11 Comments

Useful article on sanctions and their ramifications on givers and takers and neutral s in between.

Expand full comment

Thank you!

Expand full comment

Very convincing and clear position on a captivating but not so easy to catch topic (at least for an amateur). I read this blog for the first time, following a link in Adam Tooze’s Chartbook, and I think I will come back for other posts !

Beyond the big question of the statute of reserve currency change, could be a realistic pathway that the Sino Russian trade moves from the “88% of Russian exports to China [were] priced in dollars or euros” to trade flows mainly on an renminbi basis, especially as they are relatively complementary trade flows (commodities vs. manufactured products) ? Eventually, could an Eurasian trade area outside Dollar/Euro influence develop in such a way (the economic reflection of the Shanghai Cooperation Organisation) with some level of isolation from the global system ?

Of course, it would to some extent epitomize and foster a vassalization of Russia to China, but could it be a first realistic step (well ahead of shaking the dollar leadership) ?

Expand full comment

Excellent article. It just shows how complex the issue is beneath the surface. I think Bill Gates said something along the lines: people overestimate what’s possible in a year and underestimate what’s possible over 5 years. It’s all about timeframes, and we need to be thinking in decades.

Expand full comment

What about a less extreme scenario where China moves out of UST and into gold and BTC over ten years as a hedge against wanting to take over Taiwan

Expand full comment

China's desire for stability and control makes bitcoin a nonstarter, and their desire to manage their currency valuation means keeping a good amount of reserves on hand is necessary. The more likely response will simply be continued movement towards more technological and production self-sufficiency from China, which have been ongoing since the start of the trade war.

But also Taiwan isn't Ukraine and China isn't Russia. An invasion of Taiwan would be more difficult and justify a larger military response.

Expand full comment

thanks makes sense !

Expand full comment

The "crumbling" of the "dollar order" periodically surfaces. From 1995: "If the administration does not change its laissez-faire dollar policy and cut the budget deficit, boost savings, and take a hard line on trade, the 50th anniversary of V-J Day will signify its collapse."

https://thefaintofheart.wordpress.com/2011/08/07/the-myth-of-the-strong-dollar/

Expand full comment
Comment deleted
Mar 29, 2022
Comment deleted
Expand full comment

I think that's highly unlikely. For anything to unseat the dollar it would have to come with a ton of backing outside the US, which in practice means the national currency of another major power. Having a supranational body dictate any degree of monetary policy is really difficult (the Eurozone is extremely integrated and still a massive headache), and India/China disagree too much to accept ceding control to a unified international body like that.

Expand full comment

Lol ..

Expand full comment

Lol ..

Expand full comment