Thank you, the compliments are very appreciated. I did edit/reread at least 5 times before posting.
Exactly the problem. There was a simple choice for the world: bow to the USD, with the grip of the American State behind it, risk getting sanctioned, risk american laws being applied to your citizens, risk the ire of the USA when their interests came upon you...or on the other hand, there was the great dark void of losing all the infrastructure (SWIFT, international banking system) and trying to survive alone against the world.
And in a few years, the choice will be "USD and the U.S State and its imperial interests" or "the Russian alternative and its imperial interests".
It is a dramatically worse situation in every possible metric. The unknown is now known. Countries with little for large scale banking infrastructures will eventually just "attach" to Russia like they did to the U.S. If the Russians aren't too stupid they'll merely match 80% of what the Americans offer and that'll be that. Take BRICS(which really means China) general financial backing and that's it, the total monopoly has suddenly become a competitive market where the Americans are so, so, so ridiculously bloated because nobody competed before.
To put it in computer terms, "It's 1982 and IBM suddenly has competition with Compaq". And we all know where that ended.
I'm not enough of a competent economist to give a prediction, but Young Grasshopper and you have pointed out the problem: the USD is under an absurd degree of debt, and that's fine as long as you're the best option, or formerly the only option, to hope that debt repaid.
In the words of Tywin/Tyrion Lannister "if the Iron Bank can't get its money back, it will fund our enemies". Well, there were no enemies or competitors that held any promise. And now, there will be.
The problem isn't to have $33T or any other ridiculous number, the problem is that if your debt is less likely to be repaid than the competition's, you get an increasing amount of weight against you, and as the Law of Capitalism states, the more money you have, the more you can do things which makes you more money. Stands to reason that the N°2 has an uphill battle against the N°1, so the question becomes who's going to become N°1?
And for that, I love using this metaphor:
There's a whisky seller (let's call him Johnny) in the street that's selling his whisky from the biggest, most mean-looking barrel ever. And everyone comes for a glass.
Then someday, the seller sees Ivan and kicks him off the stand, telling him he won't be getting any whisky anymore and tells everyone to not talk to Ivan.
Ivan sets up his vodka stand across the street. The vodka stand is smaller, has a worse table and looks pretty poor, but it does attract a few customers who were also kicked out by Johnny.
And every day, people notice that at Ivan's stand, they seem to get pretty damn drunk. VERY drunk.
So one after the other, depending on how much they like Johnny or how much of Johnny's whisky they already drank, they go and try. And realise immediately that Johnny's whisky was being cut with water. More and more water every single day since years. When you're having just one source, you don't see it, but when you test Ivan's vodka, it's instantly obvious.
And you pay the same money for Johnny's whisky as you pay for Ivan's vodka.
While the american debt is absolutely ridiculous, the real problem is the american inflation. "Cutting with water" means printing money, and throwing the dollar's value down the drain every year. Countries who have $1M and want to buy 1000 barrels of petrol will have to get that $1M through selling things on the intl markets. But when a few years later, they'll want to get the same 1000 barrels, suddenly they need $1.3M, while not having any more dollars than before.
Inflation through money printing is functionally a tax. With taxes, the State takes your money for itself. With inflation, it prints money, injects it into the economy, buys what it wants at full currency price, the money gets shuffled into the economy and loses value as it does. The goods, services and skills in your economy are the same, more paper just means that what used to be bought for 1$ now can be bought with 2$, one from the normal economy, and one that was freshly printed by the State. So prices rise because there's more "currency watering down", because the State's money is pressuring the economy's current money.
When the Dollar is the sole currency that the world uses, the world pays tax through inflation to the United Printers of America. When the American State gets global competition on the dollar (Ivan opens up shop), suddenly everyone will go from "have 1M$, get 300 barrels instead of 1000" to "have 1M[Russian global currency], get 1000 barrels". And that's how you know who's going to become number 1.
The problem will also climb into an absurd death spiral at some point. Because let's say you start with:
- 150 countries use the dollar for their oil
- the U.S state prints enough dollars to create a 30% inflation of monetary mass in the U.S.A, but spreads it across the world
- the dollar makes a 5% shared inflation
A year later, it's:
- 140 countries use petrodollars
- 30% inflation of monetary mass
- dollar makes 5.5% shared inflation
Three years later:
- 100 countries on petrodollar
- 30% inflation of monetary mass
- dollar makes 10% shared inflation
Meanwhile the competition's monetary space has a 3% flat inflation and all the countries that go to them have to deal with comparatively much less stringent consequences of the Russian/Chinese/BRICS monetary policies. Meaning the inflation tax and multiple privileges the US state gave itself from the USD dominance just aren't there. The countries that jump off the USD keep getting richer because they suffer less inflation tax, and keep climbing while the followers of the USD keep suffering harder every year.
When you get to the point that it's the last guard of the American Empire (read: the most wrecked/submissive vassals, say, England) that's going to be stuck there with 30% yearly inflation and an absolutely deadly financial situation, everyone's gonna jump. And it will be hard. Very hard. Because it won't just be 30% inflation every year, it'll be 30% inflation while a huge amount of the global financial power of the U.S.A shrinks, while tons of public servants have to be fired, while the economy crunches extremely hard, while the banking sector tries desperately to sustain whatever still works and takes its money out of the country from what doesn't, while nobody wants to take responsibility, while...well while everything blows the hell up within a few months. A slow climb of pressure that at its end explodes volcanically. Yes, the current inflation in the West is the SLOW part of the crisis.
Suddenly we'll see Weimar Republic tier of financial consequences. Probably very hostile govt takeover of means of production or savings. And I can picture a bunch of Lindsay Grahams and Janet Yellens or Ben Bernankes take a plane to the Bahamas like they're Sam Bankman Fried when the inevitable crunch from the american people will come.
I always find it funny when americans explain to me that "they have good industries, good skills, agricultural independence, nobody's gonna touch them". Guys, nobody's gonna conquer Colorado. Colorado is going up in flames due to your govt, but it's not getting invaded. However, that global trade control? Massive army? Impossibly long list of bases? Huge administration with innumerable public servants? Subsidising entire nations? Subsidising your industries? Subsidising however many "NGOs" around the world? Predatory industries that could maim and gobble up European industries? Controlling the oil market to your advantage? The ability to run the world? Almost all of them have no idea of how the world has been paying for it.
And now, we're going to see the world get divided between those who pay for an empire shouldering a $33T debt and those who pay for an empire shouldering a $280 billion debt. With inflation showing very quickly who's solvent and who really, really, really isn't.
And the irony of all of this, again, is that Russia didn't even "walk away" from the dollar.
Russia was kicked out. They literally did this to themselves. Unbelievable amounts of sheer incompetence and the hubris of thinking that the world was going to just bow to their monetary craze no matter what.
The actions the U.S Empire took in regards to Ukraine will be the death of the U.S Empire within the next 15 years tops. Possibly less than 10.
The Russians are effectively incredibly behind, somewhere I read that the Elbrus chips are on 150nm, that's 2005 technology, but China is such a ridiculously poorly analysed affair. I still remember large amounts of naive fools in the semiconductor industry assuring me, with great certitudes, that "China isn't even close to EUV" or "China can't do this class of chips", before they all went Surprised Pikachu Face when China announced that it had jerry rigged 7nm class chips for its own industries.
Sure, there are hard limits and many hurdles to overcome, but these people just look at the technicals and ignore how power works. In the case of China, they have a lot of money, and a lot of influence locally in Asia, so hiring away people disgruntled with TSMC or Samsung and getting a local industry kickstart on the back of CCP money was just obvious (Asianometry made excellent videos on that subject, like the "TSMC Renegade Genius" one).
I can easily envision announcements in a few years of 5nm chips, and then the beginning of EUV technology based off more or less stolen ASML technology, with help from a surprising amount of people formerly of ASML or TSMC or Carl Zeiss. All this economic growth is giving the Chinese a lot of options to pay for a lot of nice things, and they will get the nice things. And to boot, the U.S has made the moronic move of placing Russia as the main enemy/danger, when China is unquestionably the real weight. Reminds me of France thinking Mussolini was the danger in 1938 and Hitler was a lesser risk. The incompetence just piles on, might as well get beer and enjoy the West going up in flames.
Yeah, I think I'll pass. I prefer conversations that do not have me saying something and the response is different grades of base sarcasm, insults and pointless distractions meant to bring back the discussion to within Party Guidelines.
I feel I gave it a honest shake and got nothing of value, I won't be trying again. I'm really not too keen on using angry milifan spit as my shampoo from now on. In the first place, my education is in politics, but I hold an intellectual interest in semiconductors, that's why I opened an account here. Listening to semi professionals is very educational to me, if giving back with geopolitical education gets rejected this strongly, I won't be bothering anyone with trying to make them think against their will.
I don't mind answering genuine questions about geopolitics or discussing events, but I won't be trying to convince anyone anymore. My time is better spent on 5 hours of failures at Slaying the Spire than spending a minute talking to those who have welcomed me so...liquidly.