These sanctions always make me think of papal interdicts 800 years ago. At first a powerful tool then people stopped caring about them when they were used for trivial purposes. We will dull our weapons with overuse
Well, it's fairly easy to not pay attention to interdicts, as the stuff they affected aren't so real. But money is real and going to prison is real (or at least "realer" than the stuff Papal interdicts banned). So long as we can sustain a coalition of the willing (and really, if a country opts out of SWIFT, what would they use instead? Some system run by the CCP? Would _you_ trust them more?), we'll be fine.
The interdicts where absolutely real to the people they affected. At some point the risk of being in a USD nexus will not be worth it to more and more people
If people didn't pay attention to them, then interdicts weren't real. As for the risk of not using the USD, folks would need a suitable substitute. Good luck convincing India that their reserves are safer in RMB, for instance.
I know this point doesn't deal with the main point of this article but I'm bemused by the idea that the 2nd war with Iraq 'yielded marginal gains for U.S. interests'. If it wasn't that I highly regard the hard working staff at DreznerWorld I'd be laughing in the fact of absurdity. Unlike the removal of the Taliban from Kabul and al-Queda from Afghanistan I cannot see any gains at all to American interests from the occupation of Bagdhad. The loss of American prestige when it was found there was huge when no WMD program was discovered, the loss of blood was big the loss of treasure was huge. The power and influence of Iran was enhanced and as I write this and further rack my brains and squint my intellectual vision I still can't see any modest gains for US interests at all. Have I missed something?
I've started to read Underground Empire. I expect it's going to do a good job of explaining how we use global financial and communications systems to project power into the world. But I'm also curious whether we profit financially from the empire in the book's title, and if we do, how it works on a nuts and bolts level.
A different way to phrase the question is, why has America been so prosperous, and to what extent does our prosperity depend upon our foreign policy? It seems intuitively obvious to me that we're benefiting from our central role in the global economy, but I don't really know that's true, or how it works, if it is.
We don't really benefit _that_ much. There is seignoirage from the USD, but that is offset by the US having to consistently run trade deficits (hollowing out our manufacturing capabilities and slamming our working class). I guess the major benefit is that we have someone we trust (us or allies) running the world financial system instead of, say, the CCP. So the benefit is more that we can keep others from wrecking us more easily.
I'd say our prosperity is more dependent on our socioeconomic system than our foreign policy (which, if anything, is dependent on our socioeconomic system than the other way around).
American prosperity is how the US could survive multiple foreign policy misadventures in the ME without huge harm.
If the Renminbi/Yuan replaced the dollar as the world reserve currency and we ran our trade deficits and tried to run our fiscal deficits wouldn't our economy get Argentina-ized? Haven't we been able to get away with fiscal profligacy countries that don't have their convertible reserve currency because of the combination of our economic size generating market power and the USD simply being the least distrusted store of value?
As an American, no. But there are hundreds of millions of people who would distrust the CCP less than the capriciousness of the United States. The CCP to date mainly has its places it has territorial and historical claims to places and flexes its muscle to demand it not be contested on those or be insulted, but otherwise asks very little of anyone but to do business. A "don't pee in my cheerios and I won't pee in yours" approach to distant international relations. With America, you never know what insult or cultural practice will put you on a random Congressman or interest group's radar for harassment, and once you're Washington's naughty list, it's nearly impossible to get off.
Anyway - your response was a total non-response on the substantive value of having or not having the reserve currency. It was just a denial, a statement of "that would never happpen, cuz communism and nobody trust it."
Where are these "hundreds of millions" (outside of Russia)? Do you see anyone (besides Russia, which essentially doesn't have a choice) choosing to keep their reserves in RMB? I don't. For all of the US's capriciousness, we still have (well, at least the veneer) of rule of law. The CCP can't even promise that.
I would not put my life savings in RMB because I am an American and China is not looking out for me. America still has the confidence of the elite deciders of financial elite policy in nearly all countries for its currency to be the reserve currency, but Russia, and others like Iran, North Korea, possibly Syria, or Huthi Yemen pushed out of the dollar system could prefer RMB. If you put it up to a referendum in much of of Asia and the global south about where they think their money would be safer, they may well vote China, but they don't decide directly. In any case, China itself hasn't taken the commitments and made the guarantees to offer itself up as provider of the reserve currency. My argument is that it hasn't happened because it hasn't tried, and China hasn't wanted to because it is not worth the costs of obligations and loss of flexibility incurred. It sounds like you would argue it has not happen because the Chinese just "anticipate" no one would trust their currency as a reserve currency so if they tried would be highly embarrassing.
These sanctions always make me think of papal interdicts 800 years ago. At first a powerful tool then people stopped caring about them when they were used for trivial purposes. We will dull our weapons with overuse
Well, it's fairly easy to not pay attention to interdicts, as the stuff they affected aren't so real. But money is real and going to prison is real (or at least "realer" than the stuff Papal interdicts banned). So long as we can sustain a coalition of the willing (and really, if a country opts out of SWIFT, what would they use instead? Some system run by the CCP? Would _you_ trust them more?), we'll be fine.
The interdicts where absolutely real to the people they affected. At some point the risk of being in a USD nexus will not be worth it to more and more people
If people didn't pay attention to them, then interdicts weren't real. As for the risk of not using the USD, folks would need a suitable substitute. Good luck convincing India that their reserves are safer in RMB, for instance.
I know this point doesn't deal with the main point of this article but I'm bemused by the idea that the 2nd war with Iraq 'yielded marginal gains for U.S. interests'. If it wasn't that I highly regard the hard working staff at DreznerWorld I'd be laughing in the fact of absurdity. Unlike the removal of the Taliban from Kabul and al-Queda from Afghanistan I cannot see any gains at all to American interests from the occupation of Bagdhad. The loss of American prestige when it was found there was huge when no WMD program was discovered, the loss of blood was big the loss of treasure was huge. The power and influence of Iran was enhanced and as I write this and further rack my brains and squint my intellectual vision I still can't see any modest gains for US interests at all. Have I missed something?
Alot of that treasure was transferred to the MIC...
But the US did take down the 3rd largest military in the world. And then there were two...
Farrell explains how the book is being misunderstood here:
https://open.substack.com/pub/programmablemutter/p/the-underground-empire-is-not-an?r=yxvd&utm_medium=ios&utm_campaign=post
I've started to read Underground Empire. I expect it's going to do a good job of explaining how we use global financial and communications systems to project power into the world. But I'm also curious whether we profit financially from the empire in the book's title, and if we do, how it works on a nuts and bolts level.
A different way to phrase the question is, why has America been so prosperous, and to what extent does our prosperity depend upon our foreign policy? It seems intuitively obvious to me that we're benefiting from our central role in the global economy, but I don't really know that's true, or how it works, if it is.
We don't really benefit _that_ much. There is seignoirage from the USD, but that is offset by the US having to consistently run trade deficits (hollowing out our manufacturing capabilities and slamming our working class). I guess the major benefit is that we have someone we trust (us or allies) running the world financial system instead of, say, the CCP. So the benefit is more that we can keep others from wrecking us more easily.
I'd say our prosperity is more dependent on our socioeconomic system than our foreign policy (which, if anything, is dependent on our socioeconomic system than the other way around).
American prosperity is how the US could survive multiple foreign policy misadventures in the ME without huge harm.
If the Renminbi/Yuan replaced the dollar as the world reserve currency and we ran our trade deficits and tried to run our fiscal deficits wouldn't our economy get Argentina-ized? Haven't we been able to get away with fiscal profligacy countries that don't have their convertible reserve currency because of the combination of our economic size generating market power and the USD simply being the least distrusted store of value?
"If" is doing a lot of heavy lifting there. Would you trust your life savings to a currency that the CCP can and does control and manipulate?
As an American, no. But there are hundreds of millions of people who would distrust the CCP less than the capriciousness of the United States. The CCP to date mainly has its places it has territorial and historical claims to places and flexes its muscle to demand it not be contested on those or be insulted, but otherwise asks very little of anyone but to do business. A "don't pee in my cheerios and I won't pee in yours" approach to distant international relations. With America, you never know what insult or cultural practice will put you on a random Congressman or interest group's radar for harassment, and once you're Washington's naughty list, it's nearly impossible to get off.
Anyway - your response was a total non-response on the substantive value of having or not having the reserve currency. It was just a denial, a statement of "that would never happpen, cuz communism and nobody trust it."
Do you disagree with that last statement?
Where are these "hundreds of millions" (outside of Russia)? Do you see anyone (besides Russia, which essentially doesn't have a choice) choosing to keep their reserves in RMB? I don't. For all of the US's capriciousness, we still have (well, at least the veneer) of rule of law. The CCP can't even promise that.
I would not put my life savings in RMB because I am an American and China is not looking out for me. America still has the confidence of the elite deciders of financial elite policy in nearly all countries for its currency to be the reserve currency, but Russia, and others like Iran, North Korea, possibly Syria, or Huthi Yemen pushed out of the dollar system could prefer RMB. If you put it up to a referendum in much of of Asia and the global south about where they think their money would be safer, they may well vote China, but they don't decide directly. In any case, China itself hasn't taken the commitments and made the guarantees to offer itself up as provider of the reserve currency. My argument is that it hasn't happened because it hasn't tried, and China hasn't wanted to because it is not worth the costs of obligations and loss of flexibility incurred. It sounds like you would argue it has not happen because the Chinese just "anticipate" no one would trust their currency as a reserve currency so if they tried would be highly embarrassing.
For context, when I was born, it had been roughly 22 years since D-Day!!