Before China might be successfully externally compelled to
comply with any foreign demand, the compelling source likely must
first possess a consumer base thus trade import/export bargaining chip compatible with that of China, with its nearly
1.5 billion consumers.
Perhaps some
securely allied nations combining their resources could go without the usual
bully-nation China trade/investment tether they’d prefer to sever, instead
trading necessary goods and services between themselves and other interested
non-allied yet non-China-bound nation economies? Maybe such an alliance has
already been covertly discussed but rejected due to Chinese government
strategists knowing how to ‘divide and conquer’ potential alliance nations by
using door-wedge economic/political leverage custom-made for each nation?
Could it be
that every country typically placing its own economic and big business
bottom-line interests foremost may always be its, and therefore collectively
our, Achilles’ Heel to be exploited by huge-market nations like China?
Regardless,
China seems to know well what it’s doing.
Felix_Mish
2 years ago
It seems to me the next “dollar” will not be tied to any nation-state. Such ties are a fundamental weakness of money as it exists today. The current crypto-coin follies are an indication this weakness is well known, if not acknowledged. This weakness cannot endure. Money is too important to be tied to a particular nation’s whims or local concerns.
Since nations tax transactions in and out of “money”, this decoupling of money and countries is gonna be Chinese-curse “interesting”. But it’ll be a done deal after the next global financial debacle. (Which, BTW, will be followed by the familiar cries of “After WWI, they could have just scheduled WWII and here’s who knew it!” – with “WW” changed to “FinancialCrisis”.)
anoop
2 years ago
Given how dependent the US is on China, perhaps the dollar is the yuan. There is no need to replace anything.
KidHorn
2 years ago
USD will eventually lose reserve status. Continually running huge current account deficits will insure it. I don’t know when it will happen, but it will be gradual, reach a critical breaking point, and then fall out of favor quickly. The Yuan is the best bet to replace it, IMO.
Dutoit
2 years ago
I think that this will go on as long as the main powers (China the biggest one) find this advantageous.
What would happen is there is a threat of war between US and China ?
frozeninthenorth
2 years ago
As a friend at Blackstone often says, sure sell the dollar, and then buy what?
As you say the Chinese Yuan fails all the tests of an international currency and means of exchange. Its controlled by the Chinese government and will always be controlled by the Chinese Government. While the leadership of the Chinese Communist party pays lip service to the idea of ending the US dollar hegemony there is really not much else available to replace it. The Euro, seems to be doing OK and better than anticipated.
Interestingly enough the fall (and then rise) of crypto is associated with the Chinese government’s clamp down on the instruments since it allowed Chinese citizen to bypass the Chinese regulators. Beyond funds flow, the CCP is driven by total control of its population
I am amazed that anyone could think that the Yuan could play a role in international trade.
Zardoz
2 years ago
The problem with armageddon is it’s always late.
Scooot
2 years ago
In my opinion trust in China is set to deteriorate even further over investigations into the origin of Covid.
Eddie_T
2 years ago
The US economy is something like 25% of global GDP. That matters. Our bond market is the best by far, although liquidity is the main thing it has going for it now imho, other than the US’s political stability, which is still pretty good. You have to compare it to what’s going elsewhere, not just what’s driving the news cycle here.
The Euro is probably at its peak as far as how much global trade is denominated in Euros….Germany, the engine of the Euro, has 47% of its GDP in exports, and it’s unlikely that they can keep growing that, given the austerity in Southern Europe and the slowdown in China.
Rickards is another goldbug book salesman. I read a couple of his books. Nothing he says ever comes true.
These days I get my intel from George Friedman and Peter Zeihan. Nobody is unbiased, but I think Friedman gets geo-politics and the world economy much better than most people. Zeihan is a student (former employee, actually) of Friedman, and their POV is the same.
Friedman lives here, when he isn’t traveling. I wish I could meet him.
“You have to compare it to what’s going elsewhere, not just what’s driving the news cycle here.”
Exactly. You just have to read about the fights between the right-wing and the (so-called) left wing in the other big democracy i.e. India. It will make the political fights in the US look like a weekend picnic!
I have two Texans in my close family so I have to keep up on Texas history and life. I just finished “The Comanche Empire” by PekkaHämäläinen. Have you read it?
I’ll have to put yours on the list. I love to read about guys like Rip Ford and Charles Goodnight too.
I always recommend Indian Depredations in Texas by J.W. Wilbarger. Not exactly PC these days, it was written in the 1880’s by a guy who was there and saw a lot. . It’s free online to read, and I recommend it for social justice warriors. We fought a war with the Comanches here , and only new technology saved us from losing it, most likely.
Empire of the Summer Moon is good. I prefer Friedman. Zeihan although still good seems to have a blind spot on Florida. He says he doesn’t understand it and avoids the subject. Freidman like to explain Texas mentality by quoting Davy Crockett after he lost the election in Tennessee. Crockett said” “You may all go to hell and I will go to Texas.”
Before China might be successfully externally compelled to
comply with any foreign demand, the compelling source likely must
first possess a consumer base thus trade import/export bargaining chip compatible with that of China, with its nearly
1.5 billion consumers.
Perhaps some
securely allied nations combining their resources could go without the usual
bully-nation China trade/investment tether they’d prefer to sever, instead
trading necessary goods and services between themselves and other interested
non-allied yet non-China-bound nation economies? Maybe such an alliance has
already been covertly discussed but rejected due to Chinese government
strategists knowing how to ‘divide and conquer’ potential alliance nations by
using door-wedge economic/political leverage custom-made for each nation?
Could it be
that every country typically placing its own economic and big business
bottom-line interests foremost may always be its, and therefore collectively
our, Achilles’ Heel to be exploited by huge-market nations like China?
Regardless,
China seems to know well what it’s doing.
Exactly. You just have to read about the fights between the right-wing and the (so-called) left wing in the other big democracy i.e. India. It will make the political fights in the US look like a weekend picnic!
I listen to it only for entertainment, of course!