Interesting the pressure is increasing.
More and more countries questioning why they need to base their foreign transaction on the US Dollar.
Could this mounting unrest be as a result of the seeming inability of the US Federal bank in checking inflation of the US Dollar.
Also, some of these Nations can no longer determine what benefit it is to them is using the US Dollar as their reserve currency and trading currency.
Some nations might have alternative properties/currencies that would favour their external trade but yet they are stock with the Dollar and must defer to the US in all that concerns it.
I would really love someone more knowledgeable to make a prediction as to where all these could be going.
Do you see a country like Saudi going off the USD?
Do you think the West-African countries relying on CFA will turn away from that any time soon?
Is there a case to be made why these nations should maintain the status quo?
> Could this mounting unrest be as a result of the seeming inability of the US Federal bank in checking inflation of the US Dollar.
This is completely backwards. The problem right now is that the dollar is too strong, meaning expensive wrt other currencies. In this context, inflation of the USD supply, leading to devaluation of the USD would actually help other countries that are suffering from the strong dollar.
I'm not saying it would be good for the US, but it certainly would be good for pretty much everybody else.
And there in lies the rub. To keep countries placated we need to create more debt, a metric ton of more debt and hence more broad currency. But doing so at the moment is political suicide as is proven by the left's efforts (deficit spending blah blah etc).
Triffin paradox predicted in the 60s at it's full glory.
It's also worth noting that at the moment both the Fed and the Treasury (obv) are mandated to be operating with an inward looking view only. Meaning we run a global reserve currency with no 'department' in charge of the global part.
I don't think this should be downvoted. I believe this is all 100% correct.
Maybe because of the "left's deficit spending" part, which is not wrong, but ignores the right's historical deficit spending (e.g. TCJA). Or perhaps the "political suicide" part is misinterpreted: It would be political suicide for a politician to interfere with Fed policy and undercut their blunt force effort to reduce domestic inflation.
But any way you slice it, right now the Triffin dilemma is indeed exactly what we're experiencing.
Why? The eurozone can’t hold itself together, China is a house of cards with bad planned economy failures, the uk isn’t worth mentioning any more, and everywhere else either has unstable economies or economies based on volatile or limited lifetime commodities.
The dollar is the global reserve currency because the US has centuries of reasonable behavior and military and natural resources that guarantee long term stability. There isn’t a better option unless you’re playing temporary political games or if your macroeconomic situation is so bad you can’t play the game normally.
I think this take is somewhat over-reacting. I'm pretty sure you'll find that the price they agreed is really in USD, and only the medium of exchange is gold (even if the paperwork or agreement doesn't even reference USD). So really they are paying X USD's worth of gold - with both oil and gold price being fixed in USD somewhere abroad. USD is so incredibly ubiquitous, it won't easily go away.
Reserves are a little different, but even then, whenever something bad happens, the dollar strengthens as investors flock to it. When the 2008 crisis happened (and it was US-centric!) US and the dollar were still the safe haven everyone escaped to. Not the Rouble, not the Yuan, not so much EUR or CHF or, from memory, gold.
So we'll see people avoid the USD as a medium of exchange, maybe, even if the prices are fixed on USD-denominated prices. But also remember, gold is not a great medium of exchange. Will Ghana ship physical gold around the world (risky and expensive)? Or will they sign a piece of paper saying "gold held by in a safe by someone else and owned by me is now owned by someone else" - in which case there is similar counterparty risk, except perhaps not against the US government. But if you think the US is an evil octopus with long tentacles, surely they could get their hands on this gold. Where will this haven safe from US interference be?
If anything, I can more easily believe an alternative economy based on crypto. It's actually happening and working well, for all sorts of shady or illicit activity.
> Or will they sign a piece of paper saying "gold held by in a safe by someone else and owned by me is now owned by someone else" - in which case there is similar counterparty risk, except perhaps not against the US government.
The US holds a quarter of all the known gold reserves in the world, and has more gold than the next three countries combined, so there's a decent chance that Ghana's gold is already in the US.
I think it’s more an issue of other countries seeing that the U.S. can just confiscate their dollar reserves if the US doesn’t agree with their sovereign actions. Those countries are choosing to divest from the mono world order which is crumbling. For a long but instructive discussion on current economic events check out this interview.
“Mono world order” is the appropriate term when the US can go around conquering other people in their perceived self interest (Iraq, Afghanistan) but says nobody else can.
If you want the real-politick answer then “yeah, absolutely”. What’s your point?
But the U.S empire has been pretty amazing for a pretty amazing number of people across the globe, and it is shockingly easy to stay on the good side of U.S. foreign policy.
Be reasonably democratic, don’t genocide undesirable elements of your population, don’t pick on other reasonably democratic countries, don’t threaten world trade and resources, don’t steal all the Americans’ stuff by suddenly socializing industries in your country, don’t fund terrorist activity against them.
Yeah you can find exceptions to every one of those listed items - welcome to global politics.
> But the U.S empire has been pretty amazing for a pretty amazing number of people across the globe, and it is shockingly easy to stay on the good side of U.S. foreign policy.
Hell no
> Be reasonably democratic, don’t genocide undesirable elements of your population, don’t pick on other reasonably democratic countries, don’t threaten world trade and resources, don’t steal all the Americans’ stuff by suddenly socializing industries in your country, don’t fund terrorist activity against them.
I'm sure Iraq and Palestine would agree.
And of course the country that did very well to the world, also wanted to illegally control the worlds population for its own interest.
Russia went from being the “evil empire” to having Starbucks and McDonalds within ten years of ticking just a couple of those boxes. If your nation is still on the international naughty list it’s because of your behavior.
Americans would much rather be selling you cheeseburgers and blue jeans and Avengers movies than fighting with you.
Yes, it’s true Americans are very easy to get along with. All you have to do is depose your leaders, change your entire economic system and dismantle your military capacity for force projection just like the USSR did as it broke down.
US can confiscate your dollar reserves if you keep those dollars in the US, just as they can confiscate your gold reserves if you keep them in the Fort Knox.
No, I'm refering to only country in XXI century that literally decided to annex other country's territory - two times. All that while losing war, and deciding to unleash hell on civilians they claim to be "their kin".
At least we can cheer our hearts looking at fields littered with dead russian soldiers and see that there are countries of the world that won't leave those who need help alone.
There are two fundamental differences. One is that Russian invasion and genocide is happening now, not couple of decades ago. Second is that the fact we can’t punish US doesn’t mean we shouldn’t punish other offenders.
I predict we'll see blocks forming up again, something like:
- West (US+EU)
- East (China+Russia)
- India (India, Sri Lanka, Himalayan States, South China states)
- Middle (Middle East+North Africa)
- Latam (Central + South American States)
One wild card IMO would be the rise of the Indian sphere of influence. I'll leave some room for India's remarkable ability to snatch defeat form the jaws of victory. If they don't f this up, they have UUUGE tailwinds going for them.
Middle east is overrated IMO, its like an oasis with oil instead of water. When the oil money runs out, not gonna be fun any more.
Latam is probs the biggest wildcard, even bigger than India. They don't need a lot of things to be right to wildly outperform as a block. Just like the US, they are protected by two oceans so they can choose to not involve themselves in stuff.
Africa is highly overrated IMO, the entire continent is cursed in multiple ways. If u compare africa to another post colonial continent like Latam, africa is in a place where they need to get so many things right to just survive, let alone to catch up.
I agree with the general premise of your comment, that this is a small sign of the deglobalization which is _already_ under way.
But, what are the UUUGE tailwinds benefiting India? India, even more so than China, seems likely to "get old before it gets rich." Its TFR is already below replacement and falling rapidly.
I strongly disagree with on demographics, it looks really good for most of the century. Everything including TFR, young population, working population and even elderly populations looks REALLY good. Especially relative to China.
Demographics aside, India is a perfect replacement for China in high tech manufacturing. Stability is a huge factor here giving India a massive edge compared to south east asian alternatives.
On top of that, you have young highly skilled & literate workforce. A largely discounted wealthy diaspora investing back into the motherland. Huge pool of software talent.
IMO it makes for a huge Shenzhen like moment for India. Again, I leave a massive amount of room for India to duck this up but it is India's opportunity to fuck up. The winds have shifted heavily in their favour.
If PRC's official population is as low as Yi thinks, then her per capita GDP is already "secretly" high income at ~14000 USD. She would technically already have gotten rich before old. CCP has incentive to overreport population / underreport GDP to keep "developing" country status.
>India ones are still over replaceability
Indian overall TFR this year is ~2.0, but more important to break down Indian TFR by state, which will reveal all the high HDI/developmed/educated regions are ~1.6 and trending down, while the underdeveloped and poorly educated regions are still >2. The TLDR is India's demographic divident in her high potential regions is basically over, while low potential regions are generating excess bodies that will have little opportunity develop. Recipe for disaster in democracy, and hence:
> India, even more so than China, seems likely to "get old before it gets rich."
Of course India is going to grow, by a lot, but much of her high potential demographic divident is already tapped out while stuck in low middle income unless the system get it's shit together.
People that keep bunching Russia with China are deluding themselves that Russia is anywhere on China's radar except as a source of cheap resources (gas, oil, wood)
Russia is a UUUUGE strategic geopolitical ally for China.
In a de-globilised world split into spheres of influence, Russia would be a foothold into Europe.
Cheap resources cant be discounted, China has duck all for resources. It imports everything (raw nat resources) and its current source Australia is not an ally.
Unlikely. Ghana happens to be a gold producer; they may see this as a better deal for them, and may get some other benefit from a country like China for rattling the cage.
What’s more likely is that Ghana is using monetary policy as a cover for acquiring locally produced gold at a lower price and selling it abroad for resources to make up for trade deficits.
If you look at the actual numbers, you'll find that USD dominance is still unchallenged.
BUT, there is definitely way more chatter about alternative payment options, including from well-placed government sources and central banks in important non-west allied countries.
It's now a matter of "when", not "if" when an alternative currency pops up, maybe a BRICS currency.
I believe the war in Ukraine has permanently damaged the USD's dominance in the medium to long term.
The use of a supposedly neutral financial network (SWIFT) as a sanction weapon will make other nations who aren't on good terms with the U.S. and the West (and not just the "usual suspects" but many nations in Africa and South America too) seeking alternatives.
As previously mentioned, Bitcoin is a viable alternative. But there may be others. In any case I see nations ganging up to create an alternative to the SWIFT network, potentially undermining its usefulness.
The SWIFT network has been used that way against Iran in 2012 though. These sanctions have been lifted in 2016 and this usage has probably disappeared from popular awareness because of that.
Why would countries that don't plan to commit genocide need to be bothered by SWIFT cutting off countries that commit genocide? In fact, this is a good thing for countries that don't want to be genocided as it provides an additional incentive against genocide.
Because who knows what’s on the list of excommunicatable offenses. Today it’s war of aggression, 40 years later on not enough diversity and inclusion could qualify, or the eagle knows what else. Hope for the best prepare for the worst.
> "No one knows with certainty how many people have been killed and wounded in Iraq since the 2003 United States invasion. However, we know that between 184,382 and 207,156 civilians have died from direct war related violence caused by the U.S" [0]
Is it only a genocide if a non-western ally does it?
I'm sure you were outside the embassy calling for Indonesia to be added to the OFAC list when they started massacring East Timorans. Or when Turkey invaded North Cyprus.
> More and more countries questioning why they need to base their foreign transaction on the US Dollar.
For spot transactions, it doesn't really matter beyond giving the buyer and seller a common language to negotiate in. For contracts sometime in the future, if you're Argentina, no one wants to bet on where the Peso will be in 6 months.
Saudi Arabia isn't going off the USD. That would seriously undermine their relation with the U.S. and could even have them branded an antagonistic nation.
The dominance of the USD is EXTREMELY important to the U.S. and I can assure you that Washington is even willing to wage war over it.
But I believe the ball has already started rolling with Bitcoin and Russia's demand for payment in Rubles.
FTX's collapse has left its mark, but this will only be temporary.
Bitcoin is already demonstrating its usefulness by helping countries evade economic sanctions. There are a truckload of nations who're fed up with the West's financial dominance and are actively seeking alternatives.
> FTX's collapse has left its mark, but this will only be temporary
Bitcoin was down well in advance of the FTX collapse. The reason it is down is because it's a Ponzi scheme, and an unconscionable waste of resources so that cryptobros can LARP at being a libertarian.
If by "stonks" you mean meme stocks and SPACs, then practically yes. They both rely on the people coming afterwards being a bigger idiot onto whom poor value instruments can be offloaded.
Common ETFs usually trade at 20x+ their actual output. When people ask me for investment advice, I tell them that I am good at predicting this fiction and no I won't subject anyone else to it because the whole thing is 50% a complete insider trading scam. My point is to call one thing a scam and pretend the other thing is legit is a joke.
To me "stonks" is a name to belittle stocks. Disclosure: I am heavily invested in both space cash and stonks.
And it is going to fall more after the rug pull about to happen.
Still, even in its worst, it is doing well against TRL, ARP, etc. And those are currencies used by many tens of millions.
Its definitely not a lack of confidence in USD or the feds. Relative to pretty much every noteworthy alternative, the feds have handled things a lot better.
- EU royally f'd with their stimulus & rates. Mind you, they were in a very precarious position to start with.
- China has proven themselves to be a house of cards with zero covid, massive public/corporate debt bubbles and Ji becoming god emperor.
- Russia is a glorified gas station with an economy the size of florida.
The reason for Ghana's action, Saudi looking to end petro dollar, China+Russia looking to form a block etc: US deep state ducking up big time.
The weaponised the dollar.. They've been ramping this up big time during the past few decades but the Ukraine War was a UUUUGE reveal the cards moment.
During the last 2 years, Russia was filling up their coffers with high oil prices. The US turned these foreign reserves into worthless numbers on a screen overnight with the press of a few buttons.
Now pretty much every country is looking at each other like "oh shit".
The petrodollar is a really weird thing. According to its critics, it is a global monopoly on violence and pure extortion, to its implementors - merely a conspiracy theory. Please, before you clinge to the conspiracy theory label, check how many great people such as de Gaulle have whined against it and what is Privilege l'exorbitant in French political science.
In reality, global trade is not in USD purely because it is backed by carriers and they can invade anyone, but because this navy also protects shipping lanes and offers international rule of law. Remember when the US took a break in the gulf of Aden and it took us Europeans (+Russia and token help from US!!) years to agree and secure it. So, things are not black and white.
Anyway, this system is collapsing from within and will be replacing. The success of the S.Arabia pivot is going to merely decide if it happens in 10 or 20 years time. Btw does anyone know how did the MBS-Xi meating go?
> Petrodollar
Is rather remnant of the past. FYI I think half of world forex reserve is held in the 5 entities in East Asia (CN, JP,KR,TW,HK). Whatever dollar the Petrostate get (sans Russia) they recycled
it to various goods and services mostly sourced from East Asia.
> Btw does anyone know how did the MBS-Xi meating go?
Will commence in December, previously rumored didn't happen
The exorbitant privilege thing is kind of strange when countries voluntarily demand more dollars or even borrow dollars. The "privilege" is only exorbitant if you are the only survivor of a world war.
I'm only at the level of guessing for topics like this, but my guess is that a chain reaction is more likely to see a switch from USD to Renminbi than a switch to gold (or Euros).
China because of the potential assuming similar GDP/capita as the current USA.
Not soon because I expect as a prerequisite for change being the new winner's GDP to be dominant rather than just joint top 3 in a ranking system that changes their ordering depending on what you value most.
Not gold because the justifications given for why we all stopped using the gold standard in the fist place, still seem to apply.
China might be able to force a switch to the Renminbi simply by virtue of their GDP. First as a medium of exchange (which they're doing), then as a reserve currency.
But having people willingly adopt it?
If people are unsatisfied with the USD in specific ways, how would those specific ways be better using the RMB?
It'd be pretty shortsighted to complain about US financial manipulation or use of currency to further political goals... and then jump in mainland China's pool!
Do you think GDP is the critical factor for determining a global reserve currency?
IMO, respect for property ownership rights, legal/judicial recourse, ubiquity of US banks, and political stability are large contributing factors that few other countries can compete with. China has a pretty checkered past regarding ownership rights for citizens who are critical of its leadership.
Property rights and such are secondary. The primary issue is: who has the power? Right now the answer to that question is "US", but since China is catching up on GDP, and, unlike US, actually manufactures things. If China decides that they want payments for all the goods that they export to be in RMB then there's nothing the rest of the world can do about it, except stop all the imports from China (which would take decades, because they have to learn to manufacture all those goods themselves). Once most of your imports come from China instead of the US it does make sense to use Chinese currency as the reserve currency, since you are going to need a lot of RMB to pay for your imports anyway.
China can't tank imports until they finish pivoting to their own internal, consumptive middle class. And probably not even then.
The plan the international community hoped for is actually somewhat working, the timeline for China's giant population to metabolize it was just wrong.
Large Chinese middle class = power = political risk to disrupting the economy = incentive not to rock the international trade boat's status quo.
The CCP is already seeing with the anger over zero-COVID that {middle class life} >> {good of the Party} for most of the population.
Unfortunately, China probably also learned from the USSR that the entire charade only collapses when you blink and refrain from using the military to crush civilian dissent. Which doesn't bode well for Chinese citizens...
>"Unfortunately, China probably also learned from the USSR that the entire charade only collapses when you blink and refrain from using the military to crush civilian dissent."
Baloney. USSR did not crush because of "civilian dissent". All the changes were driven from the top.
Berlin Wall did not cause the collapse of the USSR, it was one of the results of generally declining empire and change of it policies that again came from the top. Gorby and Reagan had decided to be "friends"
Saudi Arabia (to pick a major oil exporter) imports about 20% of its goods from China. But it also imports vastly more from regional partners and the US and Europe, not to mention that it depends on the US to secure all of its oil exports to China across thousands of miles of vulnerable ocean routes.
I suspect it's a prerequisite, though perhaps not the only one.
I also suspect that political stability is more likely to favour China than the USA over the next few decades — it is very human for success to be followed by the assumption of indefatigability and that to be followed by fighting over who leads the nation, rather than continuing to focus on what actually made a nation dominant and how to keep it that way. The UK lost its literal empire that way; the Soviet Union took 50 years to go from agrarian to space, but by the end they had become at least as out of touch with their own people as the last Tsar had been; I think the US may lose its metaphorical empire similarly to the UK's actual empire, though the group deciding to call itself "The Tea Party" at least implies the possibility of it failing, with analogy to the USSR, in the same way it was formed.
The US may have backslid a bit, but it still leads the world in property ownership rights and fairness of the legal system. When a foreign corporation takes a domestic corporation to court, which jurisdiction will they get the fairest shake? What happens to billionaires when they speak critically of the Chinese government? Despite claims to the contrary, freedom of speech and rights of the property ownership are still vigilantly protected in the US.
Certainly; this is a hypothetical about a future where both China improves and the USA continues downhill. But even then, don't image a static world, imagine the difference (on the world stage, not in absolute terms) between the UK in 1922 and 1950, and assume the USA might fall proportionally as far by 2050. Or the growth of the Soviet Union in the same period, and apply that to China by 2050.
The UK lost its literal empire because of the costs of two wars that devastated the continent - not domestic politics. On the other hand, the PRC is turning back on itself. It has been unable to produce a successor to Xi - making it very hard to change direction. Under Xi, it has actively cultivated hostility against itself and only manages to exercise influence others through force. It also has much less stable demographics. It is not reasonable to expect China to collapse and it would be fearful if they did, but they are likely to have a much less stable period ahead as they come to terms with their situation.
As for the US, they're not alone in this but they are now in a situation where younger voters with a longer time horizon are able to win majorities against older voters with shorter time horizons. This means they're entering into a period of creativity. It is not clear what the outcome will be. But it is clear that we cannot take for granted that pursuit of an unreformed ideology will distract them from the compromise and teamwork that brought them to strength.
In both cases, I think you're extrapolating from recent politics. But both countries are in different turns of the demographic wheel, and have different ways of dealing with that. Democracy also tends to make turmoil more obvious to external observers, so it's easy to accidentally compare apples to oranges when you're looking at a democracy and an autocracy.
> The UK lost its literal empire because of the costs of two wars that devastated the continent - not domestic politics.
That’s the story the British like to tell themselves.
I don’t think it fits the counterexample that Germany was able to rebuild itself enough after the first to be a world-scale threat by the second (and might have won the second in the alternative timeline where they had not been so anti-communist to attempt to conquer the USSR before the UK, and possibly also in the hypothetical alternative timeline if they had not been anti-Semitic — even before all the horrors of Holocaust became known, they were bad enough to make a significant number of Jewish scientists run away, in particular the ones went to the USA and helped with the Manhattan Project); and again after WW2 and being divided by the Allies, that Germany went from having their industrial base punitively dismantled in 1949 to The Times referring to the its reconstruction as a Wirtschaftswunder by 1959. (Yes I do know they got help, but it’s important to also know why the UK didn’t get that help, and I think part of that is the USA while part is internal domestic UK politics).
It also doesn’t fit that the observation that empire, which was worldwide, had been bringing riches to the UK before the war. One thing that might have changed the cost/benefit ratios was all the locals finally getting their hands on sufficient firearms to make it expensive to suppress independence movements. Given what else the British government was busy doing with local industrial policy at that point, and the honours granted to those directly involved in war crimes during the Mau Mau uprising, I don’t think they were that self-aware. (Could also be that the USA was putting pressure on the old powers to drop their imperialism, but I don’t feel confident about the dynamic there given British cultural attitudes to the USA vary from it being “one of us, even if they don’t realise it” (no, I don’t get it either, but I’ve seen it) to “if they say jump, we ask how high”).
It also doesn’t fit that the Commonwealth’s GDP is now about $11 trillion, about 3 times the UK itself; although I would regard the end of Imperialism as a morally good thing and correct all by itself, I don’t think “money” is a reasonable justification for giving up on that potential. Morally, sure. Politically, it is “gave up an empire to gain a continent… hang on, why isn’t the continent doing what we say? That must mean they are dictating to us!”
Your argument leaves aside the fact that Germany lost the second world war and was absolutely devastated by it, and that a lot of their military power in that war came about at the expense of their citizens. It's also way too narrow: the resources the UK devoted to controlling its empire, couldn't be devoted to holding Germany down. The UK was never the sort of monopolar superpower that the US was 1989-2008 (the US very much learnt from the UK's more primitive form of partial dominance).
Moreover, even if any of your claims are true, it still doesn't show that they collapsed due to domestic politics. If they didn't have a goal of maintaining their global empire - and you seem to argue that they didn't - then it's not domestic politics but rather public opinion that led to the end of the empire. That is to say, it offers no real lessons for a country that wants to remain dominant. Maybe the US wants to leave its empire behind it, but if so you can only learn that if a country wants to leave its empire behind it, then it might succeed. So what? The British example in your presentation doesn't say anything about a country that wants to remain dominant. And it is completely one-sided, failing to account for domestic politics in China, which is in a far far worse situation than the US in terms of being able to gain/retain the (international) support needed for a dominant position.
> Politically, it is “gave up an empire to gain a continent… hang on, why isn’t the continent doing what we say? That must mean they are dictating to us!”
This is chronologically wrong. The British had already lost almost every bit of their empire, and certainly their imperial standing, before they tried to join the EEC. It cannot be maintained by anyone with even a milligram of dedication to the truth that they "gave up an empire to gain a continent". It's true that the price they had to join the EEC was to end the imperial preference, but they were poor, the sick man of Europe, and their ability to conduct internal imperial trade was dependent on the United States. Even their very best colonies in Australia and New Zealand, although still dependent on imperial trade, had turned and saw their future as key allies of the US - not dominions of the British Empire.
So while it might be the case that more lately, some British politicians have sought to build domestic support by lying to their constituents and claiming they "gave up an empire to gain a continent" only to be surprised that it was a partnership, they didn't lose their empire to join the EU/EEC. Your false-quote has resonance in the context of the Brexit debate, but it has no meaning in the original circumstance.
I can certainly believe they're like that today, given how inept they obviously are in every aspect of the Ukraine war. So much so, I will take that at face value without even bothering to google it even though it would've seemed like a surprising and unbelievable claim this time last year.
That doesn't mean they didn't go to space, nor does it mean they didn't industrialise, nor does it mean they weren't a significant word power and viable threat to the USA during the Cold War.
That continued after WW2. Russia was dependant on western trucks, a lot of which they gained via Land-Lease. So, they literally bought truck factory from the western companies - Kamaz - that they obviously branded as their great achievement.
Wouldn’t a switch to Renminbi as a global reserve currency be fundamentally incompatible with China’s currency control regime? This has always been the explanation I’ve been given for why such a switchover is improbable.
There's also a lot less in circulation. The US Dollar has by far the largest volume out of any currency, which helps other central banks manage their holdings. This is something that holds back for instance the euro to be used for reserve banking.
Could be; I don't even understand British economic policies, despite my nationality, Chinese economic policies are completely outside my domain of knowledge.
Could this lead to a chain reactions, were countries abandon the dollar and the dollar looses in value, in return leading to more countries abandon it? A world were the most stabilizing region and its currency become temporary hegemon?
Ghana's GDP is flow while Twitter's valuation is stock.[1] Given that Twitter's EBITDA was $211mn, it is more accurate to say that Ghana's GDP is 368 Twitters.
I'm not going to say that I have strong views on this right now. But the reason I used EBITDA is that GDP is the total value added of the economy. EBITDA is the total value added of the company.
I don't think that's quite the right interpretation. EBIDTA is the value added of the company net its employees (and I'd quibble over depreciation and taxes), whereas GDP includes the labour share.
Imagine we had a single-company country, where every worker was also a customer, all costs were internalized, and capital did not depreciate. The GDP of the country would be equal to the profit of the company plus the wages of the employees.
Using the EBITDA equivalence, however, the GDP of the one-company country would be more (possibly far more) than "the one company's earnings."
In principle, Twitter’s market value is the net present value of its future profits, which excludes input costs. So the closest concept to parent’s comparison (GDP vs. market value) is GDP vs. profits.
> The GDP of the country would be equal to the profit of the company plus the wages of the employees.
Also plus any other input costs, like rent, electricity, loans, etc., right?
So GDP vs. revenue would be the comparison that would include both profits and input costs.
You ultimately need to pay in some common currency so which common currency do you trust to be secure from inflationary pressures or government interference? Do you trust the Euro to not implode? Do you trust the Chinese Communists with their Yen manipulation? The US dollar is the last currency standing after all others are disqualified.
Somewhere in my comment history I made the prediction "It will be possible to buy large amounts of oil without USD by 2024" - so I think I've got a decent track record on this subject.
I'm much less confident in these predictions than that one, but I'll predict Saudi Arabia won't go off the USD because they depend on US military support in a pretty warlike part of the world and the CFA will be replaced by 2027 as currently planned without any major interference from the European powers.
As for a case for maintaining the status quo - The example made of Ghaddafi comes to mind.
The reason US$ denominate most trade is that without what is broadly referred to as "The West" global trade would not move. Trade would not be protected by a web of alliances among developed nations. If that goes away, ships would not be insured. Uninsured ships would be lost to pirates and rogue nations. Prices would jump sharply. Supply chains would have to go back to warehousing enough supply to withstand disruptions. Warehoused parts would become stranded assets when products change. Growth would be choked off.
This is not an excuse for imperialism and crony capitalism that exploits developing nations. Especially in how multinational oil companies corrupt entire nations. Working toward the end of fossil fuels will hasten them losing their power. But the lesson of this year is that those dull bureaucratic things like NATO and the EU are what keeps fascistic autocrats contained and gives aggressor nations the thrashing they deserve.
Even the Tories are realizing they got played by Putin's plan to divide the nations that could hold him back.
>Do you see a country like Saudi going off the USD?
Going off, certainly not (why would they?)
But exchanging their oil for other currencies, absolutely.
What will be interesting is how long the Sauds will remain in power once they agree to exchange their oil against other currencies.
Historically, all regimes that made that decision were or are in the process of being taken down either directly by the US or a combo of their close allies (see: Khadafi, Saddam Hussein, Vlad Putin, etc...)
Russia's sanctions were as a result of their invasion of Ukraine and they'd still be a part of the normal financial system otherwise. It's nothing to do with petrodollars.
Apologies, but your reading of the situation is shallow.
What do you think led Vlad to invade?
The US has been mounting a proxy war against Russia in Ukraine for the past 20 years, one they're ready - barring political upheaval in the US - to fight down to the last European.
To a certain extent this is true, but the Ukranians have been very keen on it as they've benefited from not being a puppet state run by a corrupt president who built himself a huge palace. And Russia has no right to be "in" Ukraine in the first place.
Much more knowledgeable people than I am suggest that the reasons include nostalgia for empire, and the acute fear that near-Russia is not defensible if states like Ukraine are not controlled up to the nearest natural defensible barrier. Modern Russia appears to have a mortal fear of being invaded that is a little perplexing to the modern European.
>Modern Russia appears to have a mortal fear of being invaded that is a little perplexing to the modern European.
This is a media deflection. They massively blow this up with Ukraine but literally do nothing when Sweden and Finland joins.
What putin really fears, is free, rich and democratic country in which large parts of population speak russian language. The masses can't be placated if "the same people" live better lives than under mafia regime. That's why russia spend last 30 years undermining free Ukraine and ensuring their hold on Belarus.
Polish and Ukrainian economies were exactly the same size in 1991 after collapse of the Soviet Union.
In 2021 Polish economy was 3 times bigger than Ukrainian and almost 2 millions of Ukrainians emigrated to Poland for work.
Very clearly Poland done some things right, while Ukraine did not.
The one important thing that we have done right appears to be immediate turning towards West after collapsing communist regime in 1989. Joining NATO and EU.
Poland never wanted to be in the Russian sphere of influence. We have spilled rivers of blood in countless wars, uprisings and protests against Russian imperialism in past 300 years.
Ukraine means "borderland". Historically Ukraine was in a constant state of wars between Polish-Lithuanian Commonwealth, Swedish Empire and Russian Empire since before USA even existed.
So, historically Ukraine was always split between West and East. All regions of Ukraine very clearly wanted independence in 1991. But modern Western Ukraine wanted to join EU and follow Polish path to prosperity. That's why Maidan protests started in late 2013.
Putin invaded Ukraine because he believed in a false story that Ukrainians wanted to be Little-Russians fed to him by FSB agents (KGB successor). And in order to keep Ukrainians from the Western path to prosperity. Ukraine as prosperous as Poland, meaning more prosperous than Russia, would threaten his regime and Russian idea of greatness.
But Russian speaking Ukrainians sympathetic to Russia never asked for their whole lives to be upended and to be bombed by Russia into oblivion. Ukraine is no longer split. This war is their war of independence, true nation forming event. Their new found hatred towards Russia and Russians is enormous and that leaves them with the only other direction - towards West.
> Ukraine means "borderland". Historically Ukraine was in a constant state of wars between Polish-Lithuanian Commonwealth, Swedish Empire and Russian Empire since before USA even existed.
Don't forget Turkey. Ukraine was also invaded by Turks and Tatars many times.
>Putin invaded Ukraine because he believed in a false story that Ukrainians
wanted to be Little-Russians fed to him by FSB agents (KGB successor).
I don't think he really believed in an real enthusiasm, but rather passiveness and complacency that characterized "Great-Russians" under his regime.
>But Russian speaking Ukrainians sympathetic to Russia never asked for their whole lives to be upended and to be bombed by Russia into oblivion.
That's a giant point not even touched once by trolls that love to share 2012 Ukraine election results. There's massive difference between believing that Ukraine needs to ally with Russia, there are cultural ties and similar points, and wishing for literal invasion of your country by foreign empire.
saudi? no. they are the only elites not tied to petrodollar by force but by financial incentives.
all the others probably no as they will see the new gana embargo :(
the terms first world and second world were originally coined to means country under petrodollar and countries under ussr. third world was a term that meant free for all to the to two powers.
Also, some of these Nations can no longer determine what benefit it is to them is using the US Dollar as their reserve currency and trading currency. Some nations might have alternative properties/currencies that would favour their external trade but yet they are stock with the Dollar and must defer to the US in all that concerns it.
I would really love someone more knowledgeable to make a prediction as to where all these could be going.
Do you see a country like Saudi going off the USD? Do you think the West-African countries relying on CFA will turn away from that any time soon? Is there a case to be made why these nations should maintain the status quo?