3 ms·

> they know that they can't do a firesale of US bonds as it would obliterate a lot of their wealth. Wealth and power are hard to distinguish at this scale. Sup

> they know that they can't do a firesale of US bonds as it would obliterate a lot of their wealth. Wealth and power are hard to distinguish at this scale. Suppose PRC were to a) instigate a global crash of USA Treasury assets and b) offer to swap USA debt for PRC debt for preferred clients. Rather than watch their UST holdings evaporate, most global wealth managers would take the deal. And then RMB does become #1 reserve currency overnight... Yes it would be terribly "expensive" for PRC in nominal terms, but what is the price of global financial hegemony?

elzbardico 2y ago
The price of financial global hegemony is the price paid by the US: - Deindustrialization - Massive Wealth Concentration - A housing crisis due to asset inflation - Unemployment and/or subemployment. China is still a bit communist. The government rules their wall street, not the other way around.
csomar 2y ago
China probably doesn’t want the RMB to become the world reserve currency. The advantages are not a free lunch. Look up the net investment position of the USA and how it degraded after 1970s. All these printed and circulating dollars are a debt to the “US economy”.
- pphysch 2y ago
  Those aren't necessary outcomes, those were policy decisions made by the US/Western elite. They chose to deregulate and let global capitalists do whatever they wanted. USD has been primary global reserve currency since more or less the 1970s (end of Bretton Woods period), but the tendency for plutocracy goes much deeper and has not abated in the last half-century. China has a lot more tradition and experience running a long-term civilization that doesn't rely on endless conquest and growth, and they have fresh memory of how USA/Britain fumbled the bag. Expect them to repeat the same mistakes at your own peril.

3 ms·

> they know that they can't do a firesale of US bonds as it would obliterate a lot of their wealth. Wealth and power are hard to distinguish at this scale. Sup

by pphysch 2y ago

elzbardico 2y ago
The price of financial global hegemony is the price paid by the US: - Deindustrialization - Massive Wealth Concentration - A housing crisis due to asset inflation - Unemployment and/or subemployment. China is still a bit communist. The government rules their wall street, not the other way around.
csomar 2y ago
China probably doesn’t want the RMB to become the world reserve currency. The advantages are not a free lunch. Look up the net investment position of the USA and how it degraded after 1970s. All these printed and circulating dollars are a debt to the “US economy”.
- pphysch 2y ago
  Those aren't necessary outcomes, those were policy decisions made by the US/Western elite. They chose to deregulate and let global capitalists do whatever they wanted. USD has been primary global reserve currency since more or less the 1970s (end of Bretton Woods period), but the tendency for plutocracy goes much deeper and has not abated in the last half-century. China has a lot more tradition and experience running a long-term civilization that doesn't rely on endless conquest and growth, and they have fresh memory of how USA/Britain fumbled the bag. Expect them to repeat the same mistakes at your own peril.