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Exorbitant privilege is a gift that lasts only as long as the trust does. https://en.wikipedia.org/wiki/Exorbitant_privilege https://en.wikipedia.org/wiki/Exor

Exorbitant privilege is a gift that lasts only as long as the trust does. https://en.wikipedia.org/wiki/Exorbitant_privilege https://en.wikipedia.org/wiki/Exorbitant_privilege https://news.ycombinator.com/item?id=47635834 https://news.ycombinator.com/item?id=47635834 covers this succinctly: > America was in practice running an empire that collected tribute from the rest of planet earth in exchange for entries in a database denominated in a currency they controlled and that was accepted everywhere. Really the only way it could go wrong is putting it under the control of someone who doesn't understand the kayfabe... from Gold overtakes U.S. Treasuries as the largest foreign reserve asset - https://news.ycombinator.com/item?id=47635056 https://news.ycombinator.com/item?id=47635056 - April 2026 (250 comments)

ProjectArcturis 8d ago
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rayiner 8d ago
This argument fundamentally does not make sense. Look at a chart of U.S. GDP per capita growth: https://substackcdn.com/image/fetch/$s_!zSCw!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fafa99d7e-749e-4e36-bf66-b4a7a043613e_2048x1249.png https://substackcdn.com/image/fetch/$s_!zSCw!,f_auto,q_auto:... The U.S. was growing at the same rate or faster as the UK from 1830 to 1930, when the UK had an empire and the U.S. didn’t. Then, in the second half of the 20th century when the U.S. had an empire and the UK didn’t, the growth rates were more or less the same in both places in the long run trend (ignoring the UK’s step change hit from WWII).
- dixie_land 8d ago
  The £ was backed by UK's (perceived) military might just as $ is by the States'. The the war on Iran (and many years of war on terror) showed we have anything but
  - rtkwe 8d ago
    There are other backers to that as well. The main ones being oil trades being settled largely in USD and the need to acquire USD to pay for US goods/services. It's not all military might there's a lot of economic might in there too.
    - toomuchtodo 8d ago
      This is the important point. Oil was/is settled in dollars. The world is rapidly moving away from oil. China has already hit peak oil. China is 1/3rd of global manufacturing capacity. If you're leaving oil behind, and buying solar, batteries, and EVs from China, your need for dollars declines, and need for yuan goes up. Also, stocks vs flows. You have to keep buying oil every day from petrostates, while the clean tech you buy is yours for its entire service life (a decade or more for EVs, decades for solar and stationary battery storage). The US did well when the Saudis required dollars for oil as part of the US-Saudi security and military arrangement, and that arrangement is declining in value over time as the value of oil to the global economy declines. The US loses investors in US treasuries when folks who sold oil for dollars do not have dollars from oil sales. Shades of theta decay. China Adds Currencies to Central Clearing in Yuan's Global Push - https://news.ycombinator.com/item?id=49736124 https://news.ycombinator.com/item?id=49736124 - September 2026 The Iran War Just Broke the Petrodollar - https://www.bloomberg.com/opinion/articles/2026-04-06/the-petrodollar-loop-supporting-the-treasury-market-is-broken https://www.bloomberg.com/opinion/articles/2026-04-06/the-pe... | https://archive.today/RyJA8 https://archive.today/RyJA8 - April 6th, 2026 > "The petrodollar loop requires two moving parts: dollars earned and dollars invested. Both have stopped." > The standard reassurance is that there is no alternative to Treasuries — no other market offers the depth, liquidity and legal infrastructure that central banks require. This remains true. Foreign central banks will not abandon Treasuries wholesale. But “no realistic alternative” and “unquestioned safe haven” are not the same thing, and the Iran war is clarifying the difference. https://ember-energy.org/data/china-cleantech-exports-data-explorer/ https://ember-energy.org/data/china-cleantech-exports-data-e... > As the world’s largest manufacturer of clean technologies, data on China’s cleantech exports provide an important early insight into the pace and scale of the energy transition. In 2024, China produced around 80% of the world’s solar PV modules and battery cells, and 70% of electric vehicles. (as of this comment, China is exporting EVs at a 12M unit/year annualized run rate, with the capacity to build 50M EVs/year; they are only constrained by not enough marine vessels to keep up with export demand; every 24 months of EV production destroys ~1M barrels/day of oil demand at current run rates, which continue to increase) China growth straining global auto shipping capacity - https://news.ycombinator.com/item?id=49553327 https://news.ycombinator.com/item?id=49553327 - September 2026 (0 comments) China's Manufacturing Advantage, Explained [video] - https://news.ycombinator.com/item?id=49451076 https://news.ycombinator.com/item?id=49451076 | https://www.youtube.com/watch?v=OgYKVpOsMJs https://www.youtube.com/watch?v=OgYKVpOsMJs - August 2026 (think in systems)
- stbede 8d ago
  Wouldn't the more relevant point of comparison be the difference between long-term government bonds. The exorbitant privilege is that it's easier to fund US government debt because trade in USD means that large institutions around the world need USD and store those dollars in the form of US treasuries, which in turn lead to lower bond rates and cheaper debt.
  - rayiner 8d ago
    What we care about at the end of the day is bottom line economic growth, specifically GDP per capita growth. Whether government debt is more or less expensive is a collateral matter. It just means you need to make different choices in taxation versus borrowing—as long as the end result is the same how does it matter?
    - toomuchtodo 8d ago
      Cost of capital is a direct input to growth (from both investment and consumption). The more expensive it is to borrow, the lower future growth is, and the cost to borrow is increasing. This means taxation must go up if you want higher potential future growth through reduced cost of capital. Bond yields go up (ie government debt)->consumer debt costs and cost of capital for business investment goes up (all consumer debt is priced off of "risk free" gov debt)->consumption slows->growth is reduced
      - rayiner 7d ago
        > Cost of capital is a direct input to growth (from both investment and consumption). The more expensive it is to borrow, the lower future growth is, and the cost to borrow is increasing Right, which gets back to my point that US GDP per capita growth has been incredibly stable from 1830 to present, both before it had an empire and cheap borrowing and since it’s had an empire and cheap borrowing.
    - stbede 8d ago
      What we care about and what the exorbitant privilege is referring to can be different things.

ProjectArcturis 8d ago

[dead]

rayiner 8d ago

This argument fundamentally does not make sense. Look at a chart of U.S. GDP per capita growth: https://substackcdn.com/image/fetch/$s_!zSCw!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fafa99d7e-749e-4e36-bf66-b4a7a043613e_2048x1249.png https://substackcdn.com/image/fetch/$s_!zSCw!,f_auto,q_auto:... The U.S. was growing at the same rate or faster as the UK from 1830 to 1930, when the UK had an empire and the U.S. didn’t. Then, in the second half of the 20th century when the U.S. had an empire and the UK didn’t, the growth rates were more or less the same in both places in the long run trend (ignoring the UK’s step change hit from WWII).

dixie_land 8d ago
The £ was backed by UK's (perceived) military might just as $ is by the States'. The the war on Iran (and many years of war on terror) showed we have anything but
- rtkwe 8d ago
  There are other backers to that as well. The main ones being oil trades being settled largely in USD and the need to acquire USD to pay for US goods/services. It's not all military might there's a lot of economic might in there too.
  - toomuchtodo 8d ago
    This is the important point. Oil was/is settled in dollars. The world is rapidly moving away from oil. China has already hit peak oil. China is 1/3rd of global manufacturing capacity. If you're leaving oil behind, and buying solar, batteries, and EVs from China, your need for dollars declines, and need for yuan goes up. Also, stocks vs flows. You have to keep buying oil every day from petrostates, while the clean tech you buy is yours for its entire service life (a decade or more for EVs, decades for solar and stationary battery storage). The US did well when the Saudis required dollars for oil as part of the US-Saudi security and military arrangement, and that arrangement is declining in value over time as the value of oil to the global economy declines. The US loses investors in US treasuries when folks who sold oil for dollars do not have dollars from oil sales. Shades of theta decay. China Adds Currencies to Central Clearing in Yuan's Global Push - https://news.ycombinator.com/item?id=49736124 https://news.ycombinator.com/item?id=49736124 - September 2026 The Iran War Just Broke the Petrodollar - https://www.bloomberg.com/opinion/articles/2026-04-06/the-petrodollar-loop-supporting-the-treasury-market-is-broken https://www.bloomberg.com/opinion/articles/2026-04-06/the-pe... | https://archive.today/RyJA8 https://archive.today/RyJA8 - April 6th, 2026 > "The petrodollar loop requires two moving parts: dollars earned and dollars invested. Both have stopped." > The standard reassurance is that there is no alternative to Treasuries — no other market offers the depth, liquidity and legal infrastructure that central banks require. This remains true. Foreign central banks will not abandon Treasuries wholesale. But “no realistic alternative” and “unquestioned safe haven” are not the same thing, and the Iran war is clarifying the difference. https://ember-energy.org/data/china-cleantech-exports-data-explorer/ https://ember-energy.org/data/china-cleantech-exports-data-e... > As the world’s largest manufacturer of clean technologies, data on China’s cleantech exports provide an important early insight into the pace and scale of the energy transition. In 2024, China produced around 80% of the world’s solar PV modules and battery cells, and 70% of electric vehicles. (as of this comment, China is exporting EVs at a 12M unit/year annualized run rate, with the capacity to build 50M EVs/year; they are only constrained by not enough marine vessels to keep up with export demand; every 24 months of EV production destroys ~1M barrels/day of oil demand at current run rates, which continue to increase) China growth straining global auto shipping capacity - https://news.ycombinator.com/item?id=49553327 https://news.ycombinator.com/item?id=49553327 - September 2026 (0 comments) China's Manufacturing Advantage, Explained [video] - https://news.ycombinator.com/item?id=49451076 https://news.ycombinator.com/item?id=49451076 | https://www.youtube.com/watch?v=OgYKVpOsMJs https://www.youtube.com/watch?v=OgYKVpOsMJs - August 2026 (think in systems)
stbede 8d ago
Wouldn't the more relevant point of comparison be the difference between long-term government bonds. The exorbitant privilege is that it's easier to fund US government debt because trade in USD means that large institutions around the world need USD and store those dollars in the form of US treasuries, which in turn lead to lower bond rates and cheaper debt.
- rayiner 8d ago
  What we care about at the end of the day is bottom line economic growth, specifically GDP per capita growth. Whether government debt is more or less expensive is a collateral matter. It just means you need to make different choices in taxation versus borrowing—as long as the end result is the same how does it matter?
  - toomuchtodo 8d ago
    Cost of capital is a direct input to growth (from both investment and consumption). The more expensive it is to borrow, the lower future growth is, and the cost to borrow is increasing. This means taxation must go up if you want higher potential future growth through reduced cost of capital. Bond yields go up (ie government debt)->consumer debt costs and cost of capital for business investment goes up (all consumer debt is priced off of "risk free" gov debt)->consumption slows->growth is reduced
    - rayiner 7d ago
      > Cost of capital is a direct input to growth (from both investment and consumption). The more expensive it is to borrow, the lower future growth is, and the cost to borrow is increasing Right, which gets back to my point that US GDP per capita growth has been incredibly stable from 1830 to present, both before it had an empire and cheap borrowing and since it’s had an empire and cheap borrowing.
  - stbede 8d ago
    What we care about and what the exorbitant privilege is referring to can be different things.