What Trump doesn't seem to get is that the hegemony of the US dollar depends upon people, well, trading in US dollars. Sanctions and tariffs are the fastest way to kill US dollar hegemony, so honestly I'm all for it.
this post was submitted on 30 Nov 2024
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I think he actually gets that part, hence why he's freaking out over countries moving off the dollar. What he doesn't get is that he can't just bully to get his way.
Historically the US would go to war or even coup countries to force them to trade with the US, it has spent a very long time building up its dollar hegemony. If it suddenly switches to cutting off trade with its largest trading partners, that will basically disappear overnight. It is already disappearing gradually because of US's obsessive use of sanctions has created a whole bloc of countries that have no choice but to figure out how to bypass the US dollar. I wouldn't even consider the US threatening to cut trade ties all its largest trading partners as "bullying," it really reflects how much weaker the US has become, because in the past it would just use force to enforce its hegemony over global trade, now it seems too weak to it is just threatening to throw a temper tantrum and threatening to pull out of the global market instead, despite this being something that will ultimately cause whatever is left of US hegemony to collapse overnight. I would bet a lot of money the US would not actually do this, Trump is just bluffing, because I'm sure he's surrounded by people who actually do care about maintaining US control.
If Biden has revealed anything about the office of the US presidency, it's that the president doesn't actually seem to control much of anything. The president can be a walking corpse and the state handlers will continue to follow the script.
So basically, great man theory is bunk
The problem US has is that the countries at the centre of BRICS are too big for them to take on.
It kind of reminds of a past job I had where a co-worker recently contacted me and told me he quit. The general manager was abusing his position and disrespectfully issuing out orders and demands to employees that already had 10 different things going on at the same time. The idea of not being a total hegemon just didn't seem to physically register in his brain and both of us ended up telling him to fuck off and leave him short staffed for Black Friday.
Trump, in a Truth Social post, said: “We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy.”
As much as we might like to laugh at such statements, not being able to sell things to the US is still considered by many businesses and countries to be a big disadvantage. And since the tariffs don't appear to be against countries trading with BRICS, just BRICS members, they could theoretically not force countries to choose between BRICS
An Atlantic Council model that assesses the dollar’s place as the primary global reserve currency states the dollar is “secure in the near and medium term” and continues to dominate other currencies.
Going to the link, we see a website which doesn't actually go into detail about this "research", and the "short to medium term" is not defined in actual years, so could be anything.
Trump’s latest tariff threat comes after he threatened to slap 25% tariffs on everything imported from Mexico and Canada, and an additional 10% tax on goods from China, as a way to force the countries to do more to halt the flow of illegal immigration and drugs into the U.S.
Ah yes, tariffs, the famous ... counter-narcotics policy tool?
No, don't throw me in the briar patch Mr. Amerikkka! Anything but that!
I don't get it, he's not even sworn in yet, right? Is this supposed to be his idea of intimidating people? "Don't you dare leave me or I'll hurt you more"? I guess he's on track for once again tanking any remaining semblance of US popularity in the wider world. Better for the world that way, that people see the US for the gangster state that it is.
it does come across as being pretty desperate doesn't it
I think the USA is pushing for cashless society partly because both parties see the USD losing hegemony, and it is more surveillable, and a bit of insulation to the power structure. The structure will collapse, of course, but all the billionaires will safely be on their private islands, by then, leaving the masses to sort/fight it out amongst themselves.
I don’t know what you mean by a cashless society when it basically already is one.
If you mean “Central Bank Digital Currency”: I think it is a distraction, a red herring, meaningless, and that even the Federal Reserve doesn’t know what it means by it. It’s nonsense, because the dollar is already digital, and has been for a long time.
If you mean crypto: the US is not actually pushing for crypto. Only crypto bros are pushing crypto, and only to make line go up and to launder money and to avoid paying taxes. With that said, I don’t know what will happen once some crypto bros get somewhat into the halls of power in January.
I do indeed mean a federal reserve cryptocurrency. Banks already have been adopting it and I assume we will see more of it in the next administration. I see it akin to the electronic version of the policing tactic known as kettling. This won't do anything in the long run, other than buy time for the Scrooge McDucks to escape and target other currencies. And I suspect they have plans for BRICS. To what extent those plans may succeed will depend on the foresight of BRICS, I would imagine.
It's difficult for me to speak in specifics, never having had resources sufficient enough to plan for centuries, before. The people of whom I speak do have those kinds of resources, and their dynasties have had them for centuries, passing those strategies down for generations. I would imagine there are contingency plans for contingency plans, but I'm having difficulty imagining what that looks like.
I’ve got a podcast episode for you, in particular the last ~23 mins. Macro N Cheese: Trump, the Fed & the Crypto Insurgency
Excellent, thank you! That there is a full transcript is a plus, I'll read it later in bed.
This is a masterclass on how to get countries off the dollar.
lol yeah
I like to think that your analysis of the situation is the case but I'm becoming increasingly doubtful about the commitment of BRICS nations to overthrow the special privilege of the US Dollar. From my perspective too many of the parties involved rely on USD trade for their wealth and status. It seems to me like too many players in this alliance are economically bound by USD and are not interested at least right now in trading off short term material gains for potential bigger gains in the future by subverting USD trade.
It appears to me that the gains in multipolar non USD trade have been offset by the US Fed play to raise interest rates to suck dollars into treasury assets and then flood them back out into periphery economies since 2022 or so. I still have much to learn about MMT and economics in general but I'm certainly not as optimistic now about dedollarization now as I was 2-3 years ago.
That being said I think the overall trend of periphery economies orienting around China is right, and I think it will come down to that nations economic policy as the driving factor of whether or not BRICS can succeed in their stated objectives and tear down the USD dominated global economy.
Basically, I think that China has no choice but to keep dedollarizing. If they don't then it's just going to be worse for them when the US starts stealing their foreign assets, cutting them out of SWIFT, and so on. They have to do it on their terms while they have leverage. Given that China has to dedollarize, they cannot possibly accept Trump's demand to stop trading outside the dollar.
China will say we're happy to keep trading in dollars, but it's our business if we want to use other currencies. At that point the US has to decide whether they start putting 100% tariffs on China and countries trading with China. If they do, then the US economy is likely gonna crash cause prices on everything will shoot through the roof overnight. On top of that, countries will be forced to pick whether trade with China or trade with US is more essential to them.
I think it's likely that Trump is bluffing, and the US walks it back when China says no, but you never know. I do think that the economic war with Russia gives us some idea of what to expect. The US pulled the trigger on trying to cut Russia out, and we see that major countries like China and India did not fall in line. At that point the whole scheme collapsed. Trying to cut China out of world trade is even more absurd in my opinion, and putting 100% tariff would be tantamount to that.
I think it’s likely that Trump is bluffing
That’s my impression as well. I think it’s mostly bravado for the audience. Maybe he also thinks it’s the art of the deal in his ½D chess brain.
Dependency Theory can help explain: the periphery doesn't rely on USD, they are dependent on it. USD can only maintain wealth and status for compradores at the expense of national development, for the nation this dependency is a factor of underdevelopment and unequal exchange. USD dependency doesn't serve the national interests of any BRICS nation or even the financial interests of any national bourgeoisie. It only serves the compradores, who benefit from their special status as agents of imperialism.
Completely agree with what you have said, I guess my fear is that the compradors will influence economic policy in these countries to a degree that will undermine the dedollarization initiative at least in the short term. I'm totally with you in thinking that long term its against the material interests of BRICS nations to do this but I guess I have been taken off guard by some recent developments in this area and it has made me doubtful. Perhaps also the bad news this week in Syria and such has just put in a pessimistic mood.
Luckily, American policy puts an immense strain on dollar hegemony. For example, Russian compradors didn't want to antagonize the West, but were forced into it, when the alternative was slowly losing their wealth and status.
Do it!