America’s aggressive use of sanctions endangers the dollar’s reign
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Re: America’s aggressive use of sanctions endangers the dollar’s reign
#2For the rest of the world this is a good thing.
Why would the United States be the one to decide if Germany is allowed to build a pipeline to Russia or not?
Image if it was Germany that used sanctions to prevent the US from building a pipeline to Mexico. Would you be ok with that?
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#3It also endangers the basic principle of a rules-based, open world.
If you think that's a good idea, imagine what happens to an economy when civil law and contracts are not enforced, even without any threat of violence.
To pick just one example: if you're trying to get a loan to build a factory or buy a house, it's good for you that there are laws and trusted courts that would cause you a whole lot of pain if you failed to repay.
It's no different in international politics, only that treaties between states are backed not by some external force, but by each country having a strong interest in remaining within that system that outweighs any short-term benefits from skirting its responsibility.
I guess some of this is mildly counter-intuitive. But really there is game theory far more complex than this regularly understood on primary school schoolyards.
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#4For the rest of the world this is a good thing. Why would the United States be the one to decide if Germany is allowed to build a pipeline to Russia or not? Image if it was Germany that used sanctions to prevent the US from building a pipeline to Mexico. Would you be ok with that?
if Germany won ww2 they might have sanctioned the united states, just saying.
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#5For the rest of the world this is a good thing. Why would the United States be the one to decide if Germany is allowed to build a pipeline to Russia or not? Image if it was Germany that used sanctions to prevent the US from building a pipeline to Mexico. Would you be ok with that?
> Image if it was Germany that used sanctions to prevent the US from building a pipeline to Mexico. Would you be ok with that?
I'd be okay with any number of countries using sanctions to "punish" the US for any number of things. It's their right as sovereign nations. The irony here is that it's a double edged sword.
But what I'd really prefer would be a more direct say over who my country is sanctioning and why.
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#6It also endangers the basic principle of a rules-based, open world. If you think that's a good idea, imagine what happens to an economy when civil law and contracts are not enforced, even without any threat of violence. To pick just one example: if you're trying to get a loan to build a factory or buy a house, it's good for you that there are laws and trusted courts that would cause you a whole lot of pain if you fai…
There's no such thing as a rules-based, open world. International relations is a state of anarchy and perpetual conflict that only fleetingly resembles peace during those periods where there's a global hegemon that can enforce those "rules". Within a country, those courts are the hegemon.
"Each country having a strong interest in remaining within that system that outweighs any short-term benefits from skirting its responsibility" was the theory prior to 1914 as to why the Great War would never actually happen.
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#7For the rest of the world this is a good thing. Why would the United States be the one to decide if Germany is allowed to build a pipeline to Russia or not? Image if it was Germany that used sanctions to prevent the US from building a pipeline to Mexico. Would you be ok with that?
Is the US building a pipeline to Mexico? Is Mexico a corrupt, authoritarian dictatorship that routinely interferes in Western politics? If my aunt had balls, would she be my uncle?
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#8For the rest of the world this is a good thing. Why would the United States be the one to decide if Germany is allowed to build a pipeline to Russia or not? Image if it was Germany that used sanctions to prevent the US from building a pipeline to Mexico. Would you be ok with that?
US opposition to a pipeline to Russia is confined to a small group of people who are strangely very friendly to Russia on all other matters. There is no widespread or popular opposition to Germany building a pipeline to Russia in the United States.
This doesn't really treat with the dollar-denominated world economy but I wanted to point this out to differentiate the current irrational foreign policy of the US government from the subject at hand.
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#9For the rest of the world this is a good thing. Why would the United States be the one to decide if Germany is allowed to build a pipeline to Russia or not? Image if it was Germany that used sanctions to prevent the US from building a pipeline to Mexico. Would you be ok with that?
Is the US building a pipeline to Mexico? Is Mexico a corrupt, authoritarian dictatorship that routinely interferes in Western politics? If my aunt had balls, would she be my uncle?
The US and Canada already possess pipelines to Mexico.
https://theodora.com/pipelines/mexico_pipelines.html
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#10James Rikard (author of Currency Wars) in his newest book Aftermath predicts that the dollar's reserve currency run may soon be over, and special drawing rights (SDR) reserve currency might only be 1/3 dollars. I think he is probably correct on this prediction but maybe not on another prediction: currencies like China's and Russia's might soon be 20% backed by gold. He makes the point that there is no need for 100% backing from gold since a smaller percentage would still prevent a country from printing new currency out of thin air.
I think the dollar has a lot of inertia so it might reign for a long while longer as reserve currency, but then I also think about how much debt we have. Our treasury can not account for $21 trillion (ref: Catherine Austin Fitts http://solari.com) and the amount of consumer, educational, real estate, etc. of debt worries me, but: I expect a slow burn of our economy, not falling off of a cliff, economically speaking.
We can adjust to a decade long slow downward economic trajectory, people are resilient.