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I’m not going to comment on your other opinions as I don’t have relevant experience. But de-dollarization was a common refrain in my field (finance) going back

I’m not going to comment on your other opinions as I don’t have relevant experience. But de-dollarization was a common refrain in my field (finance) going back to before I was involved in it (2001). I’ve seen everything from Nixon in China to the current Russian sanctions being used as reasons for it. I suspect the real reason it will happen is that people can make more money trading in yuan (or rupee) than in usd. Sadly, Russia and Ukraine just aren’t important enough to make a dent. My personal opinion is that the dollar is the reserve currency (and thus the petro currency) is due to much less conspiratorial reasons. It spends all over the world. It isn’t debased frequently and it isn’t volatile. China could introduce a currency that had all those properties tomorrow. That they haven’t is an indictment of using the yuan as a reserve currency. It would take a significant change to Chinese economics to make that true. But! If China did that it wouldn’t save Russia. Modern currencies hate autocracy and despotism because it runs counter to their premise. It doesn’t help Russia for China to liberalize, the only thing that helps them is their own liberalization.

andreygrehov 4y ago
Thanks for the common sense response. > My personal opinion is that the dollar is the reserve currency (and thus the petro currency) is due to much less conspiratorial reasons. Agreed. There is zero conspiracy around that, which is why I believe the US loosing the natural power of the Dollar is a logical fear. > It would take a significant change to Chinese economics to make that true. ..which is what BRICS aiming for? If that is one of their goals, nothing is going to stop them. And honestly, that's a good goal to have. Putting all the negative narrative around Russia/China aside and abstracting away from the US, why should a single country's currency dominate over the entire world? That's simply not fair. > If China did that it wouldn’t save Russia I somewhat disagree. Russia is not looking to be saved by anyone. Putin's interest is a mutually beneficial partnership. He's a businessman. He's cool with yuan (or any other currency) being the new reserve currency. On the other hand, he is not cool with the US pushing to be the superpower dictating the rules, which obviously goes against the United States' goals and ambitions. I could be wrong, but that's my understanding of things.
- kasey_junk 4y ago
  BRICS is not some counter balance to the US petro dollar. It is at best a coffee claque of countries with the most currency controls of any major economies and at worse a Chinese op to make the yuan more powerful. But the problem is that none of the BRICS nations want a market currency! They want a less dominant USD (which I personally think is understandable but short sighted) but they haven’t offered a viable alternative. That is to say they each want their own currency to be as valuable as USD but haven’t done the things it would take to make that happen. I don’t think it is “fair” that the USD is dominant but I think that oil settlement in other currencies is much less detrimental to USD than many people think. Again, if you can settle oil in your currency, you’ve effectively put it in competition with USD. The Chinese government has been fighting that outcome for as long as there has been modern Chinese currency, and frankly every other currency besides INR doesn’t matter for this conversation and INR also has been very controlled. People seem to have it backwards. Global trade attaches to liberal currencies because that’s good for global trade. The US has the most liberal currency of all time (and the most liberal currency currently even with Russian sanctions) and that makes it the petro currency. If the yuan or the rupee liberalize enough to take over the petro trade then there won’t be much impact on usd but if they don’t then market forces will hurt them more than the US. The thing that might cause a USD fall is a default on usd debt or the us becoming more conservative on their currency controls but there is so far to go on that compared to their comps it’s hard to extrapolate. I don’t have opinions on Putins desires, it’s outside of my understanding. But picking the Chinese in a relationship where they have more powers than the previous relationship with Europe seems crazy to me. But international politics is not my sphere.
  - andreygrehov 4y ago
    Appreciate your comments, Kasey, and thanks for the detailed response. Off-topic: the link in your profile is no longer available.

andreygrehov 4y ago

Thanks for the common sense response. > My personal opinion is that the dollar is the reserve currency (and thus the petro currency) is due to much less conspiratorial reasons. Agreed. There is zero conspiracy around that, which is why I believe the US loosing the natural power of the Dollar is a logical fear. > It would take a significant change to Chinese economics to make that true. ..which is what BRICS aiming for? If that is one of their goals, nothing is going to stop them. And honestly, that's a good goal to have. Putting all the negative narrative around Russia/China aside and abstracting away from the US, why should a single country's currency dominate over the entire world? That's simply not fair. > If China did that it wouldn’t save Russia I somewhat disagree. Russia is not looking to be saved by anyone. Putin's interest is a mutually beneficial partnership. He's a businessman. He's cool with yuan (or any other currency) being the new reserve currency. On the other hand, he is not cool with the US pushing to be the superpower dictating the rules, which obviously goes against the United States' goals and ambitions. I could be wrong, but that's my understanding of things.

kasey_junk 4y ago
BRICS is not some counter balance to the US petro dollar. It is at best a coffee claque of countries with the most currency controls of any major economies and at worse a Chinese op to make the yuan more powerful. But the problem is that none of the BRICS nations want a market currency! They want a less dominant USD (which I personally think is understandable but short sighted) but they haven’t offered a viable alternative. That is to say they each want their own currency to be as valuable as USD but haven’t done the things it would take to make that happen. I don’t think it is “fair” that the USD is dominant but I think that oil settlement in other currencies is much less detrimental to USD than many people think. Again, if you can settle oil in your currency, you’ve effectively put it in competition with USD. The Chinese government has been fighting that outcome for as long as there has been modern Chinese currency, and frankly every other currency besides INR doesn’t matter for this conversation and INR also has been very controlled. People seem to have it backwards. Global trade attaches to liberal currencies because that’s good for global trade. The US has the most liberal currency of all time (and the most liberal currency currently even with Russian sanctions) and that makes it the petro currency. If the yuan or the rupee liberalize enough to take over the petro trade then there won’t be much impact on usd but if they don’t then market forces will hurt them more than the US. The thing that might cause a USD fall is a default on usd debt or the us becoming more conservative on their currency controls but there is so far to go on that compared to their comps it’s hard to extrapolate. I don’t have opinions on Putins desires, it’s outside of my understanding. But picking the Chinese in a relationship where they have more powers than the previous relationship with Europe seems crazy to me. But international politics is not my sphere.
- andreygrehov 4y ago
  Appreciate your comments, Kasey, and thanks for the detailed response. Off-topic: the link in your profile is no longer available.