America’s aggressive use of sanctions endangers the dollar’s reign • Hacker News Board

Re: America’s aggressive use of sanctions endangers the dollar’s reign

#41

Post by shostack » Sat, Jan 18, 2020, 11:11 PM UTC

mark_l_watson wrote: post #10

James 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% b…

What would happen to life in the US if the dollar was no longer the global reserve currency?

Re: America’s aggressive use of sanctions endangers the dollar’s reign

#42

Post by kds3 » Sat, Jan 18, 2020, 11:12 PM UTC

mark_l_watson wrote: post #10

James 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% b…

How does it matter if your reserve currency is 100% backed by gold if you lose access to your currency account at the Federal Reserve Bank of New York?

Re: America’s aggressive use of sanctions endangers the dollar’s reign

#43

Post by jariel » Sat, Jan 18, 2020, 11:13 PM UTC

sschueller wrote: post #2

For 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?

"Why would the United States be the one to decide if Germany is allowed to build a pipeline to Russia or not?"

Because America provides defence for Germany, and Russia has 1000 nuclear warheads pointed at Germany, the US and others, and they are an antagonising state, actively trying to disrupt the governments in Lithuania, Estonia, Latvia, Ukraine, etc.

All these issues are quite fundamentally related, so it matters.

That said, I don't think a pipeline will matter that much.

The premise of the article is problematic because there are almost no alternatives for the USD outside the Euro, and possibly the Pound for a few things. The RMB can't effectively be a global currency until it becomes transparent, which means the CCP would have to give up control, which they won't do.

There is really nothing on the horizon - no digital/fintech/blockchain anything that will change the playing field.

If anything - as 5B people on planet earth go from $1/day to $20/day and come into the global economy, the USD will have even greater seigneuriage power.

Re: America’s aggressive use of sanctions endangers the dollar’s reign

#44

Post by zozbot234 » Sat, Jan 18, 2020, 11:17 PM UTC

FpUser wrote: post #34

ardit33 wrote: post #28

Earlier quoted context omitted.

Wat? Pretty much all eastern/former communist block countries that are in the EU oppose it. That's almost 40% of the block. They can't directly confront Germany, but the US can, and it is doing so rightly. The project comprises the long term security of the Nato block, and the said countries have a major distrust towards Russia as it has they have suffered a lot under thier imposed communist regimes. For a bunch of s…

All those countries you mentioned are totally free to buy only from the US. Building a pipeline will not prevent anyone from buying gas from the US as long as it is competitive. The sanctions are mostly trying to strangle competitor/adversary and prop own industry using political means rather then market forces.

If gas supply based on that pipeline is controlled by a single state actor, that's the definition of not being competitive. The question is, why are people willing to prop up a monopolistic supplier in that manner instead of seeking real energy independence. Because Russian gas is cheaper right now? That's penny-wise, pound-foolish. The first puff is always free!

Re: America’s aggressive use of sanctions endangers the dollar’s reign

#45

Post by augstein » Sat, Jan 18, 2020, 11:22 PM UTC

Spooky23 wrote: post #19

wavefunction wrote: post #8

Earlier quoted context omitted.

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 governm…

It isn’t in the US or NATO interest for Germany to be dependent on Russian oil. Current US policy, to the extent that we have policy today, is a whole other matter.

It’s about Russian natural gas, not oil.

About 25% of Germany’s primary energy are produced from gas, of which about 40% come from Russia (down from about 50% in 1995).[1]

The US sanctions against the Nord Stream project are seen by a number of Germans as a rather clumsy attempt to push the sale of their expensive liquified natural gas, which to a high degree is produced by hydraulic fracking.[2]

1) https://translate.googleusercontent.com/translate_c?tl=en&u=...

2) https://translate.googleusercontent.com/translate_c?tl=en&u=...

Re: America’s aggressive use of sanctions endangers the dollar’s reign

#46

Post by detaro » Sat, Jan 18, 2020, 11:26 PM UTC

FpUser wrote: post #34

ardit33 wrote: post #28

Earlier quoted context omitted.

Wat? Pretty much all eastern/former communist block countries that are in the EU oppose it. That's almost 40% of the block. They can't directly confront Germany, but the US can, and it is doing so rightly. The project comprises the long term security of the Nato block, and the said countries have a major distrust towards Russia as it has they have suffered a lot under thier imposed communist regimes. For a bunch of s…

All those countries you mentioned are totally free to buy only from the US. Building a pipeline will not prevent anyone from buying gas from the US as long as it is competitive. The sanctions are mostly trying to strangle competitor/adversary and prop own industry using political means rather then market forces.

> All those countries you mentioned are totally free to buy only from the US.

That has nothing to do with their objections to the pipeline, to the contrary.

Re: America’s aggressive use of sanctions endangers the dollar’s reign

#47

Post by tjenkinsqs » Sat, Jan 18, 2020, 11:27 PM UTC

I prefer sanctions a thousand times over war.

Don't we have enough of the endless wars (Afghanistan, Iraq, Libya, Syria, etc. from the last 2 administrations?

Re: America’s aggressive use of sanctions endangers the dollar’s reign

#48

Post by nradov » Sat, Jan 18, 2020, 11:29 PM UTC

FpUser wrote: post #34

ardit33 wrote: post #28

Earlier quoted context omitted.

Wat? Pretty much all eastern/former communist block countries that are in the EU oppose it. That's almost 40% of the block. They can't directly confront Germany, but the US can, and it is doing so rightly. The project comprises the long term security of the Nato block, and the said countries have a major distrust towards Russia as it has they have suffered a lot under thier imposed communist regimes. For a bunch of s…

All those countries you mentioned are totally free to buy only from the US. Building a pipeline will not prevent anyone from buying gas from the US as long as it is competitive. The sanctions are mostly trying to strangle competitor/adversary and prop own industry using political means rather then market forces.

The Eastern European countries that were formerly occupied by the USSR would prefer to keep Russia economically weak. They don't want to be invaded again.

Re: America’s aggressive use of sanctions endangers the dollar’s reign

#49

Post by sremani » Sat, Jan 18, 2020, 11:30 PM UTC

philwelch wrote: post #27

wavefunction wrote: post #9

Earlier quoted context omitted.

The US and Canada already possess pipelines to Mexico. https://theodora.com/pipelines/mexico_pipelines.html

Does Mexico use those pipelines to project power into North America? If anything it would be the reverse as the US is a net exporter, but in reality it’s not quite comparable.

Rule#1 : Relationship between two countries is almost always Asymmetric.

Re: America’s aggressive use of sanctions endangers the dollar’s reign

#50

Post by mark_l_watson » Sat, Jan 18, 2020, 11:34 PM UTC

shostack wrote: post #41

mark_l_watson wrote: post #10

James 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% b…

What would happen to life in the US if the dollar was no longer the global reserve currency?

I think it would put us on par with other countries, we would lose a nice advantage. Worst case scenario would be a sharp economic decline, but I optimistically think it would be a slow leveling out, a slow decline in consumer purchasing power, limit government expenditures, etc. But, I am not at all sure what will happen.