Anybody who can (EU, Yuan) does not want to. Primairly because as export based economies, they want a weak currency in relation to a strong reserve (dollar) so they can make their goods more competitive, and also because surplus naturally appreciates a currency without central bank intervention via buying US treasuries to offset the appreciation. And for China, they're not going to accept the liberalized capital controls neede for it either.
So the answer is if the US dollars fail it would be global economic collapse and then chaos, but contrary to the rhetoric the rest of the world's economic systems are too uniquely vested in the USD to see it fail. As for gold, well we come to the same problem as noted above but worse, and in that situation the US actually holds the highest gold reserves so they still benefit the most out of it.
You do realise it is arthimetically impossible to balance all the desired export surpluses of the EU, China, Japan, etc together without the US as the demand sink right? Whatever adjustment comes is certainly going to require somebody to act in a manner contrary to their current strategies, and it's going to be a painful adjustment.
And which is harder? Bringing back production to satiate domestic demand or increasing domestic demand? Historically, demand deficiency is much harder to restore.
That furthers the imbalance to the detriment of the US and in favor of the holders of whichever currency replaces USD.
Dedollarization means that the US market is far poorer and can't import as much as before, yet the new reserve currency(ies) make holders that much richer, enabling greater demand for either imports or self-consumption.
It will be an adjustment, but there will be many winners, none of which are the US. There may be some losers who do not negotiate trade deals or can't find new markets, but it's unlikely. The supposed US trade war on China has resulted in their GDP growing by a massive 5% last year. Canada, losing its exports to the US, negotiates deals with other countries.
The pain for other countries is more organizational than anything economic. The US will face massive economic disaster in the form of devalued dollars and the need to close the government deficit after decades of being addicted to massive reserve-currency-enabled deficit spending. The US will be plummeted into massive recession by those sudden changes, while the rest of the world merely trades with whoever are the winners.
If, for example, China decides that it finally wants a consumer economy, and the Renminbi becomes a partial reserve currency, the consumer demand will be absolutely massive. Europe may have a harder time signaling to Europeans that they are far wealthier, but make imports cheaper for Europeans, and people who find that they suddenly have a lot more left in their bank account at the end of the month usually find ways to spend at least part of it.
> If, for example, China decides that it finally wants a consumer economy
This is a fantasy that the CCP leadership will not entertain, because it would mean losing their control as the (export/industrial) king. Their national security descends from having that crown firmly in their hands & making everyone else reliant on their industries, and will do as much as they can to make sure it stays that way.
A strong currency runs counter to what the CCP leadership wants, having seen how it has hollowed out the US' industrial capacity (as a result of strong currency demand leading to comparatively higher labor costs).
The CCP aspires to climb the value chain up to where the US is, which means shifting away from manufacturing to the high profit margin tech, biotech, and other science related industries.
The manufacturing stage is just a stepping stone to getting to where the US already is.
The end goal of the CCP is not to be a middling power, with middling wealth. It's to be the greatest power. That some in the US want to go down the value chain and take China's manufacturing spot just as China zooms ahead of the US, is, well... It would be comical if it weren't so sad.
>The supposed US trade war on China has resulted in their GDP growing by a massive 5% last year.
I'd take those numbers with a grain of salt. China is known to play with the numbers to hit goals when they feel that they need to.
>The US will be plummeted into massive recession by those sudden changes, while the rest of the world merely trades with whoever are the winners.
The massive devaluation in the dollar would mean that the country would become incredibly attractive for manufacturing exports, which would prevent a massive recession.
>If, for example, China decides that it finally wants a consumer economy, and the Renminbi becomes a partial reserve currency, the consumer demand will be absolutely massive.
If you think that China is going to shut down the majority of its factories, move them to other countries, and let their currency float freely (well, freer than it is today), you're delusional.
> the country would become incredibly attractive for manufacturing exports
First, the US will not be attractive in any way for investment because it is run by a madman that has ridiculous tariff policies that make starting manufacturing supply chains nearly impossible.
Second, even if the US could transition its economy back to manufacturing, that's a massive slide down the value chain to far less profitable industries than our current tech, biotech, and service driven economies. The idea as presented is a serious downgrade in quality of life compared to today.
> If you think that China is going to shut down the majority of its factories, move them to other countries, and let their currency float freely (well, freer than it is today), you're delusional.
China wants to transition its economy up the value chain to the high tech industry that the US currently has. It has the educational system and the brain power, and the biggest impediment, brain drain to the US, has now been shut off.
If climbing the value chain, out of manufacturing, requires China to shut down factories or open up currency somehow, they are far more likely to do that than to abandon their ambition of economic growth.
> balance all the desired export surpluses of the EU, China, Japan, etc together without the US as the demand sink
in 2022 China, Russia exported around 630 billion USD, US imported around 950 billion USD. maybe the world will not end if these three just go and play in a separate sandbox;)
> it's going to be a painful adjustment.
even if demand falls a bit it's not the end of the world if it becomes more sustainable afterwards (less overproduction, consumer waste, gassing the environment)
Think one step further. When a different currency becomes the reserve currency, the currency rises in value, the holders become far wealthier, get their imports for cheaper, and suddenly they can even subsidize their local industries that rely on exports to the point that it's a smooth transition to more of a consumer economy.
> subsidize their local industries that rely on exports to the point that it's a smooth transition to more of a consumer economy.
There's an implication here that the country *wants* to become a consumer economy, and not remain an export economy.
Furthermore, it relies on the leadership wanting to wind down that production, and not use that subsidy to further bolster their industrial capacity & crush global prices, in an attempt to wash out the others & only have their country be the sole remaining place capable of meeting demand at that subsidized point.
Why would a country want to remain a manufactured-good export economy, rather than having the stronger position of a consumer economy that lives off the wealth of the rest of the world?
Why grind away relentlessly in industries with tiny profit margins, when there are high-margin innovation-driven industries that your economy can advance to?
Why stick with producing clothing, when you can move on to cars? Why stick with cars, when you can move on to chips? Why stay with chips, when you can move on to the next new technology that the entire world wants, but which only your economy can produce because it grew the industry from scratch and everybody is playing catch up?
Dictators love autarky because it gives them complete control of the population. Populations should not love autarky, because it makes them poor and robs them of wealth and opportunity.
> no armies, can’t defend itself, can’t make energy.
Look I love dumping on the Europoors as much as anyone, but even I can see that this is a bit extreme. "Decadence?" What does that even mean here? That people are happy and secure and have good qualities of life, without worrying about everything falling apart?
The US is not fine, and is falling apart. The US is living decadently on its reserve currency status, which enable things like ridiculously wasteful and unproductive military spending. Even its military spending on things like the, say, F35, require external customers in order for it to make any sense at all. But all that decadence is at risk. Decadence is good, I want it, I don't want austerity. Give me this awesome US decadence or I'll have to settle for the fake European "decadence" which is mere economic and health security without all the extra spending that US consumers get to make.
We've asked you before not to break the guidelines. Political/ideological flamebait is not what HN is for and destroys what it is for. You can discuss these themes in curious ways, rather than inflammatory ways; indeed, you must, if you want your comments to avoid being killed by flags. Eventually we have to ban accounts that continually flout the guidelines. https://news.ycombinator.com/newsguidelines.html
HN is a community that exists for a specific purpose and that purpose is curious conversation. The guidelines are designed to keep activity aligned with that purpose, and HN is a place where people want to participate because enough people make the effort to follow the guidelines and raise the standards rather than drag them down.
What is acceptable in your circles is not relevant here. What matters here is preserving HN as a good place for curious conversations.
We don't need mini-sermons or defiant strutting. Just respect for the community and the groundrules that make this a place people care about preserving. The guidelines are simple, and have been in place and stable for nearly two decades. If we didn't uphold them, this site wouldn't exist for you to denigrate like this.
That idea has been so destroyed by current events that I can only imagine that you are trolling or have been living in a cave for a few weeks. Check the news!
To be fair, has it? The EU is talking about activating its anti-coercion thing, which would anyway only kick off a year-long consultation and voting process before anything happened. To my knowledge, there have been no consequences to America annexing Greenland put forward that would hit before the midterms.
What "prized industries" are still there other than automakers? They're already boned, they just haven't accepted it.
China now leads the world on R&D and hard science, and is already making strides in chip design and chip making. How far off do you think a Chinese ASML is? Two decades at most? Or more like one?
And what would be the solution? I think we've all learned that protectionism doesn't work.
China has made tremendous gains, but that should not undermine the fact that the fundamentals still exist within the EU, but Europeans on the Internet seem to vaccilate between chest-thumping Euro-nationalism (which is dead in the water and easily disprovable) or defeatism (which doesn't make sense and is also easily disprovable).
> How far off do you think a Chinese ASML is
1. ASML's EUV/DUV IP is owned and airgapped from the rest of ASML by the US DoE's JV with ASML called Cymer
2. Around 5-7 years, which is a loss from a Chinese NatSec standpoint and shows the Sullivan doctrine is still intact (keep China 1-2 generations behind the collective west in semiconductor fabrication capabilities).
> And what would be the solution? I think we've all learned that protectionism doesn't work.
The EU never actually tried protectionism or industrial policy. When most other countries and trade blocs were flouting the WTO, the EU kept trying to prop it up in order to negotiate with the US.
Interesting how the handful of comments I made that are pro-EU and shore up European strategic autonomy get downvoted, yet any comments I make that undermine European strategic autonomy in a manner that is aligned to that of think tanks at Fudan is upvoted...
The export driven economies like China or the EU rely on the dollar to weaken their own currencies for competitive trade. Without it, natural FX mechanisms would naturally begin to appreciate their currencies and make their exports uncompetitive.
>"The export driven economies like China or the EU rely on the dollar to weaken their own currencies for competitive trade"
I have about zero clue how finances really work but it looks to me as the statement is only true if the dollar is the predominant currency for international trade. This looks to be slowly changing for various reasons.
>This looks to be slowly changing for various reasons.
Well, not really, because obviously that deprecation via buying government treasuries is balanced by the appreciation in the other currencies. But if everybody (large enough to matter) dosen't want their currency to appreciate, if somebody buys Japanese bonds for example to weaken their own currency, then Japan will buy somebody else's treasuries to offset the increase in Yen, and if we go to the long chain of musical chairs of people offsetting each other's behaviours, it just leads back to the USA as the only ones both large enough and willing to take in those capital inflows.
That's not a interpretation mind you, that's a description of what central banks are doing right now. If that has to change, you need somebody willing to take the mantle of the absorber of global deficits, and nobody wants to do that.
Keynsian economists are in favour of reducing global imbalances. While tariffs are a crude and disruptive tool to achieve it, the US ultimately can unilaterally close the gap.
What is misleading is labeling a global system marked by large, persistent imbalances as benign or indicative of "free trade". A healthy free trade system should have balanced trade, and the reasons that are not are unfortunately the fault of surplus nations like China or the EU. I know, its unintuitive, but going back to Bretton Woods to IMF analysis will back this point.
P.S if one wants to note the grocery shop analogy, a better analogy is that if you count up all your transactions, your income should exceed your spending, or else you're probably in trouble. That's roughly the problem here, but made more complex with the shenanigans of the US dollar.
The moat for artists hasn't actually gone down though. Even for those in Patreon with their styles directly trained are raking the same subscribers they have.
What does 'even' here mean? Patreon artists are doing fine because they're more like influencers. Artists looking for jobs in the industry (especially graphic design, but also film and game) are the ones who are in trouble.
Canva destroyed graphic design well before LLMs caught up, but UX is still (somewhat surprisingly) on the ropes.
My bet: front end devs who need mocks to build something that looks nice get crowded out by UX designers with taste as code generation moves further into "good enough" territory.
Then those designers get crowded out as taste generation moves into "good enough" territory.
Isn't this the exact logic behind the stagnation in media right now? The risk aversion/stakes is so high that real risks aren't taken and we get bland sequel/remake slop.
Ironically when media culture is at is at its healthiest is when winners are diverse and common, and more importantly smaller shows that try out new things can still break even, with periodic flops being generally tolerable. That low risk culture for attempting new ideas is precisely what creates legendary franchises later when a few of these hit everything right.
From the perspective of an otaku, that's an ironic conclusion. The confusion regarding the neglected interiority was a conscious decision by the mainstream in the beginning was it not?
That's perhaps not to say that the otaku lifestyle as is today is preferable, but it always more about the transcendent experiences they were reaching for, an activity labelled childish by their peers. Meaning was never an issue, just actualization.
Anybody who can (EU, Yuan) does not want to. Primairly because as export based economies, they want a weak currency in relation to a strong reserve (dollar) so they can make their goods more competitive, and also because surplus naturally appreciates a currency without central bank intervention via buying US treasuries to offset the appreciation. And for China, they're not going to accept the liberalized capital controls neede for it either.
So the answer is if the US dollars fail it would be global economic collapse and then chaos, but contrary to the rhetoric the rest of the world's economic systems are too uniquely vested in the USD to see it fail. As for gold, well we come to the same problem as noted above but worse, and in that situation the US actually holds the highest gold reserves so they still benefit the most out of it.
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