14 ms·

This is what is actually so scary. Iirc the petrodollar system has kept American economic hegemony in place for ~50 years but new debt is more likely to be deno

by z3ugma 6y ago

This is what is actually so scary. Iirc the petrodollar system has kept American economic hegemony in place for ~50 years but new debt is more likely to be denominated in a mix of Euro, dollar, and RMB. At some point there will be a breaking point in foreign policy (not least of all because the end of American empire has us so focused on domestic fights) and the petrodollar will be over with the signing of a pen. That will trigger a massive reorganizing of the domestic economy and launch China’s primacy.

epistasis 6y ago
The trade deficit has also given the US power, and as the petrodollar disappears with fossil fuel no longer being the driver of energy, the US's purchasing power will keep it afloat. With T-bills trading at negative rates, the US is in a really strong position. People are paying the US for the ability to hold US currency. This is why I find it so odd that supposedly nationalists in the US rail against the trade deficit and US "debt." Our "debt" is actually just the currency of the world, and as the world grows wealthier and wants to hold our currency, there needs to be more of it out there. This is good for the US and puts other countries at a disadvantage!
- nostrademons 6y ago
  It hurts different parts of America to different degrees. A strong U.S. dollar is generally good for U.S. consumers and bad for people who work in U.S. export industries. The dollar being the global reserve currency is good for the financial industry and bad for everyone else. So basically Wall Street (and workers in industries where America is dominant anyway, like tech, defense, biotech) should favor a strong dollar, while Main Street should favor a weak dollar. This isn't far off from reality: many of the "U.S. nationalists" represent constituents whose jobs have been eviscerated by foreign competition.
- fire7000 6y ago
  Each dollar an American owns is being diluted by 2 that a foreign person owns. That debt also has huge interest payments. What you're arguing is the equivalent of credit card debt isn't a problem on the Amex black because it has no credit limit. If it doesn't work in a small community, it wont work for a large one in the long run. You can't borrow forever and still expect people to 1) lend to you or 2) not want to kill you
- __Joker 6y ago
  Except foreign holding of US debt is coming down[1]. [1] https://twitter.com/LynAldenContact/status/1361818749104447501 https://twitter.com/LynAldenContact/status/13618187491044475...
fire7000 6y ago
China still needs to learn how to innovate rather than copy before they can truly take primacy.

by z3ugma 6y ago

epistasis 6y ago

The trade deficit has also given the US power, and as the petrodollar disappears with fossil fuel no longer being the driver of energy, the US's purchasing power will keep it afloat. With T-bills trading at negative rates, the US is in a really strong position. People are paying the US for the ability to hold US currency. This is why I find it so odd that supposedly nationalists in the US rail against the trade deficit and US "debt." Our "debt" is actually just the currency of the world, and as the world grows wealthier and wants to hold our currency, there needs to be more of it out there. This is good for the US and puts other countries at a disadvantage!

nostrademons 6y ago
It hurts different parts of America to different degrees. A strong U.S. dollar is generally good for U.S. consumers and bad for people who work in U.S. export industries. The dollar being the global reserve currency is good for the financial industry and bad for everyone else. So basically Wall Street (and workers in industries where America is dominant anyway, like tech, defense, biotech) should favor a strong dollar, while Main Street should favor a weak dollar. This isn't far off from reality: many of the "U.S. nationalists" represent constituents whose jobs have been eviscerated by foreign competition.
fire7000 6y ago
Each dollar an American owns is being diluted by 2 that a foreign person owns. That debt also has huge interest payments. What you're arguing is the equivalent of credit card debt isn't a problem on the Amex black because it has no credit limit. If it doesn't work in a small community, it wont work for a large one in the long run. You can't borrow forever and still expect people to 1) lend to you or 2) not want to kill you
__Joker 6y ago
Except foreign holding of US debt is coming down[1]. [1] https://twitter.com/LynAldenContact/status/1361818749104447501 https://twitter.com/LynAldenContact/status/13618187491044475...

fire7000 6y ago

China still needs to learn how to innovate rather than copy before they can truly take primacy.