So, nice little chart here:
Seems… bad. At least for America and Europe.
Let’s lay this out:
- Most of what you want to buy you can buy from China, you don’t need to get it from the West, so why use dollars?
- China almost never uses sanctions or seizes foreign currency. The US often does. US dollars are risky, the right to use them can and is often taken away, and so often are the dollars themselves.
So why use the dollar, except that it’s still easier in some cases?
What happens when it’s no longer easier? The BRICS are spending a lot of time on an international banking system which bypasses the West and it’s allies (Japan and South Korea, basically). As that system becomes easier to use, why use the Western system or the dollar? It only exposes you to risk.
This is similar to what happened after the Huawei sanctions. Chinese firms saw the damage that was done to Huawei (they’ve roared back, but it was touch and go for a couple years.) The cry in Chinese business was “delete America.” If you bought anything important from the US you needed to find another source outside of the West, which for manufactured goods usually meant domestically, and for resources meant Africa, South America and Russia.
For a long time the way the banking system was set up you had to use the dollar, but more and more you don’t. And for a long time some key providers, like oil producers, would only take dollars, but now they’ll take Yuan.
So, again, why use the dollar when there is a safer alternative which can be used to buy or sell almost anything you want?
Jan Wiklund
I believe it’s good, even for the US.
They have been suffering from a “Dutch disease” – it has been so easy earning money from printing dollars that they have neglected their producing capacity for decades. It’s like Spain in the 16-17th centuries, it was so easy for them to pay their expenses with silver robbed from South America that they neglected their producing capacity until it almost disappeared.
Without easy credit the Americans will have to renovate their industry and get their incomes the hard but safe way.
Jan Wiklund
PS. Where is the chart from?
JR
Curious. Is the chart showing the number of transaction in those currencies or the total value of the transactions (measured in some currency or basket of currencies)?
bruce wilder
It is a bit esoteric, but while the domestic U.S. dollar and its massive accumulation of marketable debt instruments, growing at an accelerating pace, could become unstable at some still distant future point despite having the institutional structure for a well-managed fiat money, there is also a second, inherently unstable and massive pool of U.S. dollar debt instruments floating the system of Eurodollar banking, which co-exists with the Euro — the Euro, which was designed by neoliberals specifically to make possible crises of national bankruptcy to control and dampen socialist political impulses.
A properly administered monetary system ought to dampen volatility and insure against risk and hedge against uncertainty, but there’s a lot of money to be made for elites from amplifying financial risks, the better to extract usurious returns from capital that is doing no real good. That the international financial system is treated as unknowably complex by political observers is a complement to policies that have allowed significant parts of the overall system to escape public accountability and supervision.
Financial capital is an explosive that enables creative destruction, when used carefully and judiciously, but it is an explosive. The Euro and the Eurodollar, side by side, are like that warehouse in Beirut where they stored decaying fireworks next to decaying fertilizer while ministers and judges argued about whose problem it was.
david lamy
As fewer of the future Global South and East elite get indoctrinated at Western universities the allegiance to $US will decline.
Ian Welsh
Jan,
https://watcher.guru/news/chinas-renminbi-use-surges-what-it-means-for-global-trade
elkern
Jan Wiklund –
I agree with your analysis (“Dutch Disease”) but not your conclusion (“it’s good, even for USA”) – at least in the short/medium term.
At some point, the slow trend away from the US$ will explode into an avalanche, as Zillionaires dump $ before they deflate. To me, that implies Weimar-scale price inflation, starting with assets but trickling down to CPI products (quickly or slowly, I dunno).
The lightning speed of modern High Finance makes the system very susceptible to this kind of crash. The Zillionaire who panics first wins! The ones who hold onto $, hoping The System stabilizes will no longer be Zillionaires.
Such a Crash would only exacerbate the Wealth Inequality problems, which would likely worsen the political mess we already have.
At least the USA still has land & resources to continue producing – and exporting -Commodities (Food, Oil/Gas/Coal), so we should have food, energy, & transportation, but economic power would shift from Blue States to Red, and political power will follow. That will end any pretense of US cooperation with global efforts to slow Climate Change. It will also block any meaningful resurgence of Union power, and continue to roll back other New Deal and Welfare State policies. Posse Comitatus will be loosened to allow the US Military to quell the inevitable urban riots.
Like 19/20th-Century Spain, the USA will limp along, clinging to memories of Empire. When we inevitably lose a war in a way which can’t be ignored – when someone sinks our Navy – there will be some attempts at Liberal reform, but they will be smashed by Conservative backlash (see: Franco).
The resulting society will be “good” for The Rich, and will likely *feel* “good” to people who are comfortable living in an Authoritarian framework, but it will be *bad* for a large percentage of Americans (particularly Women, Queers, Blacks, Jews, Arabs, Muslims, etc).
Dan Kelly
As fewer of the future Global South and East elite get indoctrinated at Western universities the allegiance to $US will decline.
Is this happening though?
The US elite is probably the most ‘multi-cultural’ elite in the world. It’s a few generations ‘in’ now. The children and grandchildren – well-to-do citizens of the US and world travelers – are not all eager to ‘resettle’ in the ‘old country’ though they certainly may visit, and may even have a property there.
All the ‘elite’ in the US easily become swallowed by the zeitgeist. ‘Capitalism’ devours everything and reshapes it in its own interest. This is why Mark Fisher killed himself.
“The pandemic of mental anguish that afflicts our time cannot be properly understood, or healed, if viewed as a private problem suffered by damaged individuals.”
But marxism and political communism offer no relief for this dillema either. And of course both were funded by died-in-the-wool ‘capitalists’ so…
Most ‘black’ elite in the US are died-in-the-wool ‘capitalists.’ too.
Most of the people in the US from all the ‘central and south american nations’ are ‘Spanish’ Catholics and they’re still able to ‘build’ decent enough lives here, send money back ‘home’ as well as go back home – and have their relatives visit here. Needless to say, they find absolutely no appeal in what to them is bland, non-cultural and frankly often hateful ‘marxist commie’ rhetoric.
This is also true of many of the ‘Asian’ communities from ‘the east.’ The history of grievances in ‘the east’ well predates ‘the west’ coming in and exploiting said grievances in its own interest. So, the idea that all, or even most, of these nations and peoples are going to embrace China wholeheartedly is quite a stretch.
But as Ian notes, if the economic factors are in their favor then the other stuff is more easily put ‘on the back burner.’ And certainly the Israel-occupied US and ‘the west’ continue to do everything in their power to absolutely destroy their own once dominant economic ‘hold’ and they seem to be rather happily upending all the meaningful and productive ‘soft’ power that they’ve built up over the years as well.
Which just goes to show that the ‘soft’ stuff is only ever there to soften things in order to implement the economic scheme that is the heart of ‘raw’ power.
—————–
Interestingly, the aformentioned ‘Spanish Catholic’ groups are also some of the most ‘lively’ people left in the US.
The US is utterly lacking in gaeity, and there is seemingly little capacity for the carefree joy that is so vital to health and happiness.
All energies have been funnelled into competition and keeping everything, including ourselves, looking appropriately presentable.
Exactitude, from lawns to haircuts, is essential. There are more ‘grooming devices’ for men than women in ‘Target’ these days.
By the way, there are 23 things YOU NEED TO DO this week to feel a part of everything. Be sure to take lots of pics of your ‘experience’ or we won’t even know you’re alive!!!!!!!!!!!!!!!
We used to look at a few polaroids of our friends’ vacation. Even that was a bit of an eyeroll if it went on too long.
Now, everyone has an infinite ‘rolodex’ of pics of every stupid motherf*cking they’ve done for the past month.
Yes, I’m venting, but come on. It’s gotten really really stupid out here folks.
Carborundum
The source for the chart is FT.
https://www.ft.com/content/ae08b6ed-d323-4a95-a687-0172a98857f4
Dan Kelly
More weak tea from China on the Zionist genocide:
https://x.com/upholdreality/status/1835979913679036548
This language isn’t nearly strong enough. This genocide has been going on for close to a year now and all we get from China (and Russia) are these brief statements every now and again which simply rehash the obvious.
Frankly, it’s become a sick joke. We’ve heard it all ad nauseum by now.
What exactly are China and its allies going to do if the occupied US govt doesn’t change course on Israel? There aren’t even any veiled threats here, while Israel and the US and the west are always threatening action of some sort if demands aren’t met.
Russia is a joke on this as well. Putin has no problem using the word ‘Nazi’ or ‘neo-Nazi- to describe factions in Ukraine. But he never uses the word ‘Zionist’ and never uses the word ‘genocide’ and he still talks about two-state solution.
Actually, Putin – much like Jinping – rarely has anything to say about Palestine-Israel. He lets Medvedev do all the talking, and Medvedev never exhibits any righteous indignation about the genocide, let alone any palpable human feeling about lives being slaughtered by the Jewish State – itself ‘settled’ by Jewish terrorists.
Righteous indignation.
I guess I’ll go read another piece by Medea Benjamin, and perhaps join her in one of her activist dance around routines – smiling all the while – as a population is genocided.
What’s that Skippy Rosenbaum? You feel ‘microagressed’ over what I just wrote and now Jonny Greenblatt et al are coming for me? But what about the genoci……..
vmsmith
We shouldn’t confuse the SWIFT system with the role of the U.S. dollar as a reserve currency. They are only very loosely connected.
Mark Level
As a “Spanish” & “Catholic” person (not the horrid religion, though, which my parents briefly tried to get me invested in) being Universalist by instinct, I greatly appreciate what Dan Kelly has to say. I’m even more Irish than Spanish (& Sardinian) but I wanted “gaiety” early in life, since my parents were both Strivers from the “Silent Generation.” They wanted money & conformity, they wanted to be WASPs but were not allowed in that Club. (Mom was very dark-skinned, clearly took some shit for it during the 1940s & 50s when young; dad couldn’t leave the Catholic Church lest his ultra-religious mother had a stroke, so though wealthy (for a time) no way to join the right Country Clubs!! Tragic! They tried though, the conformity I grew up with was stultifying . . .
Yeah, who wants to follow the “rules based order” in the economy when the MICIMAC makes the rules and gives the orders? American looting is well known to the RoW at this point. Fool me once, shame . . . (etc.)
Oh, & I was once libeled on this site for excoriating Jose Andres for his loyalty to Zionism and getting his own employees mass-killed by the Israeli lunatics while he made them pretend they could fill more than a scintilla of the food denied when US & Netanyahu started to crush UNRWA to starve the Gazan populace.
So the 2nd even more shambolic (lunatic) Trump wanna-be assassin Ryan Wesley Routh was photographed together (just the 2 of them on a lawn studded with Ukraine-Azov flags) with Andres, Max Blumenthal showed the pic on a recent livestream. I like how Jose is pointing at RR like “Lookit this dynamic winner dude here!”
As a kid I was once warned by an elder, “If you sleep with dogs you’ll wake up with fleas.” This applies to Andres in spades. Pic–
https://x.com/MikeCrispi/status/1835698851015008570
joe
Well Said Dan k.
The Country is starting to feel like a funeral procession.
Jorge
From the watcher.guru link:
“In July 2024, the Renminbi was used in 53% of China’s foreign transactions, up from 40% in July 2021.”
This chart is money crossing China’s border. The dollar is supreme because the US exported vast amounts of it, and so Bolivia can buy stuff from Paraguay in dollars because there are so many dollars sloshing around in international banks. China will have to do the same to displace the dollar- they will have to find international banks willing to hold RMB in perpetuity.
The Eurodollar system started because the Soviets needed someone outside the US to hold US dollars and Soviet rubles for US/Soviet trade, and the Brits obliged. Something like this will have to happen for holding RMB outside China.
Jan Wiklund
South China Morning Post develops the issue: https://www.scmp.com/economy/economic-indicators/article/3220087/which-8-countries-are-using-chinas-yuan-more-and-what-does-it-mean-us-dollar.
Of course it is horribly difficult to value – a googling on “currencies used in international trade” still gives a very small portion to the RMB. But then they exclusively refer to the Swift system….
And elkern: Of course it will be tough in the short term. It always is. But remember that capitalism is a very resilient system.
Mark Level
More on Routh’s Deep State connections & training, & connection to Chef Jose Andres (a Blinken BFF) from a Naked Capitalism commenter–
Jane
September 17, 2024 at 3:21 pm
The story of Ryan Routh is a cautionary tale.“The 58-year-old suspect appears to be, as one would expect, a nut whose politics are all over the place.”
Arrested with an explosive device, after a standoff in his home. That’s a federal crime.
Routh has a long history of breaking traffic laws, not paying his taxes on time and writing bad checks. But it was in 2002 that he lost his right to own a gun when he pleaded guilty to a felony in North Carolina for possessing an unregistered fully automatic machine gun.
https://www.reuters.com/world/us/what-we-know-about-reported-suspect-behind-apparent-trump-assassination-attempt-2024-09-16/
Never did any time. Logical conclusion, he’s a Fed informant, cutout, tool, had friends in high Democratic places.
Why would one think that?
The New York Times reported it had interviewed Routh in 2023 for an article about Americans who were volunteering to help the Ukraine war effort.
Free to fly, from Hawaii without secondary inspection for terrorists, unlike ex House member and veteran Tulsi Gabbard.
Routh photgraphed with chef Andrés. In 2015, Andrés was appointed by President Barack Obama as an ambassador for citizenship and naturalization.
In 2022, Andrés was appointed by President Joe Biden as Co-Chair of the President’s Council on Sports, Fitness, & Nutrition.
Andrés sued Trump.
Routh photographed with Zelinsky, recruits soldiers of fortune for Ukraine.
Routh tries to assasinate Trump, getting there 12 hours ahead of time for a last minute decision to play golf.
Therefore, Routh had inside information.
____________________________________________________________________
I know this is a thread about Dollar Hegemony, but this seems germane to me in connecting some dots. The Due Dissidence guys seemed to think Routh had some kind of MKUltra background or training. They did use the mentally ill a lot (& according to many sources including the well-sourced book Chaos, Charley Manson as well). Kurt Metzger has studied this stuff quite a bit & also thinks Routh clearly was a dupe, wondered if his parents were involved. The kid who tried to kill Trump the first time had a dad who is a “behavioral psychologist.” (And obviously that incel kid had little to live for.)
I don’t want to go down too many rabbit holes & end up like Routh et al, but let’s not forget that Bush Sr. met with John Hinkley Senior literally on the day before Junior shot Reagan. It was in Bush daddy’s official calendar, but of course the MSM says just a big “coincidence.”
Carborundum
Aaaand here we go.
https://www.timesofisrael.com/liveblog_entry/gallant-says-israels-focus-has-moved-to-northern-front-as-new-phase-of-war-begins/