To learn more than ever from important non-fiction books, join me on Shortform: shortform.com/moneymacro. You’ll get a 5-day free trial and a discounted annual subscription. One of my favorite books on Shortform is Capital in the Twenty-First Century.
A detailed video on international bank transfers would be interesting if it includes regulation around anti-money laundering/-terrorism and currency controls, together with overview of bank transfers such as ACH, Swift and others.
Demographic factors enter into this too. An ever smaller young people cohort in China will make a consumption driven economy harder to achieve. I'm glad you mentioned the liquidity angle because that's why I think this displacement theory will fall down. People outside china need their currency and would really rather get it not from borrowing but from exports of goods/services to China. People don't like to borrow.
@The Salt Baron That's under the assumption that the old have saved enough money to retire and live as they did when they were working. My parents are retired and spend way less than they did when they were younger and working because the money they have must last them the rest of their lives. With inflation going up and the fact that they are not in the job market anymore so they can't adjust their earning power through raises/job hoping, they now have to spend even less. There's a reason that demographers and corporations target the 18 to 45 crowd, that is when people spend most of their money. All you have to do is look up retirement savings/readiness and you'll see how bleak that picture looks in North America.
aging population is not a problem. China will establish a China-centered Asian economy. RMB will be reserve currency in Asian countries, if i think you Europeans and Americans don't want to use it but it's ok. as long as the most populous area Asia where most of manufacturing is happening there, china is able to take advantage of ASEAN manufacturing capability to cope with the old people.
Great video, Joeri! I like that you mention the trade balances. I had not really thought about the trade deficit as improving the USD stance in the currency hierarchy, but it makes a lot of sense. I also found your way of taking your knowledge-exporting business as example made it very easy to follow (as these cross-currency trades can become very hard to follow pretty quick).
You mentioned it a little, but I think how much one trusts the currency holder probably in practice will matter a lot as well. Changing the rules and making ones money and thus resources disappear for ones own personal profit would be a major risk factor in holding any currency where there is a realistic chance of this happening. This is part of the reason why Crypto so far can't really be considered a very viable currency either I think. Because you can't count on your money still being there in the end when you need it the most during a crisis.
@Wilhelm Van Babbenburg One would typically think you wouldn't, but then you do have cases like Turkey, so who knows what they think at times. Might just be the risk inherent to a single person having way to much power.
Isn't that the risk inherent in any case? I mean, you also have risk of that in stocks or loans. Although I see your point, I would be hesitant to get China bonds because I do not trust that if there is an issue foreign debt holders will be served (I guess it is my prejudice?). In the case of currency, why would they want to devalue it?
@momo your observations are mostly accurate except 1 - the world does not use USD as reserve currency ‘because’ you can exchange goods and services by USD. The world began using USD because it was pegged to gold initially. The global ease of exchange of goods/services came as a consequence of being the reserve currency. Also, I must compliment you at the brilliant quality of your questions. I would really like to put my views there. I shall begin with the last. Please excuse the long answer 😁🙏 3) ‘can we have a more balanced trade so that nobody takes advantage of others ?’ As long as the Earth is round, and we have seasons, and the planet has tropical - temperate - frigid zones, we cannot have a balanced trade. That is a reality that the world seems to have forgotten over the last 4000 years starting from the Greeks and Romans. The reason - the tropical climate gives the world more opportunity for agriculture (if we stop desertification that is happening now), thereby giving them immense scope for low food inflation and low food security risks. Consequently, there will be high population over time in these regions giving them tremendous opportunities of scale. This is a situation which comes naturally, in absence of colonialism and slavery. The European, Scandinavian, and other temperate countries must learn to live with this. You can observe that most of the colonised countries come in the tropical zone, and the colonisers almost inevitably came from temperate and frigid zones (remember the mongols ?) 2) ‘do we have to use a single currency to store value ? is there an alternative such as gold ?’ Currency is simply a metric to quantify the effort and labour. Currency does not store value, it stores the effort. Somehow, governments took control of commodities and humans missed seeing the joke, so now all commodities are controlled by governments at the mines (for the royalties) but I will not delve more into that. But fundamentally, currency was invented to quantify the labour and effort, and it still does the same largely. Only the royalty part is the inserted value, and forms a small faction of the total currency value. Connecting this to your question, a single currency is like a single system of weights and measures. Otherwise, you can measure in miles and I can operate in light years, and there will be 8 billion metrics in the world. This is called standardisation. A single currency is always great. Which one ? One that has a measurable integrity factor. Not the “in-god-we-trust-but-print-indefinitely” kind. Gold is concentrated, inert and hence infinite life, and historically trusted. You could use wheat too, but whenever I exchange my effort and produce, I would need an equal effort of wheat. Which would become painful for you to store / quality (concentration and inertness). Wheat is fungible as gold, but it attracts fungi as well 😜 1) ‘do we need single one currency to do global trade ?’ A single and equal quantification of effort and labour is non-negotiable if we vouch for equality. If we don’t believe in equality, the discussion ends. Hence answer to a question depends on whether we vouch for equality among people, or not. Simple. Thanks again for the brilliant questions. 🫡🙏😊
@علي ياسر I know my friend. I have been saying so since 2013-2014, but no one heard me till it is too late. I know USA has a million problems right now. I also know how to fix the problems miring the USA. But I am not offering them over KZclip. People will think I make bold claims, but I have basis to back my claims. Yes, the solutions are hard. Very hard, in fact.
The US dollar's reserve currency status means ALL international payments must go through the USA. I am in Spain and want to pay for something in Mexico in dollars. That payment has to go through, and therefore is controlled by, the NY Federal Reserve. That's what counties like Russia, China, or Iran would like to circumvent because of current or possible future sanctions.
@Charles Schwer Look I'm not in favor of the US dollars, I would not mind for one second if the "mighty empire" crashes, but get real the Eurodollar is as in danger as the US dollar. Hint: too connected to the same people.
@Carmen Ortiz I am not clueless. If you have a clue, tell me the reserve requirement for a Eurodollar, please. No rebuttal is necessary when you understand international banking. Think of the Eurodollar as a large rock and the US domestic dollar as a small rock.
I do not agree. Much of the Eurodollar is made of bank loans in dollars from other countries, say Japan to say the Philippines. The US has nothing to say about those transactions. There is no reserve requirement for Eurodollars. These Eurodollars are created by foreign banks, not US banks. If the Philippines were to default on its debt to Japan, Japan would be holding the bag. Yet, when the US raises the rate on the dollar, they somehow are raising the rate foreign banks must respect for Eurodollars.
This is a good video on an important topic, however it misses the main point: China is not trying to replace dollar hegemony with yuan hegemony; China is trying to establish a multipolar financial order, one in which numerous currencies are used, not just the dollar and renminbi but also Russian ruble, Indian rupee, etc. This is why the BRICS bloc is developing a new global reserve currency that will be based on a basket of the currencies of its member states. So comparing the dollar and renminbi based on spendability, etc. is a bit misleading. Beijing is not trying to replicate Washington's strategy; it's doing something completely different. This is the same point Zoltan Pozsar has made. China doesn't want the renminbi to be the main global reserve currency; it will be one of several.
I think talking about how the us dollar got to the point of world reserve currency would be helpful to the video. Part of understanding what it would take to replace a universal currency like the usd is understanding how it became such a currency in the first place. Overall, I liked the video a lot, but it just felt incomplete without some mention of the Bretton-Woods system.
@jay y I'm not wrong at all. The fact is that the USD is the currency that has been used for most of the international transactions since WW2, and shows no signs of losing that distinction. Hence, it is the world's reserve currency. You are making straw man arguments that I didn't make.
@dzcav3you are wrong on all counts lol. I worked in FX for two decades. To become a reserve currency is nothing more than a trading shift where assets can be priced and delivery received in that currency, that’s it. There is no such label as “reserve currency status” in a central bank or bank holding currencies, it is merely any currency that you hold which can be exchanged for goods and services readily. That’s ALL.
Thank you for explaining it in simple layman terms so a non economic major like me can understand this as I keep seeing article and video about about bidenflation, printer go brrrr and end of the dollar talk that many influencers keep shouting from the top of their lungs.
For the despotic countries in such a trade bloc I am reminded of the old Groucho Marx joke: "I would want to belong to any club that would have me as a member"
I think it would be good to do a bit of a follow-up on this video regarding what are the actual benefits and costs of having your currency be the global reserve currency (and any resulting domestic distributional effects). Michael Pettis has been writing extensively on this very topic but I'm sure there's quite a few more names out there writing on this topic. I think another helpful thing would be to explain what you mean by the number grading you provide. For example, you gave the USD a 7 in terms of "spendability" but I would argue this may even be a 9 because almost everyone around the world will opt for the USD to settle their trades after their own currency. In many developing economies, there's actually quite a bit of black market activity where USD is very much accepted (Uzbekistan comes to mind) even before the local currency! But yeah I think this is a type of video that would be cool to revisit at least once every year. Stuff constantly changes here in both theory and practice.
How big (quantitatively) is the fiscal advantage that the US government enjoys due to US dollar reserve currency status? You mentioned that the US can currently spend much more than it otherwise could. Are there any ways to quantify this advantage and if so, what is the technical term for it?
There are many obstacles for the renminbi to become the top choice for global currency, if you even look at the issues plaguing China at the moment and companies fleeing to other areas of Asia you can see weakness ahead. It doesn’t take much research to know other countries feel the openness of the U.S. dollar is an asset that China can’t match with their lack of transparency.
there is no need to replace the dominance of US dollar, if the RMB can overpass the japanese currency and EU currency, then RMB can have some dominance in special areas.
Dr. Joeri, I appreciate this knowledge. Is there anywhere where you've made a video that goes over the possible outcomes (from both US and Rest of World perspective) of the US Dollar hypothetically losing it's reserve status? I guess the question goes out to comment section in general? (example: what happens to US debt?)
@Shahriar Alam My friend! I'm pretty much an amatuer so I really appreciate the reply! Your link to the foreign policy article by Michael Pettis was actually very helpful in my understanding. Until now I was basically under the assumption that the export of the US dollar was nothing but positive and power creating for the US in general, buying into the "exhorbitant privilege" argument. I can now see the flip side of the problem as well. We're being carved out from the inside because of it (it seems to explain the "Elephant Curve" to me a little better). Also I had never thought about the split between those who benefit from the debt and those who pay the debt being a line on which the current political landscape is divided. That was eye opening. Let me know if there are any articles I should read in relation to that issue. Again, I really appreciate the insight
I don't know how much you may be read up on comparative politics (and political economy in general) but essentially there's various distributional effects of the dollar's current status as the global reserve currency. The US stands to benefit overall if they can actually get rid of this status and have other countries share the burden. However, countries like China actually have no incentive at all (outside of political reasons) to be changing the status quo though. Many countries are very very dependent on the US being a net importer country in order to finance their economies. Debt is much weirder in macroeconomics (especially in international economics). Currently the US finances its spending through a mix of encouraging further borrowing (whether private or public) and decreasing producing capacity (by encouraging increased unemployment especially in sectors like manufacturing). In short, debt is easier to pay off when you continue to have plenty of demand for your currency. However, who benefits from the debt and who pays for the debt are very different in the US and I'd argue it's one of the main identifiers of the current political split. If global reserve currency is lost, that assumes a demand for US dollars that is lower than the current demand which will thereby make debt a bit more stressful. Again, debt is weird in international economics due to factors like military strength, issue linkage, sovereign defaults (and any related risks of contagion) etc.
Something Joeri didn't really touch on here is why a country would want to have the reserve currency status. There are some really interesting articles around about how reserve status is really an 'exorbitant burden'. Basically it hurts the US far more than it helps - it's more of a prestige thing at this stage than a financial benefit. Would love to see Joeri address this!
I think in terms of a cultivated hubris and ideologically reified sense of international impunity (apotheosis of "American exceptionalism" as a settler-colonial project), "prestige" ie ubiquitous recognition/respect is an undeniable aspect, but in terms of the _material_ reality of this assertion concerning some abstract/nebulous notion of "burden", the veracity of _that_ charge is I think illuminated more clearly if we ask what is really the _only_ political question, inherently generating a sort of generalized range of likely possibility through anchoring/grounding our internally conceived ideological political map to its external _material_ territory (aka "scary" and "definitely evil" marxism lol...): _cui bono?_ *_Who benefits_* Reminded of Michael Parenti, an excerpt from his piece Mystery: How Wealth Creates Poverty, which highlights this lacuna cultivated under the auspices of global US empire (also see: dialectical/historical materialism): _"In their perpetual confusion, some liberal critics conclude that foreign aid and IMF and World Bank structural adjustments “do not work”; the end result is less self-sufficiency and more poverty for the recipient nations, they point out. Why then do the rich member states continue to fund the IMF and World Bank? Are their leaders just less intelligent than the critics who keep pointing out to them that their policies are having the opposite effect?_ _No, it is the critics who are stupid not the western leaders and investors who own so much of the world and enjoy such immense wealth and success. They pursue their aid and foreign loan programs because such programs do work. The question is, work for whom? Cui bono?_ _The purpose behind their investments, loans, and aid programs is not to uplift the masses in other countries. That is certainly not the business they are in. The purpose is to serve the interests of global capital accumulation, to take over the lands and local economies of Third World peoples, monopolize their markets, depress their wages, indenture their labor with enormous debts, privatize their public service sector, and prevent these nations from emerging as trade competitors by not allowing them a normal development._ _In these respects, investments, foreign loans, and structural adjustments work very well indeed._ _The real mystery is: why do some people find such an analysis to be so improbable, a “conspiratorial” imagining? Why are they skeptical that U.S. rulers knowingly and deliberately pursue such ruthless policies (suppress wages, rollback environmental protections, eliminate the public sector, cut human services) in the Third World? These rulers are pursuing much the same policies right here in our own country!_ _Isn’t it time that liberal critics stop thinking that the people who own so much of the world---and want to own it all---are “incompetent” or “misguided” or “failing to see the unintended consequences of their policies”? You are not being very smart when you think your enemies are not as smart as you. They know where their interests lie, and so should we."_ To be blunt and echo Rosa Luxemburg and her Spartacus movement's political call to action from interwar Germany, before of course being executed by the freikorps paramilitary (later becoming the SS, shocker) at the behest of Ebert's ostensibly _social democratic_ SPD party, almost immediately resonating the truth of such a succinct political dichotomy to this day, what I would say broadly juxtaposes a dichotomy of financial/social order (abstracted into purely economic terms in this video, perhaps unintentionally obscuring a more holistic consideration of the trajectory for humanity and civilization): *_socialism or_* [continued] *_barbarism._*
Impressed with your channel. I think you've found a good segment to position yourself in and should expect viewership and subscription growth to amplify. The economic side of things is more of a blue ocean on KZclip compared to other areas. Just out of interest, do you work alone or how big is you and your team that support you?
I can’t see it happening. I think these currencies could be seen as alliance currencies. China can leverage their currency because they’ve devised an alliance that is in complete opposition to NATO. By comparison, Europe and the USA are both part of NATO. The Americans likely wouldn’t be too pleased if the Euro became another global currency because it would weaken their USD currency. It’s the same reason the Russian Ruble won’t likely become a secondary currency. China would subdue it because it would weaken their own currency within their alliance. Besides, you only need a single global currency as part of an alliance. The only way I could see the Euro becoming it’s own global currency would be if Europe broke off from the USA alliance-wise.
the 1minute 43second ''The Coming War on China - a film by John Pilger - Official Trailer'' and the 14.37 ''Shocking LBC Debate Shows New Cold War with China'' by Novara Media. Maybe throw in the 19min 'Banks Get $1.5 TRILLION Bailout Over Coronavirus,' by The Jimmy Dore Show and the 2.52 'Why Do Banks Make So Much Money?' by Positive Money {uk}
@Ennui Look at the rate that china is expanding renewable and nuclear energy, and continue the trend line for another 10 years. By then, their domestic production in fossil fuels will (roughly) cover their energy needs that aren’t covered by renewables and nuclear.
Opening up their capital accounts will result in net outflows of wealth by natives in PRC. Replacing USD will also mean RMB has to be exported which means trade deficits and manufacturing going to other countries. So...
@izaj ahmed wishful thinking. have you lived in latin america to understand how their trade works? developing nations trade more in us dollar than within their own economic unions, the demand for dollar has never been stronger for its stability and liquidity. to challenge dollar's dominance, china would first have to liberalize its capital market and effectively crush their economy, and where do you think all that wealth would go? that's right, it would flee like water to western banks, holdings and assets. china is held hostage by the very monetary system they oppose, their only hope is to sway enough economic partners to somehow rebalance the power of sanctions, they are afraid to death of any sanctions against them and constantly searching for loopholes, the rest of the currency rise is nothing but hot air. the dollar is here to stay for a very long time.
@izaj ahmed Yeah, no. All of the non-USD trade agreements are window dressing, without exception. Very symbolic and all, but the volumes involved are just tiny compared to the USD denominated market. Now, that doesn't mean that the USD will remain dominant forever, but it will take vastly more volume in non-USD markets to genuinely threaten the USD as the global reserve
Countries around the world have started to accept trade in other currencies..for example, Brazil-Argentina working on new currency for latin America outside of USD and BRICS nation too..Saudi said they are not bound to accept USD for oil payments and considering RMB from china for its oil. This war exposed the west completely and countries lost the trust in USD. So, work is already underway and accelerated more and more
This was really interesting, I think the scoring system was a bit arbitrary, maybe you could rank the top 5 countries' currencies for each category for a more grounded value
I don’t think most people have tried to move/pay large amounts of money from one country to another. It’s almost impossible to move currency around w/o the dollar. You almost have to convert everything to the dollar.
I heard that BRICS counties are collaborating to create a new global trade currency the will be based on trade commodities gold, silver,oil, gas grains and minerals. I don’t believe the dollar will go away it’s just not going to be the dominant currency it is today. Basically if a can of soda is $1 today it could cost $1.50 after BRICS currency starts to be used more. OPEC countries have already agreed to trade in the new currency but they will also trade in dollars.
Thanks, great video, essential topic. For a next video, maybe more details in how big companies manage their multi currency transactions and what could tip them towards the yuan. Maybe Chinese exporters offering discounts on payments in yuan?
You didn't mention much about the tight currency control China wields over the RMB, or the manipulation of the value of RMB. Until the RMB is a free-floating currency, and foreigners have easy access to capital markets, the RMB won't even overtake the Swiss Franc as a usable currency, nevermind the other basket currencies such as the EUR, GBP or JPY.
@Daniel Benner are you being sarcastic? the entire subject of this whole video is USD vs RMB and why the letter isn’t positioned to take advantage of being a reserve currency. of course if you bring up the validity of the RMB as a comparison to Chinese growth and domestic policy it is very relevant to mention comparable growth-QOL inconsistencies in the US. are you playing dumb?
@Will hmm that is a very old-school way of looking at it. I definitely think it played a very large role in the past. Nowadays, conventional large scale wars are not so common. So, it might not have the biggest impact.
@Money & Macro haven’t watched it all yet but isn’t it the navy of the USA and it’s allies that upholds the currency as that navy allows for global trade to exist.
I still think how these scores trend is the more important aspect of this kind of shift. But as we know too well, we all guessed incorrectly in the past in one way or another (or none of us needs to work for a living if one can bet correctly in the stock market every single day), all these will likely be different in a completely unexpected manner 10 or 20 years down the road.
People get way ahead of themselves. This isn't even on the Chinese radar until at least 2050. Right now they're more concerned about how they can manage their dollar denominated assets without getting ripped off by a debtor that seeks jubilee by means of inflation.
People often mention that the USA fortunate that it can run a huge deficit because it’s status as a trade currency greatly limits inflation. Seldom mentioned is that this is not necessarily a benefit to the people. Being a net importer means jobs move overseas. It’s debatable whether those jobs are “wanted” but regardless it puts higher pressure on unemployment. Alternative to running a trade deficit, loans and currency trades are essentially investments into said country. China will have to select favored investment partners or risk losing money. I don’t really see how this builds genuine trust and liquidity. It remains to be seen if China can thread the needle with its loan plan or central bank currency swap plan. If so, China will have pulled a rabbit out of a hat.
The two links at the end of the video really have a lot to say about whether this will work or not. When I found your channel, I was a total Dalio/Poszar believer, but I've been listening to Jeff Snider a lot more & his refutations certainly seem valid.
I would like to bring these points to the table: 1) The whole picture: While we are having a tunnel vision on China, this "De-Dolarisation" is not an isolated case exclusively by China. Latin America, Middle East, Africa, Asia are doing the same thing in different names and currencies. 2) The motivation: The Chinese currency could be the worst currency on the planet, but that not the point. It is literally De-Dolarisation This is not about the Chinese Yuan. President Joe Biden used the "financial nuclear bomb" on Russia, and that really freaked the rest of the world out. Traditionally, we would diversify into Euro, Pound and Yen. But these currencies proved to be worthless since their countries subserviently followed the US sanctions, seizing client's assets and gold. We might as well just hold US Dollar. This such situation, diversfy your currency reserve to US's rivals make perfect sense. Neither side can sanction us. 3) Technology: This is happening regardless of China. The technologies are growing, making alternative currencies and monetary system more and more viable. Change is constant. The idea of the US can keep doing exactly the same thing and get the same rewards forever is absurd. This single global reserve currency paradigm is gone. 4) China is just a developing country, and for valid reasons. Huge economy doesn't mean developed economy. It is unstable and lack of many facilities. 5) It's not really De-Dolarisation. Just diversification. Dollar will still dominate, just not dominate enough to use that "financial nuclear bomb" again.
On a deeper level, this is also a root cause of the world's disease after the disintegration of the Soviet Union. It is also a problem that cannot be solved by Western-dominated values. The breakdown of a system often starts from within. Eastern values cannot bridge this contradiction. This is a problem that can only be solved with the mutual assistance of people all over the world, and it cannot be solved by a wealthy country with a strong military force. But from a positive perspective, it is precisely because of these problems that the world can move forward.
In fact, the core of this matter is the issue of global wealth distribution. The earth does not lack resources, nor does it lack hard-working and smart people, but the vast majority of countries and regions still live in poverty under the US dollar-dominated global wealth distribution system. This fact may also be the truest evaluation of Western-dominated values. This fact creates the need for a multi-polar monetary system.
I’m surprised you never mentioned anything about gold backed currencies since that is the main plan of BRICS to replace the dollar. Gold is definitely a more viable alternative to the dollar, and a lot of central banks around the world are rushing in to buy gold at the moment.
@Money & Macro maybe look into what their new development bank has been up to in the last decade. Other than a $50 billion start, haven’t seen many updates since the new development bank was new…
All, what you say, is correct. The "transission" will be happening via warfare. The currency power - as you said - corelated (or mutually depends) on military strategy. It has always been like that. Go to an African country like Benin and you will - studying the coins - understand the switch of power (from pound, to franc to dollar).
You have not mentioned the elephant in the room : If I were to be a Chinese business, I would want to use direct Yuan - Trade-Partner currencies instead of having to pay a middle-man commission which is the Yuan >> USD >> Trade-Partner conversion and Trade-Partner >> USD >>> Yuan.
Oh he knew it. In fact he almost sound sane when he realized afghanistan lose half their foreign reserve. He also congratulated himself when russia foreign reserve was seized too.
@Sualtam Just like they have nuke inspectors, u don't think they can agree to have gold auditors. It's ludicrous to even throw the idea that gold cannot be trusted vs fiat money. The idea may come to pooling all the gold reserves of the Brics countries for a common currency. You think Saudis have no gold, you think S Africa has no gold ? And it might be 1/10 of the value of that currency backed by gold. That sures beats toilet paper money that can be printed ad infinitum.
@Bob Morane Gold backing is also based on trust. Who says that there will be enough gold to back every Renminbi. You can secretly devalue a gold based currency and that happened all the time during the 19th century being the main reason for economic crisis back then.
@Anonymous Believe me, the feeling is mutual !! That's why the dollar is going down, because it cannot be trusted anymore and words like yours show the rest of the world why it's not a question of if anymore, but a question of when the dollar will be gone.
No matter if it is USA or China, I always think that using IOU nothing as the base of reserve currency (money is trust) totally absurd and unfair for other country.
I'd suggest buying shares of reputable firms and holding them for as long as those companies remain reputable. Simply do this; disregard the market opinions and projections, which are at most amusing
One of the best if not, the best $DOLLAR comprehensive analysis videos. I have been Stock Trading for 23 years. So this is very helpful for future understanding & predictability
I have a question. What if the US is no longer able to print more money in bonds because overseas countries are selling them back and the opecdollar no longer exists ???.
Thank you for the vidéo. But china does not intend to replace dollar by yuan. Brics countries want at first diminish use of dollar by using local currencies for bilatéral and régional exchanges. And then create a New international currency to replace dollar for savings.
The Euro is already better suited for use as a reserve currency than the RMB, even after Xi's proposed changes. Yet it has made only modest inroads on the US dollar's hegemony. I guess one thing an improved RMB would have in its favour is that China is less likely to go along with American sanctions than the Euro Zone.
*Reserve currency means a budget deficit,the Maastricht doesn't allow it,Europeans are destroying their local economies because of this,if the Euro replaces the dollar the World will become poorer.*
I feel like every time the USD looks like it *might* be up for losing its reserve currency status, the country that was hopeful to take it ends up f#!%ing up that chance big time.
US media is so dominated by propaganda and cheerleading that it's virtually impossible to find straightforward, unbiased, fact-based reports on stuff like this. Thanks so much. :) You didn't include intangibles like trust and confidence, though, and I'm sure factors like that play a part as well. If I, in the US, can clearly see my country teetering on its pedestal, I can only suppose that people outside the country see it too.
Good try Mr. 50 Cents Army guy. Per The Bank for International Settlement, China's State-Owned Enterprises debt currently over $33 Trillion usd, which is off-balance sheet debt. The 70% of the off-balance debt must be paid back in foreign currencies (non RMB). Their real estate shadow banking industry is estimated to be at least 3 times larger than the 2008 Financial Crisis, per Bank for International Settlement (2017 and 2018 reports). China's economy is driven by debt because for every dollar it exports to the USA, $0.55 to $0.60 is imported from the USA. China's economy have been on shaky grounds for over 10 years and that is why they have a $50,000 currency exchange limit per year per person? Why are so many rich people connected to the government, including government officials, are moving money out of China for the past 15 years?
I live outside the US and I disagree with your opinion concerning the US is in a “pedestal”. US propaganda (as you said), is overblown and dominant, however, the so-called decline or fall of the US is also overblown. It just so happens that American media (which has its own interests) has overwhelming reach all-around the globe that it looks like the “fall” of the US is near. In conclusion, no, the US is not in a pedestal about to fall off.
I think, he touched on it by mentioning the sanctions and instances where each respective country has set precedents on how and why they would make their currencies less usable.
Nice video and explanations. Don't quite understand these ratings however. Why wouldn't USD get 10s in each category? And what's the difference between 3/10 and 4/10? Since this is an economics video, it's possible to be more quantitative, right? So as a suggestion, perhaps it might it be better to only rate CNY and USD relatively. Concretely, say for the liquidity category, the ratio #CNY/(#CNY + #USD) shows how many CNYs are in circulation relative to USDs. To reflect foreign influence, might have to correct for liquidity in the respective domestic economies and focus on how many are held by (respective) aliens/foreign investors. Then, on a scale of 1--10, China's rating would be 10 * (#CNY/(#CNY + #USD)) and for the US it would be 10*(#USD/(#CNY + #USD)). Round to the nearest integer for readability. So this is a more systematic way to generate a rating rather than by heuristics. It would then be possible to see how this rating has changed over time if you have that data. Would add a nice, quantitative flair to the video! Similar rationalisations could apply to the other categories.
Yeah the framework he was using also struck me as a little bit arbitrary. For most Western citizens, the USD is very much a 9 or even a 10 on each of those criteria.
I thought the point of the decentralized digital banking is so that currency conversion can happen really fast and really inexpensively, so obtaining, spending and investing wouldn't have to be in a specific currency. And china purchasing oil in Renminbi wasn't to push their currency, but to demonstrate that options do exist outside of the dollar
Thanks for another great, sober analysis without the "How China will DESTROY the US dollar" hype (which seems to alternate with the "China COLLAPSE only ONE MONTH away?" videos. For some reason I'm having a hard time distinguishing between spendability and liquidity. They seem to largely overlap to me conceptually. For example, to highlight spendability you review the idea that China wants to settle oil transactions in RMB, which entails pushing out more of that currency into the global marketplace, thus making RMB markets deeper and easier to transact with, which just sounds like the same thing as liquidity to me? For liquidity, the example you highlight is China importing more from less developed nations around it, again to push out RMB and have more of it sloshing around the global currency marketplace, thus enhancing the availability and depth of the RMB market. Am I missing something? Would appreciate if anyone would clarify this for me.
What about a currency shared by countries of the BRICS which would be backed by gold and commodities? This might be a more viable alternative to the USD.
@WilliamTheBonquerer when I say BRICS I am already projecting the inclusion of various countries which have already shown interest in joining like Saudi Arabia, Argentina, Iran... Now we are talking about a block which controls the majority of the energy resources, has more than half the world population and has a formidable industrial base. If these countries want the west to trade in their currencies, the west will have no choice. But it seems you are stuck in the present / past where the west is the center of the world, this has already come to an end.
Have you ever thought about doing a video on the US debt? I’ve read several articles that talk about how the debt is issued, as well as an article on pragmatic capitalism called understanding the modern monetary theory, and they seem to be at odds with each other. I guess my question is why do we charge interest on debt that is to ourselves? Why don’t we just print the currency?
Another area economist appear to ignore is the legal system. Evergrande is the current example. China does not have trusted mechanisms for creditors and investors to recover their loans and collateral through the courts. China has made it clear - keep internal companies going through subsidies if necessary but asset recovery and repayment to foreigners are secondary.
Do you think there is a chance that some of that future Yuan can be back by gold since pretty much all goverments over in asia are buying alot of gold, maybe even more then the official numbers
The countries buying gold simply recognize that their own paper currencies aren't worth much to most people so are hedging their welath Strong economies support strong currencies and might diversify a bit just for good practice but don't invest in gold as a primary way to ensure their wealth is secured.
The only problem I have with this analysis is that it assumes China's challenging of the dollar would be towards the ends of replacing it with a RMB currency hegemony. Xi has noted on numerous occasions this is not the intention/goal envisioned of an alternative international financial system, and the policies embraced and described here such as emphasizing currency swap/SDRs back up this intention toward regional currency dominion. I understand the perspective accurately explained here, _but_ I'd posit that the capital controls interpreted as a negative feature of the RMB (as a globally hegemonic currency) when viewed from, say, a global working class perspective (ie _not_ the perspective of transnational corporate/finance capital), might in fact more holistically be appraised as an enormous and for the most part unavailable _positive_ aspect to the alternative financial order China and others are now building/cultivating. Lost in this discussion discreetly about economics is the historical causality of how this all came to be exactly and I think here is probably the most revealing aspect as any globally considered systemic evaluation of this "cold" war history pretty conclusively and inherently illuminates the reality of US empire, the US having positioned itself as the "consumer of last resort" at the end of the global supply chain to absorb inevitable overproduction of capitalism through cheap consumption or of course through our favorite activity of war/arms sales (military Keynesianism, the only button we can push at this point clearly), launching itself to hegemony post-WWII via imposing the Bretton-Woods international financial system with the US dollar as the "global reserve currency" using the leverage of being the only industrialized nation-state _not_ bombed to shit post-WWII (the US ensuring this outcome with Dresden/Tokyo, along with denying a Japanese surrender to the USSR by mandating unconditional surrender via utilizing those nukes we dropped - a simultaneous radioactive line in the sand directed at the USSR's understanding of its geopolitical sphere of influence as well, supported by Stalin's refusal to back up the communist movement in Greece which deviated from Tito's decision from Yugoslavia in addition to other coerced consequences like the immediate withdrawal of troops from Iran after consecutive nuclear threats were made by Truman/insane generals like MacArthur, clearly I digress lol...but I guess my broader point with all of this is...this stuff is all connected and digression is often an illusion of constrained attention...or something). Take something like the "washington consensus", effectively the solidification of this ideal norm of international acquiescence to US empire, particularly in regards to the IMF/World Bank "structural adjustment" programs, which essentially offer capital loans under the stipulation of concealed and crippling control by US firms over a nation-state's labor/resources/institutions - enforcing a policy of austerity in prioritization of paying back shareholders with insane interest...it's an "offer you can't refuse" which leads directly to debt-peonage and more implicit political/capital controls guided by US firms solely toward their perpetual benefit. I'll shut up now since no one will read this wall of text anyway lol, but this is merely the tip of the imperialist iceberg and its an understanding elucidated by a materially grounded dialectical materialist/historical materialist critique (aka uh oh...m-m-m-maaaaaaaarxismmmm lol...), probably most prominently in regards to empire and its functionality in maintaining capitalism and its inherent class rule/war by Lenin's Imperialism: The Highest Stage of Capitalism, which broadly outlined the material logic of global capital in 1916 and (I would say uncoincidentally) predicted the trajectory of US empire and its "full spectrum domination". To be direct and echo Rosa Luxemburg from 1918 Germany, before of course being executed by the freikorps paramilitary (later becoming the SS, shocker) at the behest of Ebert's ostensibly _social democratic_ SPD party, almost immediately resonating the truth of such a succinct political dichotomy to this day, what I would say broadly describes the dichotomy of financial/social order abstracted into purely economic terms in this video: *_socialism or_* [continued] *_barbarism._*
I'm not suggesting that the Chinese Yuan will become the next reserve currency. But I think there is something to be said for the Western freezing Russian foreign currency and possible seizing of Russian assets in Western countries. To non-westerners this is a huge alarm bell to further investiture in those nations. Now non-western affluents will have to consider that if their native country doesn't play ball with the West that they're gonna get the Russian treatment. Not a replacement of the dollar but definitely something to consider.
Thanks but the point is not for the YUAN to go head to head with the Dollar. BRICS countries are moving to settlements in local currencies. The Yuan is just part of a basket of currencies that will form an alternative to the US Dollar. Brazil and Argentina have committed to what is hoped will become a new Sth American currency and alternative to the dollar.
RMB is not a free exchanged currency. If you have 1 M, it is very difficult to get US dollars and leave China. Not only you could not exchange to USD, but sometimes the state owned banks could automatically deposited RMB if you have USD in that bank.
you need to have stuff people want for that currency... Chinese car companies are popular now in the middle east in a way they weren't 30 years ago, or even 15 years ago.
The USD will not stop being the reserve currency in a year or two. But give it 20 years, there is a clear and undeniable trend that countries are slowly moving away from dollar dependency. Perhaps it will still be a reserve amongst western countries, but the rest of the world see it too big of a risk.
I think the biggest obstacle to RMB becoming more widespread outside of BRICS, is the lack of openness of China in general. Unless I’m trying to avoid sanctions (which isn’t a common scenario), why would I even consider RMB?
@Dingyi Pu and why would the RMB make these peoples’ lives any better? China has proven in the past 2 years that it can make absolutely fundamental changes to its economy such as ‘disappearing’ leaders of major companies, hiding/obfuscating key economic data, etc…
It's not just that the US has been running a current account deficit for a long time, but that, as the world's largest economy, even a small current account deficit relative to the domestic US economy can be significant on the global stage. When you add on top of that that the US has leveraged it's position as a global economic and military superpower to get, let's say a "good deal" on many of their imports, it just adds to the challenge for China.
The problem with the Euro being an alternative to the USD is that Europe does not have much of the natural resources unlike the dollar which is pegged to the Saudi petrol station. But it's a different thing when you talk about the soon to be BRICS+ which control, most of the natural resources, food, tech exports and other goods and don't forget the largest consumer market. It will bring something similar to Costco membership where you have access to the stuff and better deals for having the card. Of course rationally, it's safe to say that people will likely be in possession of a currency that gives them access to wide variety of goods that they need. People will likely possess the BRICS buck to have access to most of the natural resources and other commodities needed in the developing world. And also more people means a bigger consumer market to sell your exports. This is why in my opinion, not necessarily that the dollar will be toppled all together but its market share would reduce to around 30- 40 percent or even less. Only time will tell.
The rest of the world is ok with the USD being the reserve currency, the speed to de-dollarise is more related to the realisation that your money can very easily be stolen by the USD system. Its all about risk management. This is the biggest elephant in the room.
To learn more than ever from important non-fiction books, join me on Shortform: shortform.com/moneymacro. You’ll get a 5-day free trial and a discounted annual subscription. One of my favorite books on Shortform is Capital in the Twenty-First Century.
Do you have a video about external debt ? (of USA XD)
@Money & Macro 👈🤡😂
I owe big part of my economics learning to you, Jourie. Your videos inspires me to be a central banker. Hopefully it’s there
@Alejandro Hernandez Soon haakne ho.
@Tejas Chandrashekhar 😆
A detailed video on international bank transfers would be interesting if it includes regulation around anti-money laundering/-terrorism and currency controls, together with overview of bank transfers such as ACH, Swift and others.
Demographic factors enter into this too. An ever smaller young people cohort in China will make a consumption driven economy harder to achieve. I'm glad you mentioned the liquidity angle because that's why I think this displacement theory will fall down. People outside china need their currency and would really rather get it not from borrowing but from exports of goods/services to China. People don't like to borrow.
@The Salt Baron That's under the assumption that the old have saved enough money to retire and live as they did when they were working. My parents are retired and spend way less than they did when they were younger and working because the money they have must last them the rest of their lives. With inflation going up and the fact that they are not in the job market anymore so they can't adjust their earning power through raises/job hoping, they now have to spend even less. There's a reason that demographers and corporations target the 18 to 45 crowd, that is when people spend most of their money. All you have to do is look up retirement savings/readiness and you'll see how bleak that picture looks in North America.
the world economy is built on debt, people love borrowing money 🤣
aging population is not a problem. China will establish a China-centered Asian economy. RMB will be reserve currency in Asian countries, if i think you Europeans and Americans don't want to use it but it's ok. as long as the most populous area Asia where most of manufacturing is happening there, china is able to take advantage of ASEAN manufacturing capability to cope with the old people.
Oh yes. People don´t like to borrow except for some people with more than 31 trillion in debt.
Great video, Joeri! I like that you mention the trade balances. I had not really thought about the trade deficit as improving the USD stance in the currency hierarchy, but it makes a lot of sense. I also found your way of taking your knowledge-exporting business as example made it very easy to follow (as these cross-currency trades can become very hard to follow pretty quick).
Can you explain a little more
but enough procrastinating, the last paper does not write itself ;)
You mentioned it a little, but I think how much one trusts the currency holder probably in practice will matter a lot as well. Changing the rules and making ones money and thus resources disappear for ones own personal profit would be a major risk factor in holding any currency where there is a realistic chance of this happening.
This is part of the reason why Crypto so far can't really be considered a very viable currency either I think. Because you can't count on your money still being there in the end when you need it the most during a crisis.
@Quickshot0 Like gangsters in mafia america
@Wilhelm Van Babbenburg One would typically think you wouldn't, but then you do have cases like Turkey, so who knows what they think at times. Might just be the risk inherent to a single person having way to much power.
Isn't that the risk inherent in any case? I mean, you also have risk of that in stocks or loans. Although I see your point, I would be hesitant to get China bonds because I do not trust that if there is an issue foreign debt holders will be served (I guess it is my prejudice?). In the case of currency, why would they want to devalue it?
I think any country with significant capital controls will have a difficult time becoming a reserve currency
@momo your observations are mostly accurate except 1 - the world does not use USD as reserve currency ‘because’ you can exchange goods and services by USD. The world began using USD because it was pegged to gold initially. The global ease of exchange of goods/services came as a consequence of being the reserve currency.
Also, I must compliment you at the brilliant quality of your questions. I would really like to put my views there. I shall begin with the last. Please excuse the long answer 😁🙏
3) ‘can we have a more balanced trade so that nobody takes advantage of others ?’
As long as the Earth is round, and we have seasons, and the planet has tropical - temperate - frigid zones, we cannot have a balanced trade. That is a reality that the world seems to have forgotten over the last 4000 years starting from the Greeks and Romans.
The reason - the tropical climate gives the world more opportunity for agriculture (if we stop desertification that is happening now), thereby giving them immense scope for low food inflation and low food security risks. Consequently, there will be high population over time in these regions giving them tremendous opportunities of scale. This is a situation which comes naturally, in absence of colonialism and slavery. The European, Scandinavian, and other temperate countries must learn to live with this. You can observe that most of the colonised countries come in the tropical zone, and the colonisers almost inevitably came from temperate and frigid zones (remember the mongols ?)
2) ‘do we have to use a single currency to store value ? is there an alternative such as gold ?’
Currency is simply a metric to quantify the effort and labour. Currency does not store value, it stores the effort. Somehow, governments took control of commodities and humans missed seeing the joke, so now all commodities are controlled by governments at the mines (for the royalties) but I will not delve more into that.
But fundamentally, currency was invented to quantify the labour and effort, and it still does the same largely. Only the royalty part is the inserted value, and forms a small faction of the total currency value.
Connecting this to your question, a single currency is like a single system of weights and measures. Otherwise, you can measure in miles and I can operate in light years, and there will be 8 billion metrics in the world. This is called standardisation. A single currency is always great. Which one ? One that has a measurable integrity factor. Not the “in-god-we-trust-but-print-indefinitely” kind. Gold is concentrated, inert and hence infinite life, and historically trusted. You could use wheat too, but whenever I exchange my effort and produce, I would need an equal effort of wheat. Which would become painful for you to store / quality (concentration and inertness). Wheat is fungible as gold, but it attracts fungi as well 😜
1) ‘do we need single one currency to do global trade ?’
A single and equal quantification of effort and labour is non-negotiable if we vouch for equality. If we don’t believe in equality, the discussion ends. Hence answer to a question depends on whether we vouch for equality among people, or not. Simple.
Thanks again for the brilliant questions. 🫡🙏😊
@علي ياسر I know my friend. I have been saying so since 2013-2014, but no one heard me till it is too late. I know USA has a million problems right now.
I also know how to fix the problems miring the USA. But I am not offering them over KZclip. People will think I make bold claims, but I have basis to back my claims. Yes, the solutions are hard. Very hard, in fact.
@momo if no reserve currency, how to stabilize currency exchanges lol you’re missing one of the main points entirely
@Sri No, the US economy is very bad
The US dollar's reserve currency status means ALL international payments must go through the USA. I am in Spain and want to pay for something in Mexico in dollars. That payment has to go through, and therefore is controlled by, the NY Federal Reserve. That's what counties like Russia, China, or Iran would like to circumvent because of current or possible future sanctions.
@Charles Schwer Look I'm not in favor of the US dollars, I would not mind for one second if the "mighty empire" crashes, but get real the Eurodollar is as in danger as the US dollar. Hint: too connected to the same people.
@Carmen Ortiz I am not clueless.
If you have a clue, tell me the reserve requirement for a Eurodollar, please. No rebuttal is necessary when you understand international banking. Think of the Eurodollar as a large rock and the US domestic dollar as a small rock.
@Charles Schwer You are clueless as to what "reserve currency" actually means.
I do not agree. Much of the Eurodollar is made of bank loans in dollars from other countries, say Japan to say the Philippines. The US has nothing to say about those transactions. There is no reserve requirement for Eurodollars. These Eurodollars are created by foreign banks, not US banks. If the Philippines were to default on its debt to Japan, Japan would be holding the bag. Yet, when the US raises the rate on the dollar, they somehow are raising the rate foreign banks must respect for Eurodollars.
It would be interesting to see the EUR rated on the same scale
This is a good video on an important topic, however it misses the main point: China is not trying to replace dollar hegemony with yuan hegemony; China is trying to establish a multipolar financial order, one in which numerous currencies are used, not just the dollar and renminbi but also Russian ruble, Indian rupee, etc.
This is why the BRICS bloc is developing a new global reserve currency that will be based on a basket of the currencies of its member states.
So comparing the dollar and renminbi based on spendability, etc. is a bit misleading. Beijing is not trying to replicate Washington's strategy; it's doing something completely different.
This is the same point Zoltan Pozsar has made. China doesn't want the renminbi to be the main global reserve currency; it will be one of several.
You had me on Ray Dalio being an economic analyst.
I was about to say, after the last time Joeri dismissed Dalio's claims I was thinking "Oh, so only 1 analyst will have new arguments then"
I think talking about how the us dollar got to the point of world reserve currency would be helpful to the video. Part of understanding what it would take to replace a universal currency like the usd is understanding how it became such a currency in the first place. Overall, I liked the video a lot, but it just felt incomplete without some mention of the Bretton-Woods system.
@jay y I'm not wrong at all. The fact is that the USD is the currency that has been used for most of the international transactions since WW2, and shows no signs of losing that distinction. Hence, it is the world's reserve currency. You are making straw man arguments that I didn't make.
@dzcav3you are wrong on all counts lol. I worked in FX for two decades. To become a reserve currency is nothing more than a trading shift where assets can be priced and delivery received in that currency, that’s it. There is no such label as “reserve currency status” in a central bank or bank holding currencies, it is merely any currency that you hold which can be exchanged for goods and services readily. That’s ALL.
@HomerOJSimpson unlikely with fall of Europe economy when no cheap oil from Russia!!!???
@HomerOJSimpson unlikely with fall of Europe economy when no cheap oil from Russia!!!???
Thank you for explaining it in simple layman terms so a non economic major like me can understand this as I keep seeing article and video about about bidenflation, printer go brrrr and end of the dollar talk that many influencers keep shouting from the top of their lungs.
As you mention at the end, this plan will realisticly just work as a way to create a trade bloc between santioned countries.
For the despotic countries in such a trade bloc I am reminded of the old Groucho Marx joke:
"I would want to belong to any club that would have me as a member"
I think it would be good to do a bit of a follow-up on this video regarding what are the actual benefits and costs of having your currency be the global reserve currency (and any resulting domestic distributional effects). Michael Pettis has been writing extensively on this very topic but I'm sure there's quite a few more names out there writing on this topic.
I think another helpful thing would be to explain what you mean by the number grading you provide. For example, you gave the USD a 7 in terms of "spendability" but I would argue this may even be a 9 because almost everyone around the world will opt for the USD to settle their trades after their own currency. In many developing economies, there's actually quite a bit of black market activity where USD is very much accepted (Uzbekistan comes to mind) even before the local currency!
But yeah I think this is a type of video that would be cool to revisit at least once every year. Stuff constantly changes here in both theory and practice.
How big (quantitatively) is the fiscal advantage that the US government enjoys due to US dollar reserve currency status? You mentioned that the US can currently spend much more than it otherwise could. Are there any ways to quantify this advantage and if so, what is the technical term for it?
QE n stimulus cheques
Are you familiar with Brent Johnson & Dollar Milkshake Theory?
There are many obstacles for the renminbi to become the top choice for global currency, if you even look at the issues plaguing China at the moment and companies fleeing to other areas of Asia you can see weakness ahead. It doesn’t take much research to know other countries feel the openness of the U.S. dollar is an asset that China can’t match with their lack of transparency.
there is no need to replace the dominance of US dollar, if the RMB can overpass the japanese currency and EU currency, then RMB can have some dominance in special areas.
A good explanation as always. Good job man 👍
Write me ⬆️
Dr. Joeri, I appreciate this knowledge. Is there anywhere where you've made a video that goes over the possible outcomes (from both US and Rest of World perspective) of the US Dollar hypothetically losing it's reserve status? I guess the question goes out to comment section in general? (example: what happens to US debt?)
@Shahriar Alam My friend! I'm pretty much an amatuer so I really appreciate the reply! Your link to the foreign policy article by Michael Pettis was actually very helpful in my understanding. Until now I was basically under the assumption that the export of the US dollar was nothing but positive and power creating for the US in general, buying into the "exhorbitant privilege" argument. I can now see the flip side of the problem as well. We're being carved out from the inside because of it (it seems to explain the "Elephant Curve" to me a little better). Also I had never thought about the split between those who benefit from the debt and those who pay the debt being a line on which the current political landscape is divided. That was eye opening. Let me know if there are any articles I should read in relation to that issue. Again, I really appreciate the insight
I don't know how much you may be read up on comparative politics (and political economy in general) but essentially there's various distributional effects of the dollar's current status as the global reserve currency.
The US stands to benefit overall if they can actually get rid of this status and have other countries share the burden. However, countries like China actually have no incentive at all (outside of political reasons) to be changing the status quo though. Many countries are very very dependent on the US being a net importer country in order to finance their economies.
Debt is much weirder in macroeconomics (especially in international economics). Currently the US finances its spending through a mix of encouraging further borrowing (whether private or public) and decreasing producing capacity (by encouraging increased unemployment especially in sectors like manufacturing).
In short, debt is easier to pay off when you continue to have plenty of demand for your currency. However, who benefits from the debt and who pays for the debt are very different in the US and I'd argue it's one of the main identifiers of the current political split. If global reserve currency is lost, that assumes a demand for US dollars that is lower than the current demand which will thereby make debt a bit more stressful.
Again, debt is weird in international economics due to factors like military strength, issue linkage, sovereign defaults (and any related risks of contagion) etc.
Something Joeri didn't really touch on here is why a country would want to have the reserve currency status. There are some really interesting articles around about how reserve status is really an 'exorbitant burden'. Basically it hurts the US far more than it helps - it's more of a prestige thing at this stage than a financial benefit.
Would love to see Joeri address this!
I think in terms of a cultivated hubris and ideologically reified sense of international impunity (apotheosis of "American exceptionalism" as a settler-colonial project), "prestige" ie ubiquitous recognition/respect is an undeniable aspect, but in terms of the _material_ reality of this assertion concerning some abstract/nebulous notion of "burden", the veracity of _that_ charge is I think illuminated more clearly if we ask what is really the _only_ political question, inherently generating a sort of generalized range of likely possibility through anchoring/grounding our internally conceived ideological political map to its external _material_ territory (aka "scary" and "definitely evil" marxism lol...): _cui bono?_ *_Who benefits_*
Reminded of Michael Parenti, an excerpt from his piece Mystery: How Wealth Creates Poverty, which highlights this lacuna cultivated under the auspices of global US empire (also see: dialectical/historical materialism):
_"In their perpetual confusion, some liberal critics conclude that foreign aid and IMF and World Bank structural adjustments “do not work”; the end result is less self-sufficiency and more poverty for the recipient nations, they point out. Why then do the rich member states continue to fund the IMF and World Bank? Are their leaders just less intelligent than the critics who keep pointing out to them that their policies are having the opposite effect?_
_No, it is the critics who are stupid not the western leaders and investors who own so much of the world and enjoy such immense wealth and success. They pursue their aid and foreign loan programs because such programs do work. The question is, work for whom? Cui bono?_
_The purpose behind their investments, loans, and aid programs is not to uplift the masses in other countries. That is certainly not the business they are in. The purpose is to serve the interests of global capital accumulation, to take over the lands and local economies of Third World peoples, monopolize their markets, depress their wages, indenture their labor with enormous debts, privatize their public service sector, and prevent these nations from emerging as trade competitors by not allowing them a normal development._
_In these respects, investments, foreign loans, and structural adjustments work very well indeed._
_The real mystery is: why do some people find such an analysis to be so improbable, a “conspiratorial” imagining? Why are they skeptical that U.S. rulers knowingly and deliberately pursue such ruthless policies (suppress wages, rollback environmental protections, eliminate the public sector, cut human services) in the Third World? These rulers are pursuing much the same policies right here in our own country!_
_Isn’t it time that liberal critics stop thinking that the people who own so much of the world---and want to own it all---are “incompetent” or “misguided” or “failing to see the unintended consequences of their policies”? You are not being very smart when you think your enemies are not as smart as you. They know where their interests lie, and so should we."_
To be blunt and echo Rosa Luxemburg and her Spartacus movement's political call to action from interwar Germany, before of course being executed by the freikorps paramilitary (later becoming the SS, shocker) at the behest of Ebert's ostensibly _social democratic_ SPD party, almost immediately resonating the truth of such a succinct political dichotomy to this day, what I would say broadly juxtaposes a dichotomy of financial/social order (abstracted into purely economic terms in this video, perhaps unintentionally obscuring a more holistic consideration of the trajectory for humanity and civilization):
*_socialism or_* [continued] *_barbarism._*
Impressed with your channel. I think you've found a good segment to position yourself in and should expect viewership and subscription growth to amplify. The economic side of things is more of a blue ocean on KZclip compared to other areas. Just out of interest, do you work alone or how big is you and your team that support you?
☝☝Tell Max that I recommended you for a business investment that will change your financial life
Great stuff, Joeri - as usual.
I would like to have one more currency in your ranking table - the Euro
That would involve mentioning the exchange rate which nullifies this crap
I can’t see it happening. I think these currencies could be seen as alliance currencies. China can leverage their currency because they’ve devised an alliance that is in complete opposition to NATO. By comparison, Europe and the USA are both part of NATO. The Americans likely wouldn’t be too pleased if the Euro became another global currency because it would weaken their USD currency.
It’s the same reason the Russian Ruble won’t likely become a secondary currency. China would subdue it because it would weaken their own currency within their alliance. Besides, you only need a single global currency as part of an alliance.
The only way I could see the Euro becoming it’s own global currency would be if Europe broke off from the USA alliance-wise.
China doesn't want the end of the dollar system; becoming a new reserve currency, even challenging it would devastate its trade position.
the 1minute 43second ''The Coming War on China - a film by John Pilger - Official Trailer'' and the 14.37 ''Shocking LBC Debate Shows New Cold War with China'' by Novara Media. Maybe throw in the 19min 'Banks Get $1.5 TRILLION Bailout Over Coronavirus,' by The Jimmy Dore Show and the 2.52 'Why Do Banks Make So Much Money?' by Positive Money {uk}
@alan yosores US and European companies will refuse to trade in gold, which will mean manufacturing will come back to the West.
@Ennui Look at the rate that china is expanding renewable and nuclear energy, and continue the trend line for another 10 years. By then, their domestic production in fossil fuels will (roughly) cover their energy needs that aren’t covered by renewables and nuclear.
Opening up their capital accounts will result in net outflows of wealth by natives in PRC. Replacing USD will also mean RMB has to be exported which means trade deficits and manufacturing going to other countries. So...
@ainz bandanas what does the clown
@izaj ahmed time to wake up from ur dreams thats not how it works my friend from the middle east lol
@izaj ahmed wishful thinking. have you lived in latin america to understand how their trade works? developing nations trade more in us dollar than within their own economic unions, the demand for dollar has never been stronger for its stability and liquidity. to challenge dollar's dominance, china would first have to liberalize its capital market and effectively crush their economy, and where do you think all that wealth would go? that's right, it would flee like water to western banks, holdings and assets. china is held hostage by the very monetary system they oppose, their only hope is to sway enough economic partners to somehow rebalance the power of sanctions, they are afraid to death of any sanctions against them and constantly searching for loopholes, the rest of the currency rise is nothing but hot air. the dollar is here to stay for a very long time.
@izaj ahmed Yeah, no. All of the non-USD trade agreements are window dressing, without exception. Very symbolic and all, but the volumes involved are just tiny compared to the USD denominated market. Now, that doesn't mean that the USD will remain dominant forever, but it will take vastly more volume in non-USD markets to genuinely threaten the USD as the global reserve
Countries around the world have started to accept trade in other currencies..for example, Brazil-Argentina working on new currency for latin America outside of USD and BRICS nation too..Saudi said they are not bound to accept USD for oil payments and considering RMB from china for its oil. This war exposed the west completely and countries lost the trust in USD. So, work is already underway and accelerated more and more
Damn another great video! Very well done and well explained!
This was really interesting, I think the scoring system was a bit arbitrary, maybe you could rank the top 5 countries' currencies for each category for a more grounded value
Thanks for your assessments.
-Would have been interesting to see a column for the Euro in the chart.
I don’t think most people have tried to move/pay large amounts of money from one country to another. It’s almost impossible to move currency around w/o the dollar. You almost have to convert everything to the dollar.
I heard that BRICS counties are collaborating to create a new global trade currency the will be based on trade commodities gold, silver,oil, gas grains and minerals. I don’t believe the dollar will go away it’s just not going to be the dominant currency it is today. Basically if a can of soda is $1 today it could cost $1.50 after BRICS currency starts to be used more. OPEC countries have already agreed to trade in the new currency but they will also trade in dollars.
Thanks, great video, essential topic.
For a next video, maybe more details in how big companies manage their multi currency transactions and what could tip them towards the yuan. Maybe Chinese exporters offering discounts on payments in yuan?
Write me ⬆️
Biggest threat to dollar hegemony is it's own action
I wish the little score sheet was available in a link, preferably with attribution information, so I could share it elsewhere.
You didn't mention much about the tight currency control China wields over the RMB, or the manipulation of the value of RMB. Until the RMB is a free-floating currency, and foreigners have easy access to capital markets, the RMB won't even overtake the Swiss Franc as a usable currency, nevermind the other basket currencies such as the EUR, GBP or JPY.
@Elliott S we’re talking about reserve currencies and you’re talking about homeless people. I’m thinking you’re the one that must be joking.
@Daniel Benner are you being sarcastic? the entire subject of this whole video is USD vs RMB and why the letter isn’t positioned to take advantage of being a reserve currency. of course if you bring up the validity of the RMB as a comparison to Chinese growth and domestic policy it is very relevant to mention comparable growth-QOL inconsistencies in the US. are you playing dumb?
@Elliott S ah yes I forgot about whataboutism, touché. Please point to the comment where I was talking about the US at all.
@Bisquick very fascinating analysis, thank you.
I just watched 2 videos, and I am hooked now. Simple explanations and to the point
I like your videos ! Keep on producing!
I've never heard anyone speak so coherently and clearly on this topic than you have done in this video!
@Will hmm that is a very old-school way of looking at it. I definitely think it played a very large role in the past. Nowadays, conventional large scale wars are not so common. So, it might not have the biggest impact.
@Money & Macro haven’t watched it all yet but isn’t it the navy of the USA and it’s allies that upholds the currency as that navy allows for global trade to exist.
Thank you Oliver! It took a ton of effort to summarize so much information. So, I'm really happy that it helps :)
I still think how these scores trend is the more important aspect of this kind of shift. But as we know too well, we all guessed incorrectly in the past in one way or another (or none of us needs to work for a living if one can bet correctly in the stock market every single day), all these will likely be different in a completely unexpected manner 10 or 20 years down the road.
Excellent video, informative and engaging.
People get way ahead of themselves. This isn't even on the Chinese radar until at least 2050. Right now they're more concerned about how they can manage their dollar denominated assets without getting ripped off by a debtor that seeks jubilee by means of inflation.
@Вадим Вадимович Damn tourniquets
i doubt any of us will last till 2050
Gold
the inflation is well managed
People often mention that the USA fortunate that it can run a huge deficit because it’s status as a trade currency greatly limits inflation. Seldom mentioned is that this is not necessarily a benefit to the people. Being a net importer means jobs move overseas. It’s debatable whether those jobs are “wanted” but regardless it puts higher pressure on unemployment.
Alternative to running a trade deficit, loans and currency trades are essentially investments into said country. China will have to select favored investment partners or risk losing money. I don’t really see how this builds genuine trust and liquidity. It remains to be seen if China can thread the needle with its loan plan or central bank currency swap plan. If so, China will have pulled a rabbit out of a hat.
Send a what'sapp direct message for lnquirues & consultation..
The two links at the end of the video really have a lot to say about whether this will work or not. When I found your channel, I was a total Dalio/Poszar believer, but I've been listening to Jeff Snider a lot more & his refutations certainly seem valid.
I would like to bring these points to the table:
1) The whole picture: While we are having a tunnel vision on China, this "De-Dolarisation" is not an isolated case exclusively by China. Latin America, Middle East, Africa, Asia are doing the same thing in different names and currencies.
2) The motivation: The Chinese currency could be the worst currency on the planet, but that not the point. It is literally De-Dolarisation This is not about the Chinese Yuan. President Joe Biden used the "financial nuclear bomb" on Russia, and that really freaked the rest of the world out.
Traditionally, we would diversify into Euro, Pound and Yen. But these currencies proved to be worthless since their countries subserviently followed the US sanctions, seizing client's assets and gold. We might as well just hold US Dollar.
This such situation, diversfy your currency reserve to US's rivals make perfect sense. Neither side can sanction us.
3) Technology: This is happening regardless of China. The technologies are growing, making alternative currencies and monetary system more and more viable. Change is constant. The idea of the US can keep doing exactly the same thing and get the same rewards forever is absurd. This single global reserve currency paradigm is gone.
4) China is just a developing country, and for valid reasons. Huge economy doesn't mean developed economy. It is unstable and lack of many facilities.
5) It's not really De-Dolarisation. Just diversification. Dollar will still dominate, just not dominate enough to use that "financial nuclear bomb" again.
On a deeper level, this is also a root cause of the world's disease after the disintegration of the Soviet Union. It is also a problem that cannot be solved by Western-dominated values. The breakdown of a system often starts from within. Eastern values cannot bridge this contradiction. This is a problem that can only be solved with the mutual assistance of people all over the world, and it cannot be solved by a wealthy country with a strong military force. But from a positive perspective, it is precisely because of these problems that the world can move forward.
In fact, the core of this matter is the issue of global wealth distribution. The earth does not lack resources, nor does it lack hard-working and smart people, but the vast majority of countries and regions still live in poverty under the US dollar-dominated global wealth distribution system. This fact may also be the truest evaluation of Western-dominated values. This fact creates the need for a multi-polar monetary system.
@ihmpall ASEAN has been using it for quite some time now.
What countries in Asia are running to adopt Chinese currency again ?
Emeğinize ve yüreğinize sağlık kardeşim, güzel analizler yapıyorsunuz
✍️✍️♥️👆👆👆
I’m surprised you never mentioned anything about gold backed currencies since that is the main plan of BRICS to replace the dollar. Gold is definitely a more viable alternative to the dollar, and a lot of central banks around the world are rushing in to buy gold at the moment.
@Money & Macro maybe look into what their new development bank has been up to in the last decade. Other than a $50 billion start, haven’t seen many updates since the new development bank was new…
I think there's a need for an alternative to the dollar dominance in international markets.
All, what you say, is correct. The "transission" will be happening via warfare. The currency power - as you said - corelated (or mutually depends) on military strategy. It has always been like that. Go to an African country like Benin and you will - studying the coins - understand the switch of power (from pound, to franc to dollar).
Not a surprise, chicom strategic thinking has advocated this since the 90s.
I don’t think the dollar is going anywhere. I think in the long term we’ll see the world split in two regarding currencies.
It will still b there but of low value, Brics is all about west vs east
You have not mentioned the elephant in the room : If I were to be a Chinese business, I would want to use direct Yuan - Trade-Partner currencies instead of having to pay a middle-man commission which is the Yuan >> USD >> Trade-Partner conversion and Trade-Partner >> USD >>> Yuan.
Oh he knew it. In fact he almost sound sane when he realized afghanistan lose half their foreign reserve. He also congratulated himself when russia foreign reserve was seized too.
I would love to accept Renmenbi. It's just very hard to accept it and spend it. Even Chinese supplier only accept USD or EUR. It's quite fascinating.
@Sualtam Just like they have nuke inspectors, u don't think they can agree to have gold auditors. It's ludicrous to even throw the idea that gold cannot be trusted vs fiat money. The idea may come to pooling all the gold reserves of the Brics countries for a common currency. You think Saudis have no gold, you think S Africa has no gold ? And it might be 1/10 of the value of that currency backed by gold. That sures beats toilet paper money that can be printed ad infinitum.
@Bob Morane Gold backing is also based on trust.
Who says that there will be enough gold to back every Renminbi.
You can secretly devalue a gold based currency and that happened all the time during the 19th century being the main reason for economic crisis back then.
@Anonymous Believe me, the feeling is mutual !! That's why the dollar is going down, because it cannot be trusted anymore and words like yours show the rest of the world why it's not a question of if anymore, but a question of when the dollar will be gone.
@Bob Morane lol. Delusion.
May be the aim is not for RMB to compete with the USD but to promote local currencies for the moment and a new reserve currencies later.
No matter if it is USA or China, I always think that using IOU nothing as the base of reserve currency (money is trust) totally absurd and unfair for other country.
Sir your analysis is impeccable and logical.I really appreciate your views.
Get in touch directly!!⬆️✍️✍️♥️👆👆
There are so many countries that are actively trying to get out of trading in USD due to the excessive printing.
I'd suggest buying shares of reputable firms and holding them for as long as those companies remain reputable. Simply do this; disregard the market opinions and projections, which are at most amusing
Write me ⬆️
It's not a threat, it's a promise. Do it
Please have a follow up video doing this analysis with the Euro
I don’t think China wants to replace dollar with RMB, but it doesn’t stop the BRIC countries to issue a new currency to partially replace dollar
@akeshshi9137 I wish!
@akeshshi9137 who’s the master of EU?
@akeshshi9137 nobody force u to own anything
India and China haven’t been getting along and India joining the Quad alliance is kind of awkward.
One of the best if not, the best $DOLLAR comprehensive analysis videos.
I have been Stock Trading for 23 years.
So this is very helpful for future understanding & predictability
Get in touch directly!⬆️✍️✍️♥️👆👆
The automatic demand side give way to monthly withdrawals.
I have a question.
What if the US is no longer able to print more money in bonds because overseas countries are selling them back and the opecdollar no longer exists ???.
@ainz America means the old dementia reality
Then u need to wake up from ur dreams
Write me ⬆️
Hey, great video! Do you have the text of this somewhere? I'd like to study this a bit more in depth
@jpablo he probably meant cited resources not captions
YT auto generates a video transcript. I can see it on mobile, under the description.
I'll upload it shortly.
Thank you for the vidéo. But china does not intend to replace dollar by yuan. Brics countries want at first diminish use of dollar by using local currencies for bilatéral and régional exchanges. And then create a New international currency to replace dollar for savings.
@akeshshi9137 nope
Akesh Shi No, it will be a basket of the national currencies of the BRICS following a proposal emitted by Keynes on 1945
The Euro is already better suited for use as a reserve currency than the RMB, even after Xi's proposed changes. Yet it has made only modest inroads on the US dollar's hegemony. I guess one thing an improved RMB would have in its favour is that China is less likely to go along with American sanctions than the Euro Zone.
@Rap it's literally the truth china admitted to it
@WilliamTheBonquerer You got that from the western media, right?
*Reserve currency means a budget deficit,the Maastricht doesn't allow it,Europeans are destroying their local economies because of this,if the Euro replaces the dollar the World will become poorer.*
Thank you for your presentation , I watched all of it .
I feel like every time the USD looks like it *might* be up for losing its reserve currency status, the country that was hopeful to take it ends up f#!%ing up that chance big time.
I would love to see the same kind of analysis with the Euro compared to the Renminbi and the dollar
US media is so dominated by propaganda and cheerleading that it's virtually impossible to find straightforward, unbiased, fact-based reports on stuff like this. Thanks so much. :) You didn't include intangibles like trust and confidence, though, and I'm sure factors like that play a part as well. If I, in the US, can clearly see my country teetering on its pedestal, I can only suppose that people outside the country see it too.
@Kiro America, then why spread gangs
Good try Mr. 50 Cents Army guy. Per The Bank for International Settlement, China's State-Owned Enterprises debt currently over $33 Trillion usd, which is off-balance sheet debt. The 70% of the off-balance debt must be paid back in foreign currencies (non RMB). Their real estate shadow banking industry is estimated to be at least 3 times larger than the 2008 Financial Crisis, per Bank for International Settlement (2017 and 2018 reports). China's economy is driven by debt because for every dollar it exports to the USA, $0.55 to $0.60 is imported from the USA. China's economy have been on shaky grounds for over 10 years and that is why they have a $50,000 currency exchange limit per year per person? Why are so many rich people connected to the government, including government officials, are moving money out of China for the past 15 years?
I live outside the US and I disagree with your opinion concerning the US is in a “pedestal”.
US propaganda (as you said), is overblown and dominant, however, the so-called decline or fall of the US is also overblown. It just so happens that American media (which has its own interests) has overwhelming reach all-around the globe that it looks like the “fall” of the US is near.
In conclusion, no, the US is not in a pedestal about to fall off.
I think, he touched on it by mentioning the sanctions and instances where each respective country has set precedents on how and why they would make their currencies less usable.
Nice video and explanations. Don't quite understand these ratings however. Why wouldn't USD get 10s in each category? And what's the difference between 3/10 and 4/10? Since this is an economics video, it's possible to be more quantitative, right? So as a suggestion, perhaps it might it be better to only rate CNY and USD relatively. Concretely, say for the liquidity category, the ratio #CNY/(#CNY + #USD) shows how many CNYs are in circulation relative to USDs. To reflect foreign influence, might have to correct for liquidity in the respective domestic economies and focus on how many are held by (respective) aliens/foreign investors. Then, on a scale of 1--10, China's rating would be 10 * (#CNY/(#CNY + #USD)) and for the US it would be 10*(#USD/(#CNY + #USD)). Round to the nearest integer for readability. So this is a more systematic way to generate a rating rather than by heuristics. It would then be possible to see how this rating has changed over time if you have that data. Would add a nice, quantitative flair to the video! Similar rationalisations could apply to the other categories.
Yeah the framework he was using also struck me as a little bit arbitrary. For most Western citizens, the USD is very much a 9 or even a 10 on each of those criteria.
I thought the point of the decentralized digital banking is so that currency conversion can happen really fast and really inexpensively, so obtaining, spending and investing wouldn't have to be in a specific currency. And china purchasing oil in Renminbi wasn't to push their currency, but to demonstrate that options do exist outside of the dollar
☝☝Tell Max that I recommended you for a business investment that will change your financial life.
Thanks for another great, sober analysis without the "How China will DESTROY the US dollar" hype (which seems to alternate with the "China COLLAPSE only ONE MONTH away?" videos. For some reason I'm having a hard time distinguishing between spendability and liquidity. They seem to largely overlap to me conceptually. For example, to highlight spendability you review the idea that China wants to settle oil transactions in RMB, which entails pushing out more of that currency into the global marketplace, thus making RMB markets deeper and easier to transact with, which just sounds like the same thing as liquidity to me? For liquidity, the example you highlight is China importing more from less developed nations around it, again to push out RMB and have more of it sloshing around the global currency marketplace, thus enhancing the availability and depth of the RMB market. Am I missing something? Would appreciate if anyone would clarify this for me.
Liquidity is more related to how quickly the currency (or other asset) can be exchanged.
What about Euro as the alternative to USD?
very good information and nice presentation - thank you :-)
It's not a rivalry, it's a war
What about a currency shared by countries of the BRICS which would be backed by gold and commodities? This might be a more viable alternative to the USD.
@WilliamTheBonquerer when I say BRICS I am already projecting the inclusion of various countries which have already shown interest in joining like Saudi Arabia, Argentina, Iran... Now we are talking about a block which controls the majority of the energy resources, has more than half the world population and has a formidable industrial base. If these countries want the west to trade in their currencies, the west will have no choice. But it seems you are stuck in the present / past where the west is the center of the world, this has already come to an end.
Have you ever thought about doing a video on the US debt? I’ve read several articles that talk about how the debt is issued, as well as an article on pragmatic capitalism called understanding the modern monetary theory, and they seem to be at odds with each other. I guess my question is why do we charge interest on debt that is to ourselves? Why don’t we just print the currency?
Let's talk, I have something bigger to introduce....⤴️
That is why I'm using Chinese Union Pay instead of Visa or Master Card, works everywhere including Russia!
once Chinese companies start offering RMB credit cards in international markets, it's going to be a real multipolar world.
very informative ...loved it........
Another area economist appear to ignore is the legal system. Evergrande is the current example. China does not have trusted mechanisms for creditors and investors to recover their loans and collateral through the courts. China has made it clear - keep internal companies going through subsidies if necessary but asset recovery and repayment to foreigners are secondary.
Mind your lehman brothers, SVB bank , and homeless living in street tent 😂😂😂
Ha ha ha look at your own country's financial system first, any debt recovered goes to your local lenders / local banks first.
Do you think there is a chance that some of that future Yuan can be back by gold since pretty much all goverments over in asia are buying alot of gold, maybe even more then the official numbers
@Tony Su America, this is why I print dollars, I don't have gold
The countries buying gold simply recognize that their own paper currencies aren't worth much to most people so are hedging their welath
Strong economies support strong currencies and might diversify a bit just for good practice but don't invest in gold as a primary way to ensure their wealth is secured.
The only problem I have with this analysis is that it assumes China's challenging of the dollar would be towards the ends of replacing it with a RMB currency hegemony.
Xi has noted on numerous occasions this is not the intention/goal envisioned of an alternative international financial system, and the policies embraced and described here such as emphasizing currency swap/SDRs back up this intention toward regional currency dominion. I understand the perspective accurately explained here, _but_ I'd posit that the capital controls interpreted as a negative feature of the RMB (as a globally hegemonic currency) when viewed from, say, a global working class perspective (ie _not_ the perspective of transnational corporate/finance capital), might in fact more holistically be appraised as an enormous and for the most part unavailable _positive_ aspect to the alternative financial order China and others are now building/cultivating.
Lost in this discussion discreetly about economics is the historical causality of how this all came to be exactly and I think here is probably the most revealing aspect as any globally considered systemic evaluation of this "cold" war history pretty conclusively and inherently illuminates the reality of US empire, the US having positioned itself as the "consumer of last resort" at the end of the global supply chain to absorb inevitable overproduction of capitalism through cheap consumption or of course through our favorite activity of war/arms sales (military Keynesianism, the only button we can push at this point clearly), launching itself to hegemony post-WWII via imposing the Bretton-Woods international financial system with the US dollar as the "global reserve currency" using the leverage of being the only industrialized nation-state _not_ bombed to shit post-WWII (the US ensuring this outcome with Dresden/Tokyo, along with denying a Japanese surrender to the USSR by mandating unconditional surrender via utilizing those nukes we dropped - a simultaneous radioactive line in the sand directed at the USSR's understanding of its geopolitical sphere of influence as well, supported by Stalin's refusal to back up the communist movement in Greece which deviated from Tito's decision from Yugoslavia in addition to other coerced consequences like the immediate withdrawal of troops from Iran after consecutive nuclear threats were made by Truman/insane generals like MacArthur, clearly I digress lol...but I guess my broader point with all of this is...this stuff is all connected and digression is often an illusion of constrained attention...or something). Take something like the "washington consensus", effectively the solidification of this ideal norm of international acquiescence to US empire, particularly in regards to the IMF/World Bank "structural adjustment" programs, which essentially offer capital loans under the stipulation of concealed and crippling control by US firms over a nation-state's labor/resources/institutions - enforcing a policy of austerity in prioritization of paying back shareholders with insane interest...it's an "offer you can't refuse" which leads directly to debt-peonage and more implicit political/capital controls guided by US firms solely toward their perpetual benefit.
I'll shut up now since no one will read this wall of text anyway lol, but this is merely the tip of the imperialist iceberg and its an understanding elucidated by a materially grounded dialectical materialist/historical materialist critique (aka uh oh...m-m-m-maaaaaaaarxismmmm lol...), probably most prominently in regards to empire and its functionality in maintaining capitalism and its inherent class rule/war by Lenin's Imperialism: The Highest Stage of Capitalism, which broadly outlined the material logic of global capital in 1916 and (I would say uncoincidentally) predicted the trajectory of US empire and its "full spectrum domination".
To be direct and echo Rosa Luxemburg from 1918 Germany, before of course being executed by the freikorps paramilitary (later becoming the SS, shocker) at the behest of Ebert's ostensibly _social democratic_ SPD party, almost immediately resonating the truth of such a succinct political dichotomy to this day, what I would say broadly describes the dichotomy of financial/social order abstracted into purely economic terms in this video:
*_socialism or_* [continued] *_barbarism._*
About time someone is a threat to the bully ,the boot on the other foot
China are building Silk Road Belt projects, if much countries are joining it deeper, They will issue Ruaminbi as major trading currency
I'm not suggesting that the Chinese Yuan will become the next reserve currency. But I think there is something to be said for the Western freezing Russian foreign currency and possible seizing of Russian assets in Western countries. To non-westerners this is a huge alarm bell to further investiture in those nations. Now non-western affluents will have to consider that if their native country doesn't play ball with the West that they're gonna get the Russian treatment. Not a replacement of the dollar but definitely something to consider.
Thanks but the point is not for the YUAN to go head to head with the Dollar. BRICS countries are moving to settlements in local currencies. The Yuan is just part of a basket of currencies that will form an alternative to the US Dollar.
Brazil and Argentina have committed to what is hoped will become a new Sth American currency and alternative to the dollar.
Fickle as all those countries are. The initiative will very likely never get off the ground.
thanks for the content which is covering a lot of ground
RMB is not a free exchanged currency. If you have 1 M, it is very difficult to get US dollars and leave China. Not only you could not exchange to USD, but sometimes the state owned banks could automatically deposited RMB if you have USD in that bank.
you need to have stuff people want for that currency... Chinese car companies are popular now in the middle east in a way they weren't 30 years ago, or even 15 years ago.
I'm impressed by the pronunciation of "Xi Jinping" and "renminbi", especially as Joeri managed to repeatedly nail the latter one.
@Liam NIre Well, we _are_ on KZclip.
He was actually an exchange student in America, he is fluent
Wow. You're easily impressed...
The USD will not stop being the reserve currency in a year or two. But give it 20 years, there is a clear and undeniable trend that countries are slowly moving away from dollar dependency. Perhaps it will still be a reserve amongst western countries, but the rest of the world see it too big of a risk.
I think the biggest obstacle to RMB becoming more widespread outside of BRICS, is the lack of openness of China in general. Unless I’m trying to avoid sanctions (which isn’t a common scenario), why would I even consider RMB?
@Dingyi Pu and why would the RMB make these peoples’ lives any better? China has proven in the past 2 years that it can make absolutely fundamental changes to its economy such as ‘disappearing’ leaders of major companies, hiding/obfuscating key economic data, etc…
It's not just that the US has been running a current account deficit for a long time, but that, as the world's largest economy, even a small current account deficit relative to the domestic US economy can be significant on the global stage.
When you add on top of that that the US has leveraged it's position as a global economic and military superpower to get, let's say a "good deal" on many of their imports, it just adds to the challenge for China.
quality+interaction+algoritme+joeri+L+ratio
Easier said than done. It will be extremely difficult to accomplished…I doubt if it could done...
Send a what'sapp direct message for lnquirues & consultation.
The problem with the Euro being an alternative to the USD is that Europe does not have much of the natural resources unlike the dollar which is pegged to the Saudi petrol station. But it's a different thing when you talk about the soon to be BRICS+ which control, most of the natural resources, food, tech exports and other goods and don't forget the largest consumer market. It will bring something similar to Costco membership where you have access to the stuff and better deals for having the card. Of course rationally, it's safe to say that people will likely be in possession of a currency that gives them access to wide variety of goods that they need. People will likely possess the BRICS buck to have access to most of the natural resources and other commodities needed in the developing world. And also more people means a bigger consumer market to sell your exports. This is why in my opinion, not necessarily that the dollar will be toppled all together but its market share would reduce to around 30- 40 percent or even less. Only time will tell.
This whole money thing has to move slowly so all countries can adjust. Otherwise there will be a worldwide catastrophe.
The USD has transparency and audits some China does not have.
The rest of the world is ok with the USD being the reserve currency, the speed to de-dollarise is more related to the realisation that your money can very easily be stolen by the USD system. Its all about risk management. This is the biggest elephant in the room.
America, the dollar has unfortunately become C because of a demented old man who cannot differentiate between Iran and Ukraine. This is strange
I think only EURO or European currencies can end dollar dominance
u wish
You should make a video about the planned brics currency, it is the real threat not the yuan