6 ms·

sigh Fifty years ago, the dollar had value because America was the one-stop-shop for everything. Cars, electronics, appliances, all of it. Nowadays, that's Ch

by donw 5y ago

sigh Fifty years ago, the dollar had value because America was the one-stop-shop for everything. Cars, electronics, appliances, all of it. Nowadays, that's China. China makes everything, or the parts to make everything, and increasingly to a higher standard than can be produced in the US. Go watch Project Farm and think on those results. The dollar has value now because it functions as a medium of exchange. That's it. The machinery of international purchasing and banking works in dollars, but that's not a given. Kicking Russia out of SWIFT undermines that entire system. Doesn't matter if it's expedient or warranted or if you just really fucking hate Ivan. It is now very clear to every single bank on the planet that the USG is willing to use commercial entities as a weapon against your country. Not just banks, either: technology companies, medical suppliers, all the rest. That has very real long-term consequences, and I wouldn't be surprised if China and Russia jointly rolled out a competing standard within the next decade. The combination of "you're using this if you want to buy from us" and "can you really trust the Americans?" is not going to have good consequences for the USD.

avalys 5y ago
All valid points, but...using military force to seize control of another sovereign, democratic nation also undermines the entire economic system. I don't see this as driven by the US government and as something that will be held against the USD, it is just as much motivated by the Europeans and the Euro. The point of these sanctions is to say - a country is not allowed the benefits of integration with the global economy if they are willing to use military force against it.
- donw 5y ago
  > All valid points, but...using military force to seize control of another sovereign, democratic nation also undermines the entire economic system. History disagrees. > The point of these sanctions is to say - a country is not allowed the benefits of integration with the global economy if they are willing to use military force against it. What happens when that country is no longer interested in the trade-offs required to "integrate into the global economy"?
  - dotancohen 5y ago
    Interesting to note that the two pariah states both have advanced space programs. Less than a dozen countries in the world have orbital capability, North Korea among them.
- j16sdiz 5y ago
  > a country is not allowed the benefits of integration with the global economy if they are willing to use military force against it. Instead of hurting just Russia, this is literally hurting every country. I really hope we can do something good for everybody, but my fallible mind has its limit.
  - KptMarchewa 5y ago
    Besides fossils and defence stuff (which as we can see... is way overhyped) Russia has nothing interesting to offer to the world.
    - sanxiyn 5y ago
      Russia is #1 exporter of wheat.
1270018080 5y ago
50 years ago the dollar had value because of a massive and extremely temporary economic opportunity while the rest of the world played catch up from world wars, civil wars, and imperialism. Now we're closer to a level playing field and America doesn't get to play on easy mode. Regardless, manufacturing isn't the primary measure for economic strength anyway.
llamataboot 5y ago
I mean arguably I'd want a country that cares more about human rights in the world than it's own currency on an open market, without even saying that this is what the US is doing here. But the US also couldn't act unilaterally in these sanctions so I'm not sure that comes into play so much
tyrfing 5y ago
You mean SPFS and CIPS? It's not like everyone woke up this week and realized these economic levers exist. Look at Huawei, the EUV blockade, Russia using gas for politics, etc. SWIFT is a relatively weaker lever in that the US is not able to unilaterally impose this, it took EU signing off - and pre-war, this wasn't a very likely outcome. Assuming dollar hegemony forever without using it as a weapon also isn't very truthful. With the rise of China that you point out and with the decline over long timescales of oil, it's going to wane in importance without more levers like silicon.
lambdasquirrel 5y ago
I don't agree with the analysis here, through and through. Russia may buy things from China, but they need to sell energy and goods to Europe. In particular, it is difficult for Russia to send a good chunk of their energy output to China. Energy is a bulk good, and thus sensitive to transport costs. China and Russia are not liberal economies. A side effect of that is that their own markets do not offer enough liquidity to support an alternative exchange medium. It really is as simple as that. China has advanced in strides, but it will take true liberalization before it can wield economic weapons on a global scale. Its society will need to mature more before that happens, and then it will be a different day. I'm not going to rah-rah let's beat Russia – or China – those are nationalistic attitudes I won't partake in. At the same time, I really am very negatively against this war, and just as much, I believe the systems should be impartial as they can be. With all that said, your analysis simply does not hold weight, and given the European consensus behind blocking the Russian government from SWIFT, I don't think the legitimacy or effectiveness of that system is significantly compromised either, for all practical purposes.
rib3ye 5y ago
I see this "Chinese production + Russian... (I guess just oil) = superior economic system" argument before, but I suspect these people have never opened a history book on Sino-Soviet relations. Because of decades of undermining and backstabbing, the trust between these two societies is pretty close to zero despite "communism". The only thing they really have in common is that they are both autocratic governments, so not exactly beacons of stability and cooperation. So the USD doesn't doesn't have to be the best, just the least worst.
- imwillofficial 5y ago
  Except this isn’t the case at all. Modern Russia, and Modern China are as tight as ever. Being driven closer by the West.
  - Animats 5y ago
    That does not seem to be the case. The leadership of China has been rather quiet the last few days. China Daily is not spouting a pro-Putin line at all. The party line may be to sit this one out.
    - netsharc 5y ago
      It seems like China is in a great position to "buy" Russia: an embarassed Putin can't go to the people who sanctioned him and say "I'm sorry, I was wrong, I'll stop now, can we go back to the way we were before", but when he does retreat after declaring "Mission accomplished!" he can still go to Xi and say "My friend Xi!". Maybe Russians will get AliPay and WeChat in the near future...
      - KptMarchewa 5y ago
        And Xi will squeeze him much harder than he squeezed Iran. https://en.wikipedia.org/wiki/Iran%E2%80%93China_25-year_Cooperation_Program https://en.wikipedia.org/wiki/Iran%E2%80%93China_25-year_Coo...
    - 5y ago
solatic 5y ago
Yep, same thing that happened to British Pound Sterling. The Industrial Revolution and the British Empire made it the global reserve currency; war losses, the dismantling of the Empire, and the decline of British industry handled the mantle to the American Dollar. Nothing truly protects USD from the same forces. China and Russia won't succeed at launching a competing standard though. Autocracy may promote economic growth at home, but it cannot credibly protect the financial interests of foreigners from its own impulsive and selfish desires. You deposit funds into Russian and Chinese banks at your own risk.
- sudosysgen 5y ago
  CIPS isn't about trusting China with your money, it's just an interchange system. It's not necessary to trust Chinese or Russia banks.
  - kasey_junk 5y ago
    CIPS is about getting money to Chinese banks (effectively the only members). The commenter is suggesting that having money in those banks is not a desired outcome for most institutions due to the fact that Chinese finance does not run on the same premises as institutions used to doing business with the west.
    - sudosysgen 5y ago
      Russian banks are joining CIPS now, and likely other countries will as well. You're getting money to Chinese banks because presumably you are buying something from someone that has an account there, not for safeholding.
      - kasey_junk 5y ago
        It’s going to take a long time for international companies to get the yuan/cips/China bank corridor working, those relationships don’t get built quickly and most places that aren’t dealing directly with China don’t bank there (as opposed to the UK, Ireland or other countries that act as banking nexus’. Those Chinese banks can’t even be used for traditional style fx management because you’ll have to double fx from local currency to yuan and yuan to ruble. The yuan fx scene is much less efficient and liquid as well. What this more likely does is set Russian & Chinese firms to trade with each other. That looks a lot like the North Korea relationship.
abofh 5y ago
SWIFT is a Belgian corporation that is not tied to a specific currency. Kicking them out of SWIFT has nothing to do with USD hegimony. China and Russia do have a competing system, it's used by China and Russia. Moreover, Russias currency and market have been in a downfall for a month, not a week - that its actions _have_ long term consequences is exactly the point. Now, please remember, there's a whole planet out there, and Russia has a GDP that equals _Italy_ or Benelux - it's just, in the grand scheme of things, not important enough to justify its repeated demands to be able to invade soverign nations without consequences. Russia is still free to settle its debts through the thing it has: physical goods. SWIFT is a messaging system - not a payment system - they're still free to use faxes and carrier pigeons. The world need not let you participate in modern conveniences if you're just a bully.
- lnxg33k1 5y ago
  I agree with almost everything but Russia GDP is a trillion less than the italian one
  - mike_d 5y ago
    Measuring Russia by GDP is like measuring a bank robber by their tax return. They have a shit ton of dark money that isn't calculated as part of GDP. Their economy is also in much better shape even with the smaller official calculations, having external debt equal to 38% of GDP compared to 102% for the US.
    - lnxg33k1 5y ago
      I mean are you really saying that italian mafia declares everything? Let's do mafias GDP then, let's see who has it bigger (As italian, neapolitan)
      - Hamuko 5y ago
        Isn't crime already accounted for in the Italian GDP? https://qz.com/212962/drugs-prostitution-and-smuggling-italys-gdp-is-about-to-get-much-bigger/ https://qz.com/212962/drugs-prostitution-and-smuggling-italy...
sto_hristo 5y ago
All i'm getting from China is cheap disposable garbage. The rest is made in the West and merely packaged in China, because robots have not been developed enough to put phone in box on their own, and nobody wants to do this job.
- GekkePrutser 5y ago
  Yes a lot of cheap crap comes from China but lots of high quality manufacturing too. Not to mention all the components we use. Those shiny MacBooks and iPhones were all designed in California but made in China.
nradov 5y ago
The dollar had value now because US taxes must be paid in that currency.
KptMarchewa 5y ago
>It is now very clear to every single bank on the planet that the USG is willing to use commercial entities as a weapon against your country. If you act like North Korea you'll be treated like North Korea.
modo_mario 5y ago
Fifty years ago the US and allies forced Japans arm exactly because the US was not the one-stop-shop for everything and the US had trouble and a massive trade deficit with japan which was experiencing the reverse. Forced technology transfers, bad monetary policy, quotas for US tech, cars, etc in their domestic market. Japan was forced to take it all as they had no comparable export market to switch to (the USSR and co were a nono, china and such poor), no independent army and foreign policy of their own and all in all no way to resist and was thus very susceptible to a tradewar.

by donw 5y ago

avalys 5y ago

All valid points, but...using military force to seize control of another sovereign, democratic nation also undermines the entire economic system. I don't see this as driven by the US government and as something that will be held against the USD, it is just as much motivated by the Europeans and the Euro. The point of these sanctions is to say - a country is not allowed the benefits of integration with the global economy if they are willing to use military force against it.

donw 5y ago
> All valid points, but...using military force to seize control of another sovereign, democratic nation also undermines the entire economic system. History disagrees. > The point of these sanctions is to say - a country is not allowed the benefits of integration with the global economy if they are willing to use military force against it. What happens when that country is no longer interested in the trade-offs required to "integrate into the global economy"?
- dotancohen 5y ago
  Interesting to note that the two pariah states both have advanced space programs. Less than a dozen countries in the world have orbital capability, North Korea among them.
j16sdiz 5y ago
> a country is not allowed the benefits of integration with the global economy if they are willing to use military force against it. Instead of hurting just Russia, this is literally hurting every country. I really hope we can do something good for everybody, but my fallible mind has its limit.
- KptMarchewa 5y ago
  Besides fossils and defence stuff (which as we can see... is way overhyped) Russia has nothing interesting to offer to the world.
  - sanxiyn 5y ago
    Russia is #1 exporter of wheat.

1270018080 5y ago

50 years ago the dollar had value because of a massive and extremely temporary economic opportunity while the rest of the world played catch up from world wars, civil wars, and imperialism. Now we're closer to a level playing field and America doesn't get to play on easy mode. Regardless, manufacturing isn't the primary measure for economic strength anyway.

llamataboot 5y ago

I mean arguably I'd want a country that cares more about human rights in the world than it's own currency on an open market, without even saying that this is what the US is doing here. But the US also couldn't act unilaterally in these sanctions so I'm not sure that comes into play so much

tyrfing 5y ago

You mean SPFS and CIPS? It's not like everyone woke up this week and realized these economic levers exist. Look at Huawei, the EUV blockade, Russia using gas for politics, etc. SWIFT is a relatively weaker lever in that the US is not able to unilaterally impose this, it took EU signing off - and pre-war, this wasn't a very likely outcome. Assuming dollar hegemony forever without using it as a weapon also isn't very truthful. With the rise of China that you point out and with the decline over long timescales of oil, it's going to wane in importance without more levers like silicon.

lambdasquirrel 5y ago

I don't agree with the analysis here, through and through. Russia may buy things from China, but they need to sell energy and goods to Europe. In particular, it is difficult for Russia to send a good chunk of their energy output to China. Energy is a bulk good, and thus sensitive to transport costs. China and Russia are not liberal economies. A side effect of that is that their own markets do not offer enough liquidity to support an alternative exchange medium. It really is as simple as that. China has advanced in strides, but it will take true liberalization before it can wield economic weapons on a global scale. Its society will need to mature more before that happens, and then it will be a different day. I'm not going to rah-rah let's beat Russia – or China – those are nationalistic attitudes I won't partake in. At the same time, I really am very negatively against this war, and just as much, I believe the systems should be impartial as they can be. With all that said, your analysis simply does not hold weight, and given the European consensus behind blocking the Russian government from SWIFT, I don't think the legitimacy or effectiveness of that system is significantly compromised either, for all practical purposes.

rib3ye 5y ago

I see this "Chinese production + Russian... (I guess just oil) = superior economic system" argument before, but I suspect these people have never opened a history book on Sino-Soviet relations. Because of decades of undermining and backstabbing, the trust between these two societies is pretty close to zero despite "communism". The only thing they really have in common is that they are both autocratic governments, so not exactly beacons of stability and cooperation. So the USD doesn't doesn't have to be the best, just the least worst.

imwillofficial 5y ago
Except this isn’t the case at all. Modern Russia, and Modern China are as tight as ever. Being driven closer by the West.
- Animats 5y ago
  That does not seem to be the case. The leadership of China has been rather quiet the last few days. China Daily is not spouting a pro-Putin line at all. The party line may be to sit this one out.
  - netsharc 5y ago
    It seems like China is in a great position to "buy" Russia: an embarassed Putin can't go to the people who sanctioned him and say "I'm sorry, I was wrong, I'll stop now, can we go back to the way we were before", but when he does retreat after declaring "Mission accomplished!" he can still go to Xi and say "My friend Xi!". Maybe Russians will get AliPay and WeChat in the near future...
    - KptMarchewa 5y ago
      And Xi will squeeze him much harder than he squeezed Iran. https://en.wikipedia.org/wiki/Iran%E2%80%93China_25-year_Cooperation_Program https://en.wikipedia.org/wiki/Iran%E2%80%93China_25-year_Coo...
  - 5y ago

solatic 5y ago

Yep, same thing that happened to British Pound Sterling. The Industrial Revolution and the British Empire made it the global reserve currency; war losses, the dismantling of the Empire, and the decline of British industry handled the mantle to the American Dollar. Nothing truly protects USD from the same forces. China and Russia won't succeed at launching a competing standard though. Autocracy may promote economic growth at home, but it cannot credibly protect the financial interests of foreigners from its own impulsive and selfish desires. You deposit funds into Russian and Chinese banks at your own risk.

sudosysgen 5y ago
CIPS isn't about trusting China with your money, it's just an interchange system. It's not necessary to trust Chinese or Russia banks.
- kasey_junk 5y ago
  CIPS is about getting money to Chinese banks (effectively the only members). The commenter is suggesting that having money in those banks is not a desired outcome for most institutions due to the fact that Chinese finance does not run on the same premises as institutions used to doing business with the west.
  - sudosysgen 5y ago
    Russian banks are joining CIPS now, and likely other countries will as well. You're getting money to Chinese banks because presumably you are buying something from someone that has an account there, not for safeholding.
    - kasey_junk 5y ago
      It’s going to take a long time for international companies to get the yuan/cips/China bank corridor working, those relationships don’t get built quickly and most places that aren’t dealing directly with China don’t bank there (as opposed to the UK, Ireland or other countries that act as banking nexus’. Those Chinese banks can’t even be used for traditional style fx management because you’ll have to double fx from local currency to yuan and yuan to ruble. The yuan fx scene is much less efficient and liquid as well. What this more likely does is set Russian & Chinese firms to trade with each other. That looks a lot like the North Korea relationship.

abofh 5y ago

SWIFT is a Belgian corporation that is not tied to a specific currency. Kicking them out of SWIFT has nothing to do with USD hegimony. China and Russia do have a competing system, it's used by China and Russia. Moreover, Russias currency and market have been in a downfall for a month, not a week - that its actions _have_ long term consequences is exactly the point. Now, please remember, there's a whole planet out there, and Russia has a GDP that equals _Italy_ or Benelux - it's just, in the grand scheme of things, not important enough to justify its repeated demands to be able to invade soverign nations without consequences. Russia is still free to settle its debts through the thing it has: physical goods. SWIFT is a messaging system - not a payment system - they're still free to use faxes and carrier pigeons. The world need not let you participate in modern conveniences if you're just a bully.

lnxg33k1 5y ago
I agree with almost everything but Russia GDP is a trillion less than the italian one
- mike_d 5y ago
  Measuring Russia by GDP is like measuring a bank robber by their tax return. They have a shit ton of dark money that isn't calculated as part of GDP. Their economy is also in much better shape even with the smaller official calculations, having external debt equal to 38% of GDP compared to 102% for the US.
  - lnxg33k1 5y ago
    I mean are you really saying that italian mafia declares everything? Let's do mafias GDP then, let's see who has it bigger (As italian, neapolitan)
    - Hamuko 5y ago
      Isn't crime already accounted for in the Italian GDP? https://qz.com/212962/drugs-prostitution-and-smuggling-italys-gdp-is-about-to-get-much-bigger/ https://qz.com/212962/drugs-prostitution-and-smuggling-italy...

sto_hristo 5y ago

All i'm getting from China is cheap disposable garbage. The rest is made in the West and merely packaged in China, because robots have not been developed enough to put phone in box on their own, and nobody wants to do this job.

GekkePrutser 5y ago
Yes a lot of cheap crap comes from China but lots of high quality manufacturing too. Not to mention all the components we use. Those shiny MacBooks and iPhones were all designed in California but made in China.

nradov 5y ago

The dollar had value now because US taxes must be paid in that currency.

KptMarchewa 5y ago

>It is now very clear to every single bank on the planet that the USG is willing to use commercial entities as a weapon against your country. If you act like North Korea you'll be treated like North Korea.

modo_mario 5y ago

Fifty years ago the US and allies forced Japans arm exactly because the US was not the one-stop-shop for everything and the US had trouble and a massive trade deficit with japan which was experiencing the reverse. Forced technology transfers, bad monetary policy, quotas for US tech, cars, etc in their domestic market. Japan was forced to take it all as they had no comparable export market to switch to (the USSR and co were a nono, china and such poor), no independent army and foreign policy of their own and all in all no way to resist and was thus very susceptible to a tradewar.