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> Mainstream economists have broadly always said that the trade deficit is a good thing for the United States yes, this is the traditional position but the un

by blibble 8mo ago

> Mainstream economists have broadly always said that the trade deficit is a good thing for the United States yes, this is the traditional position but the underlying assumption is that USD remains the world reserve currency and there's now an entire western hemisphere no longer interested in maintaining that

ericmay 8mo ago
> and there's now an entire western hemisphere no longer interested in maintaining that Well the USD is one of the world's reserve currencies, not the only one, though of course it's the dominant one. A reserve currency is just a currency that central banks or other significant financial institutions hold "in reserve" for liquidity purposes and so on. Even if the USD was no longer the dominant one, which isn't necessarily great, it hasn't seemed to have been that big of a problem for the EU. I also don't think there's an entire western hemisphere that is no longer interested in maintain "that". Despite online noise, and a few symbolic selling of treasuries, nothing has really changed. You have to remember that politicians, including EU politicians talk a different game to the public than they do when they're sitting in rooms together at Davos or wherever. There are other considerations. How good for the EU will it be if the US collapses into financial ruin (it won't)? Who is going to backstop their militaries against Russia or other bad actors? The EU can say well we're going to go sell all these treasuries, well they become worth less and less and collapse the global economy. All you hear about on the Internet is the US's dirty laundry. It's the same thing with China and their military and economy. Most people can't speak about their failures because they're not aware, we only talk about the United States (and EU and others of course) and those failures and we don't speak in terms of incentives and actions and reactions. "China has hypersonic missiles the US Navy is doomed!" is often parroted - yet who can speak intelligently to what the United States has done to negate or address that concern? Very few. Why is that? Well we're all reading the same articles about China's capabilities - it's propaganda. I also don't see the USD going anywhere, anytime soon since the US military enforces the petrodollar system. But sure let's talk about some Swedish pension fund selling $50bn (7% of Elon Musk's net worth - screw that guy) worth of treasuries and call that the death of the United States economy. Please don't take this as a defense of objectively bone-headed things the United States is doing either, I'm just pointing out that it's much more complicated than what your comment seems to suggest.
- blibble 8mo ago
  > How good for the EU will it be if the US collapses into financial ruin (it won't)? this isn't the aim the aim is to decouple enough so you can't be blackmailed which unfortunately is quite a herculean task, but hey, you've gotta start somewhere > The EU can say well we're going to go sell all these treasuries, well they become worth less and less and collapse the global economy. they won't sell them simultaneously, because that would be crazy but they will change their portfolio allocations over time in response to these new risks made obvious from the hourly yelling out of the white house which increases US funding costs, decreasing its competitiveness, which is a vicious circle if it goes on long enough, other trading partners won't want to be paid in dollars at all
  - ericmay 8mo ago
    I wouldn't frame EU activity as decoupling from the United States, though the irony of "decoupling" from the US and cozying up to China is super cringe* despite our bombastic and rude American president. * Instead the EU is engaging in increasingly protectionist activity to build more domestic industry. I don't have a problem with that, but I'm also more on the protectionist side given the current state of global affairs and the need for the US to decouple from China - or is it only the EU that gets to decouple from a major trading partner and the US isn't allowed? At least that's what is parroted on the Internet. :) * Just a quick note, there's a lot of uproar on the Internet over Greenland. Deservedly. But if the EU "decouples" from the US, there's no incentive for the US to not, for example, take over Greenland. These are the kinds of push-pull engagements that are continually failed to take into account by most commentaries and in most discussions. Again it's centered around what the EU will do, or what China will do, and so forth and the analysis never makes it past this, despite the most important activities happening downstream from initial activities. * I'm an Ukraine hawk - US should have went straight to war with Russia over the invasion - being overly simplistic here but just to illustrate my hawkish-ness. But the EU is sitting here telling us it's this huge problem that Russia is invading Ukraine, yet they're happy to increase cooperation and trading with China who is providing support to Russia for their invasion? Of course, these things are all part of a negotiating mix. Maybe increasing trade will help China stop helping Russia's war against Ukraine, but if we wanted to stop analysis at the very first thing we see as everyone seems to want to do with respect to the EU or China, we could just look at that activity and say, well, maybe we shouldn't help the EU here and if they really think Ukraine is a problem they should take these other actions instead, whatever they may be.

by blibble 8mo ago

ericmay 8mo ago

> and there's now an entire western hemisphere no longer interested in maintaining that Well the USD is one of the world's reserve currencies, not the only one, though of course it's the dominant one. A reserve currency is just a currency that central banks or other significant financial institutions hold "in reserve" for liquidity purposes and so on. Even if the USD was no longer the dominant one, which isn't necessarily great, it hasn't seemed to have been that big of a problem for the EU. I also don't think there's an entire western hemisphere that is no longer interested in maintain "that". Despite online noise, and a few symbolic selling of treasuries, nothing has really changed. You have to remember that politicians, including EU politicians talk a different game to the public than they do when they're sitting in rooms together at Davos or wherever. There are other considerations. How good for the EU will it be if the US collapses into financial ruin (it won't)? Who is going to backstop their militaries against Russia or other bad actors? The EU can say well we're going to go sell all these treasuries, well they become worth less and less and collapse the global economy. All you hear about on the Internet is the US's dirty laundry. It's the same thing with China and their military and economy. Most people can't speak about their failures because they're not aware, we only talk about the United States (and EU and others of course) and those failures and we don't speak in terms of incentives and actions and reactions. "China has hypersonic missiles the US Navy is doomed!" is often parroted - yet who can speak intelligently to what the United States has done to negate or address that concern? Very few. Why is that? Well we're all reading the same articles about China's capabilities - it's propaganda. I also don't see the USD going anywhere, anytime soon since the US military enforces the petrodollar system. But sure let's talk about some Swedish pension fund selling $50bn (7% of Elon Musk's net worth - screw that guy) worth of treasuries and call that the death of the United States economy. Please don't take this as a defense of objectively bone-headed things the United States is doing either, I'm just pointing out that it's much more complicated than what your comment seems to suggest.

blibble 8mo ago
> How good for the EU will it be if the US collapses into financial ruin (it won't)? this isn't the aim the aim is to decouple enough so you can't be blackmailed which unfortunately is quite a herculean task, but hey, you've gotta start somewhere > The EU can say well we're going to go sell all these treasuries, well they become worth less and less and collapse the global economy. they won't sell them simultaneously, because that would be crazy but they will change their portfolio allocations over time in response to these new risks made obvious from the hourly yelling out of the white house which increases US funding costs, decreasing its competitiveness, which is a vicious circle if it goes on long enough, other trading partners won't want to be paid in dollars at all
- ericmay 8mo ago
  I wouldn't frame EU activity as decoupling from the United States, though the irony of "decoupling" from the US and cozying up to China is super cringe* despite our bombastic and rude American president. * Instead the EU is engaging in increasingly protectionist activity to build more domestic industry. I don't have a problem with that, but I'm also more on the protectionist side given the current state of global affairs and the need for the US to decouple from China - or is it only the EU that gets to decouple from a major trading partner and the US isn't allowed? At least that's what is parroted on the Internet. :) * Just a quick note, there's a lot of uproar on the Internet over Greenland. Deservedly. But if the EU "decouples" from the US, there's no incentive for the US to not, for example, take over Greenland. These are the kinds of push-pull engagements that are continually failed to take into account by most commentaries and in most discussions. Again it's centered around what the EU will do, or what China will do, and so forth and the analysis never makes it past this, despite the most important activities happening downstream from initial activities. * I'm an Ukraine hawk - US should have went straight to war with Russia over the invasion - being overly simplistic here but just to illustrate my hawkish-ness. But the EU is sitting here telling us it's this huge problem that Russia is invading Ukraine, yet they're happy to increase cooperation and trading with China who is providing support to Russia for their invasion? Of course, these things are all part of a negotiating mix. Maybe increasing trade will help China stop helping Russia's war against Ukraine, but if we wanted to stop analysis at the very first thing we see as everyone seems to want to do with respect to the EU or China, we could just look at that activity and say, well, maybe we shouldn't help the EU here and if they really think Ukraine is a problem they should take these other actions instead, whatever they may be.