Comment by hayst4ck

For extra sauce on the "they're barely even thinking about this" cake someone figured out where those crazy "Tariff Charged" numbers were coming from, they're taking the trade deficit and dividing by the total imports from that country.

https://imgur.com/a/jBTiz7T

edit: The White House deputy press secretary posted their formula and it is just trade_deficit/2*total_imports per country just dressed up with a lot of fancy language to make it seem smarter but the two extra terms are constants.

https://x.com/KushDesai47/status/1907618136444067901

It’s been our turn for a hot minute. Republicans have been blowing up the status quo since Reagan, and the Democrats enforcing austerity since Clinton. American corporate leadership is excellent at hitting quarter-after-quarter KPIs for bonuses and share price growth, but there’s ample data it has all come at the expense of workers - increased precarity, decreased wages, increased costs of everything, as the country is plundered down to its core and sold off piecemeal.

Post-Carter United States (and South Korea, and Japan, and the UK, and much of the developed world in general) is a prime example of the follies of prioritizing numbers-on-a-spreadsheet growth in the short term, over a balanced and robust domestic economic engine that ensures a healthy, happy, stable populace that wants to have kids (since they have the money and time to be good parents).

> What still baffles me is how people act like this was some kind of thoughtful decision.

I'm no economist, but I can see that there are second order effects that this addresses that other systems would lack.

1) Tit for tat on tariffs doesn't work because of other barriers to trade such as currency manipulation, subsidies, regulations, etc.

2) We've learned from games such as iterated prisoner's dilemma that strategies that succeed are ones that clearly communicate how they'll act and respond. A clear formula such as deficit/imports accomplished this. Countries know exactly what they must address in order to access US markets.

3) You can end up playing whack a mole with countries in that they can set up shop in other countries to bypass tariffs in their own country. By applying a consistent formula to all countries, you no longer have to play whack a mole.

It seems thoughtful if you or your children or your friends are heavily invested in crypto and think removing the USD as the primary currency of trade is a good idea.

I know it's a Republican joke to blame evil meddling globalists for the US's problems but it sure seems like a bunch of people looking to ruin the US for their own global ambitions are running the show right now.

Luckily the US has quite some momentum so it can be hoped the damage is limited before the next election so it can then be reverted.

In this case it's much much worse than just incompetent. You're looking at someone who takes an evil delight it doing the opposite of what smart people say to do, and destroying stuff.

This is what forced me vastly curtail my news consumption for the most part. I can only take so much breathless reporting about the "strategy" of the Trump administration, when it's plainly sheer incompetence with the winds of malice in the background. There is no actual plan to "make America great again", it's non-stop incompetent pandering to a base that just wants others to suffer.

> What still baffles me is how people act like this was some kind of thoughtful decision

Maybe it's the "Why not inject disinfectant to beat covid" [1] for the economy. But this time nobody around him said no. (note: added around him)

[1] https://www.bbc.com/news/world-us-canada-52407177

Plenty of us knew the outcome would be catastrophic. We were outvoted by the idiots.

I'm really do appreciate all those on HN who comment either for or against these tariff measures by including cogent arguments and relevant facts. As against ...

There’s been many people opposed to free trade for decades, on both sides like Pat Buchanan and Bernie Sanders. You can think those guys are incorrect in their analysis, but calling it “mindless” is just ridiculous.

This tariff regime is simply a “minimal viable product” aimed at the idea of reducing structural trade deficits.

> What still baffles me is how people act like this was some kind of thoughtful decision.

It is. This is being done as part of a plan, with full intent.

I wonder how much more evidence American people need to see Trump for being a Russian asset and working against US interests.

We are in treason territory.

> What still baffles me is how people act like this was some kind of thoughtful decision.

I'm afraid it is. An unholy coalition of capitalist-anarchists and ultra-conservatives is the driving force behind it. They both want to reduce the influence of the government to a level as small as possible. That can only be done by dismantling the current federal government.

The clearest evidence of incompetence for all to see is Trump's cabinet from his first term. If they're actively speaking out against him, something is seriously wrong.

> Rex Tillerson on Trump: ‘Undisciplined,’ ‘doesn’t like to read' and tries to do illegal things

Sadly, people didn't vote for Trump so much as they voted for "anti-woke." Or: I am tired of being looked down on and this is my revenge.

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Sri Lankan here. They just slapped 44% on us (higher than on China). The country is just trying to recover from the economic crisis and the sovereign debt default of 2022, so we have very high import duties on certain items (e.g. vehicles) to discourage dollar outflow. Looks like the US just saw that as hostile and decided to strike back.

> it feels like a good opportunity for China to increase their trade/influence in the region as well

influence for sure. But trade? Vietnam/Thailand/Cambodia already have ~40% of their imports from China and 5% or so from the US, I don't think this tariff can realistically increase trade between China and SEA countries much.

The Chinese don't want to buy anything, except raw materials. Their idea of trade is to sell products to you, not buy anything from you.

Not to mention 29% tariffs on Norfolk Island. Who hasn’t exported anything to the U.S. in years.

And a 10% tariff on the Macdonald Islands, which has a population of zero (not including the penguins).

Perhaps Trump thought he was taxing a fast food competitor?

Fun fact: these are all internal territories of Australia. Why they get separate tariffs is weird.

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Europeans have a lot of alternatives to American services, including building out their own.

What Europeans truly lack is the ability to defend itself without the U.S. They have the technical know how and can build the manufacturing capacity but that will take a decade at least.

Also, European financing is just not as strong.

However, with the U.S. voluntarily walking away from its role as the center of the world, this may not be a problem for too long.

Tech is the easiest service to replace considering American tech workers by insisting on WFH have already largely eliminated the geographical advantages American tech used to have.

The Chinese have alternatives to American services. Europeans could have too if we wanted.

> Right now Europe's own companies just ignore the statutes to keep their US trade.

If it’s the trade keeping EU companies in line, isn’t the destruction of trade that these tariffs are intended to achieve precisely the kind of thing that will then prevent them from staying in line in the future?

It's more likely to be related to culture and political structure than education is my guess. Unless, maybe, we want to use a different definition for education than just degree attainment. For example, Finland has lower attainment rates for bachelor degree equivalents than the US. This would seem to disprove your point.

The real issue is the two party split and urbanized distribution. The way the voting works and the structure of the houses means that once you reach about 85% urbanization the rural areas won't matter. We can see this at many state levels that mimic national political structure. We have multiple nations within our county, with the biggest divide probably being between urban and rural. So all you have you have to do is promise the rural group who feels they are increasingly marginalized a candidate who will look out for their interest. The specifics of those promises don't really matter because in the 2 party system it's us vs them more than actual policy positions. You will find a much bigger difference looking at the urbanization based metrics than you will at the roughly 10pt difference in who people with bachelor degrees voted for.

Edit: why disagree?

Switzerland. Power is extremelly distributed between municipalities, cantons and, in the Federal Government, there are 7 equal ministers. The system is not only robust by definition, but encourage dialogue and citizens participation in politics at every level through popular vote, educating people during centuries.

Germany. The country was designed to be incredibly hard to takeover from the inside.

Central government is weak, even if AFD would takeover the chancellorship there are few measures that would immediately allow them to intervene in the federal states or „Länder“, much much less than in the US e.g. unless there is war there is no way to use the military to force compliance.

You would have to take over the country 17 times, and since the elections are not synchronised you would have to convince everybody all the time that this is good idea.

Individual German federal states could be taken over much easier, Thuringia probably will be the first in 2028.

The biggest weakness than is that the legal prosecution on German federal state level is under control of the executive and could be used to prosecute political adversaries. But if this goes to far the remaining parts of the country could vote to takeover the executive if there was a breach of the constitution.

Expanding on this, Vlad Vexler offers a broader framework here:

https://www.youtube.com/live/hgPGPZRQdaU?si=4W0z1vkk2bfnueJZ

His analysis complements the crucial discussions elsewhere in this thread about the economic details (reserve currency risks, the tariff math) and specific geopolitical impacts, by focusing on the political drivers; the nature of post-truth populism, underlying societal weaknesses, the challenge of maintaining civic coherence in the midst of it all, etc.

The allies tried to make Germany robust against this.

Doesn't matter how intelligent or educated or homogenous culturally the Finns are...if Russia were to decide to invade.

Domestic political antifragility means nothing if you're not anti-fragile in terms of the outside world.

It's called the anarchic global system for a reason. The only thing enforcing norms is power and the fear of it.

Antifragility would be the EU finally forming a real union. As someone living in Finland, I'm not holding my breath that happens in our lifetimes. If you take a sample of average, non-cosmopolitan Europeans, they can barely even communicate with each other in the same language. Let alone come to agreements on who's going to pay for each others bloated social welfare expectations.

The EU is the very definition of Fragility. While Finland has made far more rational decisions than its EU neighbors (having correctly prioritized energy security, military, and technology), it doesn't matter because size is more important.

You can look at countries that have remained democratically stable for a long time. The UK and Switzerland come to mind. I live in the UK and we have an odd system that I used to consider a bit of a gimmick for the tourists to take photos of but appreciate more these days. Basically the fact that we have a king but with severely curtailed powers delegated to the elected folk makes it very hard for one of them to appoint themselves effectively king, especially as the military all swear allegiance to the actual king (or queen).

It's partly effective because they system wasn't really designed but evolved out of a lot of bloody power battles, going back to at least 1215 https://en.wikipedia.org/wiki/Magna_Carta

I used to think it was silly but if you look at rival European powers they had Russia with Stalin, Hitler in Germany, Napoleon in France, Franco in Spain, Mussolini in Italy etc. The UK is one of the very few which avoided having a dictator.

[Edit - I was kind of talking about the wrong thing - avoiding dictators rather than Trump types]

It would also help to have a population without a deep-seated beef going back to the civil war. You arguably have two separate 'America's split down that historical line that might not ever see eye-to-eye and, just like the US itself has installed dictators or favourable governments by funding disruption abroad, it is open to be exploited the same way.

How does this impact consumables? The capital doesn't balance, it disappears but the money used for it still exists

I was just thinking about this and I'll bet you anything that Trump is 100% hung up on the word "deficit" and that's about it. If we said "net importer" or "goods taker" or something like that we would not be in this situation.

> If they fold and remove tariffs on the US

The issue with this is the "reciprocal" tariffs that were announced are not related in any way to tariffs imposed by other nations. According to the administration, they set the tariff rate for each country as (trade deficit / (imports * 2)). Obviously the country in question cannot undo this even by zeroing all tariffs with the US, because none of this is based on tariff rates.

(so the US can drop the tariffs on them)

That would require other countries trusting the promises of the current administration, yes? How much credibility does the Orange One have on the world stage?

British tariffs come to a weighted value of 1.02%. That's what the US is worried about, 1.02%. Seriously.

> If they fold and remove tariffs on the US

Part of the problem is that Trumps's definition of tariffs doesn't make any sense. VAT isn't a tariff but according to Trump it is.

Does he seriously expect other nations to just get rid of VAT? Or somehow replace it overnight with some other system all just to appease the US? Because that's the only way you can lower 'tariffs' to zero.

It just won't happen and we'll be in a continual standoff until Trump concedes that trade barriers are not in fact a good thing for anyone. He'll never admit it, but it wouldn't surprise me at all if the illusion of a 'deal' is struck in order to save face and reverse this mess once it becomes clear it's not sustainable unless you want to shrink your economy and destroy others at the same time.

Foreign countries buy USD through trade. Japan needs dollars for international trade so the US Treasury prints dollars and gives them to Japan and in return Japan gives the US Nintendo Switches or whatever. Those dollars go into the international trade system and some of those dollars will just circulate internationally indefinitely and won't ever make their way back to the US, hence the perpetual trade deficit. This is a great deal for the US because at the national level they effectively got those Nintendo Switches for free.

People trade in USD because the US is the largest of large economies. Everyone trading in USD understands already that the US can manipulate its own currency. But they take a low-risk bet that it probably would have far less incentive or inclination to do so than an authoritarian state like China or a small economy like Argentina. Capital flows to the US because the dollar has been "safe"... it inflates, but predictably slower. The Chinese regime is more than capable of opening the illusion of free markets and making 50-year promises not to interfere with free trade and capital, tempting foreign investment, only to break those promises with an iron fist.

Regardless of the response from China, America is showing that it is irrationally willing to cede its incredible advantage for no decipherable reason beyond that some logarithmic curve of population idiocy has crossed the already absurd hockey stick of its own national wealth. It's a realtime lesson in the ancient rule dating back to the fertile crescent, that civilizations destroy themselves from within before they're conquered from without.

Should be understood as buying dollars for goods.

Also us trade is not bilateral.

The usd that are exported from the US, is not used to buy gods from the US. They are used to buy gods from other countries.

I think you’re somewhat missing the point, which is that the collapse of the dollar as the reserve currency around the world will eventually lead to default of US debt, which has cascading consequences domestically and internationally. This is the direction the US is heading if it really continues to alienate its allies and try to “fix” its trade deficit.

However, the OP was wrong about the fact that China will become a hegemony, for reasons like you mention, and so what’s likely happening isn’t the change of hegemony, it’s the beginning of the end of the era of the American Empire and to a likely a multi polar world. It’s going to take another world war, in some form, to create enough of a vacuum to give us another superpower/hegemony like we have with the US currently.

Looking forward to ”great” as in ”great recession”.

Make America a great mess.

Not surprising from someone who could bankrupt a casino

Good. Time for this idea to die finally.

In simple terms, if you're the Philippines and you're selling fish to Russia, would you rather have Rubles or US dollars? Way back in time, US Dollars were one to one based on gold in fort knox. Right? But no country has a gold reserve now. Most countries have a dollar reserve to back the paper money they print themselves. This is the main reason the dollar hasn't collapsed already.

[edit] someone who graduated college with an economics degree please come and correct the following vague and possibly totally wrong perceptions I have as a subject of the American empire /edit

The value of a country's money is backed by a combination of how much they produce and how much foreign currency and assets from other countries they hold (euros, dollars, gold) they have on reserve. Only the US gets away with having no actual reserve ...because a combination of military might and cultural strategic dominance has allowed it to BE the reserve for everyone else. This is why it somehow makes sense for America's economy to be based entirely on consumption rather than production.

OP is right. Whichever superpower controls the levers of global trade is the one that can sell debt and enforce the currency regime.

Some of us think that it's a lucky thing that it's been America, rather than a more authoritarian power, who had held that control for the past 80 years. Europe would not have recovered from WWII otherwise, and be living behind an iron curtain. Anyone who controls global trade after America is likely to be worse from a human rights perspective.

Because you can easily and cheaply convert USD to any other currency, and because it is the usual currency for international trade you can use it to pay someone else.

Suppose a British company imports tea from Sri Lanka and Kenya, blends and packages it, and exports it to retail chains in multiple countries. If all the buyers pay in the same currency used to pay the suppliers the British company does not have to convert more to GBP than required to meet its costs (and profits!) so loses less on converting currency at all. The usual currency used for this is USD.

So rather than:

customers currencies -> GBP -> suppliers currencies

we have customers currencies -> USD -> suppliers currencies.

Edit: I have not explained very well in the bit immediately above. The point is that the British company will not need to convert the currency at all as they will be paid in USD and will pay in USD. In most countries you get better rates converting to USD, and its easier to hedge this way. Even more so if there is a longer supply chain as then you get

A's currency -> B's currency -> C's currency to D's currency

vs

A's currency -> USD -> D's currency.

There are a few wrinkles on this in that customers may already have USD accounts, and suppliers might keep some money in USD, but obviously customers will be paid by their customers in their own currency, and will pay their staff and most other costs in their own currency.

Look up the petrodollar.

If I'm Romanian and my currency is leu (RON) and you're Mexican and your currency is pesos (MXN), you don't want my RON since you can't use it for anything except for imports from Romania and I don't want your MXN since I can only use it for imports from Mexico.

If we both agree on USD, I can go to any other country which wants USD (all of them) and buy whatever I want.

There are both hard and soft reasons for this.

Hard reason: Oil was traded in U.S. dollars. This was basically built off America’s status as the only open superpower and its military strength.

Soft reasons: U.S. political stability (yeah, it’s hard to understand that now after the past decade, but generally the U.S. has been extremely politically stable with Presidents largely maintaining their predecessors foreign policy even if they didn’t agree with them), US company culture which is much cleaner than the rest of the world (American companies are far less likely to bribe, for example), and strong financial institutions like the independent Fed and the publishing of reliable and open data.

Other currencies are not always great: for example, being under sanctions Russia sold oil to India for Indian rupees; then it found out that you cannot simply take rupees abroad or exchange and you need to invest them locally [1].

But I also wonder what's wrong with other currencies and why they are not used more often.

But of course, current US move will greatly help recent Russian efforts in persuading other countries to switch the trade from US-controlled dollars.

[1] https://www.asianews.it/news-en/Delhi-pays-for-Russian-oil-i...

This is called the euro dollar (look it up, it had nothing to do with Europe).

In short: when two non us countries trade, eg., oil they settle on USD.

So for south Africa to buy oil from Kuwait, they need USD.

That was the part of Bretton Woods agreement, 1944.

https://en.wikipedia.org/wiki/Bretton_Woods_Conference

If America's reserve status goes, they will face the same constraints, except with way more debt and far less experience managing currency risk.

If India buys a widget off Brazil it will probably be paid in dollars. Therefore, people need to own dollars. Thus a demand for US debt. This lowers the potential interest rate. Other countries who's currency is not a need for people to buy, their debt is purchased by the attractiveness of its offering (i.e interest rate). If US dollar is no longer required than government bonds have to be attractive. Also, not all sovereign debt is issued in the home countries currency, which means that the printing press doesn't help. US debt is very large, interest repayment are close to military spending. Without the reserve currency that would get worse. Something like 68% of world holding is dollar 17% Euro, nothing else of note.

The other side is that as there is a demand for dollars. The value of the currency is higher than if it wasn't which increases the price of exports and reduce price of imports. Trump might want to weaken the dollar.

I agree, losing reserve currency status would make American gdp / living standards to come way closer to Europe for the simple fact it won't be able to permanently increase its debt deficits. However its far from clear losing reserve status is going to happen, sure some countries will try to diversify but others are probably too tight inside the American umbrella (for defense for example).

But yeah, surprises can happen so interesting times.

Have to say I disagree there. It was American exceptionalism first which then led to the dollar being popular.

> thinking you can get away with anything because you are special

Might have been the case some many years ago. Not anymore with many nations not all that far behind.

> He surrounded himself with yes-men that know perfectly not to contradict him.

Stephen Miran is believed by some to be the "mastermind" behind this. I'm not sure Trump has ever had a singular original idea.

Looks like he learned that from Putin, who also surrounded himself with yes-men which lead to him thinking he could take Ukraine in 3 days.

Do you know how many taxes on many goods European Union has introduced? Was that "empire hubris" as well?

Why is it a binary choice? This is just reductive. The idea that we couldn't maintain American hegemony and return more of the benefits of it to the middle/lower classes seems silly.

This is about tearing down a system / world order that a lot of people are angry about, with little thought to how to replace it and make it work for the citizens. The global economy has changed, manufacturing capabilities in the west will never be competitive again for a wide variety of products, and those jobs are not ones that regular Americans want anyway. Just like they don't want the farming jobs that illegal immigrants are doing.

This vision to essentially return America to a idealized view of 1900 is in for a rude awakening.

"The dystopic open-air homeless cities of the west coast"? Hyperbolic much?

I'd feel a lot better about it if more countries held values of free speech and democracy. If mainland China were like Taiwan, great. Unfortunately I fear those might just end up being viewed as instruments of America's decline.

The US issues debt in dollars and repays those debts in dollars. The purchasing power of dollars can change due to inflation. If you suddenly increase the global supply of dollars by 2x, dollars that existed prior to the increased supply will be able to purchase less.

There is a somewhat small chance Donetsk-Luhanks escape in the next 5-10 years. Let's see.

It's impossible for both things to be true. For the dollar to be the reserve currency countries need to accumulate dollars. They can't do that unless more dollars leave the US than come back.

The problem is that countries don't just take the dollars and sit on them. We're on the third iteration of solving this intractable problem:

Try 1 was gold. The US was running out of gold and Nixon had to end redemption of dollars for gold.

Try 2 was assets (think the Japanese buying everything in the 80s). That was unpopular and the Plaza Accords put an end to it with significant damage to the Japanese economy

Try 3 is government debt. But it's the same fundamental problem. The US isn't ever willingly going to give back assets for this debt. Everyone agrees with the polite fiction that the US will and so things are fine. But if they ever expect actual stuff for that debt it will all break down again.

US manufacturing is better than it ever has been by all measures except number of people working in them. This means that there isn't much need for someone to get good at putting a nut on a bolt and other such mindless work that is skilled only in that with a lot of practice you can get really fast as doing it. People who don't want to spend a lot of years in school are thus not doing very well because there isn't much need for people who don't want to use their brain.

1) Chicago-school interest groups successfully putting people on courts and in the legislature to all but completely eliminate anti-trust enforcement, starting in the '70s. TL;DR policy used to be that a company holding too much market share was per se bad for the country and that the government could act on it, the shift added more tests making it slower (so, also more expensive) and harder to successfully enforce anti-trust, so much so that we all but stopped doing it.

2) Failure to send Nixon to prison.

3) Loss of the Fairness Doctrine under Reagan.

4) Failure to send a whole list of Reagan's folks (and maybe Reagan) to prison over Iran-Contra and other misdeeds. And those same names keep popping up, making things worse for the '90s and '00s. This was a huge mistake.

5) The Democrats totally surrendering economics policy to a newly farther-right [edit: more accurately, a set of policies championed by a certain set of pro-capital right wing interests—we recently saw this totally overthrown by right-populist policy, when Trump took over the party in 2016, which was the most remarkable development in US party politics since the '80s] Republican view, in the '80s, and adopting basically the same policy. This set the stage for the current backlash, because this all-in neoliberal shit was never popular, but persisted because both parties supported it.

6) Loosened media reach ownership rules in the early '00s.

7) CU

8) Nobody at any point finding a way to dismantle the Heritage Foundation and Federalist Society (if you're wondering "how", it seems the NRA had been doing all sorts of illegal shenanigans for a loooong time—I'd be absolutely floored if these two don't have some big ol' skeletons hanging around)

9) We all watch a coup attempt live on TV (re-watch some of the news footage if your memory is fading, it remains shocking) and then the Biden administration dicked around during the six months or so when it might have been possible to go after the leaders of it.

10) The Internet putting intense pressure on the news media, leading to even more profit-focus than before (and see also the loss of various controls above) with nothing done to try to mitigate that.

11) Extreme centralization of control of the narrative online under a handful of platforms (and the narrative is "whatever gets us more eyeballs", see again #11) and nothing done to fix that.

> until the US collapses and/or another power rises to displace it, which really means the same thing at this point. That might ultimately be China but it's not yet

I imagine the Euro is a contender also even though the EU it's not one homogenous power.

> and the Chinese yuan is wholly unsuitable to be a global reserve currency currently.

Curious why you say this? I was considering holding some EUR and CNY in the event that one of those becomes a replacement for USD

Yeah, the whole "decapitation strike" talking point betrays a serious bias. It also implies something which no evidence is provided for. The idea that foreign actors got someone elected, then managed to get that person to implement a specific strategy that rapidly destroys the dollar as a reserve currency, all for the benefit of the foreign actor, is quite the stretch.

I certainly wont disagree with the US not representing any moral heights especially now, however do you have sources for the US being particularly egregious in relation to its peers in its actions?

Russia is the number one war criminal in the world. Of course now that Russia owns American leadership, we can partially blame them for American human rights abuses.

The Euro is already a reserve currency and makes up about 20% of worldwide reserves. Which is of course not as much as the dollar which is about 60%, but these numbers could of course shift.

The new reserve currency won't be a single country's currency but a basket of currencies, where the ratio contribution of component currencies gets adjusted every once in a while.

BRICS has been proposing a sort of basket mechanism. Bitcoin is not yet thickly enough capitalized. The historical standard was gold for 3000 years, and that's what backed the dollar until that was "temporarily suspended" in 01971. That's the default.

The Chinese yuan is not a viable reserve currency. Why? Because it's pegged to a basket of other currencies. It should really inflate in value but Chinese government policy is to undervalue it to aid exports. Exports are ~20% of China's economy. It would devastate the economy if the yuan was allowed to freely float, or at least float with the level of central bank management that other developed nations' fiat currencies have.

China has repeatedly tried to activate a consumption economy (like the US) but the Chinese just save and buy real estate, in part because there is no retirement benefits so they have to self-fund that.

So what currency? Currently, there is no viable alternative to the US dollar. It is backed by the largest economy in the world AND the US military.

You might find people who talk about BRICS like it's a real thing. It is not. It's just a group of randomly selected countries meant to sound nice (literally, South Africa is only there for the S sound) with no unified policy or currency.

It's not the euro either. Europe ultimately is still dependent on US defence and beholden to US foreign policy.

Perhaps we should dust off Keynes' Bancor proposal? :)

https://en.wikipedia.org/wiki/Bancor

IMF does have Speecial Drawing Rights that kind of, but not really, acts as a global currency

Bitcoin would be the most fair choice for a new reserve currency. It has equivalent properties as gold but is more practical to use, and there's no geographic inequality to mining it.

No government could benefit from manipulating it. How cool is that ?

My long term wish is in 40 years, after civil wars/world war and rebuilding efforts, that we discover a better alternative to democracy; we have gone all in on it the past 200+ years and is utterly exploitable in the information age, as the populace gets less informed and more malleable to any malicious actor. It is a pretty fatal problem if the success of your government model depends on citizens not being total idiots.

My anarchist wish is that we figure out that large states have large benefits but also very large downsides. A country as big as many Western countries have simply no business existing, as they are unworkable. How is it realistic to have a functional government for 300 something millions souls and an area the size of the United States?

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> It is not correct that an Asian business doing business with a Italian company first exchanges their currency to USD by selling the US goods then using that USD to complete the transaction.

The only way around that is the EUR. Otherwise, most countries have very little connections to one another. Even neighbors will trade with USD and settle in New York.

然后呢？

>Another thing is that for years USA was in a sense donating European industry,

Sure and Europe is not at all donating to US arms industry or to US tech sector? Europe is pretty liberal about letting US dominate those domains inside the EU, without opposing that. Plus in geopolitics it simply follows the US, that's sort of been the deal.

Seems like this US leadership thinks it can both have its cake and eat it.

> For instance it keeps value of the currency high, what makes whole USA production noncompetitive.

But devaluation of the currency will hurt people who have savings in this currency, and cause higher inflation, right? On the other hand, paying back loans and mortgages becomes much easier.

You conveniently omitted the 25% tax on European light trucks and SUVs in the US. Which is the biggest car market segment.

> My only hope is that this is part of some grand bargain where other countries reduce theirs on US goods and things reach a more balanced equilibrium.

The thing is that we don't. That 39% Trump claims Europe is levying on US goods? It doesn't exist. I've heard they include VAT in this which makes no sense because it applies to all goods including those made locally. That is not a trade tariff. It's just internal taxation.

However I've also heard they calculated it with the trade deficit (which in itself makes no sense, it's not a tariff) but in the case of the EU that makes even less sense as Trump always quotes the deficit on goods, but ignores the deficit on services (eg IT) which is highly in favour of the US.

Also when I hear people say "they don't buy American cars in Europe", we do have American brands like Ford and Tesla. Ford just sell smaller models designed for our market here. Those big SUVs and pickups are not suitable for our traffic or environment.

Like GP said - America's enemies.

That's an over-simplified answer. There are many people who share in the blame. Him for doing it as a visible catalyst, everyone who voted for him, presidential advisers who recommended these disastrous policies, and those who sat idly by and let the country be destroyed without acting to prevent it, especially those with greater-than-ordinary power who failed to act.

BTC

was thinking the same thing. US is a giant in software.

The narrative with the president is about us vs them. The problem here is the enemy is within.

The EU may be awful, Japan may be an unfair partner. But when you play with a handgun and shoot yourself in the foot, that’s on you.

The RMB does not float. It would be virtually impossible. More likely: EUR will share the title (more than ever) with USD.

Something tells me that both China and Russia know all this and yet, the US administration is completely blind to it or are naively playing into their hands.

Maybe Russia, that's the only country which has not been slapped with tariffs. Apart from Russia, there are nuances. There are peaceful enemies like the EU, Canada, Australia etc. and there are threatening enemies like the Houthis or Iran.

I assure you that the fantasy of this being a band-aid rip-off moment will turn sour when the sore becomes infected and you're living through a depression.

It's not "dumping the dollar" that would be a concern. It's bumping US federal treasury bills (the US debt) which are mostly held by China, the UK, Luxembourg, and Canada. If the latter three just dump their T-bills in retaliation (and do nothing else) the dollar will bottom out. Also, the likely buyer is China. End result: China owns the US and the RMB becomes the new reserve currency.

> and also I'm certain Trump will threaten to remove American military support from anyone who dumps the Dollar - so Europe will probably stay, Australia, Canada, Saudi and quite a few more.

Europe already has the mindset US military support is no longer a given. Europe is already re-arming. I wonder if additional threats by the Trump administration are going to make much of a difference. Even though it will take atleast half a decade to re-arm the main adversary, Russia, is currently in no shape to launch any kind of new offensive against a European country.

> I'm not sure though he wants it to become THAT weak that its on longer the reserve currency.

Intentions aside, with big moves like these the question will be how much control he has over what happens next.

That's just economist flowery language for - If you're willing to work for less, more people would hire you.

Not one single job was moved offshore by a foreign country. Every single one was moved offshore by an American business looking to reduce costs and increase the quarterly bottom line.

Now they're run out of jobs to move offshore and they're looking to the government for the next handout. This time, it's by adding a new tax on Americans on what they buy from overseas.

The people to blame for the economic problems are rich Americans, and the solution is to increase taxes on poor Americans, but the story is that the problem is foreign devils and the solution is to make them pay. The misdirection is working and the magic trick is successful.

"A nation that can’t produce [physical goods] can’t stand."

Based on what evidence?

"And I think part of the issue is that we’ve become lazy. People don’t want to work anymore"

Americans work more hours per week than a majority of countries. Low-paying factory jobs are off-shored because they're low-paying.

"So what’s the answer? Unfortunately, hardship."

You probably should do more research on the subject, and successful onshoring regimes that have been implemented by other countries. If you, for e.g., determine that America needs to produce a certain quantity of semi-conductors to insulate from various natsec risks, there are ways to tackle that problem and usually they don't involve hoping an onshore industry magically appears because you've haphazardly shivved trade across the board.

> And I think part of the issue is that we’ve become lazy. People don’t want to work anymore — they want things handed to them. Entitlements, bonuses, luxury homes, multiple cars, the works. But someone has to build all that. Someone has to maintain the food supply. Someone has to assemble the vehicles. Someone has to keep production alive. Yes, technology can help fill gaps, and we’ve done amazing things — and still do — but America’s edge in tech? That’s slipping away. China has surpassed the U.S. in key areas of advanced technologies, auto manufacturing, aerospace, and absolutely obliterating in shipbuilding. U.S. industry? Ashes in many places.

It has nothing to do with "people being lazy" and everything to do with poorly-run companies combined with globalization.

This started in the 70s/80s with American auto manufacturers. The Japanese cars were much more fuel efficient and a much more robust build. The line worker wasn't responsible for that, management is.

Then the global free trade / NAFTA in the 90s. Ross Perot was as popular as he was, because a big segment of the US population saw this coming.

That all seems built on some romantic notion that a job making physical objects ("working with their hands") is fundamentally better than a job providing a service ("staring at screens"). But it's not obvious there is a lot of factual support for the idea, either on the level of individual jobs or the economy as a whole. You could certainly use protectionist barriers or subsidies to try to force industries like ship building back to the US, but would the US really be economically better off overall if you did so?

That said, it's really irrelevant since Trump's current approach isn't looking to support specific industries or outcomes, it's just across the board tariffs on everything. We're not just going to have to build our own ships or cars, but grow our own coffee and bananas. Targeted, strategic tariffs and subsidies on the industries we want to support could be arguable, but this is not that.

The US can use internal policies to support the industries and skills you mentioned. Tariffs as implemented, and greatly damaging longstanding relationships with allies, will have the opposite effect. The existing lead in services will be lost, consumption will drop, and the increase in production of goods due to tariffs won't offset it. I would recommend you read the outcome of the Smoot Hawley tariffs.

I hate this mindset that Americans are lazy, they are usually some of the hardest working people in the globe. The wealthy are greedy, and wealth and power continue to concentrate at the top while infrastructure, working conditions and public services crumble. I don't fault anyone for not wanting to contribute to that, quite the opposite. I don't see how the jobs you mentioned are going to start commanding better wages when everyone has to rush to do them because there are no more options.

I can't imagine any person having listened to Trump even once would in good faith claim he is a smart man

Because they would prefer functional pro democratic world rather then constant struggle for domination with fascists from Russia and USA at the same time. EU people don't want to become poorer or suffer, not even to "own the USA".

Europeans you talk about see Russia as a threat. They are not fascists themselves, so Germany having to arm itself more because Russia just got new ally is not a good news.

I don't think anyone has a problem with europe being a more independent player, it becoming a necessity is what people are upset about. I'd rather have germany make massive investments in infrastructure and health reform than its military.

>This is why I don't get why my EU people are attacking Trump - he singlehandedly gave Europe political capital to rebuild itself as an independent player on the international stage.

What a completely baffling statement. It's like saying the left arm should be grateful that the right arm cut itself off of the body because now the left arm has to strengthen itself. Sabotaging the alliance system that has prevailed since World War II leaving both Europe and the United States more dangerously exposed and compromising the safety of our shared democratic values that were once the bedrock of our alliance.

It's so obviously catastrophic that I can't fathom how someone would try to portray this as a win other than out of an appetite for a JV debate team sophistry. Europe is banding together not out of positive diplomatic achievements, but in the same sense that they would band together if a meteor is headed toward Earth and you're asking us to thank the meteor.

Because it's a bit like someone telling you that they're going to burn your house down so you can claim on the insurance and you'll be better off.

It might be technically true in some circumstances, but I still don't want some jackass burning my house down thanks, I like my house. That's why I live there.

Some say many EU politicians are compromised by Russia and China...

I know squabbling is the norm for European countries but I feel there are some recent big own goals. Crazy how we can't get our crap together in such times. (Crazy opinion: UK needs to be in the EU again to be the grown up in the trio of UK, France and Germany)

Because the EU does NOT want Germany to arm, remember what happened the last couple of times ?

It stops them from having to address their national debt, has allowed for incredible spending and the arguably pushed humanity forward with the wonderful inventions. Without it, it will be interesting to see how the future unfolds.