De-dollarization: Not a matter of if, but when(responsiblestatecraft.org)
responsiblestatecraft.org
De-dollarization: Not a matter of if, but when
https://responsiblestatecraft.org/2023/05/03/de-dollarization-not-a-matter-of-if-but-when/
52 comments
The article does not support the claim made in the title. Similar claims have been made many, many times. They never come to pass. A better approach to this topic would be to acknowledge the failure of earlier prophets and explain what's actually different this time.
The author failed to cite hard numbers, but they can be found elsewhere:
https://markets.businessinsider.com/news/currencies/dollar-d...
"In a Monday note, strategists Joana Freire and Stephen Jen calculated that the greenback accounted for about two-thirds of total global reserves in 2003, then 55% by 2021, and 47% last year."
You can make the argument that the decline of this number will be a lot slower than 2021-2022 going forward, or that it will perhaps bottom out at a relatively high number. But the trend is there.
https://markets.businessinsider.com/news/currencies/dollar-d...
"In a Monday note, strategists Joana Freire and Stephen Jen calculated that the greenback accounted for about two-thirds of total global reserves in 2003, then 55% by 2021, and 47% last year."
You can make the argument that the decline of this number will be a lot slower than 2021-2022 going forward, or that it will perhaps bottom out at a relatively high number. But the trend is there.
Political instability driving a default would be pretty different.
Tea party tried to do that a decade ago. What’s different this time?
An actual default would be different. The US doesn't have anything like the wiggle room it had last time.
Until there is a politically stable alternative, the Dollar will rule. Nobody trusts China, even the Chinese. The Euro? Only a few years ago pundits were proclaiming its death. The Pound? Nope.
The US is willing to go to incredible lengths to prop up the world financial system. No other country is willing or able to do that, including China.
The US is willing to go to incredible lengths to prop up the world financial system. No other country is willing or able to do that, including China.
«The U.S. has a comparative advantage as a safe financial haven. We have the world’s strongest military and a stable government. Thus, we have a comparative advantage in producing debt, primarily government debt.» (Arnold Kling somewhere online.)
Dollar is backed by the US military. A credible dedollarization threat will mean that the US will use it's military might to stop it in any way it can. Saddam tried it, Gaddafi tried it... Iran and Venezuala have been trying it and Russia, China and now some middle eastern superpowers have been toying with it.
So far, none of them have had any teeth and it is unlikely that it will happen anytime soon (not in the next 50-100 years).
So far, none of them have had any teeth and it is unlikely that it will happen anytime soon (not in the next 50-100 years).
The dollar is also backed by everyone already having infrastructure set up to accept USD, and both the people to buy from, and the people to sell to already having USD, or wanting to get USD.
And foreign debt in dollars.
Venezuela has been trying... Well, maybe on paper, Citizens have been using USD as defacto national currency for a long while by now
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Gaddafi was overthrown by his own people
Western countries armed rebels and denied Libyan military their own air space with a no-fly-zone. Hardly a lack of involvement…
sure but the Libyan people started the civil war and there is no evidence any of Gaddafi's crazy gold schemes had anything to do with the civil war (or later western intervention)
With enough weapons, psyops, and funding, you can start a civil war anywhere. With overwhelming military force, you can make the civil war end in the way you want.
Consider that if the US was in Libya's relative standing, an external actor of such magnitude could easy have interfered to make Jan. 6 into the start of a civil war. If then you have a foreign country getting involved militarily, it can end however you want. This is true of basically any country in the world.
Consider that if the US was in Libya's relative standing, an external actor of such magnitude could easy have interfered to make Jan. 6 into the start of a civil war. If then you have a foreign country getting involved militarily, it can end however you want. This is true of basically any country in the world.
"We came, we saw, he died" - Hillary Clinton.
Why aren't US interests threatened by the Euro?
The parent comment is conspiratorial.
The Iraq invasion was stupid and immoral but there's no evidence it had anything to do with currency plans.
The Euro is indeed most likely to overtake the US dollar (although not anytime soon) but they are likely to remain close allies and the dollars status as a reserve currency isn't all upside anyways(it makes our exports less competitive)
Because control of the Euro is split between lots of argumentative, economically-varying countries who are instinctively more interventionist than the US.
The US interests own Euro with the help of NATO.
If the US loses a major war like ww3 scale, then it’s likely but otherwise everyone wants to trade with usd because it’s already biggest(network effect), and most stable(military/economic might/feed back effect from being global currency).
> because it’s already biggest(network effect)
This is exactly what is downtrending. Nations fear being sanctioned and holding on to dollars they can't use
> and most stable(military/economic might/feed back effect from being global currency)
This is also what is being questioned. There is domestic turmoil and the US economy is funky.
I'm just paraphrasing Ray Dalio's recent discussions and extensions on his dialogue on the rise and fall of nations.
This is exactly what is downtrending. Nations fear being sanctioned and holding on to dollars they can't use
> and most stable(military/economic might/feed back effect from being global currency)
This is also what is being questioned. There is domestic turmoil and the US economy is funky.
I'm just paraphrasing Ray Dalio's recent discussions and extensions on his dialogue on the rise and fall of nations.
Things look backwards judging by demographics. The US is relatively younger than its peers and is most likely to stay that way because of immigration. On top of that there is an industrial boom happening as manufacturing gets reshored.[1] Looks like the opposite of being on the brink of collapse, really.
[1] https://www.wsj.com/articles/americas-factory-boom-drives-sa...
[1] https://www.wsj.com/articles/americas-factory-boom-drives-sa...
One of the things all these pundits neglect when they focus on the structural drawbacks of the dollar is the existence of a viable alternative. To be a real alternative reserve currency, the other currency must have enormous trading liquidity, very significant debt issuance (ie the issuing nation must have voracious debt appetite backed by a huge productive economy), be broadly accepted for trade (ie I can't just convert on my own - my trading partners need to convert as well) and be relatively more stable in both political and market volatility terms.
It's not enough for the US/dollar to have problems, the alternative would need to be far better, and there would need to be huge capacity for everyone to be able to buy in without massive market moves leading to a catastrophic stampede for the exits.
I personally think we will see (and are in fact already seeing) a gradual shift from absolute dollar hegemony to a more mixed picture but I think it will never amount to actual 'dedollarization' but more likely a situation in which you can trade in RMB, you can trade in EUR or you can trade in USD and there will be an increase in Eurobonds etc where nations raise debt in these foreign currencies as well as USD or their domestic currency to provide trading liquidity.
It's not enough for the US/dollar to have problems, the alternative would need to be far better, and there would need to be huge capacity for everyone to be able to buy in without massive market moves leading to a catastrophic stampede for the exits.
I personally think we will see (and are in fact already seeing) a gradual shift from absolute dollar hegemony to a more mixed picture but I think it will never amount to actual 'dedollarization' but more likely a situation in which you can trade in RMB, you can trade in EUR or you can trade in USD and there will be an increase in Eurobonds etc where nations raise debt in these foreign currencies as well as USD or their domestic currency to provide trading liquidity.
No they don't. It just requires there bring a currency they can use in trade without the risk of having their assets frozen.
There is no such thing then.
A decentral global reserve currency is not a global reserve currency, that is a global price index with local bank specific currencies denominated in that price index.
A decentral global reserve currency is not a global reserve currency, that is a global price index with local bank specific currencies denominated in that price index.
Weaponization of the dollar was really shortsighted.
My hope is that my country can maintain dollar reserve status for another decade, but that might not happen. I may be wrong, but I think de-dollarization will be gradual with other currencies seeing slow increases in use for international financial settlements. I think that a fast transition would be bad for most of the world’s population.
My hope is that my country can maintain dollar reserve status for another decade, but that might not happen. I may be wrong, but I think de-dollarization will be gradual with other currencies seeing slow increases in use for international financial settlements. I think that a fast transition would be bad for most of the world’s population.
When the tipping point arrives, it will be sudden and unexpected. There's a way these things happen- first very slowly, then all at once.
My partner is from the ex soviet part of the world. She uses the term "very slowly, then all at once" to describe what happened there.
This is a great summary. But, it makes the same mistake that other such commentators are making.
Other replacement currencies will need to be much more stable and liquid than the dollar. It is not possible today.
But it is right in its sentiment. Most other countries are tired of American sanctions sending generations into poverty. For them, finding anything else is a no brainier. If they can find any currency to replace their trade with, they'll take it in a heartbeat.
Other replacement currencies will need to be much more stable and liquid than the dollar. It is not possible today.
But it is right in its sentiment. Most other countries are tired of American sanctions sending generations into poverty. For them, finding anything else is a no brainier. If they can find any currency to replace their trade with, they'll take it in a heartbeat.
I believe you forgot to mention something important.
US does not impose sanctions on the only basis of "hey, we don't like them, let's ruin their lives".
In each case there is a reason, you know, like a blatant violations of human rights, mass rapes, ethnic cleansings, things like that.
If some country is bothered that other countries won't be continuing doing business with it because US sanctioned it then it is implied it intends to do something of the above. I really and sincerely hope its not "most" countries out there.
Consequently, it's not the US that "sends generations into poverty". Typically it's the ruling class who, being bored out of their minds due to their needs being met by their appropriation of national wealth, decide to do something normally unthinkable for "reasons". And let's not forget that people always have a choice of leaving or changing their government.
It is actually good that there is a power on the mudball that can if not coerce idiots to behave but at the very least impose so much pressure they cannot enjoy their lives as if they did nothing wrong, without military involvement.
US does not impose sanctions on the only basis of "hey, we don't like them, let's ruin their lives".
In each case there is a reason, you know, like a blatant violations of human rights, mass rapes, ethnic cleansings, things like that.
If some country is bothered that other countries won't be continuing doing business with it because US sanctioned it then it is implied it intends to do something of the above. I really and sincerely hope its not "most" countries out there.
Consequently, it's not the US that "sends generations into poverty". Typically it's the ruling class who, being bored out of their minds due to their needs being met by their appropriation of national wealth, decide to do something normally unthinkable for "reasons". And let's not forget that people always have a choice of leaving or changing their government.
It is actually good that there is a power on the mudball that can if not coerce idiots to behave but at the very least impose so much pressure they cannot enjoy their lives as if they did nothing wrong, without military involvement.
> And let's not forget that people always have a choice of leaving or changing their government
Absolutely don't agree. People definitely don't typically have that power. In authoritarian nations not even motivated majorities might not be able to overthrow their government.
It's a quite rude thing to claim, implying that any time there's a cheating, lying, corrupt bastard leader around, it's because their people choose them.
I'd argue that in the last decades revolution has actually become increasingly difficult because law enforcement authorities benefit a lot from the improvements to surveillance and communication technology.
Absolutely don't agree. People definitely don't typically have that power. In authoritarian nations not even motivated majorities might not be able to overthrow their government.
It's a quite rude thing to claim, implying that any time there's a cheating, lying, corrupt bastard leader around, it's because their people choose them.
I'd argue that in the last decades revolution has actually become increasingly difficult because law enforcement authorities benefit a lot from the improvements to surveillance and communication technology.
It's not rude at all. It's true. Those bastard leaders are there because their people refuse to do anything about it, and a large fraction of those people serve in the military and police forces to keep the bastard in power. The only way a "motivated majority" can be unable to overthrow their government is if a very sizeable, motivated minority holds a lot of military power somehow (which was arguably the case in Saddam's Iraq, where the Sunni minority oppressed the other two minority groups). Usually, this is not the case.
The people are almost always to blame for their authoritarian leadership. I'll give a pass to a few people, such as the Kurds in Saddam's Iraq who actively resisted his rule, but generally speaking the people are the ones ultimately to blame. It's quite rude to claim that people have no agency and somehow are magically forced to do the bidding of a geriatric leader.
The people are almost always to blame for their authoritarian leadership. I'll give a pass to a few people, such as the Kurds in Saddam's Iraq who actively resisted his rule, but generally speaking the people are the ones ultimately to blame. It's quite rude to claim that people have no agency and somehow are magically forced to do the bidding of a geriatric leader.
I understand your perspective. Everyone is entitled to their opinions, but just adding a few notes.
When it comes to certain historical events or experiences, there are nuances that can only be truly understood by those who have lived through them. This does not mean that those who haven't experienced a particular event or lived through a specific period of history are incapable of contributing to the discussion or forming valid opinions.
The world we live in is indeed far from black and white. It is filled with shades of gray, and acknowledging this complexity is essential when discussing matters of politics, power, and oppression. Recognizing the intricacies involved helps us avoid oversimplifications and enables us to delve into a more comprehensive analysis.
Opressive regimes throughout history have demonstrated their ability to manipulate people and gain and perpetuate power. It is a phenomenon worth studying and understanding. By examining historical examples, we can gain insights into the factors and mechanisms that contribute to the rise and longevity of oppressive regimes.
Revolutionary movements do exist, but they are often the result of a long process that builds up over time. Social, economic, and political factors intertwine in complex ways, eventually leading to significant changes.
When it comes to certain historical events or experiences, there are nuances that can only be truly understood by those who have lived through them. This does not mean that those who haven't experienced a particular event or lived through a specific period of history are incapable of contributing to the discussion or forming valid opinions.
The world we live in is indeed far from black and white. It is filled with shades of gray, and acknowledging this complexity is essential when discussing matters of politics, power, and oppression. Recognizing the intricacies involved helps us avoid oversimplifications and enables us to delve into a more comprehensive analysis.
Opressive regimes throughout history have demonstrated their ability to manipulate people and gain and perpetuate power. It is a phenomenon worth studying and understanding. By examining historical examples, we can gain insights into the factors and mechanisms that contribute to the rise and longevity of oppressive regimes.
Revolutionary movements do exist, but they are often the result of a long process that builds up over time. Social, economic, and political factors intertwine in complex ways, eventually leading to significant changes.
>Opressive regimes throughout history have demonstrated their ability to manipulate people and gain and perpetuate power.
Of course, this is indeed true. We can see it in Russia today, with so many people believing the lies from the regime, and security forces working to suppress outside news or views. But this doesn't excuse those people IMO. Committing a horrible crime against a victim because someone else convinced you that the victim somehow deserved it does not excuse your crime. If you pull the trigger, ultimately you're responsible, not the guy urging you to do so. The Nuremberg trials put to rest, for once and for all, that "I was just following orders" is not a valid defense. If we want to progress as a species into a future with a more peaceful and enlightened society, then we must hold everyone accountable for their actions, regardless of how deceived they were.
Of course, this is indeed true. We can see it in Russia today, with so many people believing the lies from the regime, and security forces working to suppress outside news or views. But this doesn't excuse those people IMO. Committing a horrible crime against a victim because someone else convinced you that the victim somehow deserved it does not excuse your crime. If you pull the trigger, ultimately you're responsible, not the guy urging you to do so. The Nuremberg trials put to rest, for once and for all, that "I was just following orders" is not a valid defense. If we want to progress as a species into a future with a more peaceful and enlightened society, then we must hold everyone accountable for their actions, regardless of how deceived they were.
I’ve missed some previous context, not at all excusing those who commit crimes and perpetuate opressive regimes.
They should be prosecuted and taken to trial.
I don't think you've missed any context, it's just the discussion continuing on a tangent I guess. Anyway, the question is: how do you prosecute the people who perpetuate oppressive regimes? Even when Nazi Germany fell, all the people responsible were not prosecuted; there were simply far too many. The top people were, of course, but low-level police or whoever were not. But all those people, collectively, are part of the problem, which is my point. It's not just a few jerks at the top, it's all the other people below them who enable them (especially the police or other security services). Should all the cops be rounded up and shoved into the gas chambers for their crimes of complicity? I don't think the court system can realistically prosecute that many people, and a few of them probably did try in some ways to resist.
There is no way in any shape or form that the same country the invaded Iraq and Afghanistan, steals OIL left, right and center, and supported more coups than anyone can be though of as caring for human rights.
They don't care at all, it never mattered.
They don't care at all, it never mattered.
> In each case there is a reason, you know, like a blatant violations of human rights, mass rapes, ethnic cleansings, things like that.
Some of those sanctions are for these reasons. Others are for geopolitical reasons.
Imagine China imposing sanctions on America for geopolitical reasons such that you are unable to buy food for your kids. This amount of power is never admired.
Some of those sanctions are for these reasons. Others are for geopolitical reasons.
Imagine China imposing sanctions on America for geopolitical reasons such that you are unable to buy food for your kids. This amount of power is never admired.
Not necessarily. At some point the pain inflicted by the US gov’t using its financial powers to enforce its will on you is greater than the pain of using a less stable and liquid currency. There is a tipping point.
Gold meets all of those requirements, provided you could set up some type of custodial system that would allow paper trading.
Apart from Russia and China, which other countries are tired of American sanctions?
Venezuela, Iran, North Korea, Afghanistan, Syria.
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Maybe Venezuela could be cut some slack, but those other 4 are definitely not poster childs of human rights or liberal societies that we should support.
The people opposed to "western imperialism" are usually big fans of theocratic, misogynistic societies where women are stoned to death in the street for showing their ankle.
Good to point out, for the record, that it was the French who forced the US off the gold standard.
This has been predicted to happen every year for the last 30 years or so.