Western sanctions on Russia are leading to trade being denominated in other currencies between eg, India and Russia. Iran and China are both in on this too.
Aside from a general undermining of the US, what are the implications?
As far as I can see, some would be:
- The US ability to interfere with other countries’ foreign currency reserves is severely limited (since those reserves don’t need to be in dollars)
- The US ability to print endless money might come under pressure, potentially endangering its ability to spend freely on its military
- Financialisation and de-industrialisation bite harder as US financial services might become less useful and America has lost much of its advantage in actually making stuff.
- Lessened capacity for the US to exert hegemony over other states via fiscal and monetary domination/coercion (a la gramsci)
Is that stuff right? And what else is there?
PS, sorry if this isn’t quite the right community, I’m new here.
Peter Schiff has an allegory he uses to describe the world economy.
On a desert island with a bunch of people who escaped from a shipwreck, you’ve got a Russian, an Iranian, a Chinese person and an american, and they’re divvying out jobs. One of the people, his job is to gather materials and build shelter. One of them, his job is to find food. The third one, his job is to get firewood and build and maintain a fire. The American, his job is eating, sleeping, and keeping warm.
Now, a modern economist will look at that arrangement and say “Oh, the American is the most important person there, he’s making sure that the 3 others have work!” but in reality, if the American wasn’t there, the 3 others could continue doing their thing and they would be able to sustain themselves more, they could maybe eat more because they could use the fruits of their labor themselves, they could maybe spend some time improving the tools or techniques they’re using so they could do more with less effort, or they could just spend less time working and have more leisure time.
It’s a Tom Sawyer economy. The Americans have found a way to convince the world that they’re doing everyone a favor by “letting” everyone paint their fence for them for the past 50 years.
The end of the US Dollar will be the end of the current global order, and it’s going to hurt Americans a lot. That will suck for them, but it’s going to end a lot of fictions in their politics. The Americans are some of the worst NIMBYists in the world. They pretend they’re ending fossil fuel usage and pollution, then just have the Chinese manufacture everything and ship the pollution over there. They pretend they’re ending fossil fuel production, then demand Saudi Arabia increase production to compensate. Then they export this attitude to other first world nations because everyone looks at the success of the US and say “Oh, the big powerful US is saying this is the way to succeed, we should emulate them”.
Look at the largest companies in the US: You’ve got a company that doesn’t manufacture anything and instead gets the Chinese to do it for them; You’ve got a company that doesn’t manufacture anything and sells 1s and 0s with a worldwide monopoly enforced by the current world order that’s useless without equipment manufactured by the Chinese; You’ve got a company that doesn’t manufactre anything and has a couple popular websites that’s useless unless everyone has equipment manufactured by the Chiense; You’ve got a company that loses money selling physical stuff so they can lead venture capital to use their web services that are all useless unless everyone has equipment manufactured by the Chinese; and you’ve got the world’s smallest car company with the a market cap large enough to buy the rest of the auto industry combined. This is all indicative of an economy based on total fiction.
If the world stops using the dollar as the reserve currency of the world, then America becomes Japan – Japan is still a powerful economy, but it can’t dominate the world like it appeared on track to do in the 80s because the real problems with their economy can’t be wallpapered over. At that point, the rest of the world likely gets a marked increase in quality of living because a lot of resources being diverted to Tom Sawyer in exchange for nothing will be shared amongst people who are actually contributing.
Global communism might get a boost, because some of the loudest voices right now are Americans, and in their world saying “everyone should get everything for free and not have to work and that’s communism” sounds reasonable since their entire economy is based on dollar backed quasi-imperialism and getting something for nothing from the rest of the world because of the strength of the US dollar. That’s absurd on its face and any voice proposing such discredits any movement they’re a part of. Forcing this freeloading economy to act as an equal in global trade is going to be a bitter pill for corrupt crony-capitalists and the corrupt crony-communists looking at the crony-capitalists as if that’s a sustainable model without the inequity fuelling it.
- Also it expands the influence of countries against it, like the ruble, renmibi, and rupee (I just realized they all start with r).
Yuan would be the combo-breaker? XD
fuck you’re right
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The advantages are close to what you’ve stated. By having the world use the US dollar, the US is able to cut them off from trade from most of the world. The more the US does that, the more it’s tempting for other countries to find an alternative.
The downside is that you need a fairly stable currency that has some amount of ubiquity to replace it.
Peter Zeihan did a pretty good explanation of de-dollarization and BRICS
https://www.youtube.com/watch?v=xTwwNoh0E6Q&pp=ygUecGV0ZXIgemVpaGFuIGRlIGRvbGxhcml6YXRpb24g
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Yes, this community is for tankies
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might look tempting, but another totalitarian authority would have to swoop into the power vacuum created by dedollar-efforts.
Why is this a given?
is this for community meant for tankies??
You don’t have to be a “tankie” to see that harm of maintaining dollar hegemony, or to see the potential value in alternative currencies gaining support. And using “tankie” here is just meaningless; you’d add as much value saying “is this community meant for wokies??”.
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I doubt the US would discontinue spending freely on the military. Without the ability to run roughshod over the rest of the world, they would turn their military power inward. It’s already happening with the police and border patrol.
