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Comment by treflop | Hacker News Reader

These agreements are just agreements.

The dollar has been the reserve currency for a long time because (1) the US has been a big promoter of liberalization and world trade, but really most importantly, (2) despite various conflicts, the US currency has been consistent and stable for decades, and everyone who values stability is going to want to park their value in a currency that continues to be boring. So far, the US has been able to scratch that itch because it’s been the same government that has been predictably the same for nearly 250 years.

Now it doesn’t mean the world’s reserve currency won’t change over time but if it does, it’s because some other country or group of people have managed to establish themselves as equally boring for decades. And by the time that happens, the world will have already changed significantly already.

Really, the reason the US Dollar has held for so long is because the rest of the world has had a lot of instability (think world wars, governance changes, unions of countries formed or abolished, etc.). The US hasn’t even had a change in states in 60 years.

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> So far, the US has been able to scratch that itch because it’s been the same government that has been predictably the same for nearly 250 years.

This is an exaggeration. There have been at least 3 drastic shocks to the United States currency in that time. The secession of the southern states, who adopted their own currency. Leaving the silver standard for the gold standard. And devaluing the dollar then leaving the gold standard unilaterally in the 1970s.

Don't forget FDR's banning private ownership of gold and then changing the value of the dollar from around $20 and ounce to $35 and ounce.

The USD didn't really become the world reserve currency until after WWII when the European empires fell apart and the US was a clear superpower.

This. The US Dollar could have crises and be flaky because Sterling was the global reserve currency (and everyone on the gold standard, obviously).

It'll be interesting to see what happens now. I suspect the Russians will play silly buggers because they seem to enjoy that. And they have significant oil to play silly buggers with.

There's an active de-dollarization effort from BRICS. Unsure how effective it'll be with the LIO

How active and serious that effort is?

https://www.noahpinion.blog/p/brics-is-fake

Brazil, India, and South Africa seem odd bedfellows with increasingly authoritarian China and Russia.

I have no doubts they'll all increase trade together, including military hardware, but establishing a reserve currency requires trust and dependency.

Those seem heavy loads for the ties of pragmatism and convenience that bind BRICS together.

No you’re right. I neglected to mention them because I think it goes both ways and it acts as a test.

In the end, after the shock, it went back to business as usual.

It’s like despite the Jan 6 riots, everything still is business as usual.

It’s like the old adage about investing in the S&P 500 over any 10 year period… you will make money, but it doesn’t mean it will have made money the entire time during those 10 years. But if you expect that you will be around at least 10 years, then it makes sense.

Don’t forget strong property rights, fairly impartial justice system wrt foreign representation, and a large body of corporate case law with predictable outcomes

And, perhaps most of all, a willingness to run massive deficits to accommodate foreigners' desire to hold those debts as an asset.

> fairly impartial justice system

Seems like that’s crumbling, to the point it’s concerning even to me.

I took am genuinely worried that our society is losing its respect of rule of law due to disinformation and stupidity on the social web.

What is the argument that makes the US special in this regard, in light of their seizure of Russian assets? Assets which might well end up being tagged for use waging war with Russia and supporting Russia's target?

It is hard to see the US system seizing its own assets to donate to the targets of US aggression in a comparable way. But for the sake of argument - impartial it may be, but it doesn't seem like the type of impartiality that is appealing to foreigners. If China goes for Taiwan they'll lose all their US assets for example; I doubt that sits well with them.

Those assets are merely 'frozen' currently, all that was approved to be spent is some of the income.

Who is more impartial than the US, in these scenarios?

"Don't invade fellow democracies".

Business doesn't like things like wars of conquest where the legal system your factories operate under, your workers and the factories all seized by force or blown up when someone artillery strikes the town they're in to the ground.

The whole point of being a reserve currency is to be stable and a key part of that is also enforcing stability - which the US does through things like it's naval supremacy.

"Don't invade fellow democracies" is a pretty easy set of rules to play by, and is appealing to every country which would like not to be invaded - which is to say, economically doing business with the US is a very good deal if it means the US has your back if someone does look like they want to invade you.

This entire concept is one of the ideas currently being used to try and keep China in check, and it was presumed in Europe that this was what would keep Russia in check (and the failure of that assumption is now the cause of the huge uptick in orders for US military equipment - so even there, the US is doing well out of the policy).

It's a spectrum, not a binary distinction. The answer would be don't go to war with the explicit notion of overturning the very system that maintains the security of those assets. Any system that is totally impartial to enemies that seek to exploit it's rules against itself is doomed to failure; Ergo there will be ALWAYS be the distinction between "insiders" and "outsiders".

But the US is a conglemeration of interests, and if you are businessman, an investor, a Capitalist, your interests are the US interests. If you actually understand what guides US foreign policy it's actually very easy to align yourself with US interests in a beneficial way without much costs. To become an "insider". There is no such thing as "unprovoked US aggression", it's all quite predictable decades ahead from certain actions performed today. The US is predictable, and that makes it easy to invest in.

China, Iran, Russia, NK, Cuba etc instead are still guided by nationalist impulses, which unfortunately can result in irrational decisions (Ukraine, Taiwan) that are unalignable with business interests. It's a matter of pride really, and that's a big no-no for the investor. It's unpredictable, we don't know if China will really invade Taiwan or not, and that's going to put a major cost in investing. As for other places like India or the EU, their economies aren't large enough and have good enough returns yet, but even if they did, they would likely operate in a similar manner as the US.

> The answer would be don't go to war...

China are, in a disturbingly literal sense, doing dress rehearsals for a Taiwan invasion. As far as I know (not speaking Chinese) their rhetoric has been quite clear that they see military invasion as an option on this topic. They're probably going to be a US-calibre military superpower in short order given their economic and manufacturing foundations.

I doubt your answer will make a compelling case to their ears.

> There is no such thing as "unprovoked US aggression", it's all quite predictable decades ahead

That is suspect:

* It almost rejects the entire concept of unprovoked aggression. Although de-facto it is, damaging or obstructing the US's commercial interests isn't supposed to be considered a military provocation.

* It is at odds with a country like the US that is continuously in a state of conflict because of their commercial interests. On balance they're probably the most militarily aggressive country in existence right now. That is a lot of implicit provocation!

> China, Iran, Russia, NK, Cuba etc instead are still guided by nationalist impulses, which unfortunately can result in irrational decisions (Ukraine, Taiwan)

I can't resist a jab at this one. Thank goodness the rationalists prevailed on topics like Iraq and Afghanistan, leading to glorious success, prosperity and other good outcomes!

China is responding to provocative actions of the US in Taiwan, the same way russia responded in Ukraine.

"The others are irrational actors, crazies. We are the normal ones" If you can't smell the propaganda you've been fed to believe this irrational racist statements probably you will enjoy the draft.

> provocative actions of the US in Taiwan

which was started via China's provocations in the southern china seas. Not to mention the de-democratization of hong kong.

As for russia, their "response" is due to the fact that they don't want ukraine to lean westwards, regardless of the desire of the populous. I personally don't believe russia should have any say in how ukraine leans, and if their populous wants to lean westwards, russia have no right to intervene.

From the Pacific to the Himalayas, the republic of China will be free?

No country should be subjugated to the desires of another. Ukraine wanted to join the EU, that was their provocation?

Several paramilitary groups in its home soil have been funded by Russia, Russia took over Crimea, Russia has invaded them. Only then was NATO ever on the table.

The provocateur is pretty obvious in this case.

> Ukraine wanted to join the EU, that was their provocation?

Hello, 2014 American sponsored, Nuland-designed Maidan coup which got rid of an elected President whose election had been formally and successfully vetted by EU observers, following which a fifth of Ukraine's ethnic Russian regions rebelled.

Remember - Nuland was so personally involved that she was handing over food and drinks to "protestors". If this had been a U.S. ally, there would have been howls of foreign interference 24x7 on TV.

Ukraine even put joining NATO as a constitutional guideline and part of their National Security Strategy in 2020-21!

Imagine Mexico as a member of a military Anti-USA coalition - you can bet that there would an American invasion the next year for "regime change".

> No country should be subjugated to the desires of another.

Remove U.S. military bases from Cuba, Iraq and Syria - and then talk about "subjugation" to the desires of another nation. The sanctimonious hypocrisy of Americans always astonishes non-NATO citizens.

You try to justify an invasion of Ukraine by explaining what Russia perceived as problems. Dude, we know Russia’s position on the matter: we don’t believe it is enough. Giving water to protestors, and the existence of Gunatanamo do not make Putin correct.

Hey, did the man in the telly ever tell you about how messy the process of setting Ukraine's borders was back in 1990? Independent countries had to be carved out from the corpse of the USSR, and how does one set their borders? Well, one convenient way would be to use some existing administrative boundary, and this Ukraine was created within the borders of the Ukrainian SSR...

Except that it wasn't that easy. Even back then there as debate over what status Crimea should have. The region already was an autonomy, and even held elections and elected a president. And then got attached to Ukraine anyway and had its independence obliterated.

https://en.m.wikipedia.org/wiki/Yuriy_Meshkov

Sure, because there is not 100% consensus on the political situation of Crimea, that gives the right of Russia to invade Ukraine and kill people as much as it wants.

There is a mechanism to resolve those matters: referendums. Once again your arguments are left wanting. Messy and difficult internal politics surrounding fundamental issues does not allow the invasion of a neighbour.

Crimea didn't need daddy Russia to forcibly integrate it into the Russian state. It could have done that all its own if it had wanted. The fact Russia has to lower itself to violence to integrate territory illustrates how poor its logic is.

Funny, because just such a referendum was held. And ignored. And I'm not talking about the recent one, but the one back in the early 1990s.

It wasn't ignored -- it got a lot of attention all right.

But then 2014 happened, and everything changed. Once you choose to ally yourself with a foreign power that is aggressively attacking the larger nation you are attempting to secede from -- as the political establishment of the ASSR did at the time -- your moral claim to independence (a key being always an assurance that you will never do harm to that nation) is instantly invalidated.

And when that foreign power you are seeking to ally with also happens to be the one that genocided a large chunk of your indigenous population -- not centuries ago; but in living memory -- that claim is nullified even further.

Hello, there was no "Nuland-designed Maidan coup", and no, there was no indigenous violent rebellion in the Eastern regions.

Nuland was so personally involved that she was handing over food and drinks to "protestors"

And still she had no effect on the actual course of events. The whole Nuland story exists entirely in the lefty/peacenik blogosphere; but it's a complete non-story within Ukraine. You will literally not find a single educated person who gives any credence to it (outside the usual 5 percent of population who are ready to go off and believe anything).

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I see Americans will ...

You have no bleeding idea what I am. But you are welcome to be disgusted by whatever you like.

Nuland giving out cakes and comingling with protestors represents major culpability in a coup?

So those protestors didn't riot because Yanukovych killed the EU association agreement a day before signing?

An agreement that he ran his election platform on and replaced it with a customs union with Belarus and Russia.

Btw it was Yanukovych who proposed making Yatsenyuk as prime minister on Jan 25.

FSB thug Igor Girkin himself said that he and his men started the Donbas conflict when they occupied Sloviansk.

The first prime minister of Donetsk Alexander Borodai once said in a phone call that his loyalty was to one and one nation only, the Russian Federation.

How many countries has NATO invaded?

- Bosnia (92-95, air and naval campaign)

- Kosovo (99, air campaign)

- Afghanistan (ISAF, technically post-invasion, 03-14)

- Libya (11, air campaign)

If Russia is worried about NATO aggression, that doesn't seem to be supported by facts.

> How many countries has NATO invaded?

Uh, if we’re literally counting air campaigns as invasion better not tally up Wagner’s score.

Beyond moronic to frame invading Ukraine as defensive. It’s as inexcusable as us fucking into Iraq.

"Unilaterally violated territorial sovereignty" is probably a more objective way to put it.

Although there's the argument the Kurds invited us into Iraq... (before we abandoned them for the 3rd time)

> "The others are irrational actors, crazies. We are the normal ones"

Everyone believes this, not just those on "our" side. Geopolitics is currently best described as a forcefield, where a myriad of interests vie for influence at any cost. To believe that "the other side" is simply responding to the nefarious, expansionist ambitions of the west is not smelling the propaganda too.

The good side is but one, the side that seeks to replace destructive, imperialist, selfish policies from all sides with cooperation and the rule of international law. That is unfortunately a fledgling position to take ATM.

US diplomats say US foreign policy is governed by national interests, implying it's common sense. Who claims impartiality?

The availability of US treasuries is also a big appeal of the dollar. There really aren’t many places where you can safely park a few billion or even a few ten billion in USD equivalent. The US government is basically a debtor of last resort.

> Really, the reason the US Dollar has held for so long is because the rest of the world has had a lot of instability (think world wars, governance changes, unions of countries formed or abolished, etc.). The US hasn’t even had a change in states in 60 years.

Yes and no. What you're not comsidering is the obligation of The US Federal Reserve (aka The Fed). While dollars are international, The Fed's only concern is the US and US citizens. That is, often enough The Fed makes decisions that achieve this ends, but screws the rest of the world. Such decisions become self-serving to the USA's power, influence, etc. That decision undermines other countries, economies, etc.

So yeah, the USD is stabler, and The Fed helps to see to that.

> The Fed makes decisions that achieve this ends, but screws the rest of the world.

any other country would do the same, in the same position.

The point is that this happens less, and with less severity in the US than other countries.

Perhaps. I'm simply pointing out the "flaw" in metaphorical breaking someone's kneecaps and then staring down your nose over the top of your glasses, waving a finger, and mocking them for not being able to walk, not able to help themselves, etc.

The Fed and petrodollars have made the US stronger and plenty of others weaker, is the US leadership - gov and private - prepared for a shift in that balance of power? And might there be some looking for revenge, so to speak?

Hint: Correct answers are no and yes, in that order.

I would say that the freezing of Russian assets has changed this equation considerably for almost every non-western country.

People seem to think we are still living in the past, where the US alone accounted for more than 40% of the global GDP and was the single most important trade partner of every country outside the former communist block.

It is a different world now. The BRICS GDP in Purchase Power Parity terms has surpassed the G-7, their growth rate is also bigger.

Yeah. it is not the end of the world. Things won't change everyday, zero-hedge doomers are a bunch of crazy scammers shorted as fuck. But the situation is dynamic and requires attention.

> BRICS GDP in Purchase Power Parity terms has surpassed the G-7, their growth rate is also bigger

Yes, random arrangement of countries beats another in a stat.

Two of the BRICS are increasing military tensions with each other. One just saw a massive change in government, and with it, possible geopolitical alignment. Another is in the shitter.

The dollar should wane in importance alongside China’s rise. But BRICS sure as hell won’t have anything to do with it.

Yeah. You can see things like that and call the BRICS a random arragement of countries and ignore that it is evolving into a more formal and integrated coalition, all the while believing all the FUD from the press that overvalues the disagreements between China and India.

I also wouldn't call the government changes in India a masssive government change. Neither china is in the shitter. Stock and Financial market shenanigans are not as critical in China as they are in the US because they are heavily regulated, they are not as critical for capital financing as in the US, and chinese citizens wealth and retirement are not tied as strongly to stocks.

Or you can just see things in another way and realize that most former colonial countries have developed a lot, and that the US and Europe are no longer the former titans compared to what people sometimes call the global south.

> while believing all the FUD from the press that overvalues the disagreements between China and India

What's your information source? Mine includes family in the Indian military.

> wouldn't call the government changes in India a masssive government change

South Africa. (India's government didn't change.)

> Neither china is in the shitter

Russia.

> the US and Europe are no longer the former titans compared to what people sometimes call the global south.

Correct. Look at with whom India, Eastern Europe and South-east Asia are allying.

BRICS+ is all talk, no action. Russia, China, and India all have diametrically opposed interests on core issues and none will ever agree to a total realignment of the global financial system lest one of the other two gain an advantage. South Africa is a failed state with a crashing economy.

The C in BRICS is for China though.

> C in BRICS is for China

Sure. What's good for America isn't necessarily good for NATO, the OECD or WTO. Similarly, BRICS is a stupider Belt & Road pitch.

China is doing real work in becoming a superpower. That ascent has nothing to do with BRICS.

>all the while believing all the FUD from the press that overvalues the disagreements between China and India.

Either I must have slept through the Indo-Sino (Sino-Indo?) Peace Treaty Negotiations & Signing Ceremony or "disagreements" is doing some heavy lifting in the above quote.

https://en.wikipedia.org/wiki/2020%E2%80%932021_China%E2%80%...

Correct. For the avoidance of doubt, India and China have signed no peace treaty. They're increasingly militarising their disputed borders, which have never actually been agreed upon, and India is now joining mulitple U.S.-involved security arrangements.

America's superpower is in trade and diplomacy. Agreements. We don't win because we can blow stuff up bigger. (Though we can.) We win because we're uniquely competent at knitting together alliances. I believe that directly draws from our commercial culture--it encourages cutting deals over face-saving Pyrrhic victory.

This is the most laughable thing I have ever read. The United States are a bully that has proven time over time that are completely agreement incapable and that has resorted to force more than any other country in modern story. It is not loyal even to its friends, except for Israel.

> United States are a bully

Yes, unlike Russia, China and Iran, our paragons of peace.

> has proven time over time that are completely agreement incapable

Yes, the Allies in WWI and WWII as well as NATO were ineffective. (As are AUKUS and the Quad to-day. I'll ignore the United Nations, IMF, World Bank, WTO, G-20, G-7, OECD, et cetera out of respect.)

> has resorted to force more than any other country in modern story

Superpowers be superpowering. News at 11.

Can't believe I took your other comments in good faith...

Conduct between nations is sovereign, and outside of any enforceable jurisdiction or legal system. So there will always be the need for a a strong dominant nation to set and establish the rules of conduct and enFORCE them as has been the role of the US since WW2.

Its a dirty job keeping this world order in some semblance of functional, and the Dominant enforcer of that order will always take a cut for their imperfect pursuit of the same. All-volunteer police forces are less common than the compensated type. Perhaps CRINK (China, Russia, Iran and NoKo) will deal you and your peoples a better hand than the US has?

> BRICS GDP in Purchase Power Parity terms

I'm confused as to how this is a useful metric in the context of choice of currency in international trade.

You can't trade between countries in PPP currency.

Almost all small to medium countries started efforts to create or find alternatives to SWIFT should be a clue.

The efforts started after weaponizing dollar.

Pan-African Payment and Settlement System, ASEAN QR settlement, Direct currency settlement. Even mBridge for settlement between BRICS was launched just a couple days before the end of petrodollar agreement.

Current SWIFT settlement is not going anywhere but everyone is starting to wait and see.

The US has frozen national assets before, most notable Iran but the big difference this time is that the US is now openly considering confiscating those assets and giving them to another country just because it has the ability to do so. Even Iran, who for decades was considered part of the "Axis of Evil" had its frozen assets kept in reserve until they were eventually given back. It really feels like the powers that be are now people who have no consideration for anything they can't see past the horizon and have unwavering faith that "it'll all just work out in the end somehow". They're becoming reckless on so many levels and unfortunately the public, or at least the loudest voices, are happy to cheer them on.

Even if the US ultimately doesn't turn over Russian assets to Ukraine, just making the threat to do so is globally destructive to faith in the current system that greatly benefits the United States.

Its not genocide when I say it isnt is not convincing anyone, all we see is the once mighty uncle sam groveling at the feet of some small country that just happens to control the entire us government.

People mistakenly think it is about Palestinans or Israelies.

I disagree. If things had moved in the same trajectory as the last decades a decline of the current system seemed inevitable. So why not use that power while you still have it.

Also considering the state of most BRICS countries, it does not seem so certain that there will be viable alternatives to the current system.

[BRICS is comprised of] Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates

Really, you only need RIC and you'd be making a much stronger argument. The idea that all these countries work in unison to some end is weak.

Excuse my ignorance but how are frozen assets relevant? Isn't the utility of the dollar and the unassailability of US held assets a different thing?

If we used gold or yuan and the US froze those assets how would it devalue those currencies?

Not sure how the US would freeze gold in a Moscow bank. It can freeze dollars because it controls SWIFT and how dollars move. The dollars it froze were not a huge pile of physical bills in Russia but electronic chits.

Well, exactly. Is the US's influence over swift tied to the dollar or to the fact it's a superpower and has forged these relationships? If we used other currencies wouldn't that be the same situation or are you saying that the dollar's stability is tied directly to swift?

Said another way, if there is a backlash to these frozen accounts, shouldn't it be against swift and for swift alternatives instead of against the dollar?

So what is the alternative to park your money? Rubles, Yuan, Rupees.....? So don't invade and annex your neighbors if you want your assets to be safe. Quite frankly I am not sure if that is a net positive or negative in the long run.

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