pull down to refresh
31 sats \ 3 replies \ @justin_shocknet 14 Aug \ parent \ on: MicroStrategy, IN-Q-TEL, & the CIA conspiracy
China doesn't export energy, raw materials, or security at any real scale so it is incapable of having a world reserve currency... Pockets of trade do not mean it has a lasting network effect, I don't even think the states that use it denominate anything lasting in it.
This is why Bitcoin is inevitable as world reserve and sooner not later.
After WW2 USA held more than 1/2 the worlds manufacturing capacity. It made the cars and fridges and other manufactured chattels essential to a modern industrial economy. It also imported the raw materials required. Raw materials suppliers are rarely price setters and are naturally the first target of any hegemony(look at the tragedy of most oil producing nations- look at Iran and Russia now under Chinas yoke).
USAs resource hegemony started with Latin American commodities more than a century ago.
Today China dominates both the production of the chattels a modern economy, while still contesting the highest levels for example chip production currently held by Taiwan, and the raw materials commodity markets it buys from to supply its manufacturing.
Most nations need to trade with China or suffer significant economic disadvantage.
Dominating both export and import markets of most nations globally is the position from which to quite naturally gain global monetary hegemony- it is how the US did it.
Domination of global trade has been the corollary for monetary hegemony since The Rom,an Empire.
Whether Bitcoin can change that historic power dynamic is unproven and looks unlikely, if not impossible.
reply
Dollar became reserve not because is could produce stuff, but because the US was stable
You can't produce stuff if you're unstable
Lack of natural resources, including defensible geography, demographics, and rule of law, are requirements for stability
Chinas manufacturing can disappear overnight, unlike when Europe was bombed out and US had leverage... China has no such leverage, it has bad geography, demographics, no expeditionary force... it's not even remotely comparable.
That's the point, fiat is temporary, not just the current fiat. All fiat. There's no where to run after the dollar, because we no longer live in the world in which it was created.
reply
US was 'stable' in part because of its distance from Europe and the devastation of WW2. USA only entered WW2 after it was invaded but never suffered the destruction of its main industrial base.
The world is now dependent upon Chinese manufactured goods. The USA cannot declare war on China because that would bankrupt many of the USAs biggest corporates who are so seriously dependent upon Chinese production chains. Fiat money is a form of state leverage- leveraging upon the monetary wealth of your citizens to wage war or expand your economy or to fund whatever woke project. China is using fiat capital issuance to build a global trade infrastructure network.
In the west the banks have become parasites capturing fiat capital issuance and using it to rentseek non productive fiat debt- a lot of it housing debt. The governments of the west have become subservient to the banks while China still maintains control over banks and direction of capital flows. China is now supporting proxy war military attack upon Western backed territories and intends to expand its sphere of dependent states as the logic of hegemony dictates. IMO the outcome cannot be easily predicted or prejudged.
reply