy making rocket ships, fake computer currencies, and large estates in south Florida to deal with real world problems.
If you are in the US, buy some gold or a house so your savings aren't destroyed - utterly predictably - by the man who declared Chapter 11 bankrupcy at least 6 times.
The US was a rather empire without many scruples before WW2 and after it. It engaged in genocide in Vietnam, and was complicit in several others, including the ongoing one in Gaza - which was sanctioned, funded and facilitated first and foremost by the Biden-Harris administration.
So, without detracting from Trump's crimes and jingoist rhetoric and action, his deviation from US foreign policy tradition is not as far as one might imagine.
Vietnam, Korea, Iraq, Gaza, and so many others are atrocities but they are well understood by anyone with a casual understanding of 20th century geopolitics.
Anything you could list is awful but still respected the norms and rules that exist between nation states. There is not a high bar for these things, but some people within a specific flavor of the Republican party reject these rules and norms. By a quirk of history they were able to gain power. I could describe this in more technical and impressive sounding language, but "FAFO, and we are in the find-out stage" goes by many names and is accurate.
USD dominance isn't going anywhere despite hurt feelings over Trump or US policies.
Obama started a process, Biden and Trump are in lockstep. They've reduced this issue by about 1/3rd by 2024. Trumps' tariffs are almost certainly going to be upheld by the supreme court.
This has led to a reshoring boom and trillions of new investment in the usa. Estimates seem to suggest only a marginal improvement of about 3%, so roughly another 20% improvement.
But fixing the very broken trade balances for the USA has long term benefit but it will result in a strong USD, but weaker reserve currency. Obviously the USA is rapidly moving away from bretton woods and being the world police.
They will drop below 50%, but nobody else is there to pick up the reserve currency crown. They get all the benefits of seignoiorage and very little of the downsides for decades.
Their dominance is over but they clearly saw that the cost-benefit was not worth continuing into the future.
Meanwhile, since they stop being the world police and reshored the important things. They dont care about the stability of global trade. Instead their super carrier groups will move to poke their nose only in their own business. You're going to see a fast shift from the usa being hated to being loved over the next 10-20 years.