9 ms·

America might wield its ultimate weapon of mass disruption

49 points by known 6y ago

adammunich 6y ago
Won't this just encourage China to make their own system like they're doing with computer chips now?
- mola 6y ago
  Maybe, and if they succeed, what will the US do then? This is a terrifying path.
  - justaguy88 6y ago
    Just another cold war
    - ed25519FUUU 6y ago
      What is a Cold War called when only one side is playing? Because that’s been the history for the last three decades.
      - p1esk 6y ago
        Somehow it doesn’t feel like the Cold War ever stopped.
      - crakenzak 6y ago
        not only one side is playing. China has a history of blatant violation of copyright law (helping Chinese companies steal research & tech that US companies spent billions of R&D money on) and using that to attempt to undercut US companies. China also constantly bans US companies[1] from accessing Chinese customers (eg. Facebook, Google, YouTube, Twitter etc). It's imperative that the US castrates China & CCP and doesn't allow it to spread its toxic influence further. [1] https://en.wikipedia.org/wiki/List_of_websites_blocked_in_mainland_China https://en.wikipedia.org/wiki/List_of_websites_blocked_in_ma...
- ed25519FUUU 6y ago
  More like accelerating their efforts to make a new system.
- PeterisP 6y ago
  That own system needs participants to be useful for international deals, and USA can extend the same embargo to that new system, so that all financial institutions have to choose whether they break the embargo, participate in the Chinese system and be banned from the main USD systems, or pretend that the Chinese system does not exist and keep all their non-Chinese business functioning.
- bassman9000 6y ago
  If you're trading internationally, and have to denominate on a given currency, would you use the one backed by China, or the one backed by the US? Would you use a new currency with nothing yet denominated in it, or the one in which trillions of assets are denominated into? The one backed by a legal system that in the end is a reflection of the whims of a single ruling, communist party with an inaccessible and arbitrary hierarchy, or the one backed by the, yes, imperfect, but still pretty much free and open legal system? It's never about the actual money. Or the technical aspect of it. It's about trust.
- makomk 6y ago
  China has supposedly been trying to make their own system. The big problem with that, as I understand it, is that they have massive currency controls - people and companies outside China aren't generally allowed to buy and hold their internal currency, and people within China aren't generally permitted to take it out the country or exchange it for other currencies, with some exceptions that have been clamped down on heavily in the last few years. That means they're not a terribly attractive option as the big central clearinghouse for international payments compared to US dollars.
ntsplnkv2 6y ago
This would just hasten the demise of the already broken US. Lot's of silent downvotes - I'm happy to debate, do not be afraid to comment and tell me what you disagree with.
- spiderfarmer 6y ago
  The Covid crisis showed perfectly just how broken the US is. The country in its current state is hopelessly divided, terribly corrupt and it doesn’t have a functioning government or healthcare system. Politicians and civilians seem to pride themselves in making dumb and arrogant statements that show their lack of knowledge and experience. Democracy seems on the chopping block too. Trump is a major cause of this broken image, but for my generation it really started with the potential vice president Sarah Palin. As a European I can say that the only people who still look up to the USA as a great country are the people who base their views on Hollywood instead of the news.
  - dwater 6y ago
    I don't know what generation you are, but for my generation it started with Newt Gingrich and the "Moral Majority"'s intentional stonewalling and dismantling of government.
    - thewebcount 6y ago
      It definitely goes back to at least Reagan saying that government is the cause of all of our problems, but it's probably earlier than that. I have a vague recollection of Nixon saying something similar, but can't remember the details.
    - toby 6y ago
      There's a great podcast about this: https://www.thisamericanlife.org/662/transcript https://www.thisamericanlife.org/662/transcript To me the most interesting part was about how Tip O'Neill and Ronald Reagan were pretty close friends: "Then one day, I picked up the paper and read where he had made a statement about me that was pretty harsh. And I called him, and I said, Tip, I thought we had a relationship here, where we could do business together. And, oh, now, I read in the paper that you said-- And he interrupted me and said, well, buddy, that's just politics. He said, after 6 o'clock, we're buddies. We're friends. I did take it that every once in a while, when we had a meeting, I would visibly set my watch at above 6 o'clock."
deleted 6y ago
[deleted]
olivermarks 6y ago
This is like the economic policy of the Hells Angels, borrow vast amounts of money then freeze out, ostracize and threaten. We already have the splinternet evolving fast and Chinese style surveillance in North America. The dollar as reserve currency remains omnipotent and this is naked imperialism imo
- olivermarks 6y ago
  'Naked imperialism' wasn't intended to bash the USA, what I MTSW we have come to a point of naked imperialism between the two superpowers: China vs the offshore imperialists who control the USD
avmich 6y ago
China government is eager to try following the steps of USSR with better starting conditions - at least some of them. We can turn to history and see what steps were taken in Cold War and how they turned out to have some rough prediction of results today.
- Fjolsvith 6y ago
  Everyone knows how that turned out for the USSR.
raverbashing 6y ago
People are overlooking one important point here The system is a detail here, a major one sure, but the main thing is that the Yuan is not fully convertible Cutting China off means that either they turn the Yuan into a fully convertible currency or they'll use something else (limited choices here) Cutting China off: US sellers can't pay China. Will they cut everybody else from transacting with China? I think that China would see this as justification for very harsh actions. Funny thing is, if China is forced to make their currency convertible, this will result in a more Open China, not less. Weird times we're in
- onepointsixC 6y ago
  A more open China would mean trillions more in capital flight, a complete non starter for the CCP. If you genuinely believe that there is even a chance of a more open China, you have no been paying attention to the actions of the emperor for life.
OliverJones 6y ago
After the first Gulf War, the attempted embargo on oil from Iraq led to a limited market in which oil was priced in Euros. That was bad for the US. An attempt to cut China off from the USD international payments system will lead to a parallel system denominated in some other currency, possibly Remnimbi. That will be bad for the US too. Not for nothing they call Afghanistan the Graveyard of Empires.
- onepointsixC 6y ago
  The Chinese cannot lead with a RMB system which maintains the capital controls which they currently enforce. For an RMB system to take hold it needs to be freely exchangeable, and that would lead to trillions in additional capital flight from China. A complete non starter for the CCP. The fact is that the dollar is king. Even the BRI, which many describe as China's master plan to influence the world, are denoted in Dollars.
  - president 6y ago
    Correct, this is why it is reported that China and other nations like Iran are trying to create an alternative currency to sidestep dollar restrictions.
    - bassman9000 6y ago
      And they won't succeed, because currency is about trust, and dictatorships can't generate any of it long term.
    - onepointsixC 6y ago
      And that won't much more useful to them than the RMB. The Saudi's, whom supply a significant percentage of China's oil, don't want RMB nor some new currency which has the Iranians involved. The Saudi's don't buy as much from China as China buys from them. So they don't want to be stuck with billions of a currency they can't use for anything. But dollars? They can use to that to buy whatever they want from whomever they want. That's because USD is used one one side 88% of all FX trades[1]. If you were going to buy something from another country you already were going to use dollars. [1]: https://stats.bis.org/statx/srs/table/d11.3 https://stats.bis.org/statx/srs/table/d11.3
submeta 6y ago
The US is pushing against every nation, except IL. Even old partners from five eyes are not save anymore. Recent pushes against Canada demonstrate that. - The rest of the world is constantly shocked about US actions against almost every nation or institution (UN, WHO, ICJ, many more). Slowly they realize that they need to build new alliances that are not only in favor of the US. China sees the vacuum and is being pushed in new directions. Latest move: In the Middle East, cooperating with Iran, shocking Israel with that move. - The US are hurting themselves in the long run by trying to make politics by brute force.
- fermienrico 6y ago
  The next president is going to have to go around and sew broken relationships the current administration has torn apart.
  - cstross 6y ago
    Bad news: people outside the US have memories longer than 4 (or 8) years. Even if the next POTUS does make nice, there will thereafter always be the memory of how rapidly Trump tanked the USA's relationships. As a result, nobody will be able to count on US cooperation/amity for long term planning purposes without building in contingency plans for a "what if the next POTUS reverses course abruptly" situation. It might be fixable with a constitutional rebalancing to reduce the ability of the president to rule as an executive without congressional oversight, but that hardly seems likely short of there being a revolution or civil war. So US "soft power" is probably irrevocably damaged, at least for the next 8-20 years.
    - Gibbon1 6y ago
      Yeah no one's going to forget that a big chuck of the US voted for the current administration and will vote for them again. And they especially aren't going forget that the majority of business leaders are supporting the current administration. That includes all FAANG companies.
  - dencodev 6y ago
User23 6y ago
> And it, too, has a last-ditch deterrent: selling its $1.1trn stock of American treasury bills, equivalent to 4% of the total outstanding. America’s highly liquid bond markets may prove capable of absorbing the shock. The Fed would be forced to buy those bonds to maintain its interest rate targets. And since the Fed by law must remit its profits to the Treasury, the end result would be the net interest rate on that debt would drop from whatever it is now to zero. Hardly what I'd call a crushing blow. Imagine trying to threaten your banker by telling him if he's not careful you're going to move your money from your savings to your checking account.
known 6y ago
https://archive.vn/YJrfN https://archive.vn/YJrfN

49 points by known 6y ago

adammunich 6y ago

Won't this just encourage China to make their own system like they're doing with computer chips now?

mola 6y ago
Maybe, and if they succeed, what will the US do then? This is a terrifying path.
- justaguy88 6y ago
  Just another cold war
  - ed25519FUUU 6y ago
    What is a Cold War called when only one side is playing? Because that’s been the history for the last three decades.
    - p1esk 6y ago
      Somehow it doesn’t feel like the Cold War ever stopped.
    - crakenzak 6y ago
      not only one side is playing. China has a history of blatant violation of copyright law (helping Chinese companies steal research & tech that US companies spent billions of R&D money on) and using that to attempt to undercut US companies. China also constantly bans US companies[1] from accessing Chinese customers (eg. Facebook, Google, YouTube, Twitter etc). It's imperative that the US castrates China & CCP and doesn't allow it to spread its toxic influence further. [1] https://en.wikipedia.org/wiki/List_of_websites_blocked_in_mainland_China https://en.wikipedia.org/wiki/List_of_websites_blocked_in_ma...
ed25519FUUU 6y ago
More like accelerating their efforts to make a new system.
PeterisP 6y ago
That own system needs participants to be useful for international deals, and USA can extend the same embargo to that new system, so that all financial institutions have to choose whether they break the embargo, participate in the Chinese system and be banned from the main USD systems, or pretend that the Chinese system does not exist and keep all their non-Chinese business functioning.
bassman9000 6y ago
If you're trading internationally, and have to denominate on a given currency, would you use the one backed by China, or the one backed by the US? Would you use a new currency with nothing yet denominated in it, or the one in which trillions of assets are denominated into? The one backed by a legal system that in the end is a reflection of the whims of a single ruling, communist party with an inaccessible and arbitrary hierarchy, or the one backed by the, yes, imperfect, but still pretty much free and open legal system? It's never about the actual money. Or the technical aspect of it. It's about trust.
makomk 6y ago
China has supposedly been trying to make their own system. The big problem with that, as I understand it, is that they have massive currency controls - people and companies outside China aren't generally allowed to buy and hold their internal currency, and people within China aren't generally permitted to take it out the country or exchange it for other currencies, with some exceptions that have been clamped down on heavily in the last few years. That means they're not a terribly attractive option as the big central clearinghouse for international payments compared to US dollars.

ntsplnkv2 6y ago

This would just hasten the demise of the already broken US. Lot's of silent downvotes - I'm happy to debate, do not be afraid to comment and tell me what you disagree with.

spiderfarmer 6y ago
The Covid crisis showed perfectly just how broken the US is. The country in its current state is hopelessly divided, terribly corrupt and it doesn’t have a functioning government or healthcare system. Politicians and civilians seem to pride themselves in making dumb and arrogant statements that show their lack of knowledge and experience. Democracy seems on the chopping block too. Trump is a major cause of this broken image, but for my generation it really started with the potential vice president Sarah Palin. As a European I can say that the only people who still look up to the USA as a great country are the people who base their views on Hollywood instead of the news.
- dwater 6y ago
  I don't know what generation you are, but for my generation it started with Newt Gingrich and the "Moral Majority"'s intentional stonewalling and dismantling of government.
  - thewebcount 6y ago
    It definitely goes back to at least Reagan saying that government is the cause of all of our problems, but it's probably earlier than that. I have a vague recollection of Nixon saying something similar, but can't remember the details.
  - toby 6y ago
    There's a great podcast about this: https://www.thisamericanlife.org/662/transcript https://www.thisamericanlife.org/662/transcript To me the most interesting part was about how Tip O'Neill and Ronald Reagan were pretty close friends: "Then one day, I picked up the paper and read where he had made a statement about me that was pretty harsh. And I called him, and I said, Tip, I thought we had a relationship here, where we could do business together. And, oh, now, I read in the paper that you said-- And he interrupted me and said, well, buddy, that's just politics. He said, after 6 o'clock, we're buddies. We're friends. I did take it that every once in a while, when we had a meeting, I would visibly set my watch at above 6 o'clock."

deleted 6y ago

[deleted]

olivermarks 6y ago

This is like the economic policy of the Hells Angels, borrow vast amounts of money then freeze out, ostracize and threaten. We already have the splinternet evolving fast and Chinese style surveillance in North America. The dollar as reserve currency remains omnipotent and this is naked imperialism imo

olivermarks 6y ago
'Naked imperialism' wasn't intended to bash the USA, what I MTSW we have come to a point of naked imperialism between the two superpowers: China vs the offshore imperialists who control the USD

avmich 6y ago

China government is eager to try following the steps of USSR with better starting conditions - at least some of them. We can turn to history and see what steps were taken in Cold War and how they turned out to have some rough prediction of results today.

Fjolsvith 6y ago
Everyone knows how that turned out for the USSR.

raverbashing 6y ago

People are overlooking one important point here The system is a detail here, a major one sure, but the main thing is that the Yuan is not fully convertible Cutting China off means that either they turn the Yuan into a fully convertible currency or they'll use something else (limited choices here) Cutting China off: US sellers can't pay China. Will they cut everybody else from transacting with China? I think that China would see this as justification for very harsh actions. Funny thing is, if China is forced to make their currency convertible, this will result in a more Open China, not less. Weird times we're in

onepointsixC 6y ago
A more open China would mean trillions more in capital flight, a complete non starter for the CCP. If you genuinely believe that there is even a chance of a more open China, you have no been paying attention to the actions of the emperor for life.

OliverJones 6y ago

After the first Gulf War, the attempted embargo on oil from Iraq led to a limited market in which oil was priced in Euros. That was bad for the US. An attempt to cut China off from the USD international payments system will lead to a parallel system denominated in some other currency, possibly Remnimbi. That will be bad for the US too. Not for nothing they call Afghanistan the Graveyard of Empires.

onepointsixC 6y ago
The Chinese cannot lead with a RMB system which maintains the capital controls which they currently enforce. For an RMB system to take hold it needs to be freely exchangeable, and that would lead to trillions in additional capital flight from China. A complete non starter for the CCP. The fact is that the dollar is king. Even the BRI, which many describe as China's master plan to influence the world, are denoted in Dollars.
- president 6y ago
  Correct, this is why it is reported that China and other nations like Iran are trying to create an alternative currency to sidestep dollar restrictions.
  - bassman9000 6y ago
    And they won't succeed, because currency is about trust, and dictatorships can't generate any of it long term.
  - onepointsixC 6y ago
    And that won't much more useful to them than the RMB. The Saudi's, whom supply a significant percentage of China's oil, don't want RMB nor some new currency which has the Iranians involved. The Saudi's don't buy as much from China as China buys from them. So they don't want to be stuck with billions of a currency they can't use for anything. But dollars? They can use to that to buy whatever they want from whomever they want. That's because USD is used one one side 88% of all FX trades[1]. If you were going to buy something from another country you already were going to use dollars. [1]: https://stats.bis.org/statx/srs/table/d11.3 https://stats.bis.org/statx/srs/table/d11.3

submeta 6y ago

The US is pushing against every nation, except IL. Even old partners from five eyes are not save anymore. Recent pushes against Canada demonstrate that. - The rest of the world is constantly shocked about US actions against almost every nation or institution (UN, WHO, ICJ, many more). Slowly they realize that they need to build new alliances that are not only in favor of the US. China sees the vacuum and is being pushed in new directions. Latest move: In the Middle East, cooperating with Iran, shocking Israel with that move. - The US are hurting themselves in the long run by trying to make politics by brute force.

fermienrico 6y ago
The next president is going to have to go around and sew broken relationships the current administration has torn apart.
- cstross 6y ago
  Bad news: people outside the US have memories longer than 4 (or 8) years. Even if the next POTUS does make nice, there will thereafter always be the memory of how rapidly Trump tanked the USA's relationships. As a result, nobody will be able to count on US cooperation/amity for long term planning purposes without building in contingency plans for a "what if the next POTUS reverses course abruptly" situation. It might be fixable with a constitutional rebalancing to reduce the ability of the president to rule as an executive without congressional oversight, but that hardly seems likely short of there being a revolution or civil war. So US "soft power" is probably irrevocably damaged, at least for the next 8-20 years.
  - Gibbon1 6y ago
    Yeah no one's going to forget that a big chuck of the US voted for the current administration and will vote for them again. And they especially aren't going forget that the majority of business leaders are supporting the current administration. That includes all FAANG companies.
- dencodev 6y ago

User23 6y ago

> And it, too, has a last-ditch deterrent: selling its $1.1trn stock of American treasury bills, equivalent to 4% of the total outstanding. America’s highly liquid bond markets may prove capable of absorbing the shock. The Fed would be forced to buy those bonds to maintain its interest rate targets. And since the Fed by law must remit its profits to the Treasury, the end result would be the net interest rate on that debt would drop from whatever it is now to zero. Hardly what I'd call a crushing blow. Imagine trying to threaten your banker by telling him if he's not careful you're going to move your money from your savings to your checking account.

known 6y ago

https://archive.vn/YJrfN https://archive.vn/YJrfN