5 ms·

>I'm American and kinda stunned how little salience the issue has. Please punish us as much as possible. The majority of major economies are all exporters, it'

>I'm American and kinda stunned how little salience the issue has. Please punish us as much as possible. The majority of major economies are all exporters, it's only a few and mostly just the USA that is both large enough and willing to absorb their surpluses. Without the USA, the entire system collapses because nobody else is willing to run that deficit. You cannot have a room filled only with sellers. The root of the dispute here is the right to freely sell to the USA while simulatenously pursuing their own protectionist tariffs and subsidies. When you realize the absurdity of a relationship which requires both parties to believe in different things, then it's also understandable that the gravy train has stopped and it's time to negotiate to a more realistic deal. Ironically enough, it's for the same reasons in their beliefs in protectionism that they won't be able to coordinate together.

geraneum 1y ago
I’m afraid it’s more complicated than that. How would you get rid of this asymmetric relationship and still keep USD as global reserve currency?
- corimaith 1y ago
  You won't be keeping the USD as the global reserve. Trump wants his cake and to eat it, but that position is likely unsustainable long term anyways. Mind you, the role of reserve currency today is larged hoisted by the rest of the world onto the USA, there is no rule dictacting its role. But the thing is anybody who is large enough to support it (EU/China) dosen't want that role either, lest they end up deindustrialising like USA. The actual alternative, with the so-called multilateral "Bancor" and the International Clearing Union as originally proposed by Keynes works via directly controlling exchange rates to punish surplus nations and provide relief to deficit nations. Well, it's for that reason there isn't a serious effort to create it from these other nations, which leaves them at an impasse. That's why as much as I hate to admit, Trump may actually win here because other countries don't really have any good options. Unfortunately the USA is playing a necessary systemic role here that nobody else wants to do.
  - rayiner 1y ago
    Is there a resource you’d recommend to learn about this?
    - corimaith 1y ago
      You can read Bern Bernanke's hypothesis on the Global Savings Glut. But there are plenty of articles by almost all economic insitutions that are talking about the imbalanced nature of trade today. https://www.federalreserve.gov/boarddocs/speeches/2005/200503102/ https://www.federalreserve.gov/boarddocs/speeches/2005/20050...
  - qqqwerty 1y ago
    Trump is being pulled in too many different directions to the point where nothing coherent is going to emerge from his strategies (or lack of). You can't promise Wall Street/Corporate America the moon and keep the economy running along nicely while rounding up and deporting immigrants, cutting federal spending, and implementing regressive taxes via tariffs. If he would have just limited himself to the goal of balancing trade while maintaining reserve currency status, I think that he would have had a shot to pull it off. But there is the very real risk that the rest of the world just starts routing around the US so even that is not a given. But when you combine this with all the other things he is trying to do, I think he is seriously risking sending the U.S. economy off a very tall cliff. That is also why he probably is so obsessed with lower interest rates. It is an attempt to try and jolt the economy before all the head winds from his policies start to have an impact.
    - jacquesm 1y ago
      > But there is the very real risk that the rest of the world just starts routing around the US so even that is not a given. That's no longer just a risk, it is a reality.
  - geraneum 1y ago
    I do largely agree with you, however > Mind you, the role of reserve currency today is largely hoisted by the rest of the world onto the USA It’s the opposite [1]. Trump openly threatens anyone who tries to replace dollar. It even goes beyond Trump. I bet it will go to war if there are real threats to replace USD. > there is no rule dictating its role There’s also no rule dictating other countries to honor US sanctions, but they do. Tarrif 1. https://www.reuters.com/markets/currencies/trump-repeats-tariffs-threat-dissuade-brics-nations-replacing-us-dollar-2025-01-31/ https://www.reuters.com/markets/currencies/trump-repeats-tar...
- deleted 1y ago
  [deleted]
favflam 1y ago
You do not include digital services like FANG here.
- corimaith 1y ago
  The current account balance (BoP) considers goods and services. And it's not bilateral relationships that matter, but the aggregate global imbalance. To say that America is the engine of the deficits that absorbs the world's surpluses is trivially accepted by economists. https://data.worldbank.org/indicator/BN.CAB.XOKA.CD?most_recent_value_desc=false https://data.worldbank.org/indicator/BN.CAB.XOKA.CD?most_rec... There's a nice table to understand how skewed things are really with the balance of payments here. America's deficit is 10x higher than the second rank with the UK, which should illustrate how difficult it is for the surplus countries to find alternatives. In any case, this whole situation on excessively relying on one country to buy all the world's exports is a stupidly unstable situation.

geraneum 1y ago

I’m afraid it’s more complicated than that. How would you get rid of this asymmetric relationship and still keep USD as global reserve currency?

corimaith 1y ago
You won't be keeping the USD as the global reserve. Trump wants his cake and to eat it, but that position is likely unsustainable long term anyways. Mind you, the role of reserve currency today is larged hoisted by the rest of the world onto the USA, there is no rule dictacting its role. But the thing is anybody who is large enough to support it (EU/China) dosen't want that role either, lest they end up deindustrialising like USA. The actual alternative, with the so-called multilateral "Bancor" and the International Clearing Union as originally proposed by Keynes works via directly controlling exchange rates to punish surplus nations and provide relief to deficit nations. Well, it's for that reason there isn't a serious effort to create it from these other nations, which leaves them at an impasse. That's why as much as I hate to admit, Trump may actually win here because other countries don't really have any good options. Unfortunately the USA is playing a necessary systemic role here that nobody else wants to do.
- rayiner 1y ago
  Is there a resource you’d recommend to learn about this?
  - corimaith 1y ago
    You can read Bern Bernanke's hypothesis on the Global Savings Glut. But there are plenty of articles by almost all economic insitutions that are talking about the imbalanced nature of trade today. https://www.federalreserve.gov/boarddocs/speeches/2005/200503102/ https://www.federalreserve.gov/boarddocs/speeches/2005/20050...
- qqqwerty 1y ago
  Trump is being pulled in too many different directions to the point where nothing coherent is going to emerge from his strategies (or lack of). You can't promise Wall Street/Corporate America the moon and keep the economy running along nicely while rounding up and deporting immigrants, cutting federal spending, and implementing regressive taxes via tariffs. If he would have just limited himself to the goal of balancing trade while maintaining reserve currency status, I think that he would have had a shot to pull it off. But there is the very real risk that the rest of the world just starts routing around the US so even that is not a given. But when you combine this with all the other things he is trying to do, I think he is seriously risking sending the U.S. economy off a very tall cliff. That is also why he probably is so obsessed with lower interest rates. It is an attempt to try and jolt the economy before all the head winds from his policies start to have an impact.
  - jacquesm 1y ago
    > But there is the very real risk that the rest of the world just starts routing around the US so even that is not a given. That's no longer just a risk, it is a reality.
- geraneum 1y ago
  I do largely agree with you, however > Mind you, the role of reserve currency today is largely hoisted by the rest of the world onto the USA It’s the opposite [1]. Trump openly threatens anyone who tries to replace dollar. It even goes beyond Trump. I bet it will go to war if there are real threats to replace USD. > there is no rule dictating its role There’s also no rule dictating other countries to honor US sanctions, but they do. Tarrif 1. https://www.reuters.com/markets/currencies/trump-repeats-tariffs-threat-dissuade-brics-nations-replacing-us-dollar-2025-01-31/ https://www.reuters.com/markets/currencies/trump-repeats-tar...
deleted 1y ago
[deleted]

favflam 1y ago

You do not include digital services like FANG here.

corimaith 1y ago
The current account balance (BoP) considers goods and services. And it's not bilateral relationships that matter, but the aggregate global imbalance. To say that America is the engine of the deficits that absorbs the world's surpluses is trivially accepted by economists. https://data.worldbank.org/indicator/BN.CAB.XOKA.CD?most_recent_value_desc=false https://data.worldbank.org/indicator/BN.CAB.XOKA.CD?most_rec... There's a nice table to understand how skewed things are really with the balance of payments here. America's deficit is 10x higher than the second rank with the UK, which should illustrate how difficult it is for the surplus countries to find alternatives. In any case, this whole situation on excessively relying on one country to buy all the world's exports is a stupidly unstable situation.