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Graber said I quote: > American imperial power is based on a debt that will never-can never-be repaid. Its national debt has become a promise, not just to its

by unmole 5y ago

Graber said I quote: > American imperial power is based on a debt that will never-can never-be repaid. Its national debt has become a promise, not just to its own people, but to the nations of the entire world, that everyone knows will not be kept. Graber then likens the large holdings of US treasuries by Western Europe, Japan and Korea to a tribute system which siphons wealth from these supposed client states to the American Empire. And then in the very same chapter he also says China accumulating US treasuries is the first stage of a very long process of reducing the United States to something like a traditional Chinese client state. No mention of the actual conventionally understood reason of why US treasuries are favored as reserves i.e. safety and liquidity. Tell me again how I am misrepresenting the book.

modo_mario 5y ago
>Graber then likens the large holdings of US treasuries by Western Europe, Japan and Korea to a tribute system which siphons wealth from these supposed client states to the American Empire. Doesn't it kind of keep interest rates low and create needed liquidity in the US markets? I'm a layman but to me this reminds me of how i heard it explained that the status of the dollar as reserve currency and for oil transactions, etc subsidises subsidises the perpetual american trade deficit on the back of other nations. That person also referenced north african nations trying to protect their currency pegs even tho US fiscal policy was in part leading to issues for them leading up to the arab spring. I wonder how much truth there is to that.
pydry 5y ago
China isn't your neighbor topping up his pension or your local insurance company seeking a home for its premiums. Their risk profile and reasons for buying are utterly different. Even the liquidity of treasuries is, for them, different. Why do you think Russia dumped its treasuries in 2018 if they're such a safe investment for military opponents of US hegemony? How liquid would they be right now if they'd kept them? Which buyer of treasuries do you really think China shares most in common with? Is it State Farm or Calpers? Or is it Russia? What you're doing right now is the economic equivalent of trying to apply Newton's second law to relativistic speeds. Yes, that's absolutely misrepresenting the book.
- unmole 5y ago
  OK, let's pretend that central banks around the world don't buy US treasuries because they are safe and liquid. Why do they buy them then? Is it because they are vassals of the American empire paying tribute? Or is it because they are trying to turn America into a client state? They both can't be simultaneously true. Yet these are the explanations proffered by Graber in addition to claiming: > Its national debt has become a promise, not just to its own people, but to the nations of the entire world, that everyone knows will not be kept.
  - pydry 5y ago
    China's holdings are large enough that will they be able to trigger an enormous inflationary spike by unloading US treasuries unlike pretty much every other holder. The larger their holdings and the more the US is reliant upon their industrial output the larger the inflationary spike they can trigger just by flipping a switch. Whether that spike is large enough to break confidence in the US dollar entirely and break its hegemony is another matter. The longer China manages to maintain a trade surplus with a US and siphon US industry away the better their odds are though and the scarier them unloading is. It's kind of like adage about how you owing the bank $1000 is 100% your problem and you owing the bank $10 mil is now the banks problem.
    - unmole 5y ago
      So, the thesis is that China will be able to trigger a inflationary spike in the US by plunging their own economy into a recession? As a nuclear option, it could possibly work. But I will point out that China holds ~3% of US debt. And if China starts dumping US treasuries, they will be scooped up by other central banks. As interesting as this thesis may be, this is not even remotely close to what Graeber was alluding to: > From a longer-term perspective, China's behavior isn't puzzling at all. In fact it's quite true to form. The unique thing about the Chinese empire is that it has, since the Han dynasty at least, adopted a peculiar sort of tribute system whereby, in exchange for recognition of the Chinese emperor as world-sovereign, they have been willing to shower their client states with gifts far greater than they receive in return. The echnique seems to have been developed almost as a kind of trick when dealing with the "northern barbarians" of the steppes, who always threatened Chinese frontiers : a way to overwhelm them with such luxuries that they would become complacent, effeminate, and unwarlike. It was systematized in the " tribute trade" practiced with client states like Japan, Taiwan, Korea, and various states of Southeast Asia, and for a brief period from 1405 to 1433, it even extended to a world scale, under the famous eunuch admiral Zheng He. He led a series of seven expeditions across the Indian Ocean, his great " treasure fleet"-in dramatic contrast to the Spanish treasure fleets of a century later-carrying not only thousands of armed marines, but endless quantities of silks, porcelain, and other Chinese luxuries to present to those local rulers willing to recognize the authority of the emperor.

by unmole 5y ago

modo_mario 5y ago

>Graber then likens the large holdings of US treasuries by Western Europe, Japan and Korea to a tribute system which siphons wealth from these supposed client states to the American Empire. Doesn't it kind of keep interest rates low and create needed liquidity in the US markets? I'm a layman but to me this reminds me of how i heard it explained that the status of the dollar as reserve currency and for oil transactions, etc subsidises subsidises the perpetual american trade deficit on the back of other nations. That person also referenced north african nations trying to protect their currency pegs even tho US fiscal policy was in part leading to issues for them leading up to the arab spring. I wonder how much truth there is to that.

pydry 5y ago

China isn't your neighbor topping up his pension or your local insurance company seeking a home for its premiums. Their risk profile and reasons for buying are utterly different. Even the liquidity of treasuries is, for them, different. Why do you think Russia dumped its treasuries in 2018 if they're such a safe investment for military opponents of US hegemony? How liquid would they be right now if they'd kept them? Which buyer of treasuries do you really think China shares most in common with? Is it State Farm or Calpers? Or is it Russia? What you're doing right now is the economic equivalent of trying to apply Newton's second law to relativistic speeds. Yes, that's absolutely misrepresenting the book.

unmole 5y ago
OK, let's pretend that central banks around the world don't buy US treasuries because they are safe and liquid. Why do they buy them then? Is it because they are vassals of the American empire paying tribute? Or is it because they are trying to turn America into a client state? They both can't be simultaneously true. Yet these are the explanations proffered by Graber in addition to claiming: > Its national debt has become a promise, not just to its own people, but to the nations of the entire world, that everyone knows will not be kept.
- pydry 5y ago
  China's holdings are large enough that will they be able to trigger an enormous inflationary spike by unloading US treasuries unlike pretty much every other holder. The larger their holdings and the more the US is reliant upon their industrial output the larger the inflationary spike they can trigger just by flipping a switch. Whether that spike is large enough to break confidence in the US dollar entirely and break its hegemony is another matter. The longer China manages to maintain a trade surplus with a US and siphon US industry away the better their odds are though and the scarier them unloading is. It's kind of like adage about how you owing the bank $1000 is 100% your problem and you owing the bank $10 mil is now the banks problem.
  - unmole 5y ago
    So, the thesis is that China will be able to trigger a inflationary spike in the US by plunging their own economy into a recession? As a nuclear option, it could possibly work. But I will point out that China holds ~3% of US debt. And if China starts dumping US treasuries, they will be scooped up by other central banks. As interesting as this thesis may be, this is not even remotely close to what Graeber was alluding to: > From a longer-term perspective, China's behavior isn't puzzling at all. In fact it's quite true to form. The unique thing about the Chinese empire is that it has, since the Han dynasty at least, adopted a peculiar sort of tribute system whereby, in exchange for recognition of the Chinese emperor as world-sovereign, they have been willing to shower their client states with gifts far greater than they receive in return. The echnique seems to have been developed almost as a kind of trick when dealing with the "northern barbarians" of the steppes, who always threatened Chinese frontiers : a way to overwhelm them with such luxuries that they would become complacent, effeminate, and unwarlike. It was systematized in the " tribute trade" practiced with client states like Japan, Taiwan, Korea, and various states of Southeast Asia, and for a brief period from 1405 to 1433, it even extended to a world scale, under the famous eunuch admiral Zheng He. He led a series of seven expeditions across the Indian Ocean, his great " treasure fleet"-in dramatic contrast to the Spanish treasure fleets of a century later-carrying not only thousands of armed marines, but endless quantities of silks, porcelain, and other Chinese luxuries to present to those local rulers willing to recognize the authority of the emperor.