Comment by jmyeet | Hacker News Reader

Comment by jmyeet | Hacker News Reader

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It was clear from very early on that this war was (IMHO) the largest strategic blunder in US history and it's not even close. Prior to this, closing the Strait was an untested threat. This war forced Iran to prove they can in fact close the Strait and there's nothing the largest military on Earth can do about it. Well done, everybody, the system works.

The one point I'll disagree with is that sanctions do prevent you paying Iran even with crypto. I mean, you can fund your own wallet and give money to Iran but you've technically committed a crime and a pretty serious one. It's also one that's fairly easy to document and prove that you did it.

Oh, also the impact of cutting the world fertilizer supply hasn't hit yet. That'll come later in the year when the harvests are down, primarily in the Global South. This will also impact food prices in the West so look forward to that.

Your last comment suggests weakening of the petrodollar. I don't know if you meant it this way but let me dispel that myth: the USD doesn't have strength and power because oil sales are denominated in dollars. You have it backwards. Oil trades are denominated in dollars because of the demand for dollars and the root of that is the US military.

>the USD doesn't have strength and power because oil sales are denominated in dollars. You have it backwards.

Not quite. The "petrodollar" deal has helped to bootstrap and anchor the USD strength at a somewhat critical moment of history after the gold peg was "temporarily" suspended, which was effectively a default of the US government (second in the 20th century!).

Sure, today trade of oil in USD no longer plays a significant role in supporting its dominance, but it still plays a role. Together with other factors (such as increased weaponization of the USD-led financial system) rise of alternative settlement systems corrodes the network effects on which USD relies. Each blow in isolation may be insignificant, but their accumulation could become critical owning to the extreme non-linearity of the network effects.

Re fertilizer, it’s already happening. Potash exports from Canada, the world’s largest producer, have surged. In another US own goal, I believe potash demand will offer serious Canadian leverage in CUSMA negotiations.

Agreed on the potash but I was referring to the impact on food prices, which is still to come. Although Canada still exports almost all of its energy via the US so this street goes two ways.

The nature of trade is a complex web of many interdepdencies and this applies to war too. Like for awhile, the US was letting Iran-flagged ships headed to China and Chinese-flagged ships to pass through the Strait. Why? Because of the repercussions of an energy blockade on China to the US and its allies. China produces like 30-40% of the world's "stuff". China dominates rare earth production and an export ban on that would cripple the US military long-term.

Part of the reason the US is going it alone in Iran is because of all the torched good will from the tariffs. You broke it, you bought it. This event is a seachange in the international order that will take years to play out. What's ironic is that the US designed this international order post-WW2 for their own benefit and they're probably going to destroy it in a single presidential term.

> I mean, you can fund your own wallet and give money to Iran but you've technically committed a crime and a pretty serious one.

Other countries aren't subject to any US laws. The threat of US sanctions are a just a threat, not any sort of law enforcement.

> The threat of US sanctions are a just a threat, not any sort of law enforcement.

The threat of arrest is a just a threat, not any sort of law enforcement.

The threat of handcuffs is a just a threat, not any sort of law enforcement.

The threat of tasering is a just a threat, not any sort of law enforcement.

The threat of criminal charges is a just a threat, not any sort of law enforcement.

The threat of drone strikes is a just a threat, not any sort of law enforcement.

The threat of literally having your President helicoptered out of your capital by US special forces is a just a threat, not any sort of law enforcement.

This is fun!

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