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Economic might comes down to productive capacity. Unfortunately most of the US’s “productivity” has transitioned the so-called services sector. Which is nice an

by User23 2y ago

Economic might comes down to productive capacity. Unfortunately most of the US’s “productivity” has transitioned the so-called services sector. Which is nice and all until you can’t produce strategically necessary resources. Ultimately speaking the US dollar’s reserve status rests on the US economy’s productive capacity. Chinese dollar denominated exports are what’s propping up the dollar. Their accumulation of treasuries is merely a necessary consequence of the necessary accounting operations to dollar denominate those exports.

beautifulfreak 2y ago
China is actually dumping US treasuries, as of the start of 2023. https://www.youtube.com/watch?v=SSbzefh0VEM https://www.youtube.com/watch?v=SSbzefh0VEM They've found new ways to trade in dollars without using US or European banks, so their assets can't be frozen (such as by the use of Tether) so US banks aren't getting paid. As for cross-border trade, 53% of it is now conducted in RMB, with USD falling to 41% (and continuing to decline). US economic policy towards China is backfiring on many fronts, the worst being that Chinese companies have adapted and now produce what they used to import, even advanced technologies. If the export controls were lifted, Chinese companies would not resume business with US companies, because they don't need them anymore. https://www.zerohedge.com/geopolitical/start-de-dollarization-chinas-move-away-usd https://www.zerohedge.com/geopolitical/start-de-dollarizatio...
- User23 2y ago
  The question is dumping for what? If they’re selling treasuries to buy reserves or US equities then they’re still long USD. To actually unwind their dollar position they need a counterparty who wants to buy dollars with a non dollar denominated asset. No doubt they can do that to the tune of a few billions, but who’s the counterparty looking to buy hundreds of billions of dollars that way? The only obvious (to me anyhow) candidate is Japan, but they would both have to overcome some historical baggage to pull off that play. And even then it’s not just a matter of selling. The game changes when you’re big enough to be a marginal price setter.
  - chii 2y ago
    > To actually unwind their dollar position they need a counterparty who wants to buy dollars with a non dollar denominated asset. why not gold? surely, you can see that china is continuously buying more and more gold reserves. At some point, china would also be able to convince the global south to start trading in the chinese yuan.
    - blackhawkC17 2y ago
      > At some point, china would also be able to convince the global south to start trading in the chinese yuan. It’s a pipe dream to convince people to trade in a currency controlled by an authoritarian and corrupt government. The global south can yap all they wish, but they still prefer to trade in dollars and euros, the currencies of countries with rule of law.
      - chii 2y ago
        > the currencies of countries with rule of law. laws which they don't themselves control. For all intents and purposes, the US is as "authoritarian" as the chinese in this aspect. This is even demonstrated, albeit rightly so, by the russian financial sanctions, and currency freezes/seizures. If you're part of the global south, but is rich enough to have foreign reserves, you will start to think about how to diversify.
        blackhawkC17 2y ago
        > For all intents and purposes, the US is as "authoritarian" as the chinese in this aspect. This is even demonstrated, albeit rightly so, by the russian financial sanctions, and currency freezes/seizures. No it isn’t. The reserves were frozen under due process and can be returned under specific conditions, i.e., Russia withdrawing troops from Ukraine. That’s what the rule of law is, unlike China that can seize your Yuan anytime, and there’s no due process to get it back. > If you're part of the global south, but is rich enough to have foreign reserves, you will start to think about how to diversify. They’ll still overwhelmingly stick to the dollar, not a currency that operates on the whims of a dictator.

by User23 2y ago

beautifulfreak 2y ago

China is actually dumping US treasuries, as of the start of 2023. https://www.youtube.com/watch?v=SSbzefh0VEM https://www.youtube.com/watch?v=SSbzefh0VEM They've found new ways to trade in dollars without using US or European banks, so their assets can't be frozen (such as by the use of Tether) so US banks aren't getting paid. As for cross-border trade, 53% of it is now conducted in RMB, with USD falling to 41% (and continuing to decline). US economic policy towards China is backfiring on many fronts, the worst being that Chinese companies have adapted and now produce what they used to import, even advanced technologies. If the export controls were lifted, Chinese companies would not resume business with US companies, because they don't need them anymore. https://www.zerohedge.com/geopolitical/start-de-dollarization-chinas-move-away-usd https://www.zerohedge.com/geopolitical/start-de-dollarizatio...

User23 2y ago
The question is dumping for what? If they’re selling treasuries to buy reserves or US equities then they’re still long USD. To actually unwind their dollar position they need a counterparty who wants to buy dollars with a non dollar denominated asset. No doubt they can do that to the tune of a few billions, but who’s the counterparty looking to buy hundreds of billions of dollars that way? The only obvious (to me anyhow) candidate is Japan, but they would both have to overcome some historical baggage to pull off that play. And even then it’s not just a matter of selling. The game changes when you’re big enough to be a marginal price setter.
- chii 2y ago
  > To actually unwind their dollar position they need a counterparty who wants to buy dollars with a non dollar denominated asset. why not gold? surely, you can see that china is continuously buying more and more gold reserves. At some point, china would also be able to convince the global south to start trading in the chinese yuan.
  - blackhawkC17 2y ago
    > At some point, china would also be able to convince the global south to start trading in the chinese yuan. It’s a pipe dream to convince people to trade in a currency controlled by an authoritarian and corrupt government. The global south can yap all they wish, but they still prefer to trade in dollars and euros, the currencies of countries with rule of law.
    - chii 2y ago
      > the currencies of countries with rule of law. laws which they don't themselves control. For all intents and purposes, the US is as "authoritarian" as the chinese in this aspect. This is even demonstrated, albeit rightly so, by the russian financial sanctions, and currency freezes/seizures. If you're part of the global south, but is rich enough to have foreign reserves, you will start to think about how to diversify.
      - blackhawkC17 2y ago
        > For all intents and purposes, the US is as "authoritarian" as the chinese in this aspect. This is even demonstrated, albeit rightly so, by the russian financial sanctions, and currency freezes/seizures. No it isn’t. The reserves were frozen under due process and can be returned under specific conditions, i.e., Russia withdrawing troops from Ukraine. That’s what the rule of law is, unlike China that can seize your Yuan anytime, and there’s no due process to get it back. > If you're part of the global south, but is rich enough to have foreign reserves, you will start to think about how to diversify. They’ll still overwhelmingly stick to the dollar, not a currency that operates on the whims of a dictator.