The dollar’s exceptional liquidity makes it more valuable, which is good for people who have dollars, but it’s bad for people whose costs are in dollars (American exporters). The dollar’s strength since the earlier 1980s (the first major flight to liquidity during the era of free movement of capital) has been terrible for American industry. It’s like Dutch disease, but instead of a commodity like oil causing unbalanced trade, it’s the dollar itself.
America’s aggressive use of sanctions endangers the dollar’s reign
131–140 of 326 posts
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#132As a point of fact, it isn't true that the dominant currency imposing costs is new...that has always happened. Britain did it in order to secure continued use of the £, and the US has done it before now. It is a normal extension of foreign policy (because finance is not separate from politics, as the Rusal example shows). It isn't some kind of authoritarian aberration either. The point is that the US has most to lose…
I've subscribed to the Economist for the past five years (or so). It's sad to see their decline.
About 90% is still good, especially when they focus of international news.
But they're willing to publish lower quality articles when defending their official liberal position.
Sadly, the occasional low-quality article is seeping into other areas.
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#133Earlier quoted context omitted.
Didn't the whole Greece debt situation show why that could be a problem? One country's debt crisis caused the euro to tank 30% in a very short time. It ended up rebounding, but pretty much forced the EU to handle the situation (write off debt and provide low interest loans for the rest) or risk the whole thing exploding. It seems like your betting on 5-10 countries not failing, when with most currencies you just have…
Greece was fiasco for Euro. It's a lesson learned now, and ECB will hold binge spenders on a leash. UK can leave EU, Greece or Eastern Europe can not.
It’s more that the Euro has been a fiasco for Greece, Italy, Portugal and Spain... It’s fundamentally problematic to have a single exchange rate between countries with different inflation rates, balances of trade, etc. - because you can’t have an exchange rate that works for everyone and the value can’t move between the other economies to balance out the differences.
The only way around that (apart from going to separate currencies with floating exchange rates) is to have some kind of fiscal balancing method. In the US, for example, federal taxing and spending tends to do this between the states. But that is probably politically impossible in the EU (redistribution from richer countries to poorer is pretty unpopular).
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#134Earlier quoted context omitted.
"United States have no geopolitical strategy, but a lot of self proclaimed geopolitical strategists." I once have heard this position from US ambassador in Kazakhstan on a private reception event. The guy told people he expected a visit to a *stan country to be like a visit to a warzone. He was learning martial arts, hostage negotiation, and been mentored by multiple self proclaimed experts on "warlord politics" of t…
Every time I watch some "expert" on TV taking about some country, I think one thing - does this person have any real experience with the topic he/she is taking about? Have they visited the country they are dissing on TV, even once? Most of these so called experts are paid too. This is not just faux news either, the experts are on all channels. No wonder the public has low trust of news these days. Sucks to know that…
It’s worse that that even. Lots of people who have experience and “know” are selling their opinion (trying to influence) to the audience. So often it’s their half of s story.
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#135As a point of fact, it isn't true that the dominant currency imposing costs is new...that has always happened. Britain did it in order to secure continued use of the £, and the US has done it before now. It is a normal extension of foreign policy (because finance is not separate from politics, as the Rusal example shows). It isn't some kind of authoritarian aberration either. The point is that the US has most to lose…
I’m not sure I get your argument. It doesn’t appear the Economist article is claiming that the dominant currency has only just started imposing costs.
Their claim is that the recent increased costs, and more relevantly their almost arbitrary nature, hasn’t just led to the usual suspects grousing, but has also started causing allies who didn’t grouse in the past, to actively seek and build alternatives.
As a result, the USD may potentially lose its status as the dominant currency much sooner that it may have otherwise.
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#136Earlier quoted context omitted.
> There's no such thing as a rules-based, open world. You're living in one right now. Anarchy need not be synonymous with chaos, especially if disputes and conflicts are relatively unimportant (due to easy defense making 'rights' self-enforcing). The point of courts is then to arbitrate disputes in a publicly-visible way, enforcement is relatively less important.
There's no global government so there's no global court. The global/international level is considered anarchy.
Anarchy means no ruler, not no rules.
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#137Earlier quoted context omitted.
> the near term, it's more likely the EU will break apart and the euro discarded That's not likely at all.
it's all but certain that the EU will start to break up in 12 days time (whether or not it will stop there is a separate question)
There are countries waiting to join the EU. Some go, some come. Since 2000 thirteen countries have joined the EU.
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#138This is an interesting article, but exposes the Economist's bias and lack of an honest historical accounting. While the it is new, interesting, and important that the world is becoming more skeptical of the dollar, it is kind of laughable that the only reference to Iraq and sanctions is the ones that were in the news recently. Iraq and many other countries have been subject to crippling US sanctions many times in the…
> The Iraqi government voted to remove US troops in response to an unprovoked assasination on an Iranian top general on their soil while performing what is claimed to be a diplomatic peace mission (another war crime).
I’m not sure if this is satire. The Iranian General was coordinating attacks against American forces with the Iranian-backed militia forces in Iraq.
It’s true that lame-duck Iranian-backed Shiite politicians passed the non-binding resolution on US troop withdrawal, supported by an Iranian-backed lame duck Prime Minister, which many outlets fail to report was incidentally boycotted by the Sunni and Kurdish lawmakers which will have a much larger share of the vote after the next election.
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#139Earlier quoted context omitted.
The difference is, when you go to the gold standard, how much gold you acquire to support the currency. After that, they are the same (but keep in mind, the value of a currency is dependent on a lot of factors, and not just the gold that is backing it. Otherwise currencies backed by nothing would all be worth nothing, which we know isn't true).
> (but keep in mind, the value of a currency is dependent on a lot of factors, and not just the gold that is backing it. Otherwise currencies backed by nothing would all be worth nothing, which we know isn't true). True, but once you've pegged the currency to gold, it can't fluctuate very far from the price of gold. A change in one is necessarily an equal change in the other. Currency that isn't backed by gold is fre…
> True, but once you've pegged the currency to gold, it can't fluctuate very far from the price of gold.
I think this depends on what your definition of backed means. If you include the government not just buying the currency for a given amount of gold, but also selling the currency for the same amount of gold, I agree.
But, otherwise, if the government guarantees it will only buy the currency for gold and not vice versa, then I disagree. For example, I could state tomorrow that I will guarantee to give anyone 1 oz. of gold is they give me $100 trillion in USD, and then technically USD would be backed by gold (by me), but such an offer would have no real effect on the how the market would value USD.
I might be wrong about what backed means, but if so, then I also don't understand what is meant by partially backed.
Re: America’s aggressive use of sanctions endangers the dollar’s reign
#140For 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?
Germany aggressively uses EU money to bludgeon mainly Eastern European states info accepting policies made in Brussels. Germany has done a lot worse as well obviously.