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The Tyranny of the U.S. Dollar (bloomberg.com)
126 points by pdog on Oct 3, 2018 | hide | past | favorite | 191 comments

The article from Bloomberg states the US dollar is "inaccurately" portrayed as “becoming a risky instrument in international settlements” I think this is partly true.

- US Dollars are the first thing frozen by US Banks in an RIAA/MPAA dispute. that such a small lobby has such a critical control over a world currency is shocking.

- Arbitrary domestic political pandering can, and has, frozen a number of assets for countries with literally no other enemy but the US

- We can and do deny credit processing and financial transactions using broad-stroke legislation without real due process (wikileaks) other than a senator suggesting we should.

- Republicans shut down the US Government four times under the last president. our credit rating was lowered and government debts could not be serviced. the only thing that was immediately resolved was most airlines abilities to ferry senators home for the weekend.

>- Republicans shut down the US Government four times under the last president. our credit rating was lowered and government debts could not be serviced. the only thing that was immediately resolved was most airlines abilities to ferry senators home for the weekend.

The shutdowns during Obama's term as just as much the Democrats fault as the Republicans. Regardless, the US paid its debt. There have only been two federal defaults, one in 1790 and one in 1933.

1861 and 1979.

Something I recently started to appreciate, as it relates to the dollar's attractiveness, is America's track record with peaceful leadership transitions.

Reserve currencies must be freely exchangeable. Free capital flows imply giving up control over exchange rates (and/or monetary policy) [1]. That means an idiot government halfway across the world can mess with your currency, credit and export markets at any time. Including around leadership transitions. For countries with a history of violent leadership transitions, where such transitions are tightly controlled, that is terrifying.

Now I'm sure the Congress would love to control the dollar in the months preceding an election. But there are powerful (read: wealthy) interests opposing that. Those people have this power because America is a country where the state is balanced against private interests, specifically, private property rights.

One thus gets a currency which can be trusted to remain freely convertible. Because its powerful private interests, unafraid of a currency crisis triggering violent insurrection, are aligned in maintaining it.

[1] https://en.wikipedia.org/wiki/Impossible_trinity

It seems to me, from the article, that the USD has a net-neutral effect on the US and a fairly positive effect on the rest of the world. Banks don't want to deal with volatile currency, even Russian banks make out mortgage loans in USDs. The world just needs one currency that everyone can depend on. Thankfully, given the US's general stability and investment into their military, the USD fits the bill quite nicely.

There's really 3 things going on, none of which have anything to do with the military.

1) convenient defaults. People trade in dollars for the same reason they speak English - because it's mutually convenient between two different countries with their own language and currency. This is partly due to sheer size and partly due to successful cultural export.

2) clearing and settlment. This is not well developed globally, so in practice a lot of smaller countries, foreign banks, and multinationals keep US bank accounts so they can more easily handle payments. This system plays by US rules, which is why the EU is constructing a parallel one to trade with Iran.

3) "eurodollars". I don't fully understand this aspect but apparently this market is coming under regulatory pressure.

There were a series of interviews I listened to a while back that form a nice primer for understanding the eurodollar system:


The reason I bring up the military has to do with external influence. The US has a solid internal system of governance (as per other comments), but it would be worth nothing if other countries could intimidate it through military power.

It goes further than that. The US is quite able to intimidate (or outright depose) governments it perceives as hostile to its interests. Even in friendly countries the presence of its military gives something of a check on internal politics, before we even get to outright cloak-and-dagger stuff (which has been influential on the political course of numerous US allies).

One of the more comical illustrations of this is that the US passed a law during the Bush administraron authorizing invasion of the Hague if US officials were to be tried in the ICC. Less amusing is story after story of US-authorized violence to depose governments perceived as hostile to US business interests and slaughter supporters of the deposed governments.

> One of the more comical illustrations of this is that the US passed a law during the Bush administraron authorizing invasion of the Hague if US officials were to be tried in the ICC.

You might find this comical, but many dutchmen find it absolutely abhorrent that the US is willing to enact suchs an aggresive policy into law, especially as the dutch have been close allies with the US for a very long time.

Sorry, that was a poor choice of words. It's just such an over-the-top form of strong-arming (and so seemingly unnecessary; what were the risks that the ICC was really going to go after US officials in the first place?) that it seems cartoonish.

  authorizing invasion of the Hague if US officials were to be tried in the ICC
Source? That would be unnecessary given that the US can simply opt out of jurisdiction of the ICC in any given case and has done so several times through history.

It's called the Service Members' Protection Act, although it's often known as the "Invade the Hague Act." https://www.csmonitor.com/World/Europe/2009/0213/p05s01-woeu...

And why do you suppose those are the "convenient defaults"? You ever notice how air mail always has labels in French? That's because French used to be this default. Surely you must agree that there is some political reason why the "convenient default" should become a different language.

The net is slightly positive for the US, but the effect size is relatively small

The benefit comes mainly from lower borrowing costs. The harm comes from the higher exchange rate that hurts competitiveness of US exports.


>In a “normal” year for the world economy, we estimate that the net financial benefit to the United States is between about $40 billion and $70 billion

I suggest reading https://foreignpolicy.com/2011/09/07/an-exorbitant-burden/ for a counterargument. The harm is not just export competitiveness; it's also other countries being able to export their lack of demand and unemployment to the US (via the exchange rate and balance of trade mechanisms, true, but the point is that the harm affects all of the US economy, not just export-oriented industries).

As one specific example, the low rate of saving by US consumers is a direct consequence of the use of the dollar as a reserve currency. It's not clear to me that lower borrowing costs, even if those are present, outweigh even that one harm.

And to be clear, "the United States" as a whole that's benefitting in the mckinsey report you link is an average. The actual benefits and harms from the use of dollars as a reserve currency flow to different people, and as far as I can tell that contributes to worsening inequality in the US, which is an effect (benefit or harm, take your pick) the mckinsey report doesn't seem to mention.

How could the US keep running its enormous budget deficits if the dollar wasn't in this situation? It seems to me that either taxes would have to be raised substantially, or spending cut substantially, or US inflation would be much higher if other countries weren't soaking up so many of the excess dollars.

Most of US deficit is internal, not external. Federal reserve is the biggest owner of federal debt. The level of dept is internal issue for the United States.

US has floating exchange rate and it adjusts automatically the international balances. Because US has no debt denominated in foreign currency, it is shielded from hyperinflation and other issues that Venezuela and other countries suffer.

I suspect a lot of the reason things are now the way they are is simply because they have been / you want something stable (relatively) / just need to pick SOMETHING to standardize off of. There's a lot of politics and such that leaks into these discussions but really the reasons are pretty simple.

>>Banks don't want to deal with volatile currency, even Russian banks make out mortgage loans in USDs.

But Russians get paid in local currency. If that crashes in relation to the usd, go ahead, make the $280 mortgage payment. It will be xx% more expensive this month while your salary and expenses stayed the same.

Yup, this happened about 2-3 years ago when the Ruble collapsed, causing many lenders to default.

On the other hand, the importance of USD gives the US the power to, for instance, unilaterally kill the JCPOA.

at what costs though? Killing the JCPOA with very little reason (considering nothing in the agreement has been broken) does not sit well with the EU for good reason considering iran is in the EU's backyard.

This administration is bringing a serious rift in transatlantic relations, and that is a bad thing for both sides.

I agree it's bad (although not that it's happening for no reason -- the reason is that the JCPOA makes it hard for regime-change lunatics like John Bolton to get their way). I'm saying this is a problem with the hegemonic status of the dollar.

> even Russian banks make out mortgage loans in USDs

Maybe you'll find a 2-3 obscure banks giving mortgage loans in USD in Russia. Although I'm not sure about even that.

And in the last 10 years you won't find a sane person that will apply for loan in USD in Russia.

I'm always surprised when people from the West discuss the economical/political issues in Russia while they know absolutely nothing but the typical media propaganda. Typically: "The only truth about Russia can be found in our media, not even the Russians themselves know anything about politics, economics, banks, loans, etc in their own country".

This is the case that the USD is, in fact, stable. Instability to the USD therefore represents the greatest systemic risk ever encountered in the history of human value. It is a double-edged sword.

If someone came up with a more stable store of convertible value, then it will likely gain traction; however, alternatives like the Yen, Renminbi, and Euro have so far failed to become international currencies for trade due to various reasons, but primarily stability and being relatively more free of manipulation.

The article is mostly a scareticle warning that americans focusing on america endangers the “special perch” thd dollar enjoys as international currency.

The US Dollar reserve currency/petro dollar is the biggest weapon in the US arsenal, and the US has by far the largest army on the planet to enforce with https://www.amazon.com/New-Confessions-Economic-Hit-Man/dp/1...

> petro dollar

Petrodollar hypotheses get the dollar's hegemony in international trade backwards. Petrodollars (i.e. oil producers' surplus revenues invested in U.S. dollar denominated instruments [1]) don't cause the hegemony. The United States being (a) the only advanced economy not bombed to the 19th century post-WWII and (b) the world's largest single consumer market [2] created and create international holders of U.S. dollars. (In the initial case, thanks to Bretton Woods. In the recurring case, since Americans pay with U.S. dollars.) Those holders, in turn, drive demand for dollar-denominated investments.

The interaction between these processes, international consumption by Americans and the reinvestment of international dollars, drives economies of scale in the American financial system. (It is why, until very recently, it was cheaper and faster to send U.S. dollars between two European capitals than initiate a Euro-denominated transfer.)

[1] https://en.wikipedia.org/wiki/Petrocurrency

[2] https://en.wikipedia.org/wiki/List_of_largest_consumer_marke...

The interaction is also what varoufakis calls a "surplus recycling mechanism".

When reinvestment of foreign American dollars back into Wall Street hiccuped in 2008, the cycle started to break - now there are deflationary winds blowing around

Since oil is traded in dollars I was referring to petrodollars in that context.https://en.wikipedia.org/wiki/Petrodollar_recycling The USA attacked Iraq in the S Hussien era the moment they attempted to formally trade oil in euros for example. http://www.cnn.com/2000/WORLD/meast/10/30/iraq.un.euro.reut/

> Since oil is traded in dollars I was referring to petrodollars

Oil is quoted and traded in all kinds of currencies. It tends to be exchanged in dollars for the same reason that when Lufthansa bought Airbus jets in the last decade, they did the deal in dollars: Fedwire was, until very recently, the world's only international real-time high-volume electronic money transfer system. (Now Europe has a competitor.)

The Hussein euro thing is a conspiracy. In what currency do you think British North Sea oil being shipped to Europe is paid for?

What do you mean by 'conspiracy?" Oil bourses trade in dollars

> What do you mean by 'conspiracy?"

The United States did not invade Iraq because it was threatening to switch to Euros. If anything, American banks would have been thrilled at the prospect of new FX revenues.

> Oil bourses trade in dollars

Oil bourses? Oil futures are mostly traded on exchanges, but oil the commodity is mostly traded over the counter. It's privately negotiated. Those private negotiations reference whatever they want to, whether Brent in USD, Brent in EUR, WTI in USD, COM in JPY, et cetera.

Right. 'In the case of crude oil, the main futures exchanges are the New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE) where West Texas Intermediate (WTI) and North Sea Brent crude oil are traded respectively.

These exchanges trade what is referred to as 'light- sweet' crude oil and a single contract, or 'lot', calls for the purchase or sale of 1,000 barrels of oil. Traders can buy and sell oil for delivery several months or years ahead'


The term they were looking for was "conspiracy theory", arguably one of the most important colloquial mistakes to correct when talking "cloak and dagger" politics.

  the US has by far the largest army on the planet to enforce with
That's completely wrong.


Try looking by military budget instead. The US military budget is larger than the next few budgets combined. The most recent increase is bigger than the entire Russian military budget.

Yes, what other countries do with men in boots, the US attempts to do with technology. This seems to be only partially working. The US can bomb the hell out of people, but actually controlling any situation on the ground, it is not so good at.

It is often sufficient to US ends to merely depose a government and leave their country an ungovernable morass of violence for years, or else to let a local client do the hands-on work. There have been some high-profile failures, but nobody even pays attention to, like, Haiti, or Guatemala, or Libya, or wherever, where we've had our way without too much trouble.

It seems to be that a currency is a commodity that most countries have to earn in order to use it.

A better way to look at this is let's imagine a world where copper was currency. Today, US copper has the following characteristics:

- Most efficient electric conduction

- Most widely available

- Most widely accepted outside US

- Fair and just producers

Suddenly, a new CEO of US copper Inc comes in and says, we are losing coppers to other countries (disregarding that they bartered something for it).

New CEO implements policies that reduce external supply of US copper. That changes the characteristic of US copper to:

- Still most efficient electric conductor but only locally

- Not as widely available outside the US

- Slowly, causing US copper to not be as widely acceptable outside the US since there's no use for it outside US (vicious cycle of fewer people wanting US dollars and availability of dollars)

- Unfair and unjust producers who use US copper as a threatening and bargaining chip, causing entire countries to starve. This is perhaps the biggest threat to that commodity being valuable.

Would any buyer buy US copper if it risks their populace? Sterling used to be a major reserve a hundred years ago. Its colonialism and world wars went too far and it has eroded so much now. What makes anyone think the US will remain the same?

There are only 2 alternatives to the US Dollar as the reserve currency of the world, the Euro and the Renminbi. With respect to the Euro, how sure are you that the European Union will be around 50 years from now as a political entity? With regards to China, their transparency needs to get a lot better before it becomes the reserve currency.

The SDR is also an option.

Not only an option, but I would bet that within 10 years SDRs will partially or wholly have replaced the US dollar. Of course, the largest component of SDRs would be the US dollar so this would be transitional, not an abrupt change. Anyway, just my opinion...

Why is Bitcoin not an option?

It's not as complicated as people are making it.

Look at the history of civilization and the history of reserve currencies. When Britain had the reserve currency, how did we describe that? It was called the British Empire. When Spain had the reserve currency, what did we call that? It was called the Spanish Empire. Go back for thousands of years, the history of reserve currencies is the history of empires.

Until, supposedly, we get to this great break in history with America's dominance. Which supposedly is not an empire but is based on some superior ideology or system. Is it not remarkable that up until now history was one way, and now the age of empires has gone away. And only America's luck, or ideology, or democracy, or some technical economic bullshit has supposedly created the massive advantages for America and American citizens.

There has not been a break with history. The United States is the most dominant, powerful, and yes brutal Empire the world has ever seen. Reserve currency status has been maintained by rigorous continuous ongoing military campaigns involving both overt, covert and financial means. Libya is one extremely obvious example.

The question is not something like, are we being nice enough, or are we 'leading the world'. The question is can and will any group really take geopolitical action against this domination by force? If and when they think that it is safe enough to do so then they will.

> and yes brutal Empire the world has ever seen

More brutal than the Assyrian Empire and the Mongol Empire? 5% of the world's population is estimated to have been killed by the Mongol conquests. https://en.wikipedia.org/wiki/Destruction_under_the_Mongol_E... and even in absolute numbers, the Mongol Conquest is only behind WWII in absolute numbers of people killed.

The United States has its moral issues, but being the most brutal empire in history is not one of them. In fact, of all the global empires in the history of the world, the United States "Empire" has probably been the most benign and benefited the most people.

Also remember, at the end of WWII, the United States was the sole possessor of the atomic bomb and had the best developed long range bomber fleet. They could have easily used that advantage to outright conquer a massive empire, but they did not.

I think this kind of comparison is silly, but the US has been at war essentially non-stop since WWII and carries out overt and covert military action in scores of countries every year. We're currently bombing seven countries. We've also empowered numerous client states as they slaughtered their domestic opposition or regional rivals and armed various violent rebel groups in the hopes that they'd overthrow unfriendly governments. Sanctions, a de rigeur form of punishment against hostile governments, is specifically intended to gin up internal unrest by subjecting civilians to privation, and they literally kill people (especially children). I'm not sure we can call it the most violent ever to have existed, but the least violent seems like a stretch.

> but they did not

They seriously considered it.

[1] https://en.wikipedia.org/wiki/Operation_Unthinkable

> sole possessor of the atomic bomb

which they did use to kill more people at one time then ever before in history

That is factually incorrect.

How do you square the assertion that nothing has meaningfully changed in recent times with the availability of information, education, travel/cultural exchange, disposable income now versus all of history? And in what way do you see the putative 'American Empire' as more brutal than the Soviet Union (for example)?

But, are the meaningful changed regarding information, education etc. caused by US or inspite of US? Technology and Science improving tremendously in 20th century had more to do with these changes. I would say WWI and WWII caused more of these technology and travel being available.

Human nature is remarkably constant.

The US dollar and many other international currencies are named after the Joachimsthaler, which were printed by the counts Schlik of Sankt Joachimsthal/Jáchymov, and became so important to have several currencies named after them. But there was no empire.

How does this analysis explain all the wars and international influence initiated by countries that are NOT the USA? (for examples: Russia->{Georgia, Ukraine, Turkey}, China->{North Korea, African countries}, Saudi Arabia -> Yeme, Sudan civil war, Germany->Greece)

I don't know why it has to? There are various regional powers South local spheres of influence, but there is only one global hegemon. And many of your examples did involve substantial US involvement (for instance, Saudi Arabia's campaign against Yemen could not continue without US support, and China entered the Korean War because Americans fought all the way through the Korean Peninsula up to their border... I'm not going to pick apart every single one here unless you think it would be instructive).

I have to roll my eyes

Just this statement

> and yes brutal Empire the world has ever seen

shows how little knowledge you have of history. How anyone can say the US is the most brutal empire the world has ever seen when not even 100 years ago the Belgian Congo existed is beyond me.

These "tyranny of the US dollar" articles always bring out the worst conspiracy theorists.

The US dollar is the most popular currency simply because the US is an extremely stable country. Few countries exist that have had the same government for more than 200 years. No countries exist that have similar clout to the US and have had a stable government for 200 years.

When you trade something for US dollars you know exactly what you are getting. An asset that will depreciate at a fairly consistent 2% every year. Few currencies can claim that.

Nagasaki is the most obvious example. But see the effects of bombing in general.

EDIT: oh how silly of me to think that atomic weapons would be considered brutal.

It is true that such action had to be rationalized in order to support a fictional world in which America rules by virtue rather than deadly force.

> Nagasaki is the most obvious example. But see the effects of bombing in general.

It's hard to take that as a serious argument for US imperialism since that particular war wasn't even started by the US.

A ground invasion would have killed more people.

This is pretty well accepted by historians because it would have have to have proceeded by a firebombing of the invasion target to make it even possible to land the marines on the shore.

And then there would have been the very long, very deadly fight all the way to Tokyo, with many many many civilians dying along the way in addition to the soldiers.

Also, Nagasaki is a cautionary tale about starting wars, and probably applies more to Japanese imperialism than American.

>It is true that such action had to be rationalized in order to support a fictional world in which America rules by virtue rather than deadly force.

"Such an action" is easily rationalized by realizing that in the context of total war, against a fanatical and brutal enemy, dropping atomic weapons on Japan was more humane than the results of letting the war drag on for many more months.

The only ones who don't understand that are bleeding-heart revisionists.

More were killed by conventional bombing of Tokyo alone than by both atomic bombs combined.

> Nagasaki is the most obvious example

The most obvious example of what exactly? Are you going to give comparisons to other atrocities that show that the US is the worst and most brutal empire in history? Also how does "Nagasaki" even qualify as imperial activity?

>EDIT: oh how silly of me to think that atomic weapons would be considered brutal.

You claimed the US was the most brutal empire in history not that the bombing of Nagasaki was brutal...

In fact, the post-war US leadership were proud that they were, as they saw it, taking up the mantle of Anglo-Saxon world rule from Britain.


> If and when they think that it is safe enough to do so then they will.

Which is exactly why the US should and will continue to project power all over the world. What you're really saying is that given a power vacuum, other countries will try to step in. Are there any other countries you would prefer to be projecting power?

What if we actually tried to follow through on the multipolar vision that the UN is supposed to represent, rather than paying lip service to it and seeking world domination? How much do you think your personal safety is threatened by, say, the Houthis?

I would prefer that we make an effort to transition to a sane world. Even though it is very unlikely, the goal should still be a fair and safe planet.

Its hard to speculate, but the next situation may not be controlled by a particular country per se. It may be some AI blockchain distributed political system that goes through an app that becomes popular in China but the Chinese government hates it. I think general purpose AI and distributed technologies will factor into geopolitics in some major way. Possibly.

Aside from the speculation, I do know that we're not going to get into a better situation if we keep bullshitting ourselves about what's really going on.

Complain about US exceptionalism as you wish... but about 84% of the over 5 trillion daily FX market volume is USD trades. Why? Because literally no other market (country) has the liquidity, transparency, stability, and asset base carry this level of risk (or trust).

Isn't this really just a first mover advantage though? After world war 2, the US was really the only country still in the position to advance rather than just rebuild. Combine that with the fact that we helped fund a lot of rebuilding with the USD. The United States has really lucked out in a lot of ways

No. The US legal system, a free press, a long-standing calvinist work ethic, its asset base and continued financial infrastructure investment are much more than luck. These things have proven impossible to reproduce - in aggregate - anywhere else.

Actually you just didn't have most of your infrastructure destroyed across the span of civilization's first two large-scale industrial wars and are the beneficiaries of controlling a temperate-climate block of latitude with access to both major oceans and no nearby similarly industrialized neighbors in the span of time those wars happened.

How did Germany end up with the most robust economy in Europe when it seems like it should have the worst economy since it isn't located in a temperate-climate, it was divided in half for decades and had to reabsorb the poor Eastern half, was destroyed twice, underwent sanctions, etc.? Somehow Germany overcame everything (most of which it brought upon itself of course). Why couldn't France, Italy, Greece, Spain, etc. replicate Germany's success?

Since I can't reply directly to the Marshal plan comments:

The Marshal Plan gave much less money to Germany than to anyone else, per capita.

Greece received, per capita, about 3 times what Germany got. The UK, with a smaller population than Germany, received 3,297 million, while a larger Germany got 1,448 million.

Also, European economic integration and cooperation should not be understated and it's effect on rebuilding germany.

Especially in the early days of the EEC/ECSC, rebuilding (west) germany was important for many other european nations at the time to increase their export markets. (Benelux especially).

They were forced to rebuild all of their infrastructure, in effect modernizing all of it. Additionally, they were forced to ignore military spending while also being the beneficiary of a huge amount of external military spending for the Cold War.

About 70% of Europe, including Germany, has a temperate climate...

Germany didn't start from zero. Many large companies operating in there have roots precisely in the nazi era. Combine this with the Marshall plan and the insane amount of money pumped by capitalists into destroying East Germany and later on integrating East Germany and you'll see the reasons why Germany benefited from world growth more than other European countries.

AFAIK most large ccompanies that survived from the Nazi era were founded 1870-1920 or so. Notable examples are Siemens, Daimler-Benz, BMW, Zeiss, BASF. A notable counterexample is Volkswagen.

> insane amount of money pumped by capitalists into destroying East Germany

Can you please elaborate a little? I'm wondering about 'destroying' part.

Not most, true; only half of it in the Civil War.

I think it is mostly inertia. The EUR probably has all the qualities required to be used where USD is used. But conventions and traditions die hard. For FX trading for instance, if you start quoting products against EUR instead of USD, you split the market, reduce liquidity, etc. For planes, I have absolutely no idea why a european manufacturer would sell a european made plane to a european airline in USD...

That was the hope when the EUR became official in 2002. But issues with Greece (and Italy, Spain and Ireland) and brexit... But mostly ... 2002. The Euro is only 7 years older than bitcoin. Most people on this site are older than the Euro. It is difficult to make a 16 year old currency a global reserve currency... give it another few decades.

> EUR probably has all the qualities required to be used where USD is used

The U.S. doesn’t have perennial debates about breaking up or bits breaking off. If your Euro bank deposits are at risk of suddenly turning into drachma or lira, that’s a problem.

Never been to Texas, eh?

Hell, the break-California-up initiative made it to the ballot this year, was removed for this year by the CA Sup Ct, and has a non-zero chance of being back on in 2020. E.g., https://ballotpedia.org/California_Proposition_9,_Three_Stat...

One of the questions I was asked in a State Attorney General Office interview in 2009 was: "What state would you kick out of the union and why?" (The secession debates were raging in certain circles after Obama was elected, and I guess some AGs wanted to know if incoming lawyers were inclined that way?)

Will Texas ever secede? Will CA ever actually break up? I have no idea, and I doubt it. But the debate and even the effort is there.

> the effort is there

The United States set a precedent for insolubility in the Civil War. Secession is not an option. The EU, on other hand, has an official exit mechanism. Texas talks about it in the same way New York and California talk about it; it's punchy, funny and rallies a crowd pissed off at whoever is in power.

Breaking up is not a realistic medium-term risk for the United States. It is for the EU.

The EUR isn't proven enough to overtake the USD. The eurozone is just now exiting a deep recession that exposed the weakness of its structure. Until the eurozone countries adopt a more coherent monetary and fiscal union, crises like Greece will still be a risk (this is before we get into the level of bailing out German banks for betting on Greece).

Remedy this, and the EUR will become a serious threat to the USD.

I'd guess that much of their supply chain is in USD and that the manufacturer would prefer not to be ones hedging the majority of the currency risk (at their expense).

Yeah OK but World War II and its rich natural resources might have had something to do with it.

These were hard won and hard to keep. I fear that they'll be lost within my (X) generation.

> No.


> The US legal system

The US legal system is not some global shining paragon of how a judicial system should operate. See the shitshow around Kavanaugh how the highest court of the US judicial system has become a plaything of partisan politics. Remember that for a proper trias politica, there needs to be clear separation between the two.

> a free press

America is 45th in Freedom of Press rankings, behind Burkina Faso, a country that was a dictatorship until 2014, under military control until 2015, and still somewhat in turmoil.

> a long-standing calvinist work ethic

Most of NW Europe has 'a long-standing calvinist work ethic'.

> continued financial infrastructure investment

It is not as if the rest of the worlds' financial infrastructure is in disrepair. The reason why the US has such a huge finance industry isn't 'continued upkeep' but the absurd freedom the financial industry gets to do whatever it wants. The strange thing is that the US doesn't even have the most lax regulations - they just have absurdly weak enforcement of those regulations. For a prime example look up how absurdly lightly HSBC got away with their criminal behaviour.

> These things have proven impossible to reproduce - in aggregate - anywhere else.

There are two reasons for the US dollar being the main reserve currency: WWII and the petro dollar. Your claim is pretty much a perfect example of American Exceptionalism.

'American exceptionalism is an ideology holding the United States as unique among nations in positive or negative connotations, with respect to its ideas of democracy and personal freedom'

Correct. I am not a US citizen and a majority of my assets are USD denominated primarily because I believe in the system of government, recent obstructionism is part of it. Basically, stay out of the people's way and provide recourse. Decent job so far. Not perfect, but better than any other place I've had direct experience with.

With apologies to Winston Churchill ...

Many forms of money have been tried, and will be tried in this world of sin and woe. No one pretends that the US dollar is perfect. Indeed it has been said that the US dollar is the worst form of money except for all those other forms that have been tried from time to time.


The supposed influence of Putin is really poorly manifested in US policy, which remains as hostile as ever (Mattis is going around talking about the need to prepare for military conflict with Russia and China, for Heaven's sake).

The issue stems from the constitution - and perhaps general understanding and present moment psyche of what an act of war constitutes or looks like - didn't have the foresight of understanding cyber/information warfare at the efficiencies and relative cost the internet provides.

It would have been great to foresee and design to counter what Facebook's structure exposed and allowed bad actors to take advantage of; it's not surprising however as Mark Zuckerberg. not understanding why the Harvard version of Facebook being developed was taking so long, thought he could do it faster: because they were actually working through privacy, security concerns, and such - whereas Mark's level of care was "break things fast" in comparison.

Enough of us have hopefully learned our lesson to swing back the yin-yang cycle and to manage and counterbalance the allowance a system like Facebook created, to prevent these overly efficient systems in spreading lies, propaganda so easily - without easing into censorship and the pitfalls inherent to silencing anyone.

I'm not sure how this response is intended to be related to mine.

Re: "The supposed influence of Putin is really poorly manifested in US policy, which remains as hostile as ever (Mattis is going around talking about the need to prepare for military conflict with Russia and China, for Heaven's sake)."

I understood your comment as you either believing or not believing, doubting, that Putin and their methods aren't manifested/taken into account/written into US policy to counteract said influence? I wasn't sure if you thought it was trivial that Mattis is wanting to prepare for possible conflict with Russia and China. I expanded my comment to include Facebook and other social media as a means to manipulating a population in what hope to be democratic elections.

In other words, I think the panic about Putin manipulating the election is hogwash, visible in part by the fact that American policy is, if anything, more hostile to Russia than before. I honestly think the reason this stuff has so much purchase is people don't want to accept that Trump could possibly be a homegrown phenomenon, because they don't like what it would say about their neighbors (plus it lets Democratic leadership off the hook for botching what really should have been a layup -- Trump was a historically unpopular candidate).

There's certainly a component of homegrown to it - it wouldn't be possible otherwise to stir people's emotions up with propaganda otherwise.

Are you aware of the growing list of evidence that the Mueller investigation has already uncovered, along with the people close to Trump have already been charged with crimes, etc? Likewise regarding Cambridge Analytica and what services they offered to people, to get governments/politicians into power - including admitting on video that they're willing to lie?

From my view point, Bernie Sanders would have gotten more support and votes than Hilary - who to myself, felt like more of the same. There are many systems that have issues with how they are designed to function or function.

We don't and perhaps can't ever know how much influence Putin (or other less obvious bad actors) had on the elections - however, I hope you'd agree that we should try our best to prevent that kind of manipulation from happening?

American policy is more hostile to Russia, as is more of the world's, in part as economic punishment for bad behaviour, no? The parts of the world and society that behave well then work together.

What part of what the Mueller investigations turned up do you think proves there's any meat to allegations to Russian collusion?

Readers want interesting comments to read now, I imagine, and this one doesn't teach us much. But please don't complain about voting: https://news.ycombinator.com/newsguidelines.html.

My comment was bringing attention the current climate of Trump-Russia, and counter-balancing that with bringing up security services that protect the constitution of the US - which is the foundation of the parent comment. Perhaps you're aware of this yin-yang counter-balance in the system, however others reading may not have realized that? I am sure there is more people could take from it, though I'm not them, so it would be difficult for me to brainstorm it all - and I shouldn't be naive enough to think I or even a group of people would get all of the possibilities down if we tried to write a list of value a person could get from a comment (and strangely enough in the context vs. what value does a downvote create?).

You can call it complaining - I call it protest. Shallow downvotes allows people who don't even have the will nor willing to put in the effort for critical thought to turn a negative impulse/feeling into more than a single click of a downvote. Does that level impulsivity have any place in civil discourse? I don't believe so. If there truly isn't interest in a comment, and there were other more interesting/upvoted comments/discussion in a thread then they'd be upvoted and reach the top - or if something said is so "barbaric" then someone could comment with words to give context to the dislike vs. rewarding more impulsive, lazy people.

To continue, user emodendroket left a thoughtful response, to which I just replied.

It's an interesting premise that a comment is expected or desirable if it is to teach someone something. Perhaps part of that learning process is a comment leading to a reaction in someone - however requiring them to turn that reaction into a worded response that helps everyone reading (especially who they're replying to) understand the reasons why they've have that reaction (which they'd otherwise simply turn into a single click of a downvote, and then we're only giving our best guess based on the amount of effort we're willing to give in a moment - like you gave) - so then it's an opportunity for people learn, especially the person being responded to - instead of reacted to negatively, lazily; or to continue the opportunity for someone to learn, as your written response allowed me to respond and share my deeper views.

Also, my edits were are meant to continue to trigger people who are more impulsive - which of course has the very high probability of triggering a cascade of more impulsive downvotes. What better way to show the ridiculousness of impulsive downvoting than "holding a sign" that highlights the ridiculous of downvotes - that instigates more downvotes? I think it's a disservice that the HN community has downvotes, at least how they impact structure and visually as they do now; training people to be impulsive over learning/practicing non-reaction or towards contributing with words if the urge is strong enough - which will help others better formulate their own understanding and words they use, as a positive exercise - assuming everyone involved is working towards being civil, and as long as there is forgiveness, compassion, and the like within the community.

Whether my comment leads to a review of downvotes or an understanding/compassion from my perspective, I don't know, that depends on a lot of factors about the reader, the organization they are in and the acceptance/compassion/fluidity (vs. stagnancy/rigidness) of said organization and its people, etc.

Thank you for responding though - I deeply appreciate it.

... and then curious what happens to users who blanket downvote every one of someone's comments in a thread or over the long-term - like someone just did to all of my comments. I hope they did it out of humour.

From what little experience I have with working with companies in other countries it does seem like the US is really different than many other developed countries. It is relatively easy to enforce contracts in the US. Public companies are very transparent. There is a low level of corruption. Rules about moving money around, investing, and taxes are relatively simple. Hiring people (particularly in any variety of skills) and letting people go when you need to is possible.

Lots of other countries have great economies and different advantages over the US. But that the set of advantages above isn't more widely replicated points to more than just first mover advantage.

Certainly there are many countries that do worse on those metrics. But there are others which are comparable or better. Then again, those countries do not have the world's largest military apparatus spanning the globe.

This might be something we look back on like the move away from the pound, or Nixon taking the USA off the gold standard. Hard to say at this time if it has any real possibility of being a huge shift in power structure. It could just as easily be a fizzle as the world breaks apart from the last 50 years of consistent policy choices...

If dollars are immediately exchangeable for the fair value of your currency of choice, and it doesn't cost anything to change one currency to another, does it matter what currency the transaction happens in? (I know we don't live in this world)

Because the currencies fluctuate relative to each other.

Say you buy my house for 100 Acme Dollars.

Due to hyper-inflation (or some other factor), the next day, houses are now worth 1,000,000 Acme Dollars. You now have currency that is worth 1/10,000th of a house, I still have a house.

You could also substitute "house" with "USD"

It matters if you don't want to comply with some request of the government issuing the currency.

Can you expand your reasoning a bit further? I believe what you are implying that the issuer of the currency has some control over how the currency is exchanged between third parties.

The US can, and does, use its control of the US payment system to punish anyone who deals with states it wants to sanction, such as Iran.


> The power of U.S. sanctions lies in the use of the U.S. dollar in most international transactions. A foreign company that sends its proceeds from trade with Iran through an international bank would likely face sanctions because part of it would be conducted in dollars. An international company with an American employee who has something to do with a transaction, no matter how inconsequential, could also run afoul of U.S. sanctions.

> Only a handful of countries agree with the U.S. decision to abandon the nuclear deal. The European Union said Monday that its member countries would establish a system to allow oil companies and private businesses to keep trading with Iran. But many international corporations have already stopped doing business with Iran because so much international business is conducted partially in U.S. dollars.

In support of emodendroket, in order to be a third party wanting to exchange the currency, they must obtain it. The issuer can make that significantly harder through sanctions.

Yes, because of all of the effects listed in the article. Someone else already pointed out the power it gives over sanctions, and the article talks at length that obtaining that currency for transactions effectively is a loan to the issuing country.

A lot of payments are on net30 or other longer terms. If a currency plummets, you get a lot less value for your 100 million barrels of oil than you expected. So you want those payments in as stable of a currency as you can get.

The funny part I see is that the US dollar appears to be two currencies in practice - clean and dirty and the distinction only comes up when attempting to use them in a clean market. Despite the terms and concepts being underworld there is no value judgement attached - clean only means legal and unsanctioned to US currently and there is nothing technically stopping them from doing something erratic like sanctioning Switzerland for being too neutral except good sense. Paper currency is almost always useful among the dirty as there is nothing to stop its use among even pirates and drug lords, and other sanctioned governments trade in US dollars independent of the fact they aren't supposed to be dealt with. Within the dirty economy it doesn't matter they are still stabilized, clean monet can come in if via illicit means and laundering allows for an effective conversion through many means including cash retail endpoints as the ultimate theoretical security at the cost of efficiency. (It isn't a crime for a legitimate businessman to accept a $250 cash payment for a bar tab from known gangsters - the opposite in fact. However adding it to the tills and cooking the books is.)

If the US wanted to maximize their fiscal gain above all else they would essentially give up sanctioning as peak stable currency. Whether they would want to or it would be separate questions.

It also points out why China would fail at their endeavor of replacing long term. Not even their own officials want to be in fiscal strangling reach. Nobody would believe they can reference Taiwan as a country and still remain part of their banking system let alone whatever else could draw their wrath.

U.S. dollar allows US to extract neo-colonial tax from the rest of the world. US has a huge trade deficit because US simply prints more dollars to buy everything they need.

Summing up the discussions, it seems to me that US is the capital lending source for the world. Every country loans, saves and invests in US dollars to improve their economy. Previously this role was played by Gold but gold source is limited while US can ensure(theoretically) unlimited supply of dollars. So, in effect, all the growth that we saw from 1971 was due to this switch from Gold. This arrangement works well for everyone. The other issue about US sanctions will push the rest of the world towards searching for an alternative, is not true.The reality is, the rest of the world adapts and tries to compromise with US. May be it is first mover or luck or strength of US economy, but this role played by US is not likely to be replicated or substituted. But, interestingly, this role of US dollar is very beneficial for capital or investments in US. And by the same corollary, is very bad for US labor, since they are competing not just against the other countries, but against US dollar. May be this is also the reason for the unrest and social protests?

I was a computer science major, not an economic major so just asking. Couldn't so form of crypto currency perhaps become the worlds one and only currency? This seems to me an easy way to monitor and adjust in/for real time as needed.

I don't know much about montary theory but from what I do know it seems unlikely that in my lifetime the US dollar will be threatened as the world's reserve currency.

I can only think of the euro, yen, renminbi, rupee and perhaps the pound as currencies that are backed by strong enough political forces to be considered as reserve. But there are many threats which each of these routes, do you trust the Chinese central bank? Is India stable enough? Is the EU stable enough? They are losing a prominent member in March 2019, will the UK recover post-brexit for the pound to be attractive??

Even then, as stated other nations have deep ties with the US which increases the risk of moving from the dollar. We provide for Japan's defense, we are the biggest funder of NATO, etc. While Trump has moved the US away from international institutions during his term I have no doubt that the US will continue to dictate global economic policy after his term is complete.

In many ways, while it's fun to speculate, I don't see the rest of the world having the will or options to move away from the dollar as a reserve currency.

Just trying to imagine what would be the equivalent to a Brexit in the US shows how much more stable it is. Can you imagine if Texas was actually Amerexiting (Texsiting?) the Union next year? lol

China's black box central banking is a complete sham.

Brexit has little to do with the EU's stability, and more with the stability of the UK political system.

Let's not forget that the EU is not a nation-state on the same level as the US, but a supranational type of goverment. (and currently being the only one at that).

Brexit is a lot easier to achieve politically compared to texas seceding because the US is an inherently far "stricter" type of political entity.

> the EU is not a nation-state on the same level as the US

That's the point.

The reality of brexit suggests neither the Euro nor the GB-Pound is a stable substitute for the dollar as a reserve currency.

The Yuan (with China's exchange rate manipulation and general economic manipulation)?

The Yen (with Japan's 10-20 year malaise)?

Crypto? (how much volatility and market manipulation are you willing to accept?)

Gold/silver standard? (It has certainly had a tiny fraction of the inflation of the US dollar, but there are other challenges)

The United States is not a nation-state, in the sense that there is no "American people" who make up its polity (well there are Amerindians but it's obviously not their nation-state).

We fought a war to settle that there is no right of voluntary secession for states.

You're questioning if other currencies are up to the US's level. I don't see that happening quickly (or at all really with how the competition is going & their own internal problems).

What's far more likely is the US's status dropping to other's level. If the US continues in the track that it's been on with the Gov't shutdowns and antagonistic policies towards other nations, people are going to want to rely less and less on the US. We've got a lot of inertia, but that can be overcome.

Yeah the only existing currencies I could see taking over are the euro or yuan, but Europe is too politically diverse and China is too politically hostile.

The only existing "currency" I could see is some kind of opening up and expansion of the SDR[1] (China has pushed for this as an alternative way to replace the USD as a reserve currency)

[1] https://en.wikipedia.org/wiki/Special_drawing_rights

Europe's political diversity is a benefit here though - the EU Council as a governing body, provided it got to the point where it promised not to change anything, would easily look like a stable administrator. Business is more then happy to ignore all sorts of legal inconsistency if the trade off is predictable year over year behavior.

The new currency can't be owned by anyone and it certainly can't be subject to a payment tax (conversion or transfer fees).

America will go the way of the once mighty U.K. if the dollar no longer retains it's status as the global reserve currency.

That is, America would shrink rapidly just like the U.K. did when it happened to them.

It is what fuels American growth.

Whether that is a good thing is whether you want the U.S. to be a global superpower or not.

Iran can quit OPEC and sell Oil in Yuan/Rupee to CHINDIA

You say that as if those currencies have no risk...

Provided you don't buy into the conspiracy theory that the US won't allow countries to price oil in other currencies, you have to ask why Iran doesn't do what you say. Perhaps it's because the dollar is bigger and more powerful than the political rhetoric that comes out of Washington.

Libya tried to do just that. It doesn't look like it was allowed to do that.

There is currently no alternative. I for one would love a global currency that was untethered from government corruption (printing), and manipulation. It would also be devoid of regulation where no actor gets to say if one person can use it or not. We aren't ready to empower individuals on that level though. Manipulating currency markets is ingrained in our political structures.

>> "...a global currency that was untethered from government corruption (printing)..."

This is your friendly weekly reminder that the government does not print money in almost all countries, with a very few interesting exceptions.

Money is instead created by ordinary privately-owned commercial banks, or by consortiums of privately-owned commercial banks aka the owners of central banks [0].

The spirit of the parent's point stands, which is of course that somebody is ripping you off. But that somebody is manifestly not a government.

[0] https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...

See the key quote in bold on the first page: "Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money."

Well, the government is controlling the money supply. The main way you get ripped off is when the monetary authority decides that inflation should be higher, and that devalues your money. Calling that process "printing money" seems like a reasonable metaphor.

>The main way you get ripped off is when the monetary authority decides that inflation should be higher, and that devalues your money.

Inflation doesn't cause devaluation; it is devaluation. It's an increase in the exchange value of goods to cash.

And whether or not you get "ripped off" by inflation depends on what side of the trade you're on.

Inflation is fundamentally a price level problem. I don't understand why libertarians seem to think the price level of goods and services should be fixed forever.

Inflation can indeed be caused by supply and demand, which is what you're referring to. However, if an open market is allowed (no price controls), generally supply will rise to meet demand and price will fall back.

Unfortunately, inflation can also occur when too much money floods a system. We see this in the case of college tuition. Giving college loans to anybody with a heartbeat floods the system with money, causing tuition price inflation.

This does happen with countries as well. Every dollar that a government borrows and then spends, is money creation. The act of selling the treasury notes allows them to obtain money today for the promise of paying it back with interest in the future. That new money is spent into the system and much of it takes the form of bank deposits which can then be inflated 10:1.

>That new money is spent into the system and much of it takes the form of bank deposits which can then be inflated 10:1.

And the problem with this is?

Canada has no reserve requirement. The US value of reserves in the financial system is so high that banks are no longer reserve constrained.

The absolute quantity of money doesn't matter; the supply and demand for the currency does. That's why so many people got it wrong by claiming Quantitative Easing would result in massive inflation.

> Every dollar that a government borrows and then spends, is money creation.

So is every dollar repayed back to the FED money destruction?


Wow. What a crazy system. It is so so easy to manipulate this with fiscal policy.

>This is your friendly weekly reminder that the government does not print money in almost all countries, with a very few interesting exceptions.

Yep, Canada does it for them!

Yes, but the Fed enables this behavior by loaning the banks money.

The point is, it's due to the govt that the money supply is increasing hence we have inflation.

Have you considered our liquid coin and solvent savior $randoCoin? It has a current market cap of $volumeLargerThanTheEconomyOfSmallNationYouveNeverHeardOf

(Because surely someone was going to bring it up)

Yeah..but like most here I didn't want to be the one to bark about crypto. The settlement tech and security of crypto absolutly sucks.

Why would you choose a financial instrument that's only a few years old to replace the US Dollar?

There are some primary use cases that crypto solves in regards to international monetary transactions, but there are big questions in terms of technological maturity, and most especially around governance.

I love crypto, I think its potentially transformational. But it just isn't a contender yet. It needs to scale and it needs to mature.

And we already have gold, which nobody wants to use because it doesn't allow governments to inflate at will. The exact same problem the cryptocurrencies have. What we see as a benefit, governments see as a drawback.

It's called Bitcoin.

Even a Global Currency might not be free of corruption due to those who maintain it and pressures upon those who maintain it. while in United States we worry that the politicians are not following our wishes it's a lot less corrupt than other countries.

crypto currencies are supposed to fill that role.

>> "now President Trump is retreating from the American chief executive’s traditional role as Leader of the Free World"

Citation? He may not be some people's ideal of the leader of the free world but I wouldn't say he has retreated.

He has been very vocal about a "US-first", isolationist policy. You can't be the leader of the free world by saying "I only care about my country" and expect others to follow you.

"Leader of the Free World" always struck me as an odd term. Is the US the only free country? If not, then did other countries elect the US President? Isn't an un-elected leader a dictator? Wouldn't "Dictator of the Free World" imply that the Free World wasn't actually free?

The logical assumption is that the US President is not in fact a leader of anything outside of the US and only the pride and arrogance of the citizenry would lead to that title. Alternatively, it could be true that the US President is indeed the dictator of the rest of the world, but then it would be more fitting to call him a dictator rather than some Americanized version of "Great Leader".

Indeed, and requesting that countries part of NATO fulfill their voluntarily agreed to commitments shouldn't be considered outrageous.

If that was the only controversial thing he's done on the world stage, you might have a point

Why is it controversial?

You simply cannot be leader of the free world if you are attempting to do such as a country in decline or ruin. The first order of business is to restore American economic strength. The world must wait.

> You can't be the leader of the free world by saying "I only care about my country" and expect others to follow you

There's no evidence of that. The President is a citizen figurehead (with limited powers) which has to fight a monumentally massive bureaucracy made up of other branches and citizens. Trump is not a godhead or even going to be considered important in the long run (a generation+). Curb the sensationalism.

True, many overstate the importance of the president. I think you understate his importance, though. His actions (and statements) have real-world consequences.

He describes his nationalist policy as "America First" [1] and takes explicit action to disengage from global governance, foreign aid, etc.

IMO this marks a retreat from many previous administrations.

[1] https://en.wikipedia.org/wiki/America_First_(policy)

Whether you think it's for better or worse, how is independence from global governance moving the world away from freedom?

Is diluting your vote on your nation's policies to include the rest of the world a necessary cost for having a free world?

I keep hearing about changes to US foreign policy dictated by our self-sufficient oil drilling. The US is now a net oil exporter and has fewer stakes in maintaining order in certain parts of the world since WW2.

In the short term.

Historically the U.S. has avoided drilling much of its reserves preferring to use oil from foreign sources first, knowing that it would have its own remaining if those ever dried up, either literally or because they became untenable to access for whatever reason.

If the U.S. uses up its reserves and doesn't drastically cut its consumption, it's no longer a net exporter.

One potential solution:

Use local reserves in the short term while redirecting military spending toward building sustainable / clean energy infrastructure domestically to avoid a scenario in which the country runs out of domestic reserves and is no longer able to obtain oil from foreign sources.

"Historically the U.S. has avoided drilling much of its reserves preferring to use oil from foreign sources first,"

Historically, shale oil was not economically viable. This has drastically changed the equations because suddenly available supply has shot up, rendering the old calculations moot.

(Note I am not implying anything further other than what I said. There are good aspects to that, there are bad aspects to that, and there will be disagreement about which is which. I'm just saying the old strategy has been obsoleted by practical shale extraction.)

The US has at least a hundred years of oil remaining, and that's without properly exploring for oil off either massive coast using modern technology. That's also ignoring that gasoline is about to get demolished by electric cars, which will slash oil demand in a very dramatic manner. In likely terms, the US has enough oil for multiple centuries once it's no longer heavily used for transportation.

And of course the US is neighbors with another huge oil producer up north that happens to have a small population. Mexico also likely has a lot of oil it's unaware of, near Texas, in the form of shale. Given it only has 500m people, North America is an energy reserves monster.

This is overstated though. Oil is fungible, and the US is not a vertically integrated supply chain even though it is (contrary to popular talking point) still the world's largest manufacturing exporter.

Which means it needs to buy things from the outside, and trade something people want in return - that means oil. If you want to be stable on oil, it's either competing with international market or you're throwing up price controls and export restrictions to try and keep the price down. Do that, and your currency starts devaluing anyway making all those things you want more expensive.

Right. This shift started with Obama though. While he still carried out imperialistic activity the message in his campaign was to stop. We see this in a deluge of violence that is breaking out for which we have no stake or involvement. It reminds me of pre-ww2 where all this shit went down and the US and others where like...meh.

I can have a 'family first' policy about how I run my life, but that doesn't mean I might not be a good leader for other families to follow.

You’re describing a role model, not a leader. You’re not a leader for those other families. You may be a good role model.

A more appropriate equivalent would be standing for mayor of your town and saying you will be a good leader, but you will be putting your family’s interests ahead of everyone else.

That's a very fair point - often those words are interchanged but they are actually different. My analogy was accidentally describing a role model. The mayor analogy is better, but the US President is not actually a leader of any other country, so I'm not sure that one is totally analogous either. Maybe at best the president leads by example, or is a role model, but not actually a leader (from my very limited understanding of world politics :P).

Global governance is not automatically positive, or equitable. The majority of Brits came to this conclusion in the Brexit vote. China arrived at this conclusion when the ICJ invalidated its Spratly Islands claim. Likely majorities in Greece, Italy and elsewhere are near to the same conclusion - particularly if/when German taxpayers become similarly disenchanted with supporting these countries deficits.

Scrapping TPP (ceding huge geopolitcal area to PRC / Silk Road), reducing NATO support, initiating trade conflicts, enthusiastic support of PRK/Kim... do those not all directly move us away from that role?

If you assume the status quo for all of those items mentioned are good, then perhaps, yes the US is leaving its role. If you assume that most of those are bad (except in the case of PRK), the the US is asserting its role.

Take the PRK. Will it collapse any time soon? Probably not. The government disarmed the populace. They are internally too weak to oust Kim. Does bringing the PRK into the less violent world benefit people? Yes. The US would have to spend far less on Korea. So the US could save anywhere from 350 million to 1 billion by not having to be there. [1]

TPP was terrible for rights of the individual. It was a promotion by the media companies, among others, to strip ownership rights. It also pushed a greater term for copyright, which at the current levels already stagnates the economy.

Reducing NATO has the benefit that it's making EU members start to think about spending their money on defense. The US has funded the EU social systems for too long. The EU countries mock the US saying, "If you spent less on your worthless bombs, perhaps you could provide good medical systems to your population." I'm tired of this lie. They don't spend much on their defense. They don't spend what they should with Russia parked on their front lawn. Is it good leadership to have your crew, who appear to be of little worth, make you spend on every outing?

Initiating trade conflicts is not necessarily wrong if the deals are bad. Are Americans better off under these new deals? I don't know; not enough details nor time. If they are, isn't pushing such negotiations ago thing? Could the same ends been achieved with different means?

1 - https://www.quora.com/How-much-does-the-US-spend-on-defendin...

On the idea of free trade https://youtu.be/rw7PUrgU3N0

Spending less on the military also wouldn't dent the healthcare problem the US has. The US has a $3.8 trillion healthcare system. Just covering the ~8% of the population without health insurance, would cost 50% of what the US spends on the military. The only good targets for slashing the military budget by eg $200b, is infrastructure (we could build national high-speed rail with it) or deficit reduction. You can only broaden healthcare coverage through massive cost reductions (minimum 1/3 cost slashing), or epic tax increases on the top ~60% income bracket (which is how everyone else pays for universal coverage, but this would be a huge cost break to corporations who currently largely foot that bill).

Imagine if Canada had to actually spend real money on defense to keep Russia from going after its northern most territory (Russia has begun getting aggressive there). They're spending 1.3% of GDP on their military, with no ability to actually secure their own territory if Russia decides to start claiming some of their land in the Arctic region. Who are they going to look to as Russia gets more aggressive? The US of course, nobody else can do anything about it.

The US has been free to curtail it's military spending any time it wants. The American cross to bear is apparently that they just can't help themselves in wanting to help everybody else. Just like your healthcare system which is "providing cheap drugs to the world which is why we can't improve it for our own citizens". While you know, you also manage to spend more per capita then any other nation on the planet despite a complete lack of coverage for your citizens.

On the back of threatening NATO, the US approved the largest increase in defense spending ever. To what end? Who are your enemies in a world where you apparently don't plan to commit to NATO and are going to reduce foreign imperialist activity?

If we're sticking to the topic of NATO, I'd love to leave it. I have no desire to keep the EU free. They've stepped up to say they are their own unified power equal to the US. Let them defend themselves. The US has a natural moat and friendly neighbors. The Russians couldn't invade the US and keep its troops supplied for the long haul. Not even if they successfully conquered a portion of Canada. Neither can the Chinese. I'm not sure who we're afraid of.

The US military is largely worthless in a true asymmetric war without our territory. There are better options in both law enforcement and the true concept of the US citizenry being part of an independent State militia. If we let the EU fall or stand on its own, the US could get rid of the majority of its standing military. We wouldn't need friendly bases because we could scrap the idea of a volunteer army. Such armies make foreign adventures palatable since the soldiers asked to join. An army that is mostly conscripted does not go abroad unless it has too. A conscripted army is not large enough to threaten the homeland.

If we collapsed our military to just Navy and Air force, enough to keep trade routes open and secure our airspace, we could free up 300-400 billion dollars. The US could pay down some of its 20 trillion dollar debt year after year after year.

The idea that the US would enjoy it's current trading relationships in a world where the EU's defense industry is selling to itself (remembering the idea of the EU falling is absurd - it's a nuclear ICBM equipped collection of nations, Russian expansionism ends at Germany's borders purely on some guesstimating about whether nuclear annihilation is worth saving Estonia) is laughable.

And why would an expansionist China let any country in its sphere of influence give preferable trade deals to Americans at all? The point of an empire is to get it to pay tribute to you, which is what the US currently does via it's various economic relationships backed by its military.

The reality is that if other country's build up their military's, then any money from trade the US is getting is diverted since what are they going to buy from you? The first thing you do for a self-reliant military is build your own industries, or make military alliances with your neighbors to share industrial capacity. All of which would have lost any reason to bother with US hardware.

Also, the current US policies actually make it politically viable in (especially europe) to think about a tighter integrated defence mechanism. (See PESCO[1]). This will lead to less US defence and thus influence in other countries on the long term.

[1] https://en.wikipedia.org/wiki/Permanent_Structured_Cooperati...

I don't think you getting downvoted is fair, as you asked a reasonable question. And some of the replies are helping answer said question.

But also, this is an opinion piece, no need to take it too seriously in any measure. The responses you are getting are aligned opinions.

I'll bite as you don't appear to be a troll. Trump and his regime has on many occasions talked about "America first" and also bashed international organizations like NATO/UN. But ... you knew this.

While you won't find a citation of him saying "I'm no longer interested in being the leader of free world" you will find that he rejects the concept of "the free world" by decrying "globalists" as being the cause of a perceived decline in America's influence and power.

Not to mention his bashing of allies on trade, security and a variety of other issues - making it clear he's not interested in "leading" but rather ... dominating(?)

So to me, retracting from the global economy, bashing allies, and complimenting authoritarian monsters would seem to indicate he's cool with "retreating" from that role.

For the longest time many on the left would complain about american hegemony, American interventionism, american-led globalism, etc. now that the US is retreating and China appears to be taking up some of the slack, now people are complaining of retreat, and focusing on america too much, etc.

People on the left usually weren't opposed to American interventionism in general or 'leading the free world', they were opposed to stuff like toppling governments to install friendly dictators.

"The left" is a diverse group of competing interests and political philosophies, just as "the right" encompasses fiscal conservatives, multinational CEOs, Christians, and white supremacists.


Personal swipes will get you banned here, so please don't.


Not really. The article is about the “retreat” of the dollar and how America, in their view is abdicating its responsibility to “police” the world.

I think whats happening is some people who clamored for america to retreat from dominance now regret their devil’s bargain now that they found out the devil (in this case China) disagrees with their vision.

> So to me, retracting from the global economy, bashing allies, and complimenting authoritarian monsters would seem to indicate he's cool with "retreating" from that role.

Soft power is great when it works. Soft power leaves personal and bilateral relationships largely undisturbed and reinforces stability. The problem is this... it doesn't work when both sides do not share a strong incentive (or the same timeline) to reach a negotiated agreement. Hard power is required and not inherently bad when gridlock, urgency and incentives justify its use.

Well, I guess if you were to ask him "Do you still consider your role (or America as a country) to be the leader of the free world?" I assume he would answer "Yes."

However, he may think he is being a "tougher" leader than before.

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