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Did I predict this [0] a year ago?: > More likely, the SWIFT sanctions will prove a mistake for "the West," when it realizes the downstream effects of cutting

Did I predict this [0] a year ago?: > More likely, the SWIFT sanctions will prove a mistake for "the West," when it realizes the downstream effects of cutting off Russia from the dominant payment network of the global reserve currency. Russian banks have already started offering accounts in yuan. This will lead to further balkanization (unfortunate pun notwithstanding) of world reserve currencies, which means increased decentralization and a reduced dependency on the dollar. Eventually the world will naturally diversify their reserve holdings to the point that the dollar loses its power as leverage in diplomatic negotiations. [0] https://news.ycombinator.com/item?id=30633595 https://news.ycombinator.com/item?id=30633595

anonporridge 3y ago
Tons of people predicted this when sanctions hit.
- XorNot 3y ago
  And they're still not right, just like they weren't right in 2010, 2000, 1990, 1980... The idea of the decline of the US as a reserve currency has been "about to happen" for me entire life, and yet another cherry-picked graph won't make it more likely.
  - user_named 3y ago
    Yes, they're right.
  - jliptzin 3y ago
    Same thing with gold. Apparently I needed to be buying gold since before I was born and every year since because hyperinflation is always right around the corner.
    - eska 3y ago
      Gold went up a lot though
      - consp 3y ago
        So gold has hyperinflated? Maybe I understood the buy gold because of inflation all wrong and it was just a marketing gimick to ramp up the price.
        logicchains 3y ago
        >So gold has hyperinflated The price of gold going up is the opposite of inflation. Hyper-inflation is when the "price" (value) of a currency massively decreases, not increases.
        dragonelite 3y ago
        It's the same thing as people celebrating inflation went back to 7% over here in Europe. Then i have to remind them the Euro still lost 7% of its value. If the Euro worth increased they would have used deflation and not inflation. At least that was in my high school economics 101 classes.
      - Aunche 3y ago
        Gold went up a lot while it was illegal for people own significant quantities of gold. After that, gold on average has barely kept up with inflation.
    - FredPret 3y ago
      I never get this. We're digging our mines deeper and deeper. Automation is improving by leaps and bounds. What happens when we start mining deeper in the crust where there is probably much more gold? I feel like commodity prices tend to get pushed down by tech improvements.
      - AnimalMuppet 3y ago
        "Probably" is doing a lot of work for you there. So far as I know, there is no reason to suppose that the chemical composition of the earth's crust is significantly higher in gold at deeper levels.
        FredPret 3y ago
        Heavier elements sink to the bottom. The liquid core is mostly iron, so I would expect the even heavier gold, uranium, platinum, etc to be distributed closer to the centre of mass than the surface. Now the crust is not liquid but it is very old and there have been lots of plate tectonics. I imagine all the shaking and scraping would be enough to get the gold in deeper. It's interesting to note that the richest gold field we have was created when a meteorite hit the Earth so hard, the deeper parts of the crust got bent upward and lay closer to the surface (Vredefort dome). https://en.wikipedia.org/wiki/Vredefort_impact_structure https://en.wikipedia.org/wiki/Vredefort_impact_structure
      - jliptzin 3y ago
        Not to mention asteroid mining
  - rippercushions 3y ago
    Not sure why this being downvoted: I can still remember people freaking about about the superior buying power and stability of the Japanese yen in the 1980s.
  - kevinak 3y ago
    I think this time actually is different. For the first time ever we now have a currency that is controlled by no one, with no third party risk, that can be sent in seconds across the world. It's called Bitcoin.
    - avidphantasm 3y ago
      Yes, let’s hitch our wagon to a massively deflationary currency that can only clear a few hundred transactions per day.
JKCalhoun 3y ago
I'm wondering if the countries moving off the dollar reserve are countries we would even want on the dollar. I get that Russia, China would try to diversify — not a surprise though. (The article mentions the "Global South" - I had to look it up. That's a pretty broad region that includes all of South America, Mexico, all of Africa, South Asia.... it seems unlikely all these regions are moving off the dollar.)
- tmn 3y ago
  What does it mean to not want a country using the dollar? I’m not sure such a thing computes to those fighting these battles.
- shri_krishna 3y ago
  > I'm wondering if the countries moving off the dollar reserve are countries we would even want on the dollar The US Government has gone to War with or at the very least militarily involved with the entire World except for 3 countries: Andorra, Bhutan, and Liechtenstein. You vastly underestimate how much bad blood US Government has created over the years with various countries in their own capacities. Heck the USG spies on its own all-weather Allies and recently blew up the Nord Stream Pipeline (in a covert operation no less). > I get that Russia, China would try to diversify — not a surprise though. You might want to include India in the list too. And it should come as a surprise to you that there are plenty of other countries, who have been historically neutral, are badly wanting to diversify and de-dollarize. India now does trade directly in INR with 18 countries [1]. Just a year ago there were only 4 countries we traded in INR with (this is apart from the 18 new countries that we added recently). If this doesn't ring alarm bells nothing else will. > (The article mentions the "Global South" - I had to look it up. That's a pretty broad region that includes all of South America, Mexico, all of Africa, South Asia.... it seems unlikely all these regions are moving off the dollar.) You are unfortunately living in a bubble. [1]: https://www.wionews.com/business-economy/rbi-allows-banks-from-18-countries-to-trade-in-rupees-what-does-it-mean-573123 https://www.wionews.com/business-economy/rbi-allows-banks-fr...
  - legutierr 3y ago
asdfman123 3y ago
Similarly, I predict if a man at a table starts slapping others at the table, some will try to get up and leave.
- bee_rider 3y ago
  A better solution is to kick out the violent customer, which is what the international banking system has tried to do. Of course he goes down the road to the next bar where he hasn’t gotten a reputation yet, we’ll see how long it takes him to get kicked out of there.
  - LudwigNagasena 3y ago
    Well, when the US invaded Iraq, the only thing disapproving Western nations had courage to do is to produce a bunch of unsubstantiated weasel words and empty gestures.
    - seszett 3y ago
      Well it's obviously more difficult to sanction the most powerful country in the world than a much poorer country like Russia. And there is much less reason to do so when you aren't being threatened yourself. It seems to me completely normal that the US was less sanctioned by "the West" when they invaded Iraq than how Russia was sanctioned when they invaded Europe.
      - LudwigNagasena 3y ago
        Yep, so it’s all about geopolitics. And no one cares about “violent customer this” or “violent customer that”.
        piaste 3y ago
        Although the size of the attacker is obviously critical, I wouldn't ignore the choice of targets either. I'm not American and I opposed the invasion at the time, but it was harder to argue because Saddam's Iraq had very few redeeming qualities, had been waging aggressive wars of its own, and its main role in international trade was as a member of the OPEC cartel. Whereas Ukraine, for all its problems, is a far more democratic county with far more friends, no history of aggression, and a critical source of food for many nations. If Russia had invaded Belarus or Tajikistan instead of Ukraine, I doubt there would have been any real consequences.
marianatom 3y ago
You are wrong. Yuan is still only 3% of global currency reserve, behind dollar (60%) and euro (20%). https://carnegieendowment.org/politika/88926 https://carnegieendowment.org/politika/88926. up from 2% in 2017... China is Russia's ally in the war, and even Russians don't even want yuan - it has been selling renminbi since the beginning of this year https://asiatimes.com/2023/04/rmb-based-trade-hasnt-worked-out-for-moscow/ https://asiatimes.com/2023/04/rmb-based-trade-hasnt-worked-o.... de-dollarization is mainly happening with China, and it's only because Chinese economy is crashing fast (50% real estate price cut in matter of months, 100k+ housing inventory for sale in major tier 1 cities, 80% factory order decline from foreign companies), and it needs to have access to dollar to pay back its huge debt - 400% debt to gdp, and Guizhou just became the first Chinese province to declare bankruptcy last month.
- prox 3y ago
  Wow, didn’t see anything like that on my newsradar, is China really doing that bad?
  - pas 3y ago
    yes. the covid lockdowns were just a tip of the iceberg, which was of course also happened to be on fire, and everything around it is on fire too. the service-goods shift during COVID and the shiftback after, coupled with the energy and food price shocks due to Russia-Ukraine war, definitely did not help the Chinese economy, that was already faking a higher GDP growth to paper over the cracks. geopolitical tea leaves reading experts point to the aging population of China as a massive problem (again coupled with a lot of factors that make it a worse problem than it would be with a relatively open society, etc.), the limits to efficiency gains from centralization and big infrastructure projects (only so many miles of high-speed rail have positive ROI, only so many big dams make sense, etc), and - again - the cost of maintaining the authoritarian state.
    - prox 3y ago
      Interesting times for them, thanks for clarifying!
CTDOCodebases 3y ago
Isn't the Chinese Yuan pegged to the US dollar though? Therefore isn't it just a derivative of the US dollar? It's been clear for a while that China wants to increase the dominance of it's currency. The belt and road initiative and the digital renminbi is part of that. The swift sanctions were an accelerant, not a catalyst of de-dollarization. It was no coincidence that Russia had substantial gold reserves at the time of the invasion.
- spacebanana7 3y ago
  Given that the Chinese economy is similar in size to the US economy, one could even say the USD is pegged to the Yuan with enforcement by the PBOC.
- aeternum 3y ago
  Yes but a peg alone doesn't mean that one currency can be on the way out. For example the pound was famously pegged right up until the day it wasn't: https://www.investopedia.com/ask/answers/08/george-soros-bank-of-england.asp https://www.investopedia.com/ask/answers/08/george-soros-ban... The relative strength of the two economies is really what matters, and sanctions + tariffs are a double-edged sword, the deeper you impale other countries, the deeper you impale yourself.
- dustypotato 3y ago
  Doesn't seem pegged since there's a lot of fluctuation in the [1]chart [1]https://www.finanzen.ch/devisen/us_dollar-renminbi_yuan-kurs https://www.finanzen.ch/devisen/us_dollar-renminbi_yuan-kurs
  - CTDOCodebases 3y ago
    Yeah apparently that ended in 2005. Now it’s pegged to a basket of currencies like the British pound was.
WhereIsTheTruth 3y ago
It started decades ago, this is not new, many pretend to have "predicted" it last year because it was more obvious and because the press started to talk about it I shared multiple articles on that matter many years ago on hackernews This one for example: https://www.theguardian.com/business/2003/feb/16/iraq.theeuro https://www.theguardian.com/business/2003/feb/16/iraq.theeur... This one gets me banned, but i'll share it again, this is why the CIA/FED started the work on bitcoin and help spread the cryptocurrency fad, to crowdfund the tech they'll use in the post-dollar world, the digital fiats, it won't matter if the USD is dead if you control the networks
- ShivShankaran 3y ago
  [dead]
- WhereIsTheTruth 3y ago
  Getting downvoted over this is funny, next year one dude will say "i predicted it" and he'll get upvoted :) Anyways, attach your seatbelt, turbulence ahead!
ShivShankaran 3y ago
[dead]

anonporridge 3y ago

Tons of people predicted this when sanctions hit.

XorNot 3y ago
And they're still not right, just like they weren't right in 2010, 2000, 1990, 1980... The idea of the decline of the US as a reserve currency has been "about to happen" for me entire life, and yet another cherry-picked graph won't make it more likely.
- user_named 3y ago
  Yes, they're right.
- jliptzin 3y ago
  Same thing with gold. Apparently I needed to be buying gold since before I was born and every year since because hyperinflation is always right around the corner.
  - eska 3y ago
    Gold went up a lot though
    - consp 3y ago
      So gold has hyperinflated? Maybe I understood the buy gold because of inflation all wrong and it was just a marketing gimick to ramp up the price.
      - logicchains 3y ago
        >So gold has hyperinflated The price of gold going up is the opposite of inflation. Hyper-inflation is when the "price" (value) of a currency massively decreases, not increases.
        dragonelite 3y ago
        It's the same thing as people celebrating inflation went back to 7% over here in Europe. Then i have to remind them the Euro still lost 7% of its value. If the Euro worth increased they would have used deflation and not inflation. At least that was in my high school economics 101 classes.
    - Aunche 3y ago
      Gold went up a lot while it was illegal for people own significant quantities of gold. After that, gold on average has barely kept up with inflation.
  - FredPret 3y ago
    I never get this. We're digging our mines deeper and deeper. Automation is improving by leaps and bounds. What happens when we start mining deeper in the crust where there is probably much more gold? I feel like commodity prices tend to get pushed down by tech improvements.
    - AnimalMuppet 3y ago
      "Probably" is doing a lot of work for you there. So far as I know, there is no reason to suppose that the chemical composition of the earth's crust is significantly higher in gold at deeper levels.
      - FredPret 3y ago
        Heavier elements sink to the bottom. The liquid core is mostly iron, so I would expect the even heavier gold, uranium, platinum, etc to be distributed closer to the centre of mass than the surface. Now the crust is not liquid but it is very old and there have been lots of plate tectonics. I imagine all the shaking and scraping would be enough to get the gold in deeper. It's interesting to note that the richest gold field we have was created when a meteorite hit the Earth so hard, the deeper parts of the crust got bent upward and lay closer to the surface (Vredefort dome). https://en.wikipedia.org/wiki/Vredefort_impact_structure https://en.wikipedia.org/wiki/Vredefort_impact_structure
    - jliptzin 3y ago
      Not to mention asteroid mining
- rippercushions 3y ago
  Not sure why this being downvoted: I can still remember people freaking about about the superior buying power and stability of the Japanese yen in the 1980s.
- kevinak 3y ago
  I think this time actually is different. For the first time ever we now have a currency that is controlled by no one, with no third party risk, that can be sent in seconds across the world. It's called Bitcoin.
  - avidphantasm 3y ago
    Yes, let’s hitch our wagon to a massively deflationary currency that can only clear a few hundred transactions per day.

JKCalhoun 3y ago

I'm wondering if the countries moving off the dollar reserve are countries we would even want on the dollar. I get that Russia, China would try to diversify — not a surprise though. (The article mentions the "Global South" - I had to look it up. That's a pretty broad region that includes all of South America, Mexico, all of Africa, South Asia.... it seems unlikely all these regions are moving off the dollar.)

tmn 3y ago
What does it mean to not want a country using the dollar? I’m not sure such a thing computes to those fighting these battles.
shri_krishna 3y ago
> I'm wondering if the countries moving off the dollar reserve are countries we would even want on the dollar The US Government has gone to War with or at the very least militarily involved with the entire World except for 3 countries: Andorra, Bhutan, and Liechtenstein. You vastly underestimate how much bad blood US Government has created over the years with various countries in their own capacities. Heck the USG spies on its own all-weather Allies and recently blew up the Nord Stream Pipeline (in a covert operation no less). > I get that Russia, China would try to diversify — not a surprise though. You might want to include India in the list too. And it should come as a surprise to you that there are plenty of other countries, who have been historically neutral, are badly wanting to diversify and de-dollarize. India now does trade directly in INR with 18 countries [1]. Just a year ago there were only 4 countries we traded in INR with (this is apart from the 18 new countries that we added recently). If this doesn't ring alarm bells nothing else will. > (The article mentions the "Global South" - I had to look it up. That's a pretty broad region that includes all of South America, Mexico, all of Africa, South Asia.... it seems unlikely all these regions are moving off the dollar.) You are unfortunately living in a bubble. [1]: https://www.wionews.com/business-economy/rbi-allows-banks-from-18-countries-to-trade-in-rupees-what-does-it-mean-573123 https://www.wionews.com/business-economy/rbi-allows-banks-fr...
- legutierr 3y ago

asdfman123 3y ago

Similarly, I predict if a man at a table starts slapping others at the table, some will try to get up and leave.

bee_rider 3y ago
A better solution is to kick out the violent customer, which is what the international banking system has tried to do. Of course he goes down the road to the next bar where he hasn’t gotten a reputation yet, we’ll see how long it takes him to get kicked out of there.
- LudwigNagasena 3y ago
  Well, when the US invaded Iraq, the only thing disapproving Western nations had courage to do is to produce a bunch of unsubstantiated weasel words and empty gestures.
  - seszett 3y ago
    Well it's obviously more difficult to sanction the most powerful country in the world than a much poorer country like Russia. And there is much less reason to do so when you aren't being threatened yourself. It seems to me completely normal that the US was less sanctioned by "the West" when they invaded Iraq than how Russia was sanctioned when they invaded Europe.
    - LudwigNagasena 3y ago
      Yep, so it’s all about geopolitics. And no one cares about “violent customer this” or “violent customer that”.
      - piaste 3y ago
        Although the size of the attacker is obviously critical, I wouldn't ignore the choice of targets either. I'm not American and I opposed the invasion at the time, but it was harder to argue because Saddam's Iraq had very few redeeming qualities, had been waging aggressive wars of its own, and its main role in international trade was as a member of the OPEC cartel. Whereas Ukraine, for all its problems, is a far more democratic county with far more friends, no history of aggression, and a critical source of food for many nations. If Russia had invaded Belarus or Tajikistan instead of Ukraine, I doubt there would have been any real consequences.

marianatom 3y ago

You are wrong. Yuan is still only 3% of global currency reserve, behind dollar (60%) and euro (20%). https://carnegieendowment.org/politika/88926 https://carnegieendowment.org/politika/88926. up from 2% in 2017... China is Russia's ally in the war, and even Russians don't even want yuan - it has been selling renminbi since the beginning of this year https://asiatimes.com/2023/04/rmb-based-trade-hasnt-worked-out-for-moscow/ https://asiatimes.com/2023/04/rmb-based-trade-hasnt-worked-o.... de-dollarization is mainly happening with China, and it's only because Chinese economy is crashing fast (50% real estate price cut in matter of months, 100k+ housing inventory for sale in major tier 1 cities, 80% factory order decline from foreign companies), and it needs to have access to dollar to pay back its huge debt - 400% debt to gdp, and Guizhou just became the first Chinese province to declare bankruptcy last month.

prox 3y ago
Wow, didn’t see anything like that on my newsradar, is China really doing that bad?
- pas 3y ago
  yes. the covid lockdowns were just a tip of the iceberg, which was of course also happened to be on fire, and everything around it is on fire too. the service-goods shift during COVID and the shiftback after, coupled with the energy and food price shocks due to Russia-Ukraine war, definitely did not help the Chinese economy, that was already faking a higher GDP growth to paper over the cracks. geopolitical tea leaves reading experts point to the aging population of China as a massive problem (again coupled with a lot of factors that make it a worse problem than it would be with a relatively open society, etc.), the limits to efficiency gains from centralization and big infrastructure projects (only so many miles of high-speed rail have positive ROI, only so many big dams make sense, etc), and - again - the cost of maintaining the authoritarian state.
  - prox 3y ago
    Interesting times for them, thanks for clarifying!

CTDOCodebases 3y ago

Isn't the Chinese Yuan pegged to the US dollar though? Therefore isn't it just a derivative of the US dollar? It's been clear for a while that China wants to increase the dominance of it's currency. The belt and road initiative and the digital renminbi is part of that. The swift sanctions were an accelerant, not a catalyst of de-dollarization. It was no coincidence that Russia had substantial gold reserves at the time of the invasion.

spacebanana7 3y ago
Given that the Chinese economy is similar in size to the US economy, one could even say the USD is pegged to the Yuan with enforcement by the PBOC.
aeternum 3y ago
Yes but a peg alone doesn't mean that one currency can be on the way out. For example the pound was famously pegged right up until the day it wasn't: https://www.investopedia.com/ask/answers/08/george-soros-bank-of-england.asp https://www.investopedia.com/ask/answers/08/george-soros-ban... The relative strength of the two economies is really what matters, and sanctions + tariffs are a double-edged sword, the deeper you impale other countries, the deeper you impale yourself.
dustypotato 3y ago
Doesn't seem pegged since there's a lot of fluctuation in the [1]chart [1]https://www.finanzen.ch/devisen/us_dollar-renminbi_yuan-kurs https://www.finanzen.ch/devisen/us_dollar-renminbi_yuan-kurs
- CTDOCodebases 3y ago
  Yeah apparently that ended in 2005. Now it’s pegged to a basket of currencies like the British pound was.

WhereIsTheTruth 3y ago

It started decades ago, this is not new, many pretend to have "predicted" it last year because it was more obvious and because the press started to talk about it I shared multiple articles on that matter many years ago on hackernews This one for example: https://www.theguardian.com/business/2003/feb/16/iraq.theeuro https://www.theguardian.com/business/2003/feb/16/iraq.theeur... This one gets me banned, but i'll share it again, this is why the CIA/FED started the work on bitcoin and help spread the cryptocurrency fad, to crowdfund the tech they'll use in the post-dollar world, the digital fiats, it won't matter if the USD is dead if you control the networks

ShivShankaran 3y ago
[dead]
WhereIsTheTruth 3y ago
Getting downvoted over this is funny, next year one dude will say "i predicted it" and he'll get upvoted :) Anyways, attach your seatbelt, turbulence ahead!

ShivShankaran 3y ago

[dead]