Comment by csantini
7 days ago
It's typical Empire Hubris: thinking you can get away with anything because you are special.
Trump doesn't really know what he's doing. He surrounded himself with yes-men that know perfectly not to contradict him.
The global Dollar order was built to American advantage. Trump is dismantling it for no reason. If the dollar order crumbles, the US will discover it has much lower productivity.
There is no American exceptionalism: it's just Dollar exceptionalism. No Dollar, no exceptionalism.
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.
> would make American gdp / living standards to come way closer to Europe
Why are you making it sound like EU is a third world country? Are you aware that living standards are higher in many European countries than the US, right?
> Are you aware that living standards are higher in many European countries than the US, right?
If we measure the total pie then its much smaller in Europe than in the U.S (I mean total wealth/gdp per capita). Only small countries like Norway or Switzerland have high gdp, in France or Germany its almost 50% lower than in the U.S.
Now the pie does not distribute equally in the U.S that's true, but still, there are tons of millionaires in the U.S and I mean pretty regular people (doctors, finance, software devs etc) that had they lived in Europe they would have been comfortable and nothing more. think something like 100k Euro a year (at best) instead of 3-5 times as much which is what they make in the U.S. If the U.S loses reserve status there just won't be enough money to go around for those salaries, or if there will there will be a horrible inflation, either way it just wont be sustainable.
P.S - lots of middle class people in the so called rich European countries like Germany or the Netherlands cannot afford heating anymore. So no, it is definitely not third world but its also not particulalrly rich. The main advantage though is Europe has mostly free healthcare and the U.S is an absolute mismanaged mess in that regard.
No. They’re not, anywhere in Europe. This is a mystifying talking point based on wishful thinking and vastly overestimating the non-monetary value of a larger social safety net. The median US citizen is much, much richer. The first quintile US citizen is fairly comparable to first quintile Europeans in income and in-kind transfers.
But it is certainly the case Trump is trying to bring US income down to something closer to EU levels, which will hopefully cause Congress to get its spine back.
> others are probably too tight inside the American umbrella (for defense for example).
The UK is reconsidering. If the bloody UK is not confident, who else would be? They might be too tight inside for now, but that is a strategic weakness and it will only go one way. Short of the US making it a satellite, it will only loosen.
> I agree, losing reserve currency status would make American gdp / living standards to come way closer to Europe
Why do you think that the standard of living would become better after losing reserve?
Have to say I disagree there. It was American exceptionalism first which then led to the dollar being popular.
But a large degree of the exception was being excepted from being blown to smithereens during WW2, which is the kind of opportunity that doesn't usually come around twice.
> which is the kind of opportunity that doesn't usually come around twice.
On the contrary, it most definitely did come around twice (hence the 2), and those same geographic advantages are still at play, barring thermonuclear war. It wasn't pure chance that Europe combusted in WW2, Europe had been on fire off and on for hundreds of years. Its geography just lends itself to large scale conflict.
The recent period of peace is an exception, but it's not the first exception and there's good reason to suppose this one won't last forever either.
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> doesn't usually come around twice.
There is a _2_ in WW2 :)
Sadly looking at history these "opportunities" come around quite regularly.
Big beautiful oceans
> 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.
>Not anymore with many nations not all that far behind.
Nothing has changed. The dollar simply has no alternatives. The EU? After the freezing of Russian assets? Uncompetitive. BRICS? Even worse, you have one dictator literally controlling all monetary policy. Gold and bitcoin are too volatile.
What about Chinese Yuan? China seems like an economically strong country with reasonable trade policy. Also, BRICS has at least two dictators.
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> 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.
Although it now seems as if that was massively inaccurate, things were very near to turning out completely differently in the first days of the war: https://www.youtube.com/watch?v=QlttS0N7uVA
Do you know how many taxes on many goods European Union has introduced? Was that "empire hubris" as well?
Why don't you enlighten us?
Not only America will be poorer. Everyone will be poorer
That's the point, people need to be poor and desperate enough to fight a (world) war.
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Everyone puts taxes on some sectors. It's economic policy. Trump is not doing economic policy. He's using a simple formula to ideologically reduce trade deficit. No matter the consequences!
Trust the experts: America will be poorer because of these tariffs.
Why don’t you show some data supporting a more clearly-stated theory? All countries use economic policy, but there’s usually some kind of strategy involved - for example, the EU has a tariff on American steel and aluminum because that was retaliation from Trump’s earlier tariffs. Similarly, a lot of the EU agricultural duties are both protecting local industries but also enforcing quality or safety standards (this is also the reason for the Australian beef imbalance the President mentioned: they have a strict mad cow containment plan American producers dont follow).
The American action doesn’t follow a discernible strategy other than the fantasy that we can somehow “win” every trade relationship. That’s why you see massive taxes on poor countries we buy a lot of raw materials from - Madagascar can’t afford to buy the kind of expensive goods we primarily make, but we love to buy vanilla, so that trade “deficit” is both voluntary and to our mutual benefit.