America’s aggressive use of sanctions endangers the dollar’s reign

Current US policy, to the extent that we have policy today, is a whole other matter.

They can't directly confront Germany, but the US can, and it is doing so rightly. The project comprises the long term security of the Nato block, and the said countries have a major distrust towards Russia as it has they have suffered a lot under thier imposed communist regimes.

For a bunch of smart people, HN veers too much into hands off 'libertarian' side of things. US lets its hands off in the region, it will slowly be transformed again into a basket case of 'kleptocratic' countries in the way Russia is today.

---- The Czech Republic, Hungary, Poland, the Slovak Republic, Romania, Estonia, Latvia, Lithuania, and Croatia––all highly dependent on Russian gas––signed a petition against Nord Stream 2 in March 2016, highlighting the risks for energy security in Central and Eastern Europe.

Italy is in a similar bind. In 2015, Italy accused the EU Commission of applying double-standards when the Commission did not reject the Nord Stream 2 project, as it did with the South Stream––a project which would have benefited Italy’s role as energy hub in the Mediterranean. For this reason, Italy complained about Germany’s influence in the EU Commission and called for equal treatment.

https://www.brookings.edu/blog/order-from-chaos/2019/04/22/n...

Can you give actual examples of this friendliness? I see it cited very often but I don't know any concrete example. I know Trump has imposed new sanctions on Russia last September, that is sanctioning European companies for the Russia pipeline, and that he's doing anything that he can to destabilise Iran, which is supported by Russia. So it doesn't seem that friendly to me.

This "friendly" policy is basically not considering what Russia does within its borders justification for military action. This was always the unofficial policy, with the new bit being the Trump administration doesn't pass moral judgement on what Russia does within its borders.

A pipeline between germany and Russia strengthens Russia (increased GDP, increased control over the EU) and weakens the EU (which is full of countries that have proven they cannot defend themselves). Increasing the chance of war with Russia, and creating another mess for the US to clean up.

Seems pretty consistent foreign policy to me.

Those have been there for a long time, even before the "disruption". Besides France has nukes too, so not much win there.

This is in the book that forecasts that Japan will attack the US in 2050 except that it'll be all space-borne battlestars and lasers and hypersonic weapons. Among other preposterous scenarios. Riiiight.

> It is advantageous to them to have Western Europe dependent on its oil and natural gas supplies.

Loaded language. Don't you think Western Europe has thought of this? And hey, if Russia turns off the tap they turn off their revenue stream. Besides, Europe, like the US, keeps strategic fossil fuel reserves.

> The United States' main geopolitical imperative is to maintain global hegemony.

> Not saying this is a good or bad thing. Depends on your perspective and what country you live in.

Seems to me that if the US keeps sanctioning foes and allies alike every country bar the US will consider this a bad thing.

I once have heard this position from US ambassador in Kazakhstan on a private reception event.

The guy told people he expected a visit to a *stan country to be like a visit to a warzone.

He was learning martial arts, hostage negotiation, and been mentored by multiple self proclaimed experts on "warlord politics" of the region.

There was no end to his disappointment when he came to understanding that all that geopolitical BS he learned was for nothing, and he came to station the most boring post-Soviet hillbilly town.

I think most Americans, even the most educated ones tend to greatly overthink "geopolitical conspiracies"

Ex-USSR fiefdoms, Russia included, are ran by very simple people, without any geopolitical ambitions.

For them, blackmailing Germany and other wealth nations in Europe by threatening to close the tap has no political story to it at all, just plainly a way to extort some extra bucks, and show the world how big their balls are.

If it is not clear, the US for the last two decades is not moving forward, but backwards in international politics. Trump has exposed this even more.

Trying as a strategy to contain Russia is simply not going to work and the US really needs a massive upgrade in political brains, and not more weapons.

You are completely missing the part where Germany has already been running on Russian gas for decades, from land based pipelines. I think that you might be unaware of how permeable to natural gas the iron curtain had been.

The power Russia gains from Nordstream isn't the power to stop supplying Germany (they could already do that and then go broke), the power they gain is the power to keep supplying Germany while playing with the off-switch for their dearly loved "Slavic brother nations". The geopolitical relevance of Nordstream is not Russia selling more gas, it's about Russia deriving more influence per unit of gas.

Ever wondered why Poland is refusing so hard to switch from dirty lignite to cleaner gas? It's not just money and miners, far from that.

Russian doctrine is that the satellite countries are buffers to be used as needed, like Kleenex.

It's 100% certain Russia will annex Baltic countries whenever it pleases. To say otherwise just makes you "a useful idiot", as Lenin is credited with saying.

https://en.wikipedia.org/wiki/Useful_idiot

Why? They rolled tanks into a chunk of balkanised land already and nobody lifted a finger. I think anyone that spends some time considering that shudders to imagine how bad it could get with absolutely nothing happening.

That would be less inconceivable than what they've already done in Ukraine.

Sole? So the German armed forces are for what exactly?

The problem here is that many do argue right now that the US is doing this themselves and is a large factor in lots of instability in say the middle East.

For example, it is easy to see how the U.S. would not tolerate the sort of of military exercises done near the borders of Iran off the coast of Mexico. But somehow when U.S. does it, it's fine. Same with the recent airliner disaster, which took Iran 3 days to admit to, longer than it should have, but the smug coverage from U.S. media completely omits any discussion of the U.S. taking 7 years(!) to admit to a similar disaster.

Hard to argue the Iraq War was any good, same for Libya, or the sponsoring of fundamentalists in Syria, in fact the American relationship with gulf monarchies, or even Israel, is hardly based on any moral principles.

The record in Latin America is too long to even get into etc. etc.

You're living in one right now. Anarchy need not be synonymous with chaos, especially if disputes and conflicts are relatively unimportant (due to easy defense making 'rights' self-enforcing). The point of courts is then to arbitrate disputes in a publicly-visible way, enforcement is relatively less important.

Fundamentally speaking, I think non CB backed cryptos (combined with hedging tools via futures/options/swaps/ndfs/etc) have a better chance because they can be used to lower the costs intl of payments/settlements/etc, esp in these times when the trust in central banking becomes more and more contested. But I only see this happening slowly until there's a catalyst to push this to the next level.

Imagine if you as an Australian wanted to trade with venezuela. You go and make a deal selling something for some bolivars. But by the time you get the money the bolivars are not the worth the same in AUD as when you started the deal. Now you might say that the Venezualans should just hold some AUD in order to trade with australia. but they want to trade with the rest of the world as well so they would have to hold some of everyones currencies based on how much they plan to trade with them. This is infeasible so instead they use USD as the middle man to trade with everyone else, and everyone else agrees that they will accept USD for their trades. this removes the currency risk between countries assuming the USD is liquid and remains somewhat steady, which it has for the purpose of world trade.

It seems like your betting on 5-10 countries not failing, when with most currencies you just have to deal with 1.

Which is probably why it's not currently the reserve currency, one would assume.

Only 19 out of the 28 european union members use the euro. So I don't think the euro (a 19 year old currency ) is the answer. Unless something changes, then in the future it might be one of the answers.

> you won't even have to worry about the brits messing with it...

The brits never adopted the euro as their currency, so they never messed with it to begin with.

> Stable, inflation proof, light or no sanctions. As brexit proceeds a

Stable... brexit. The problem with the euro is that its political foundation ( european union ) seems weak. With britain leaving the european union, with the EU sovereign debt crisis and potential for further problems in the near term, it's more likely the EU will break apart and the euro discarded than the euro will replace the dollar as the reserve currency of the world. Being the reserve currency of the world requires the political and military backing of a stable superpower. For all our problems, the US isn't losing states like the EU is losing countries.

If the dollar's stranglehold in the world break, we'll probably get regionally dominant currencies. The dollar will still dominate the western hemisphere. The eastern hemisphere will be dominated by regional economic powers and their currencies.

(alt s/dollars/bitcoin/)

After that, they are the same (but keep in mind, the value of a currency is dependent on a lot of factors, and not just the gold that is backing it. Otherwise currencies backed by nothing would all be worth nothing, which we know isn't true).

I never liked the idea of a 100% gold backed currency, but 20% sounds OK.

If new money is not printed out of thin air, it seems like prices for things would adjust. Slowly increasing money supply, faster growing productivity/goods/services would mean that prices would go up to keep things balanced. I am not an expert in this subject but it interests me.

Have you ever been to third world countries and wondered why their shopkeepers, barbers, regular service people don't live in houses with good materials?

Because its too expensive for them. That expensiveness will come here to the US

More indirect results would be things like making American companies less competitive than they are worldwide. For one thing, most American companies have little to no experience dealing with multi currency issues, while companies in other countries deal with these every day and do have experience. This will give those other countries and people a slight advantage against American competitors.

Also, America gets a decent chunk of stuff for free or cheaper than it would otherwise, because countries are paying Americans goods and services in return for pieces of paper. Those benefits will gradually reduce and disappear.

I actually wouldn't say it is about having an official position either. The OP really isn't about liberalism vs illiberalism...politics/finance are inseparable and the US is the guarantor for an open financial system. The article ends up arguing for the position of Iran/Russia/China (and the illiberal voices within the EU like Juncker) who extract from the system without paying in. You can't respond to illiberalism with liberalism. Imo, this is a fairly obvious aspect of international relations that, in the past, the Economist rarely missed. But since the switch in editor, it has become: our goal is Trump bad, let's write an article that shows this so we will get there any way we can.

It isn't only Trump though. In other areas, writers dispense with liberal values whenever it suits (which is increasingly common these days).

I think you are taking a slightly expansive definition of ally. You are referring to the EU? A significant grouping within the EU does not regard the US as an ally (particularly economically, ref France bringing down Bretton Woods...the US is the giving tree here, the more you give, the more the EU takes)...and all of the people grousing are the usual suspects (China, Juncker, etc.).

And no, you need to justify an extraordinary claim with extraordinary evidence. None of this is even remotely extraordinary (and counter to the fairly obvious evidence of the dollar's position growing...not receding).

That’s the major change the article is talking about, without being fully explicit about it. Russia and China have been wanting to move away from the dollar for over a decade.

It’s the fact that the EU now also wants to do so that has changed.

The greatest long term impact of Teump’s Iran policy will likely be the creation of Instex (or more relevant, whatever follows it) that will help the EU and Asian countries move away from the US as the center of the financial world.

This is how nations have been looking at debt for some time. Yeah, you can make a margin call on the US (directly or via a partner), but what are you going to replace that resource pipeline with?