Thread

1. Arubis · 1789753289 · focus · HN ↗

   Dedollarizing the world economy has more net losers than the US (though that's the obvious one).

   It's not without its benefits -- over the last couple decade, the US has found ways to weaponize access to USD, so if you're not a fan of having a country other than your own able to effectively regulate or sanction you and your business, there's some niceties here.

   Being able to trade and invest in a stable, highly liquid, easily converted, low risk currency was a net win for most of the world for about half a century. There isn't an obvious replacement, so we'll just see more friction.

   1. nostrademons · 1789753559 · focus · HN ↗

      It's kind of a prelude to a Thucydides Trap.

      The problem with replacing the world reserve currency with something else is that nobody can agree on what that something else should be. Expect to see a lot of jockeying for power as people realize the U.S. isn't the world hegemon anymore. Jockeying, on a state level, usually means war.

      1. jltsiren · 1789756143 · focus · HN ↗

         That "usually" was in a different world.

         Before the industrial revolution, there was almost no sustained economic growth and business was essentially a zero-sum game. Wars of conquest were high-risk business ventures that promised higher returns than actual business.

         Then the industrial revolution happened. Economic growth made business more lucrative, while wars got deeper into the negative-sum territory. Leaders were slow to understand that, which is why the 19th and 20th centuries saw a series of increasingly destructive wars that left almost everyone worse off.

         But there have been no wars between major powers in the last 80 years. Maybe people in power have realized that all-out wars are no longer productive. But there have been plenty of lesser wars: civil wars, proxy wars, and wars against much weaker states. As well as regional wars, where at least one of the parties is so dysfunctional that it does not benefit from positive-sum business.

         1. nostrademons · 1789757654 · focus · HN ↗

            The biggest Thucydides Trap wars were WW1 and WW2, which happened specifically as Britain (the first major power to industrialize) lost its hegemony over industrialization and faced competition from Germany, Russia, Japan, the US, etc. Thirty years of some of the most brutal war the world has ever seen followed, which only ended with the U.S. re-establishing hegemony because it was the only one whose homeland hadn't been bombed into oblivion.

            You're right that there have been no great-power wars in the last 80 years. That's about the timescale at which major hegemonic realignments occur: WW1/WW2 from 1914-1945 (England -> US), Napoleonic Wars from 1803-1815 (England -> France -> England), Nine Years War + Glorious Revolution + War of Spanish Succession from 1688-1715 (France -> England), European Wars of Religion from 1618-1648 which created the nation-state system.

            But that just means that this is the first major hegemonic realignment after the development of nuclear weapons and drone swarms, which makes me fear for the survival of civilization a bit.

            1. jopsen · 1789758635 · focus · HN ↗

               Fall of the Soviet union was also a major hegemonic realignment.

               I don't know I have some hopes that maybe it'll play out more with economic tools.

               Oh, and I don't think western alliances and trade relationships necessarily need to collapse. But Trump certainly tries :(

               1. nostrademons · 1789760054 · focus · HN ↗

                  To some extent yes, but the Soviet Union and Warsaw Pact was never really as threatening as western propaganda made it seem. In basically all metrics that matter - population, GDP, military spending, technological advancement, etc. - the eastern bloc was a distant second to NATO. That makes its collapse far less disruptive to the world order than when the former hegemon falls.

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