[HN Gopher] Ghana plans to buy oil with gold instead of dollars
___________________________________________________________________
Ghana plans to buy oil with gold instead of dollars
Author : quyleanh
Score : 144 points
Date : 2022-11-25 09:23 UTC (13 hours ago)
(HTM) web link (www.aljazeera.com)
(TXT) w3m dump (www.aljazeera.com)
| jdmoreira wrote:
| Bypass the petrodollar? Very risky business. What a great way to
| end up suffering from a three letter agency triggered coup d'etat
| max51 wrote:
| >three letter agency triggered coup d'etat
|
| that's if ghana is lucky and they don't try to liberate them
| from [insert lies] with bombing and boots on the ground.
| AlbertCory wrote:
| Naive question, but: since they do have crude oil, could they
| swap that for refined oil products?
| jonnybgood wrote:
| This has nothing to do with USD dominance as many are suggesting.
| Ghana is running out of USD reserves and has to resort to buying
| with gold. Nothing suggests they wouldn't use USD if they had it.
| factorialboy wrote:
| It has everything to do with USD dominance.
|
| Countries have resources thus commodities. Commodities have
| value. Real value.
|
| Trade in local currencies can be backed by these commodities.
|
| Necessity will force countries to find USD alternatives.
| pakitan wrote:
| > Necessity will force countries to find USD alternatives.
|
| You're misunderstanding the fundamental problem. It's not
| about a "shortage" of USD for Ghana, where they ran out of
| USD suppliers and no one is willing to sell them USD so they
| will need to switch to RUB.
|
| You get USD by exporting stuff and you can import stuff when
| you spend USD. The fundamental problem for Ghana is that they
| need to import valuable stuff but they are running out of
| valuable stuff to export in exchange, hence their USD
| reserves are dwindling. You can't solve that problem by
| changing the currency. If someone is to give you their RUB,
| they'll still want valuable stuff in exchange.
| jkepler wrote:
| Add to this that the US Federal government has conducted
| numerous hot wars to protect USD dominance. Remember when
| Saddam Hussain and then Kadafi in Libya each started selling
| dollars for euros? War.
| https://bitcoinmagazine.com/markets/petrodollar-deep-dive-
| wi...
|
| But now the US is even destroying confidence in the dollar,
| through its confiscation of the Afgan central bank reserves
| (which included private citizens' deposit accounts) and
| distributing the money to families of Sept 11th victims; or
| freezing the Russian central bank reserves, even though the
| international settlement system was meant to be apolitical.
| giaour wrote:
| > even though the international settlement system was meant
| to be apolitical
|
| "Apolitical" does not mean "usable by any party for any
| transaction." SWIFT policy prohibits using its system in
| support of illegal activity [0], and the settlement system
| has been denied to sanctioned countries before [1].
|
| [0]: https://www.swift.com/about-
| us/legal/compliance-0/fighting-i...
|
| [1]: https://www.aljazeera.com/economy/2018/11/5/what-
| swift-is-an...
| luciusdomitius wrote:
| What prevents them exchanging gold for $ like all other gold
| producers are doing? This is probably what they themselves were
| doing beforehands?
| notahacker wrote:
| This sibling comment has the answer to that: it helps
| disguise the margin the government makes on gold it
| compulsory purchases from local miners in local currency
| https://news.ycombinator.com/item?id=33742853
|
| Also helps to look like you're doing _something_ about a debt
| crisis even if the net effect is minimal or negative...
| analog31 wrote:
| It shouldn't be hard for the miners to guess that margin,
| given that the market price of gold can be looked up.
|
| Gold is, for all intents and purposes, usable as money, at
| least between sophisticated parties such as governments. It
| lacks some of the features of USD, but if Ghana is out of
| USD, then those features don't matter to them.
| notahacker wrote:
| Oh, the mining company management will know what the spot
| price in dollars is and if the spot price offered in
| cedis doesn't seem fair. But "we've found a cunning new
| way to exploit our gold reserves" is a better PR line to
| the general public than "we're fudging the figures a bit
| in our favoir*
|
| Look at HN's _somewhat_ sophisticated audience heralding
| it as a power move against the dollar rather than a
| country scrabbling around for ways to dig itself out of a
| financial hole caused in part because the dollar holds
| value much better than their own currency.
| notahacker wrote:
| It's also a country once known as the "Gold Coast" whose
| largest export is gold. I don't think they'd be proposing to
| acquire it otherwise...
| danielschonfeld wrote:
| It has everything to do with USD dominance. Ghana is shouting
| out loud I can't get my hands on USD. They're echoing what the
| global market in general has been pricing.
|
| Now true, having your product be a hot commodity everybody
| wants is good for business but there's only so much of that
| before your competitor starts offering a more readily available
| product.
|
| Pepper that with some morally objectionable stances the US has
| taken over the past 22 years and suddenly your ultra safe and
| liquid commodity while still good and desirable for this
| present crisis might not be as desirable for the post crisis
| era. Where one crack starts many others can possibly form.
| enkid wrote:
| Wouldn't any attempt to alleviate demand make inflation
| worse, when it already at levels not seen in decades?
| ars wrote:
| > Ghana is shouting out loud I can't get my hands on USD.
|
| That doesn't make sense - just take some gold, and buy USD.
| Is there some physical shortage of paper or something?
| codehalo wrote:
| [deleted]
| MonkeyClub wrote:
| If you're referring to the paper USD is printed on, it's
| cotton rather than paper.
|
| But even if there was a shortage, I doubt that on a country
| level USD (or any currency, for that matter) is bought in
| physical form - it's just credited to the country's bank
| account.
| ectopod wrote:
| It is paper. Paper made with cotton.
| hbarka wrote:
| It's a blend of linen and cotton.
|
| Linen comes from the flax plant and cotton comes from the
| cotton plant.
|
| Linen versus cotton have a great history. Linen was used
| on WW1 era airplanes as outer skins because it didn't run
| like cotton canvas when the material was shot through.
| markdown wrote:
| So paper made with linen and cotton.
| immibis wrote:
| If getting its hands on USD is hard, where's it going to get
| gold...?
| mythrwy wrote:
| Out of the ground maybe. Ghana is the leading gold producer
| in Africa.
| Ekaros wrote:
| Ghana mined 117.6 tons of gold in 2021... So from ground.
| jkepler wrote:
| Doesn't help that the US seems set on destroying the world's
| confidence in the US dollar: first the 2008 financial crises
| and monetary creation (I.e. devaluation) in response; then
| much more recently they hammered nails in the coffin of
| Breton Woods 2 (I.e. the post-1971 monetary status quo of
| floating fiat currencies) by confiscating the Afghan Central
| Bank's reserves (which included private individuals'
| deposits, and they gave the money to families of September
| 11th victims) and by freezing the assets of the Russian
| Central Bank. inter-Central Bank settlements were supposed to
| be apolitical. All that in the context of multiple hot wars
| (Iran in 2003 and then Libya, perhaps?) and military actions
| that appear to be in defense of US dollar dominance:
| https://bitcoinmagazine.com/culture/the-hidden-costs-of-
| the-....
| enkid wrote:
| If people's confidence was destroyed, it wouldn't be in
| high demand.
| delecti wrote:
| > Doesn't help that the US seems set on destroying the
| world's confidence in the US dollar
|
| Over the last 15 years, USD has increased in value against
| the Ghanaian Cedi by almost 16x. If we're trying to destroy
| confidence in USD, then Ghana sure makes it seem like we're
| doing an awful job.
|
| https://www.google.com/search?q=1+USD+to+GHS&oq=1+USD+to+GH
| S
| jkepler wrote:
| You're correct that the Cedi has lost value compared with
| the US dollar while existing in a world where USD is one
| side if nearly every international business transaction.
|
| However, look at the US dollar over longer durations
| against wheat [1], copper [2], gold[3], or Bitcoin [4]:
| the dollar buys significantly less than 10, 15, 40, or
| 100 years ago.
|
| While the Cedi may be much weaker against the dollar, the
| dollar is loosing against real commodities/assets that
| can't simply be created by banker's fiat.
|
| So, the dollar's the cleanest dirty shirt in the room.
| And Ghana just announced that they'd rather trade oil for
| a clean shirt (gold) rather than taking a dirty one.
|
| [1] https://www.macrotrends.net/2534/wheat-prices-
| historical-cha...
|
| [2] https://www.macrotrends.net/1476/copper-prices-
| historical-ch...
|
| [3] https://goldprice.org/gold-price-charts/15-year-gold-
| price-h... / For 100 year chart,
| https://www.macrotrends.net/1333/historical-gold-
| prices-100-...
|
| [4] https://www.xe.com/currencycharts/?from=USD&to=BTC&vi
| ew=10Y
| onlyrealcuzzo wrote:
| Why can't they get dollars?
|
| I was under the impression that you can buy dollars much
| easier than oil.
| bagels wrote:
| Buy them with what? The implication is that nobody wants to
| accept Ghana currency.
| zizee wrote:
| Typically exports are used to gather USD. It sounds like
| Ghana has gold. Presumably people want their gold? They
| could sell the gold for USD, then use that to purchase
| the oil.
|
| But using the gold for currency does sound like it could
| be more efficient, cutting out the middleman.
|
| Note: normally countries maitain a float of foreign
| reserves for this, and I'm guessing this stash of
| economic lubrication has run a business dry for Ghana and
| they don't have the luxury of rebuilding their reserves,
| and hoping to use gold as a more immediate solution.
| markdown wrote:
| Implication? Only a handful of currencies are accepted in
| international trade.
| danielschonfeld wrote:
| Because the world has an anemic shortage of dollars.
|
| The reason for that is post 2008 banks have become much
| more risk averse (seeing what happened to Lehman et al) and
| they are mostly the conduit through which broad currency is
| generated. That mechanism is mostly broken unless you're an
| ultra rich company like Apple or Google.
|
| So today to make a bank create USD for you you'd be
| required to have the best of the best collateral namely
| sovereign bonds. As it stands the US hasn't taken even
| close to enough debt and thus issued Treasuries to even
| come close to the shortage in dollars that banks' risk
| aversion has created since 2008.
| gtirloni wrote:
| Are you advocating for printing more USD?
|
| _edit: not sure why I 'm being downvoted for asking a
| relevant question_
| whatever1 wrote:
| People outside the US love it, so no issue with devaluing
| the USD if we print an extra couple of trillions.
|
| The main issue is that the global supply chain cannot
| literally serve richer American consumers, so the cost of
| supply increases and everyone (in the US and out) faces
| inflation pressure.
| miguelazo wrote:
| People outside the US _loved_ it. Recent moves by Japan,
| Switzerland and some others in the (quickly-losing-
| liquidity) Treasury Market suggest that era is coming to
| a close.
| kobalsky wrote:
| no one with savings in USD is glad that it inflated, but
| the reality is that other easily accesible currencies bit
| the dust harder.
| ghostwriter wrote:
| > People outside the US loved it.
|
| Correction: foreign central banks guided by IMF
| subsidiaries loved it dearly, people - not that much,
| perhaps the opposite [1]
|
| [1] https://youtu.be/p5Ac7ap_MAY?t=1769
| ars wrote:
| If we devalue the USD all that will happen is the price
| of oil, as denominated in USD, will go up. You don't
| actually accomplish anything.
| MerelyMortal wrote:
| Maybe the edit could have instead provided clarification to
| why it's relevant.
| rsync wrote:
| I downvoted you because you complained about your
| downvotes.
|
| Don't watch the score and, _especially_ , don't complain
| about it.
| gtirloni wrote:
| I did not complain. Maybe you should revisit your
| downvoting principles.
|
| I inquired why I was being downvoted for asking a
| question. I was genuinely curious about how that was bad.
| ketzo wrote:
| Just bad form to mention your own score, period.
| benj111 wrote:
| True, but if you ask a genuine question and get
| downvotes, what are you supposed to infer from that?
|
| Yes it may be bad form to mention your own score, but
| it's equally bad form to downvote for asking a question,
| or read into a question something that wasn't said which
| may require a down vote.
|
| Why don't you take the time to answer the parents
| question rather than downvote them for querying why their
| question got downvotes?
|
| If there's anywhere that appreciates the gaining of
| knowledge on the internet, surely hn must be one of the
| top candidates. So why downvote questions? And yes it's
| happened to me multiple times, and it's bloody annoying.
| Doubly so because you know if you try to clarify you'll
| get someone downvoting you because why? I don't know.
| Because that would be 'bad form'? BS.
|
| /Rant
| dislikedtom2 wrote:
| Often I think it means that you asked a painful question.
| Don't think that downvotes are always bad, they merely
| just tell what is popular, just like in reddit.
| danielschonfeld wrote:
| Generally speaking yes. If from your question I deduce that
| you're worried about how much we already "printed" then do
| some googling over why the common citing of growth of M2
| chart is interpreted wrong.
|
| Spoiler - we didn't print nearly as much as you think we
| did. And we generally haven't even scratched the surface of
| how much more a normal growth of the currency since 2008
| was needed.
|
| The question that needs to be asked is more political and
| societal than monetary. Does the US want to lead the world
| by resuming at marketing a more true and secular beacon of
| hope and freedom or does it want to become isolationist and
| toe the line of each dog to its own. If we choose the
| former the question than arises if that's even still
| possible and if we ever were true to it or were we just
| lucky enough to enjoy the arbitrage of developing countries
| not having developed yet.
|
| I personally don't have all the answers but it seems to me
| that combined with our questionable moral standing in the
| last 22 years and our secular stagnation the latter is the
| path we're choosing to follow.
| shyn3 wrote:
| Dear Ghana. See Libya. R.I.P Ghana.
| trash3 wrote:
| shyn3 wrote:
| Not sure why the reply got downvoted. Ghadafi tried to switch
| to the gold standard. America isn't backed by gold so it's a
| threat.
| Kukumber wrote:
| Let's not forget:
|
| Iraq nets handsome profit by dumping dollar for euro (2003)
|
| https://www.theguardian.com/business/2003/feb/16/iraq.theeur...
| lizardactivist wrote:
| The world needs to get off the blood currency that is the U.S
| Dollar.
|
| But I hope the U.S doesn't do to Ghana what they did to Libya,
| the last country to try something along those lines: forment
| revolt and overthrow the government, then literally sack the
| country and leave with billions in gold bars, and say they gave
| the country freedom and democracy.
| aa-jv wrote:
| This is great news for the people of Ghana .. and I hope it
| serves as an example for many other nations to come. The era of
| enslavement to the petrodollar is over.
| kaladin_1 wrote:
| Interesting the pressure is increasing. More and more countries
| questioning why they need to base their foreign transaction on
| the US Dollar. Could this mounting unrest be as a result of the
| seeming inability of the US Federal bank in checking inflation of
| the US Dollar.
|
| Also, some of these Nations can no longer determine what benefit
| it is to them is using the US Dollar as their reserve currency
| and trading currency. Some nations might have alternative
| properties/currencies that would favour their external trade but
| yet they are stock with the Dollar and must defer to the US in
| all that concerns it.
|
| I would really love someone more knowledgeable to make a
| prediction as to where all these could be going.
|
| Do you see a country like Saudi going off the USD? Do you think
| the West-African countries relying on CFA will turn away from
| that any time soon? Is there a case to be made why these nations
| should maintain the status quo?
| Zigurd wrote:
| The reason US$ denominate most trade is that without what is
| broadly referred to as "The West" global trade would not move.
| Trade would not be protected by a web of alliances among
| developed nations. If that goes away, ships would not be
| insured. Uninsured ships would be lost to pirates and rogue
| nations. Prices would jump sharply. Supply chains would have to
| go back to warehousing enough supply to withstand disruptions.
| Warehoused parts would become stranded assets when products
| change. Growth would be choked off.
|
| This is not an excuse for imperialism and crony capitalism that
| exploits developing nations. Especially in how multinational
| oil companies corrupt entire nations. Working toward the end of
| fossil fuels will hasten them losing their power. But the
| lesson of this year is that those dull bureaucratic things like
| NATO and the EU are what keeps fascistic autocrats contained
| and gives aggressor nations the thrashing they deserve.
|
| Even the Tories are realizing they got played by Putin's plan
| to divide the nations that could hold him back.
| luciusdomitius wrote:
| The petrodollar is a really weird thing. According to its
| critics, it is a global monopoly on violence and pure
| extortion, to its implementors - merely a conspiracy theory.
| Please, before you clinge to the conspiracy theory label, check
| how many great people such as de Gaulle have whined against it
| and what is Privilege l'exorbitant in French political science.
|
| In reality, global trade is not in USD purely because it is
| backed by carriers and they can invade anyone, but because this
| navy also protects shipping lanes and offers international rule
| of law. Remember when the US took a break in the gulf of Aden
| and it took us Europeans (+Russia and token help from US!!)
| years to agree and secure it. So, things are not black and
| white.
|
| Anyway, this system is collapsing from within and will be
| replacing. The success of the S.Arabia pivot is going to merely
| decide if it happens in 10 or 20 years time. Btw does anyone
| know how did the MBS-Xi meating go?
| eunos wrote:
| > Petrodollar Is rather remnant of the past. FYI I think half
| of world forex reserve is held in the 5 entities in East Asia
| (CN, JP,KR,TW,HK). Whatever dollar the Petrostate get (sans
| Russia) they recycled it to various goods and services mostly
| sourced from East Asia.
|
| > Btw does anyone know how did the MBS-Xi meating go?
|
| Will commence in December, previously rumored didn't happen
| imtringued wrote:
| The exorbitant privilege thing is kind of strange when
| countries voluntarily demand more dollars or even borrow
| dollars. The "privilege" is only exorbitant if you are the
| only survivor of a world war.
| SuoDuanDao wrote:
| Somewhere in my comment history I made the prediction "It will
| be possible to buy large amounts of oil without USD by 2024" -
| so I think I've got a decent track record on this subject.
|
| I'm much less confident in these predictions than that one, but
| I'll predict Saudi Arabia won't go off the USD because they
| depend on US military support in a pretty warlike part of the
| world and the CFA will be replaced by 2027 as currently planned
| without any major interference from the European powers.
|
| As for a case for maintaining the status quo - The example made
| of Ghaddafi comes to mind.
| snovv_crash wrote:
| CFA? What are you referring to here, not the financial
| certification institution I'm guessing?
| SuoDuanDao wrote:
| had to google it too:
| https://en.wikipedia.org/wiki/West_African_CFA_franc
| nivenkos wrote:
| The US is exploiting it to the maximum with the Inflation
| Reduction Act, etc.
|
| The rest of the world will react eventually, the Zelenksy-
| Putin puppet show will only distract them for so long.
| norswap wrote:
| > Could this mounting unrest be as a result of the seeming
| inability of the US Federal bank in checking inflation of the
| US Dollar.
|
| This is completely backwards. The problem right now is that the
| dollar is too _strong_ , meaning expensive wrt other
| currencies. In this context, inflation of the USD supply,
| leading to devaluation of the USD would actually help other
| countries that are suffering from the strong dollar.
|
| I'm not saying it would be good for the US, but it certainly
| would be good for pretty much everybody else.
| danielschonfeld wrote:
| And there in lies the rub. To keep countries placated we need
| to create more debt, a metric ton of more debt and hence more
| broad currency. But doing so at the moment is political
| suicide as is proven by the left's efforts (deficit spending
| blah blah etc).
|
| Triffin paradox predicted in the 60s at it's full glory.
|
| It's also worth noting that at the moment both the Fed and
| the Treasury (obv) are mandated to be operating with an
| inward looking view only. Meaning we run a global reserve
| currency with no 'department' in charge of the global part.
| rsync wrote:
| "Meaning we run a global reserve currency with no
| 'department' in charge of the global part."
|
| You are mistaken - there is an enormous "department" in
| charge of the global part: the US Navy.
| jacooper wrote:
| And this the entire problem.
|
| The dollar shouldn't be a global currency.
| colechristensen wrote:
| Why? The eurozone can't hold itself together, China is a
| house of cards with bad planned economy failures, the uk
| isn't worth mentioning any more, and everywhere else
| either has unstable economies or economies based on
| volatile or limited lifetime commodities.
|
| The dollar is the global reserve currency because the US
| has centuries of reasonable behavior and military and
| natural resources that guarantee long term stability.
| There isn't a better option unless you're playing
| temporary political games or if your macroeconomic
| situation is so bad you can't play the game normally.
| kyboren wrote:
| I don't think this should be downvoted. I believe this is
| all 100% correct.
|
| Maybe because of the "left's deficit spending" part, which
| is not wrong, but ignores the right's historical deficit
| spending (e.g. TCJA). Or perhaps the "political suicide"
| part is misinterpreted: It would be political suicide for a
| politician to interfere with Fed policy and undercut their
| blunt force effort to reduce domestic inflation.
|
| But any way you slice it, right now the Triffin dilemma is
| indeed _exactly_ what we 're experiencing.
| [deleted]
| Spooky23 wrote:
| Unlikely. Ghana happens to be a gold producer; they may see
| this as a better deal for them, and may get some other benefit
| from a country like China for rattling the cage.
| colechristensen wrote:
| What's more likely is that Ghana is using monetary policy as
| a cover for acquiring locally produced gold at a lower price
| and selling it abroad for resources to make up for trade
| deficits.
| edwnj wrote:
| Its definitely not a lack of confidence in USD or the feds.
| Relative to pretty much every noteworthy alternative, the feds
| have handled things a lot better.
|
| - EU royally f'd with their stimulus & rates. Mind you, they
| were in a very precarious position to start with. - China has
| proven themselves to be a house of cards with zero covid,
| massive public/corporate debt bubbles and Ji becoming god
| emperor. - Russia is a glorified gas station with an economy
| the size of florida.
|
| The reason for Ghana's action, Saudi looking to end petro
| dollar, China+Russia looking to form a block etc: US deep state
| ducking up big time.
|
| The weaponised the dollar.. They've been ramping this up big
| time during the past few decades but the Ukraine War was a
| UUUUGE reveal the cards moment.
|
| During the last 2 years, Russia was filling up their coffers
| with high oil prices. The US turned these foreign reserves into
| worthless numbers on a screen overnight with the press of a few
| buttons.
|
| Now pretty much every country is looking at each other like "oh
| shit".
| jonnybgood wrote:
| Ghana isn't questioning anything. They're just running out of
| USD.
| qikInNdOutReply wrote:
| Could this lead to a chain reactions, were countries abandon
| the dollar and the dollar looses in value, in return leading to
| more countries abandon it? A world were the most stabilizing
| region and its currency become temporary hegemon?
| Isinlor wrote:
| Ghana GDP is 77.59 billion USD. That's almost 2 Twitters :) .
|
| Ghana is not triggering any chain reactions.
| speedylight wrote:
| Lucky for them, otherwise the US would've sent some freedom
| and democracy their way.
| hardlianotion wrote:
| Seems unlikely.
| nequo wrote:
| Ghana's GDP is flow while Twitter's valuation is stock.[1]
| Given that Twitter's EBITDA was $211mn, it is more accurate
| to say that Ghana's GDP is 368 Twitters.
|
| (Which also sounds crazy nevertheless.)
|
| [1] https://en.wikipedia.org/wiki/Stock_and_flow
| KptMarchewa wrote:
| I agree that GDP-stock comparison is not good, but why
| compare to EBITDA rather than revenue or expenses?
| nequo wrote:
| I'm not going to say that I have strong views on this
| right now. But the reason I used EBITDA is that GDP is
| the total value added of the economy. EBITDA is the total
| value added of the company.
| Majromax wrote:
| > EBITDA is the total value added of the company.
|
| I don't think that's quite the right interpretation.
| EBIDTA is the value added of the company _net its
| employees_ (and I 'd quibble over depreciation and
| taxes), whereas GDP includes the labour share.
|
| Imagine we had a single-company country, where every
| worker was also a customer, all costs were internalized,
| and capital did not depreciate. The GDP of the country
| would be equal to the profit of the company plus the
| wages of the employees.
|
| Using the EBITDA equivalence, however, the GDP of the
| one-company country would be more (possibly far more)
| than "the one company's earnings."
| nequo wrote:
| Yes, that's a good point.
|
| In principle, Twitter's market value is the net present
| value of its future profits, which excludes input costs.
| So the closest concept to parent's comparison (GDP vs.
| market value) is GDP vs. profits.
|
| > The GDP of the country would be equal to the profit of
| the company plus the wages of the employees.
|
| Also plus any other input costs, like rent, electricity,
| loans, etc., right?
|
| So GDP vs. revenue would be the comparison that would
| include both profits and input costs.
| hdhdxkfchsk wrote:
| saudi? no. they are the only elites not tied to petrodollar by
| force but by financial incentives.
|
| all the others probably no as they will see the new gana
| embargo :(
|
| the terms first world and second world were originally coined
| to means country under petrodollar and countries under ussr.
| third world was a term that meant free for all to the to two
| powers.
| sys_64738 wrote:
| You ultimately need to pay in some common currency so which
| common currency do you trust to be secure from inflationary
| pressures or government interference? Do you trust the Euro to
| not implode? Do you trust the Chinese Communists with their Yen
| manipulation? The US dollar is the last currency standing after
| all others are disqualified.
| 0x445442 wrote:
| I think it's more an issue of other countries seeing that the
| U.S. can just confiscate their dollar reserves if the US
| doesn't agree with their sovereign actions. Those countries are
| choosing to divest from the mono world order which is
| crumbling. For a long but instructive discussion on current
| economic events check out this interview.
|
| https://youtu.be/cD_UcRtljDU
| Hayvok wrote:
| "Mono world order" is a fun euphemism for "boo hoo we're not
| allowed to run around the planet conquering other people".
|
| You're free to "divest" as you put it... But you're still
| expected to behave & play nicely with your neighbors.
| rayiner wrote:
| "Mono world order" is the appropriate term when the US can
| go around conquering other people in their perceived self
| interest (Iraq, Afghanistan) but says nobody else can.
| steve76 wrote:
| Hayvok wrote:
| If you want the real-politick answer then "yeah,
| absolutely". What's your point?
|
| But the U.S empire has been pretty amazing for a pretty
| amazing number of people across the globe, and it is
| shockingly easy to stay on the good side of U.S. foreign
| policy.
|
| Be reasonably democratic, don't genocide undesirable
| elements of your population, don't pick on other
| reasonably democratic countries, don't threaten world
| trade and resources, don't steal all the Americans' stuff
| by suddenly socializing industries in your country, don't
| fund terrorist activity against them.
|
| Yeah you can find exceptions to every one of those listed
| items - welcome to global politics.
| jacooper wrote:
| > But the U.S empire has been pretty amazing for a pretty
| amazing number of people across the globe, and it is
| shockingly easy to stay on the good side of U.S. foreign
| policy.
|
| Hell no
|
| > Be reasonably democratic, don't genocide undesirable
| elements of your population, don't pick on other
| reasonably democratic countries, don't threaten world
| trade and resources, don't steal all the Americans' stuff
| by suddenly socializing industries in your country, don't
| fund terrorist activity against them.
|
| I'm sure Iraq and Palestine would agree.
|
| And of course the country that did very well to the
| world, also wanted to illegally control the worlds
| population for its own interest.
|
| https://en.wikipedia.org/wiki/National_Security_Study_Mem
| ora...
|
| > Yeah you can find exceptions to every one of those
| listed items - welcome to global politics.
|
| Which is why everyone wants to get rid of the dollar.
| trasz2 wrote:
| KptMarchewa wrote:
| US can confiscate your dollar reserves if you keep those
| dollars in the US, just as they can confiscate your gold
| reserves if you keep them in the Fort Knox.
|
| >sovereign actions
|
| Nice euphemism for genocidal, imperialist war.
| 0x445442 wrote:
| > Nice euphemism for genocidal, imperialist war.
|
| You're referring to the U.S. right?
| KptMarchewa wrote:
| >You're referring to the U.S. right?
|
| You must claim to be very sarcastic!
|
| No, I'm refering to only country in XXI century that
| literally decided to annex other country's territory -
| two times. All that while losing war, and deciding to
| unleash hell on civilians they claim to be "their kin".
|
| At least we can cheer our hearts looking at fields
| littered with dead russian soldiers and see that there
| are countries of the world that won't leave those who
| need help alone.
|
| https://twitter.com/PaulJawin/status/1596033997334872064
| cauefcr wrote:
| So the US policy on Latin America is just fine? Embargoes
| and CIA financed take-over of many states are all fine?
| steve76 wrote:
| trasz2 wrote:
| [deleted]
| ur-whale wrote:
| >Do you see a country like Saudi going off the USD?
|
| Going off, certainly not (why would they?)
|
| But exchanging their oil for other currencies, absolutely.
|
| What will be interesting is how long the Sauds will remain in
| power once they agree to exchange their oil against other
| currencies.
|
| Historically, all regimes that made that decision were or are
| in the process of being taken down either directly by the US or
| a combo of their close allies (see: Khadafi, Saddam Hussein,
| Vlad Putin, etc...)
| pjc50 wrote:
| Russia's sanctions were as a result of their invasion of
| Ukraine and they'd still be a part of the normal financial
| system otherwise. It's nothing to do with petrodollars.
| ur-whale wrote:
| Apologies, but your reading of the situation is shallow.
|
| What do you think led Vlad to invade?
|
| The US has been mounting a proxy war against Russia in
| Ukraine for the past 20 years, one they're ready - barring
| political upheaval in the US - to fight down to the last
| European.
| dmitriid wrote:
| > What do you think led Vlad to invade?
|
| Any combination of (in no particular order):
|
| - paranoia
|
| - phantom empire pains
|
| - complete and utter failure to produce anything of note
| on ideological level except "we're a great empire that is
| surrounded strictly by enemies".
|
| - waning economy with no means, desire, or knowledge to
| maintain or support it
|
| > The US has been mounting a proxy war against Russia in
| Ukraine for the past 20 years
|
| No on has done more to alienate Russia from its closest
| neighbours more than Russia itself.
| KptMarchewa wrote:
| >- complete and utter failure to produce anything of note
| on ideological level except "we're a great empire that is
| surrounded strictly by enemies".
|
| You forgot one thing: WW2 victory cult.
|
| Americans who claim that their country overtly glorifies
| the military would be shocked how insanely militaristic
| and jingoistic russia is.
|
| https://www.youtube.com/watch?v=3WdGX3-e97s
| Isinlor wrote:
| Polish and Ukrainian economies were exactly the same size
| in 1991 after collapse of the Soviet Union. In 2021
| Polish economy was 3 times bigger than Ukrainian and
| almost 2 millions of Ukrainians emigrated to Poland for
| work.
|
| Very clearly Poland done some things right, while Ukraine
| did not.
|
| The one important thing that we have done right appears
| to be immediate turning towards West after collapsing
| communist regime in 1989. Joining NATO and EU.
|
| Poland never wanted to be in the Russian sphere of
| influence. We have spilled rivers of blood in countless
| wars, uprisings and protests against Russian imperialism
| in past 300 years.
|
| Ukraine means "borderland". Historically Ukraine was in a
| constant state of wars between Polish-Lithuanian
| Commonwealth, Swedish Empire and Russian Empire since
| before USA even existed.
|
| So, historically Ukraine was always split between West
| and East. All regions of Ukraine very clearly wanted
| independence in 1991. But modern Western Ukraine wanted
| to join EU and follow Polish path to prosperity. That's
| why Maidan protests started in late 2013.
|
| Putin invaded Ukraine because he believed in a false
| story that Ukrainians wanted to be Little-Russians fed to
| him by FSB agents (KGB successor). And in order to keep
| Ukrainians from the Western path to prosperity. Ukraine
| as prosperous as Poland, meaning more prosperous than
| Russia, would threaten his regime and Russian idea of
| greatness.
|
| But Russian speaking Ukrainians sympathetic to Russia
| never asked for their whole lives to be upended and to be
| bombed by Russia into oblivion. Ukraine is no longer
| split. This war is their war of independence, true nation
| forming event. Their new found hatred towards Russia and
| Russians is enormous and that leaves them with the only
| other direction - towards West.
| 988747 wrote:
| > Ukraine means "borderland". Historically Ukraine was in
| a constant state of wars between Polish-Lithuanian
| Commonwealth, Swedish Empire and Russian Empire since
| before USA even existed.
|
| Don't forget Turkey. Ukraine was also invaded by Turks
| and Tatars many times.
| KptMarchewa wrote:
| Your analysis is on point, except for one thing:
|
| >Putin invaded Ukraine because he believed in a false
| story that Ukrainians wanted to be Little-Russians fed to
| him by FSB agents (KGB successor).
|
| I don't think he really believed in an real enthusiasm,
| but rather passiveness and complacency that characterized
| "Great-Russians" under his regime.
|
| >But Russian speaking Ukrainians sympathetic to Russia
| never asked for their whole lives to be upended and to be
| bombed by Russia into oblivion.
|
| That's a giant point not even touched once by trolls that
| love to share 2012 Ukraine election results. There's
| massive difference between believing that Ukraine needs
| to ally with Russia, there are cultural ties and similar
| points, and wishing for literal invasion of your country
| by foreign empire.
| imtringued wrote:
| Putin wants to extract oil in Ukraine or at least prevent
| Ukraine from extracting it's oil to prevent competition?
| pjc50 wrote:
| Is there that much unextracted oil there? I thought it
| was more concentrated in Azerbaijan.
|
| (the Azeri/Armenian war gets almost no attention)
| hardlianotion wrote:
| Much more knowledgeable people than I am suggest that the
| reasons include nostalgia for empire, and the acute fear
| that near-Russia is not defensible if states like Ukraine
| are not controlled up to the nearest natural defensible
| barrier. Modern Russia appears to have a mortal fear of
| being invaded that is a little perplexing to the modern
| European.
| KptMarchewa wrote:
| >Modern Russia appears to have a mortal fear of being
| invaded that is a little perplexing to the modern
| European.
|
| This is a media deflection. They massively blow this up
| with Ukraine but literally do nothing when Sweden and
| Finland joins.
|
| What putin really fears, is free, rich and democratic
| country in which large parts of population speak russian
| language. The masses can't be placated if "the same
| people" live better lives than under mafia regime. That's
| why russia spend last 30 years undermining free Ukraine
| and ensuring their hold on Belarus.
| _kbh_ wrote:
| > What do you think led Vlad to invade?
|
| There are vast natural resources in Ukraine which
| threatens Russias place as the gas station to the world.
|
| They also have imperialistic ambitions to try and restore
| what they see as the glory days of the USSR.
| pjc50 wrote:
| Overconfidence and a need for an external enemy?
| Satanism?
| https://www.atlanticcouncil.org/blogs/ukrainealert/nato-
| nazi...
|
| > proxy war against Russia in Ukraine
|
| To a certain extent this is true, but the Ukranians have
| been very keen on it as they've benefited from not being
| a puppet state run by a corrupt president who built
| himself a huge palace. And Russia has no right to be "in"
| Ukraine in the first place.
| rich_sasha wrote:
| I think this take is somewhat over-reacting. I'm pretty sure
| you'll find that the price they agreed is really in USD, and
| only the medium of exchange is gold (even if the paperwork or
| agreement doesn't even reference USD). So really they are
| paying X USD's worth of gold - with both oil and gold price
| being fixed in USD somewhere abroad. USD is so incredibly
| ubiquitous, it won't easily go away.
|
| Reserves are a little different, but even then, whenever
| something bad happens, the dollar strengthens as investors
| flock to it. When the 2008 crisis happened (and it was US-
| centric!) US and the dollar were still the safe haven everyone
| escaped to. Not the Rouble, not the Yuan, not so much EUR or
| CHF or, from memory, gold.
|
| So we'll see people avoid the USD as a medium of exchange,
| maybe, even if the prices are fixed on USD-denominated prices.
| But also remember, gold is not a great medium of exchange. Will
| Ghana ship physical gold around the world (risky and
| expensive)? Or will they sign a piece of paper saying "gold
| held by in a safe by someone else and owned by me is now owned
| by someone else" - in which case there is similar counterparty
| risk, except perhaps not against the US government. But if you
| think the US is an evil octopus with long tentacles, surely
| they could get their hands on this gold. Where will this haven
| safe from US interference be?
|
| If anything, I can more easily believe an alternative economy
| based on crypto. It's actually happening and working well, for
| all sorts of shady or illicit activity.
| kibwen wrote:
| _> Or will they sign a piece of paper saying "gold held by
| in a safe by someone else and owned by me is now owned by
| someone else" - in which case there is similar counterparty
| risk, except perhaps not against the US government._
|
| The US holds a quarter of all the known gold reserves in the
| world, and has more gold than the next three countries
| combined, so there's a decent chance that Ghana's gold is
| already in the US.
| bobthepanda wrote:
| EUR is still not a great managed currency. The Euro crisis
| could, technically, happen again.
|
| RUB backing economy is pretty much one major export.
|
| JPY makes American debt look chaste in comparison
|
| CHF does not want the job, primarily because its use as a
| basket currency already makes it too strong
|
| CNY does not want the job, and their past history of capital
| controls make America look chaste
| UltraViolence wrote:
| Saudi Arabia isn't going off the USD. That would seriously
| undermine their relation with the U.S. and could even have them
| branded an antagonistic nation.
|
| The dominance of the USD is EXTREMELY important to the U.S. and
| I can assure you that Washington is even willing to wage war
| over it.
|
| But I believe the ball has already started rolling with Bitcoin
| and Russia's demand for payment in Rubles.
| pirate787 wrote:
| LOL Bitcoin is a joke, its down 65% against the dollar this
| year
| luciusdomitius wrote:
| And it is going to fall more after the rug pull about to
| happen. Still, even in its worst, it is doing well against
| TRL, ARP, etc. And those are currencies used by many tens
| of millions.
| UltraViolence wrote:
| FTX's collapse has left its mark, but this will only be
| temporary.
|
| Bitcoin is already demonstrating its usefulness by helping
| countries evade economic sanctions. There are a truckload
| of nations who're fed up with the West's financial
| dominance and are actively seeking alternatives.
| luciusdomitius wrote:
| S. Arabia was already labeled a pariah nation by the senile
| old man. Just before they refused to increase production. So,
| no leverage there.
| UltraViolence wrote:
| Ol' Joe can't completely pull his hands off Saudi Arabia.
| Same with Turkiye.
|
| Both are too important to the strategic and economic well-
| being of the U.S. to cut loose.
| dehrmann wrote:
| > More and more countries questioning why they need to base
| their foreign transaction on the US Dollar.
|
| For spot transactions, it doesn't really matter beyond giving
| the buyer and seller a common language to negotiate in. For
| contracts sometime in the future, if you're Argentina, no one
| wants to bet on where the Peso will be in 6 months.
| spaceman_2020 wrote:
| If you look at the actual numbers, you'll find that USD
| dominance is still unchallenged.
|
| BUT, there is definitely way more chatter about alternative
| payment options, including from well-placed government sources
| and central banks in important non-west allied countries.
|
| It's now a matter of "when", not "if" when an alternative
| currency pops up, maybe a BRICS currency.
| UltraViolence wrote:
| I believe the war in Ukraine has permanently damaged the
| USD's dominance in the medium to long term.
|
| The use of a supposedly neutral financial network (SWIFT) as
| a sanction weapon will make other nations who aren't on good
| terms with the U.S. and the West (and not just the "usual
| suspects" but many nations in Africa and South America too)
| seeking alternatives.
|
| As previously mentioned, Bitcoin is a viable alternative. But
| there may be others. In any case I see nations ganging up to
| create an alternative to the SWIFT network, potentially
| undermining its usefulness.
| ben_w wrote:
| I'm only at the level of guessing for topics like this, but my
| guess is that a chain reaction is more likely to see a switch
| from USD to Renminbi than a switch to gold (or Euros).
|
| China because of the potential assuming similar GDP/capita as
| the current USA.
|
| Not soon because I expect as a prerequisite for change being
| the new winner's GDP to be dominant rather than just joint top
| 3 in a ranking system that changes their ordering depending on
| what you value most.
|
| Not gold because the justifications given for why we all
| stopped using the gold standard in the fist place, still seem
| to apply.
| matthewdgreen wrote:
| Wouldn't a switch to Renminbi as a global reserve currency be
| fundamentally incompatible with China's currency control
| regime? This has always been the explanation I've been given
| for why such a switchover is improbable.
| ben_w wrote:
| Could be; I don't even understand British economic
| policies, despite my nationality, Chinese economic policies
| are completely outside my domain of knowledge.
| Tarq0n wrote:
| There's also a lot less in circulation. The US Dollar has
| by far the largest volume out of any currency, which helps
| other central banks manage their holdings. This is
| something that holds back for instance the euro to be used
| for reserve banking.
| tcbawo wrote:
| Do you think GDP is the critical factor for determining a
| global reserve currency? IMO, respect for property ownership
| rights, legal/judicial recourse, ubiquity of US banks, and
| political stability are large contributing factors that few
| other countries can compete with. China has a pretty
| checkered past regarding ownership rights for citizens who
| are critical of its leadership.
| [deleted]
| 988747 wrote:
| Property rights and such are secondary. The primary issue
| is: who has the power? Right now the answer to that
| question is "US", but since China is catching up on GDP,
| and, unlike US, actually manufactures things. If China
| decides that they want payments for all the goods that they
| export to be in RMB then there's nothing the rest of the
| world can do about it, except stop all the imports from
| China (which would take decades, because they have to learn
| to manufacture all those goods themselves). Once most of
| your imports come from China instead of the US it does make
| sense to use Chinese currency as the reserve currency,
| since you are going to need a lot of RMB to pay for your
| imports anyway.
| matthewdgreen wrote:
| Saudi Arabia (to pick a major oil exporter) imports about
| 20% of its goods from China. But it also imports vastly
| more from regional partners and the US and Europe, not to
| mention that it depends on the US to secure all of its
| oil exports to China across thousands of miles of
| vulnerable ocean routes.
| ethbr0 wrote:
| China can't tank imports until they finish pivoting to
| their own internal, consumptive middle class. And
| probably not even then.
|
| The plan the international community hoped for is
| actually somewhat working, the timeline for China's giant
| population to metabolize it was just wrong.
|
| Large Chinese middle class = power = political risk to
| disrupting the economy = incentive not to rock the
| international trade boat's status quo.
|
| The CCP is already seeing with the anger over zero-COVID
| that {middle class life} >> {good of the Party} for most
| of the population.
|
| Unfortunately, China probably also learned from the USSR
| that the entire charade only collapses when you blink and
| refrain from using the military to crush civilian
| dissent. Which doesn't bode well for Chinese citizens...
| FpUser wrote:
| >"Unfortunately, China probably also learned from the
| USSR that the entire charade only collapses when you
| blink and refrain from using the military to crush
| civilian dissent."
|
| Baloney. USSR did not crush because of "civilian
| dissent". All the changes were driven from the top.
| ethbr0 wrote:
| The Berlin Wall fell because the East German authorities
| and the USSR declined to shoot civilians.
|
| And the fact that order wasn't given was mostly due to
| bureaucratic ineptitude and delay, rather than intent. ht
| tps://en.m.wikipedia.org/wiki/Fall_of_the_Berlin_Wall#Cro
| w...
|
| It could have easily been Hungary 1956, Czechoslovakia
| 1968, Georgia 1989 instead.
|
| Progress trends towards freedom, but it can walk over a
| lot of corpses on its way there. :(
| FpUser wrote:
| Berlin Wall did not cause the collapse of the USSR, it
| was one of the results of generally declining empire and
| change of it policies that again came from the top. Gorby
| and Reagan had decided to be "friends"
| ben_w wrote:
| I suspect it's a prerequisite, though perhaps not the only
| one.
|
| I also suspect that political stability is more likely to
| favour China than the USA over the next few decades -- it
| is very human for success to be followed by the assumption
| of indefatigability and that to be followed by fighting
| over who leads the nation, rather than continuing to focus
| on what actually made a nation dominant and how to keep it
| that way. The UK lost its literal empire that way; the
| Soviet Union took 50 years to go from agrarian to space,
| but by the end they had become at least as out of touch
| with their own people as the last Tsar had been; I think
| the US may lose its metaphorical empire similarly to the
| UK's actual empire, though the group deciding to call
| itself "The Tea Party" at least implies the possibility of
| it failing, with analogy to the USSR, in the same way it
| was formed.
| tcbawo wrote:
| The US may have backslid a bit, but it still leads the
| world in property ownership rights and fairness of the
| legal system. When a foreign corporation takes a domestic
| corporation to court, which jurisdiction will they get
| the fairest shake? What happens to billionaires when they
| speak critically of the Chinese government? Despite
| claims to the contrary, freedom of speech and rights of
| the property ownership are still vigilantly protected in
| the US.
| ben_w wrote:
| Certainly; this is a hypothetical about a future where
| both China improves and the USA continues downhill. But
| even then, don't image a static world, imagine the
| difference (on the world stage, not in absolute terms)
| between the UK in 1922 and 1950, and assume the USA might
| fall proportionally as far by 2050. Or the growth of the
| Soviet Union in the same period, and apply that to China
| by 2050.
| KptMarchewa wrote:
| >the Soviet Union took 50 years to go from agrarian to
| space
|
| That's a naive view of russia. Up to this day, one of the
| main tasks of russian army - as previously soviet - is
| potato harvest.
| ben_w wrote:
| I can certainly believe they're like that today, given
| how inept they obviously are in every aspect of the
| Ukraine war. So much so, I will take that at face value
| without even bothering to google it even though it
| would've seemed like a surprising and unbelievable claim
| this time last year.
|
| That doesn't mean they didn't go to space, nor does it
| mean they didn't industrialise, nor does it mean they
| weren't a significant word power and viable threat to the
| USA during the Cold War.
| KptMarchewa wrote:
| Agreed. It's also important to look at context of all of
| those achievements.
|
| For example, industrialization was greatly driven by
| foreign engineers and companies.
|
| Like, one of the most important figures in pre-WW2
| industrialization.
|
| https://en.wikipedia.org/wiki/Albert_Kahn_(architect)
|
| That continued after WW2. Russia was dependant on western
| trucks, a lot of which they gained via Land-Lease. So,
| they literally bought truck factory from the western
| companies - Kamaz - that they obviously branded as their
| great achievement.
|
| Production: https://pbs.twimg.com/media/FVI8MeOWAAEBhMB?f
| ormat=jpg&name=...
|
| Receipts: https://pbs.twimg.com/media/FVI8lAGWUAA37eD?for
| mat=jpg&name=... https://pbs.twimg.com/media/FVI8l9eXwAEv
| MKM?format=jpg&name=...
| nivenkos wrote:
| This was the same for every industrialising country save
| Great Britain and a handful of others though.
| trasz2 wrote:
| nirimda wrote:
| The UK lost its literal empire because of the costs of
| two wars that devastated the continent - not domestic
| politics. On the other hand, the PRC is turning back on
| itself. It has been unable to produce a successor to Xi -
| making it very hard to change direction. Under Xi, it has
| actively cultivated hostility against itself and only
| manages to exercise influence others through force. It
| also has much less stable demographics. It is not
| reasonable to expect China to collapse and it would be
| fearful if they did, but they are likely to have a much
| less stable period ahead as they come to terms with their
| situation.
|
| As for the US, they're not alone in this but they are now
| in a situation where younger voters with a longer time
| horizon are able to win majorities against older voters
| with shorter time horizons. This means they're entering
| into a period of creativity. It is not clear what the
| outcome will be. But it is clear that we cannot take for
| granted that pursuit of an unreformed ideology will
| distract them from the compromise and teamwork that
| brought them to strength.
|
| In both cases, I think you're extrapolating from recent
| politics. But both countries are in different turns of
| the demographic wheel, and have different ways of dealing
| with that. Democracy also tends to make turmoil more
| obvious to external observers, so it's easy to
| accidentally compare apples to oranges when you're
| looking at a democracy and an autocracy.
| ben_w wrote:
| > The UK lost its literal empire because of the costs of
| two wars that devastated the continent - not domestic
| politics.
|
| That's the story the British like to tell themselves.
|
| I don't think it fits the counterexample that Germany was
| able to rebuild itself enough after the first to be a
| world-scale threat by the second (and might have won the
| second in the alternative timeline where they had not
| been so anti-communist to attempt to conquer the USSR
| before the UK, and possibly also in the hypothetical
| alternative timeline if they had not been anti-Semitic --
| even before all the horrors of Holocaust became known,
| they were bad enough to make a significant number of
| Jewish scientists run away, in particular the ones went
| to the USA and helped with the Manhattan Project); and
| again after WW2 and being divided by the Allies, that
| Germany went from having their industrial base punitively
| dismantled in 1949 to The Times referring to the its
| reconstruction as a _Wirtschaftswunder_ by 1959. (Yes I
| do know they got help, but it's important to also know
| why the UK didn't get that help, and I think part of that
| is the USA while part is internal domestic UK politics).
|
| It also doesn't fit that the observation that empire,
| which was worldwide, had been bringing riches to the UK
| before the war. One thing that _might_ have changed the
| cost /benefit ratios was all the locals finally getting
| their hands on sufficient firearms to make it expensive
| to suppress independence movements. Given what else the
| British government was busy doing with local industrial
| policy at that point, and the honours granted to those
| directly involved in war crimes during the Mau Mau
| uprising, I don't think they were that self-aware. (Could
| also be that the USA was putting pressure on the old
| powers to drop their imperialism, but I don't feel
| confident about the dynamic there given British cultural
| attitudes to the USA vary from it being "one of us, even
| if they don't realise it" (no, I don't get it either, but
| I've seen it) to "if they say jump, we ask how high").
|
| It also doesn't fit that the Commonwealth's GDP is now
| about $11 trillion, about 3 times the UK itself; although
| I would regard the end of Imperialism as a morally good
| thing and correct all by itself, I don't think "money" is
| a reasonable justification for _giving up_ on that
| potential. Morally, sure. Politically, it is "gave up an
| empire to gain a continent... hang on, why isn't the
| continent doing what we say? That must mean _they_ are
| dictating to _us_!"
| [deleted]
| ethbr0 wrote:
| China might be able to _force_ a switch to the Renminbi
| simply by virtue of their GDP. First as a medium of exchange
| (which they 're doing), then as a reserve currency.
|
| But having people _willingly_ adopt it?
|
| If people are unsatisfied with the USD in specific ways, how
| would those specific ways be better using the RMB?
|
| It'd be pretty shortsighted to complain about US financial
| manipulation or use of currency to further political goals...
| and then jump in mainland China's pool!
| edwnj wrote:
| As for what happens next: de-globalisation
|
| I predict we'll see blocks forming up again, something like: -
| West (US+EU) - East (China+Russia) - India (India, Sri Lanka,
| Himalayan States, South China states) - Middle (Middle
| East+North Africa) - Latam (Central + South American States)
|
| One wild card IMO would be the rise of the Indian sphere of
| influence. I'll leave some room for India's remarkable ability
| to snatch defeat form the jaws of victory. If they don't f this
| up, they have UUUGE tailwinds going for them.
|
| Middle east is overrated IMO, its like an oasis with oil
| instead of water. When the oil money runs out, not gonna be fun
| any more.
|
| Latam is probs the biggest wildcard, even bigger than India.
| They don't need a lot of things to be right to wildly
| outperform as a block. Just like the US, they are protected by
| two oceans so they can choose to not involve themselves in
| stuff.
|
| Africa is highly overrated IMO, the entire continent is cursed
| in multiple ways. If u compare africa to another post colonial
| continent like Latam, africa is in a place where they need to
| get so many things right to just survive, let alone to catch
| up.
| dmitriid wrote:
| > East (China+Russia)
|
| People that keep bunching Russia with China are deluding
| themselves that Russia is anywhere on China's radar except as
| a source of cheap resources (gas, oil, wood)
| edwnj wrote:
| Russia is a UUUUGE strategic geopolitical ally for China.
|
| In a de-globilised world split into spheres of influence,
| Russia would be a foothold into Europe.
|
| Cheap resources cant be discounted, China has duck all for
| resources. It imports everything (raw nat resources) and
| its current source Australia is not an ally.
| KptMarchewa wrote:
| China has other sources for any of the raw materials,
| russia has no other markets.
|
| If anything happens, it will be a massive extortion like
| Iran-China deal. https://en.wikipedia.org/wiki/Iran%E2%80
| %93China_25-year_Coo...
|
| Current Urals price is profitable but way below needed to
| maintain blown up russian budget by war effort. China
| likes this.
| thisiscorrect wrote:
| I agree with the general premise of your comment, that this
| is a small sign of the deglobalization which is _already_
| under way.
|
| But, what are the UUUGE tailwinds benefiting India? India,
| even more so than China, seems likely to "get old before it
| gets rich." Its TFR is already below replacement and falling
| rapidly.
| KptMarchewa wrote:
| China's official TFR figures are massively engineered:
| https://www.project-syndicate.org/commentary/chinese-
| populat...
|
| India ones are still over replaceability.
| thisiscorrect wrote:
| https://www.google.com/search?q=india+total+fertility+rat
| e tells me India's is 2.18, below the modern replacement
| TFR rate of 2.3 [1].
|
| [1] https://en.wikipedia.org/wiki/Total_fertility_rate#Re
| placeme...
| KptMarchewa wrote:
| India child mortality rate is low enough that it's closer
| to developed countries rate of 2.1, rather than global
| rate which you cite.
| dirtyid wrote:
| With respect to point of original argument:
|
| >get old before it gets rich
|
| If PRC's official population is as low as Yi thinks, then
| her per capita GDP is already "secretly" high income at
| ~14000 USD. She would technically already have gotten
| rich before old. CCP has incentive to overreport
| population / underreport GDP to keep "developing" country
| status.
|
| >India ones are still over replaceability
|
| Indian overall TFR this year is ~2.0, but more important
| to break down Indian TFR by state, which will reveal all
| the high HDI/developmed/educated regions are ~1.6 and
| trending down, while the underdeveloped and poorly
| educated regions are still >2. The TLDR is India's
| demographic divident in her high potential regions is
| basically over, while low potential regions are
| generating excess bodies that will have little
| opportunity develop. Recipe for disaster in democracy,
| and hence:
|
| > India, even more so than China, seems likely to "get
| old before it gets rich."
|
| Of course India is going to grow, by a lot, but much of
| her high potential demographic divident is already tapped
| out while stuck in low middle income unless the system
| get it's shit together.
| edwnj wrote:
| I strongly disagree with on demographics, it looks really
| good for most of the century. Everything including TFR,
| young population, working population and even elderly
| populations looks REALLY good. Especially relative to
| China.
|
| Demographics aside, India is a perfect replacement for
| China in high tech manufacturing. Stability is a huge
| factor here giving India a massive edge compared to south
| east asian alternatives.
|
| On top of that, you have young highly skilled & literate
| workforce. A largely discounted wealthy diaspora investing
| back into the motherland. Huge pool of software talent.
|
| IMO it makes for a huge Shenzhen like moment for India.
| Again, I leave a massive amount of room for India to duck
| this up but it is India's opportunity to fuck up. The winds
| have shifted heavily in their favour.
| simple-thoughts wrote:
| For people saying that this is a sign of the dollar dominance
| ending consider this.
|
| Gold is valued in dollars. Oil is valued in dollars. Any gold for
| oil exchange will be decided by the going dollar rate of each.
| Counter parties and middlemen assisting this trade will be
| hedging their positions with dollar settled derivatives traded on
| deep and liquid dollar markets.
| chewz wrote:
| Exactly... People confuse eurodollar market with dollars...
|
| What Ghana is doing is a symptom of global liquidity crisis not
| a dollar crisis... Ghana cannot print dollars... It is short
| dollars and would rather have more then less of dollars. So
| this situation makes dollar more wanted not less.
|
| Michaell Howell is an expert on Global Liquidity and does good
| job at explaing it.
|
| https://hiddenforces.io/podcasts/global-liquidity-matters-no...
| hmate9 wrote:
| Gold isn't valued in dollars. You can sell gold for any
| currency.
|
| Oil is primarily transacted with dollars because it's the
| worlds reserve currency. But if that were to change to
| whatever, you can still sell your oil and gold for whatever the
| new dominant currency is. Meanwhile your dollar is (presumably
| in this case) worth way less in terms of buying power than when
| you first bought it.
| simple-thoughts wrote:
| You can always barter anything for anything else, but how do
| you decide the rate to barter at? It's determined by the rate
| for the most liquid markets for the two sides, because the
| price of an asset in the most liquid market is the price all
| other markets will follow. There just aren't gold based
| markets that are even remotely comparable to usd ones, so the
| ratio of gold to oil is set by their respective rates in usd.
|
| To see an actual switch from usd to gold for valuing oil,
| you'd need to see the market liquidity migrate from usd/oil
| pairs to gold/oil pairs. Ghana making a political statement
| isn't that.
| themihai wrote:
| >> Gold is valued in dollars. Oil is valued in dollars.
|
| If a long term contract is signed it protects you from dollar's
| inflation/volatility as the contract used gold as currency. I
| think this is important as tomorrow Fed's decision is no longer
| that important for your energy costs.
|
| The more important part is that if enough contracts are signed
| in gold(highly unlikely given U.S's oil exports) then the
| dollar is no longer relevant to the oil price.
| thaumasiotes wrote:
| > I think this is important as tomorrow Fed's decision is no
| longer that important for your energy costs.
|
| The Fed decision wasn't important to energy costs anyway,
| though. Oil is priced in dollars, but the price changes
| minute-to-minute. Whatever the Fed decides about the value of
| a dollar, the oil price will reflect that.
|
| If you're involved in a _long-term contract_ involving the
| exchange of oil for dollars, then the Fed 's decision can
| have a big impact on you. But that's true of all long-term
| contracts involving dollars; there's nothing special about
| the other side of the contract being oil.
| themihai wrote:
| >> The Fed decision wasn't important to energy costs
| anyway, though.
|
| Of course it was. Rate hiking makes the dollar more
| expensive for anyone buying dollars(to pay for the oil).
| Were they dealing with gold they would not have this issue.
| Not to mention if the buyer is a gold producer.
| thaumasiotes wrote:
| So what? Rates go up, dollars get more valuable, it's
| more expensive to buy dollars than it used to be, _and
| each dollar buys more oil than before_.
| themihai wrote:
| But only one entity prints dollars so that's the
| catch/unfair advantage of the U.S.
| simple-thoughts wrote:
| Most dollars are created by offshore banks and are not backed
| by deposits at the federal reserve. The federal reserve only
| indirectly affects the value of dollars through manipulating
| inflation expectations. If people think the fed is easing,
| they buy assets which pumps the collateral of offshore banks
| which then have larger balance sheet capacity to issue new
| dollars backed by that collateral.
|
| So even if you are signing contracts in gold/oil pairs,
| effects of fed decisions can impact your trade in ways that
| you are protected from in usd/oil pairs as gold is usually
| viewed as a safety asset - so when animal spirits take off
| due to fed statements gold can go down while oil takes off.
| This has in fact happened several times over the last
| decades.
| thisiscorrect wrote:
| It's obviously possible to buy gold in non-USD currencies. So I
| think the gist of your comment applies to the dominance the US
| has over oil markets. So while the "petrodollar" era is still
| ongoing but its day seem numbered, e.g. by pushing Russia to
| seek other export markets besides the West, by the increasingly
| cool perception of the US by OPEC nations [1], etc.
|
| [1] https://www.forbes.com/sites/rrapier/2022/10/05/opec-
| thumbs-...
| simple-thoughts wrote:
| Not just oil markets- usd dominates gold markets as well.
| Russia will be selling oil to other countries at a "discount"
| but to what? The price of oil in usd which is why some
| counterparties consider the trade. If usd was losing
| dominance, countries would be offering a premium to purchase
| oil for something other than usd.
| rsync wrote:
| "For people saying that this is a sign of the dollar dominance
| ending consider this ..."
|
| I think you are mistaken.
|
| The technical fungibility of dollars/gold/oil is irrelevant.
|
| The requirement to sell other assets to buy dollars in order to
| settle oil is not a minor detail - _it 's the whole point_ ...
|
| ... and it would, indeed, be a sign of an erosion of US
| currency and trade dominance ... which is why it's not going to
| happen.
|
| Ghana will either not go through with this plan or they will
| proceed and pay an enormous economic and political price ...
| _or worse_.
| happyjack wrote:
| You're indeed 100% right. I think a lot of HN programmer bros
| miss this point ... that being forced to settle in dollars is
| not a formality ... it's the whole point!
| GoOnThenDoTell wrote:
| Im curious about the mechanics of how this helps, could they not
| sell the gold for dollars to buy the oil?
| 3pt14159 wrote:
| All the mechanics in the world won't help you if the
| fundamentals are broken.
|
| At some point, when push comes to shove, someone has to take
| delivery of something. This comes down to a matter of
| efficiency and faith. Who do you have more faith in? A random
| bank claiming to having a certain amount of gold on deposit?
| Your own central bank taking in tons of gold for delivery of a
| good?
|
| This is silliness. If the USD is inflating too much (or if you
| perceive American sanctions as too onerous) then use a
| different currency like the Swiss Franc or the Euro.
|
| None of this really matters. What matters is international
| settlements, agreements, and force. If you're on the wrong side
| of the WTO your economy is cooked anyway. Besides, if Ghana
| were some stalwart of anti-corruption then this may mean
| something, but it isn't. It's middle of the pack. Well behind
| Canada, Europe, Japan, and The United States; all countries or
| blocks that are perfectly fine selling and buying in USD.
| 4pkjai wrote:
| I think the reason they want to avoid the US dollar is so that
| they do not need to obey US sanctions.
|
| From what I understand, if you send US dollars around the
| world, they need to go through a US bank. All US banks must
| obey US government sanctions.
| fuzzfactor wrote:
| Right now dollars are skyrocketing in value compared to their
| own currency.
|
| For them dollars earn much more being held rather than being
| invested in most other things within reach.
|
| They can dig up more gold from their own mines which they're
| always doing anyway regardless of its prevailing price.
| pjc50 wrote:
| Ghana are not subject to sanctions?
| djbebs wrote:
| Right now. Can you guarantee that will always be the case
| we'll into the future?
| elzbardico wrote:
| They may want to buy things like fertilizers or wheat from
| a sanctioned entity, Russia coming to mind.
| fmajid wrote:
| They don't want to avoid the dollar, far from it, they want
| to keep the few dollars they still have and pay with
| something else instead.
|
| Now, if I were the Chinese with an overabundance of dollars
| (or worse, US Treasury bonds), I'd be trying to convert them
| into something else ASAP. They tried to buy companies,
| agricultural land and other things with intrinsic value, but
| were blocked by CFIUS and the EU is setting up its
| equivalent.
| ur-whale wrote:
| At some point in their history, the US unilaterally decided
| that any transaction occuring in dollars in any parts of the
| world was subject to US law.
|
| In other words, they suddenly had granted themselves legitimacy
| to enforce US law anywhere on the planet as long as a single
| dollar changed hands.
|
| As the US perceives itself as an empire, it makes complete
| sense from their POV.
|
| But mayyybeeee, if you're in Ghana, you still cherish delusions
| of being a sovereign nation ...
| pjc50 wrote:
| This. People seem very exercised about using the dollar
| specifically to buy oil, but .. currencies are fungible? You
| can trade them on international markets? Also, where does the
| gold come from? Is it just their central bank reserve?
|
| No, it seems that Ghana is experiencing the classic forex
| problem of not being able to export enough valuable production
| in order to afford its imports, and it's very hard to reduce
| imports of fuel without drastic drops in either lifestyle or
| production capacity. And if you can't afford fuel to produce
| exports, then you have a death spiral.
| squaresmile wrote:
| Yeah, it's pretty disappointing that most comments focus on
| the ideological aspect and celebrate the move while the
| picture is pretty bleak for Ghana.
|
| Unfortunately, this story is not unique to Ghana and if the
| situation does not improve, I fear for how next year will
| look.
| ksidudwbw wrote:
| Can always bring in investors
| UltraViolence wrote:
| We'll see the dominance of the USD erode in the next three
| decades is my prediction.
|
| Look at how successful Putin was in demanding payment for Russian
| oil in Rubles. It has propped up the Ruble enormously and its
| predicted collapse hasn't occurred. In fact it has rallied.
|
| I assure you that other nations have taken note and will take
| similar steps in the future. Other commodities may well be priced
| in local currencies of the producing nations. Think gold,
| diamond, gas, oil, timber, wheat.
| nirimda wrote:
| Most countries and business want to do something with their
| earnings. If you get paid in rubles for your oil, then you can
| only buy things denominated in rubles. If your _general_ trade
| is collapsing, this isn 't such a bad thing - you need to make
| an increasing proportion of your consumption. But if you retain
| an economy that wants to do general trade, you will probably
| want something other countries accept.
|
| So although it is possible that "we'll see the dominance of the
| USD erode in the next three decades", it is much less likely
| that "commodities [in general would] be priced in local
| currencies of the producing nations [following the example of
| Putin's Russia]". The problem with your prediction though is
| that it's boring - it's too easy to be true as phrased. For
| instance, if we see a new cold war divide into a China-focused
| world and a US-focused world, then the growth of whatever
| currency the China-focused world uses will necessarily result
| in decreased USD dominance. Or if not China, then India. Or who
| knows who. Or maybe the US will descend into civil war and
| someone else will pick up the mantle of world hegemon. Or the
| US will amicably divorce, and the Floridollar will dominate
| international trades.
|
| So it's more likely that you'll be right for the wrong reason,
| than that you'll be right for the reasoning established in your
| post.
| UltraViolence wrote:
| AFAIK you can still exchange Rubles for USD or EUR, so buying
| stuff shouldn't be too much trouble.
|
| The problem Russia has is that it can't buy anything from the
| West no matter how much money it's willing to pay because of
| trade sanctions.
|
| The sanctions will eventually be lifted since Russia will
| almost certainly demand this for stopping the war.
| KptMarchewa wrote:
| The "prop up the ruble" effect was negative to russia. It
| happened because export to russia totally stalled. So, russia
| still exported oil and gas, but could not buy anything for
| earned currency. For example, in August German export to russia
| dropped 45.8%, while imports dropped only 6.7% - and that only
| due to gas price increase. Now they import 0 gas.
|
| >I assure you that other nations have taken note and will take
| similar steps in the future.
|
| Why would any country do that if they don't plan similar
| genocidal war?
| jacooper wrote:
| > Why would any country do that if they don't plan similar
| genocidal war?
|
| Because not everybody likes to be controlled by the US?
| oj2828 wrote:
| Russia had to raise interest rates to 20% to achieve the recent
| appreciation. Russia is giving up economic growth for the
| foreseeable future to prop up its currency. I doubt many
| countries are eyeing a similar move
| somenameforme wrote:
| They raised them to 20% for one month in the face of a
| nuclear economic strike. Their rates are down to 7.5% which
| are close to nominal for them. Remaining effects are a 3% GDP
| decline and a 12% inflation rate trending downward from a
| peak of 18% following the attack.
|
| The overall impact seems to be fading to zero relatively
| quickly, excepting a much stronger ruble. Future growth
| numbers will be interesting to follow. Much could shift
| radically one way or the other depending on oil prices, but
| the US seems to have a declining level of influence with
| OPEC+.
| The_Colonel wrote:
| > Remaining effects are a 3% GDP decline
|
| It's 3.9% (which rounds up to 4%, not to 3%) this year and
| 5.6% next year.
|
| This forecast is based on figures kindly provided by
| Russian authorities, which in times of war have strong
| incentives to be creative.
| somenameforme wrote:
| The Russian central bank expects a rate of 3-3.5%, the
| Ministry of Economic Development expects a decline of
| 2.9%. [1] Your numbers may be dated, as the expected
| figures keep improving. Some time back they were
| expecting double digit declines.
|
| [1] - https://tradingeconomics.com/russia/gdp-growth-
| annual
| The_Colonel wrote:
| The 3.9%, 5.6% decline comes from OECD's November report,
| so hardly outdated.
|
| I don't think there's much reason to trust Russian
| Central Bank which has strong incentives (read: orders)
| to enhance the numbers.
|
| https://www.oecd.org/economic-outlook/november-2022/
| RadixDLT wrote:
| good thing bush is not president this time
| selimnairb wrote:
| Cue US invasion of Ghana...
| andsoitis wrote:
| Why do you suppose the US would want to do that?
| selimnairb wrote:
| Why did we invade Libya?
| shyn3 wrote:
| Libya moved away from the USD and got destroyed. Ghadaffi
| wanted the African countries to unite and get away from the
| standard. The American imperialists shut that down fast.
| freddealmeida wrote:
| It won't happen.
| ur-whale wrote:
| The hegemony of the dollar as a reserve currency is finally
| coming to an end, and while many will disagree with my opinion, I
| believe it's a very good thing for the world.
|
| The US has been allowed by the rest of the world to use the
| dollar as a weapon since the end of WWII, specifically using it
| to impose unilateral economic sanctions on anyone they don't
| like, thereby flouting or downright ignoring other countries
| sovereignty in the process.
|
| The have also used the privileged status of the dollar to gain
| systematic, unfair and generally undeserved economic advantage in
| international markets.
|
| They have also used this advantage to create a completely
| unsustainable amount of debt which the US will never be able to
| repay now that the dollar is becoming just another currency.
|
| Picasso was famous for writing checks, knowing fully well that
| they would never get cashed out because, bearing his signature,
| there was an intrinsic demand for them and the thing would be
| kept as is by the owner.
|
| US dollars are very similar to Picasso's checks in the sense that
| foreign country all keep large amounts of US currency reserve and
| debt instrument, but they never "cash them out" (exchange them
| for US-based hard assets such as land and businesses).
|
| The world has allowed this to happen for near 70-ish years
| because the for the longest time, the US was perceived by a large
| part of the world as a force for good.
|
| That ship has sailed though, and in 2022 it's getting pretty hard
| to find folks outside of the US that view it as a force for good
| anymore (or just don't downright hate their guts with a passion).
|
| To be a useful tool, a currency should be, among other things:
| a) managed in a sane manner (as in: the amount issued should be
| on a fixed schedule, as per Milton Friedman) b) not
| used to tilt the playing field c) essentially
| politically neutral, and in particular managed by an entity not
| in any way controllable by the government.
|
| The US dollar doesn't meet any of these criteria, and the chicken
| are now coming home to roost and the dollar will slowly lose it's
| privileged status among world currencies, slowly being replaced
| by a bunch of other.
|
| Good riddance.
| creakingstairs wrote:
| > The hegemony of the dollar as a reserve currency is finally
| coming to an end, and while many will disagree with my opinion,
| I believe it's a very good thing for the world.
|
| Yeah ideally, I agree that some competition might be good to
| keep US in check. Chinese Yuan seems most likely at this point.
|
| But I think the world would be in a "worse" place when the
| break happens. Purely due to geopolitical instability and all
| the second order effects that is bound to happen when US
| hegemony ends.
| dragonelite wrote:
| Wondering what will replace it, maybe the Brics coin a basket
| of currencies and commodities. A bit like Keynes Bancor concept
| if i'm not mistaken time will tell what sort of currencies the
| Russians and Chinese will introduce for BRICS, SCO and BRI
| nations.
| ur-whale wrote:
| The Chinese Renminbi (Yuan) is a good candidate to quickly
| get on par with the USD.
|
| If they manage it properly that is, as in: not print
| mountains of it, and not using it to enforce their political
| aims.
|
| They're currently actively busy making the Renminbi reserve
| and default trading currency in much of Asia.
|
| And, as a last resort, there's always Bitcoin and gold,
| although, as Ghana will discover (unless they make the
| mistake of using a 3rd-party custodian) gold is very tricky
| to move about.
| pjc50 wrote:
| > not using it to enforce their political aims.
|
| Ah yes, the CCP, famously known for not enforcing political
| aims.
| meowfly wrote:
| RMB is a terrible candidate for a reserve currency. If you
| are concerned about the US meddling with their currency,
| you will not pick a historically manipulated currency like
| the RMB. Moreover, in China transactions over 8k USD have
| to be reported and there is a 50k USD currency exchange
| limit. The governments managing of outflows hardly gives
| confidence that the currency is one people want to hold.
| dragonelite wrote:
| Asia does seem to move more and more into the renminbi
| sphere. It would makes sense if China starts exporting more
| RMB over the next couple of years to facilitate trade in
| the region and get the USD financial hooks out of the
| region. For now i'm mostly waiting on South china sea code
| of conduct being finalised. Seems Vietnam is now willing to
| cooperate with China on their South China sea issues and
| resources/border disputes.
|
| You also have Xi next month meeting Arab leaders in Saudi
| Arabia, a lot of people are expecting a PetroYuan
| announcement or at the very least the foundation of such an
| agreement. I think after those two events are handled and
| closed, China should be in an excellent position to become
| Asia's major energy hub. They can get Russian, Qatari,
| Central Asian stans and Saudi energy products without
| having to use Western financial institutions or services. I
| think the Russian and Arab leaders want a bigger share of
| the Chinese bonds and financial markets so they can grow
| their RMB reserves like they are already doing with their
| dollars.
|
| Ghana going with gold for energy imports seems smart for
| now but yeah moving gold isn't easy, also verifying the
| gold is also not easy. That's why i think BRICS+, SCO and
| BRI nations will create a block chain with a digital
| currency(Central Banks digital Currency) backed by a basket
| of currencies and commodities to facilitate import and
| export and government to government financial transactions.
| peter-m80 wrote:
| Honest question: Can someone explain me why using gold instead of
| dollars to buy oil isn't the same as sell gold for dollars and
| use those dollars to buy oil?
| simple-thoughts wrote:
| Only half of the story is quoted here. The other half is Ghana
| is forcing gold refiners to sell 20% to the Ghanan central bank
| in "cedis at spot prices with no discounts"[1]. So they are
| minting cedis to buy gold, then trade that gold for oil instead
| of dollars. If the trade was instead to sell for dollars, it's
| more politically obvious that the policy is a tax on gold
| miners and refiners.
|
| [1] https://www.reuters.com/markets/commodities/ghana-orders-
| min...
| Ekaros wrote:
| For two parties to transact in dollars they need either to
| physically hold large amounts of dollars. Or have access to
| some shared ledger that is accounting system where transactions
| can happen.
|
| Say A, B, C account. A sells gold and get dollars from account
| B to account A. And now they can buy oil from owner of account
| C.
|
| But who owns and runs these accounts or the transactions
| between them? One option is SWIFT system. Which Russia got
| excluded in some capacity from. As such it is clear that system
| cannot be trusted. Value of dollars there are very unlikely to
| be good for long term. And same applies to any accounts in
| banks in western influence sphere.
|
| Thus directly transacting is better option in long run. For any
| country that wants to keep their economy stable.
| lvl102 wrote:
| Ekaros wrote:
| No. I'm not thanks for ad-hominem though.
| Sargos wrote:
| Putting your entire economy at risk of being turned off
| advisory due to unknown future political disputes is a risk
| to the sovereignty of nearly every country in the world.
| Many countries are now looking for alternatives after the
| neutrality of swift/the dollar was eliminated.
| giaour wrote:
| > One option is SWIFT system. Which Russia got excluded in
| some capacity from. As such it is clear that system cannot be
| trusted.
|
| That is quite a leap. Russia was also excluded from the NY
| stock exchange due to the ongoing sanctions; does that mean
| we can no longer trust stocks bought and sold there?
| 988747 wrote:
| Yes, it does at least for those of us who are not US
| citizens. You can never be sure that one day the US won't
| sanction your home country in the same way, for some weird
| reason. Of course for some countries the risk is greater
| than for others, but still, it's a good reason to avoid US
| financial markets.
| giaour wrote:
| All financial markets participate in sanctions, so taking
| this absolute stance would limit the negotiable
| instruments available to you to briefcases full of gold
| or cryptocurrency.
| pessimizer wrote:
| > All financial markets participate in sanctions
|
| You're using the law of averages. Not all financial
| markets participate in the same sanctions to the same
| extent at the same time, which means that the decision
| about where to invest can be important.
|
| > taking this absolute stance
|
| You're the one characterizing this as an absolute stance,
| rather than a practical stance related to the current
| condition of the markets of the most powerful country
| that demands the most sanctions.
| yxhuvud wrote:
| Because of changes of the relative values between gold, dollars
| and oil over time has implications. If they have a more
| reliable source of gold than of dollars then it may make sense
| from their point of view. It is of course up to the oil
| producers if they want to be on the other side of that risk.
| gpsx wrote:
| I don't think it is different, apart from any issues with
| timing of the buying and selling and price changes in between.
| I think this is more a question that the government doesn't
| have the gold and buying it from the miners is how they will
| get it. I don't think they are giving the miners a bad deal,
| other than forcing them to accept Cedis. I believe the net
| effect is that fewer Cedis are put on the market for dollars
| and this prevents a price drop in Cedis.
| gpsx wrote:
| I'm not sure why this was downvoted. I did leave out one
| thing - I think the Ghana government is making a statement
| that they don't want to transact in dollars. That is an
| important difference, but it is not related to the monetary
| dynamics.
| elzbardico wrote:
| Decoupling from the western financial system and having a
| higher level of resilience from sanctions. You never know if
| the US will decide tomorrow you're not behaving as expected
| under the internal rules-based order.
| robertlagrant wrote:
| Why would the US be able to stop them buying oil using their
| dollars?
| bell-cot wrote:
| Very Roughly:
|
| Countries don't buy oil (or anything else) with a suitcase
| or few stuffed with $100 bills.* Instead, they have a
| really big bank move US dollars through the international
| banking system electronically.
|
| Any really big bank that wants to keep its US-issued
| "Allowed to Handle US Dollars Electronically" License has
| got to follow a bunch of US-made rules. Which rules
| doubtless permit the US to make & enforce a very long
| blacklist, of various countries / organizations / people
| who the US doesn't want banks to work with.
|
| (That said, I see no reason to suspect that Ghana has any
| interest in "Decoupling from the western financial system",
| as elzbardico put it. Though obviously the subjects of oil,
| gold, dollars, etc. are pushing a whole lotta people's
| emotional buttons in this item.)
|
| *Yes, there _are_ exceptions - usually involving sanctions-
| busting by folks who don 't care about drawing hostile
| attention from the US.
| lottin wrote:
| > US-issued "Allowed to Handle US Dollars Electronically"
| License
|
| Source?
| twoclicksnorth wrote:
| al transactions in usd are settled in US. even if trade
| happens in other places. hence they have the ability.
| giaour wrote:
| > al transactions in usd are settled in US.
|
| Do you mean this in some metaphysical sense? Because you
| can exchange USD for gods or services outside the US
| without the US government getting involved.
| Ekaros wrote:
| There is essentially loans of USD that happen on balance
| sheets that is paper between institutions outside of USA.
| So such trading and settlement is possible. But if there
| is block of actually getting this money in real dollars,
| that is rather pointless even more monopoly money.
| lottin wrote:
| What do you mean real dollars? Dollar deposits in bank
| accounts outside the US are as real as dollars deposited
| in US banks.
| RedBeetDeadpool wrote:
| Because there are no dollars involved. If they do as you
| suggest, at the start:
|
| A holds gold.
|
| B holds dollars.
|
| C holds oil.
|
| A trades B, gold for dollars. A holds dollars, B holds gold.
|
| A trades C, dollars for oil. A holds oil, C holds dollars.
|
| After your suggested trade result:
|
| A holds oil.
|
| B holds gold.
|
| C holds dollars.
|
| If there is no "middle man", party A gets oil, party C gets
| gold. Party B keeps their dollars. End result:
|
| A holds oil.
|
| B holds dollars.
|
| C holds gold.
|
| Assuming "B" is USA, USA doesn't get to export its
| inflation/funding for stimulus checks/student debt/pension
| crisis/(or in trump era - a wall that does nothing) away to
| "C", whoever that ends up being, meanwhile, Ghana gets the oil
| it wants, and "C" gets currency without having to pay for the
| choices of politicians they have no control over.
| nickdothutton wrote:
| The US export of inflation via engineered demand for
| petrodollars (and one could say enforcement via aircraft
| carrier groups) is an under appreciated effect.
| luciusdomitius wrote:
| It is literally the most controversial concept in today's
| geopolitics. Study politics science in Dover - it is a
| conspiracy theory. Study PS in Calais - it is the
| exorbitant privilege and a cornerstone of global injustice.
| And it is not like France and the empire are rivals.
|
| https://en.m.wikipedia.org/wiki/Exorbitant_privilege
| rsync wrote:
| ... charitably, I think your parent refers to
| underappreciation _within the United States_ which I
| think is a fair assessment.
| foooobaba wrote:
| Regarding France, actually they play this game too. Check
| out the West/Central African CFA franc [2]. These
| currencies are pegged to 1/100 French franc, which
| currently about 1/656 euros. Many former French colonies
| are required to use the CFA franc, minted by France, and
| required to keep 85% in reserve in French banks,
| including during times of hardship, but they can always
| barrow against their reserve and pay France the interest
| if they need to. In 2019 France has promised to drop it
| and let the africans have their own called eco [2] by
| 2027, but, also it keeps getting postponed and was
| supposed to already happen by 2020, so who knows. Trying
| to go against france can result in an assassination or
| coup, or other creative acts by france (see Operation
| Persil [3]).
|
| [1]
| https://en.m.wikipedia.org/wiki/West_African_CFA_franc
|
| [2] https://en.m.wikipedia.org/wiki/Eco_(currency)
|
| [3] https://en.m.wikipedia.org/wiki/Op%C3%A9ration_Persil
| happyjack wrote:
| This! This is the answer! Trading in dollars creates micro
| transactions where the USA can export inflation and much of
| its problems.
| dismantlethesun wrote:
| Transactions in Ghana cannot directly be in dollars, so when a
| USD price is quoted for a foreign sale behind the scenes what
| happens is cedis are brought in, converted to dollars, then
| given to the foreign party.
|
| This creates a demand for dollars in Ghana, that puts downward
| pressure on the cedis.
|
| So this avoids that, hopefully reduces inflation.
| boringg wrote:
| Saves them conversion fees for converting gold to USD then to
| Oil.
| Andrew_nenakhov wrote:
| So that's why they received that penalty in recent game vs
| Portugal. It was a warning.
| llampx wrote:
| Regime change in 3... 2...
| rightbyte wrote:
| Ye ... It would not surprise me even a little bit.
| jerkstate wrote:
| Don't necessarily even need to plan for a new regime. Libya
| tried this and now they are a failed state with open air slave
| markets.
| luciusdomitius wrote:
| https://www.theguardian.com/business/2003/feb/16/iraq.theeur.
| .. :D
| [deleted]
| happyjack wrote:
| It is really interesting that the folks running the show in the
| USA are able to export a lot of the problems with the $ to the
| rest of the world. Caribbean nations know this first hand, and
| have given in to the peg.
|
| I worked in oil, and now work in an industry where I sell parts
| worldwide. I'm not a trained economist, but deal with currency
| and transfer pricing with labor and goods.
|
| Couple things: what a lot of people don't know or understand is
| that pretty much all transactions worldwide are intermediate by
| USD. Meaning, if a company in Sweden wants to buy something in
| Cameroon, the banks don't swap currency. They buy dollars with
| krona and then buy francs with the dollar.
|
| This may seem "academic" on paper, but the world essentially has
| to deal with the dollar and the USA fed and its people with every
| transaction countries do! They're getting taxes each time they
| want to trade. Switzerland has purposely devalued its currency
| because the opposite happened: people were buying Swiss francs as
| a "safe" investment and not trading or circulating them. I
| digress ...
|
| The only country I see that could actually disrupt the petro
| dollar is Russia. Russia is doing this on a small scale by
| forcing Europe to purchase energy in rubbles. Ghana? They may be
| seeing a three letter agency from the USA very soon ...
|
| China? They do too much contract manufacturing for America, and
| no one wants yen or a currency from a dictatorship. Europe? Too
| much debt, and they would have to centralize spending (trying to
| do this with EU commission).
| bilbo0s wrote:
| _Ghana? They may be seeing a three letter agency from the USA
| very soon_
|
| This is sad precisely because it's so true. I wish poor
| countries were free to make trades on terms that were more
| fair. But that's not the world we live in.
|
| In any case, I applaud Ghana for trying.
|
| I really do wish them luck, but I'd advise them to ready their
| internal security services. (I suspect there will be a lot of
| unrest there in the very near future.) And I'd also advise
| beefing up the quality of their healthcare facilities. Because
| I think they may see a rise in cancer diagnoses among leaders
| in their steward classes over the next few years.
| edgyquant wrote:
| >They may be seeing a three letter agency from the USA very
| soon
|
| Yeah this shows how little your credibility is. Idiotic meme
| that was never true
| happyjack wrote:
| You realize that the CIA exist to keep international
| interests in line, and the FBI exists for domestic
| tranquility?
| zizee wrote:
| You think that the USA has never employed it's three letter
| agencies to protect its interests?
| happyjack wrote:
| I'm kind of confused by his comment. Isn't it common
| knowledge (and even admitted) that American three letter
| agencies protect their interests at almost full cost?
|
| The fbi had plans to assassinate MLK, and the cia led how
| many revolutions.
| themihai wrote:
| Some people still live in denial. I can surely see CIA
| paying a visit to Ghana's officials.
| themihai wrote:
| Indeed, right? Funny fact: Wikileaks is blocked my ISP (in
| Europe).
|
| https://en.m.wikipedia.org/wiki/1954_Guatemalan_coup_d%27eta.
| ..
| jkepler wrote:
| > China? They do too much contract manufacturing for America,
| and no one wants yen or a currency from a dictatorship.
|
| Yen is Japanese currency; yuan is China's money.
| happyjack wrote:
| I vote using Renminbi instead of yuan. I mentally swap it
| with yen too often.
| pwm wrote:
| I know a lot of people dislike bitcoin here but I'm wondering
| (with the huge assumption that its value stabilises over time)
| would it not actually be a better solution? Not just from an
| obvious logistical but also from an environmental perspective?
| I'd imagine gold mining to be much more destructive (both to
| nature and to human life).
| Ekaros wrote:
| And why give all that wealth away to current holders? Nothing
| actually make bitcoin inherently valuable on nation-state
| level.
|
| Gold is fine for now and maybe in future some new agreed upon
| commodity-current basket currency.
| tremarley wrote:
| It would be a lot easier. Many countries currently keep bitcoin
| in their reserves such as Russia, USA & China.
|
| Eventually Bitcoin or a similar style coin will be used for
| global trade
| fendy3002 wrote:
| I wonder if they can use it? As a noob I see that crypto value
| is very volatile and don't have intrinsic value, unlike gold
| that somehow is accepted universally as valuable.
| tremarley wrote:
| It has intrinsic value as it requires work to mine it. It is
| impossible to generate more whenever you want.
|
| You can spend bitcoin in every country, it's valuable
| everywhere.
| andsoitis wrote:
| > It has intrinsic value as it requires work to mine it.
|
| All work isn't equally valuable. Some work is worth
| nothing.
|
| > It is impossible to generate more whenever you want.
|
| Value and wealth do not only arise from scarcity.
| imtringued wrote:
| Honestly hell would freeze over before that happens. It would
| be more likely that IMF SDRs will be used as an alternative to
| dollars than Bitcoin.
| senectus1 wrote:
| The crypto market (including btc) is incredibly fragile.
|
| It's also got way too shallow a gene pool (meaning too few hold
| too much).
|
| Until it gets spread further and wider it can't be relied on
| for much.
| bell-cot wrote:
| Suggested Thought Experiment:
|
| For folks getting really excited here about the US, the US
| Dollar, etc. - imagine that, for some weird reason, the world's
| reserve currency was the Tongan pa`anga (
| https://en.wikipedia.org/wiki/Tongan_pa%CA%BBanga ). And that
| (similar to what the the story notes, for USD) Ghana's reserve of
| pa`anga was running low, so they were looking to buy oil with
| gold instead of pa`anga, to (as others have noted) put a
| smokescreen in front of a big new tax on local gold producers in
| Ghana. (Gold was ~50% of Ghana's exports in 2019, so there's
| plenty of income to tax there.)
|
| How differently would you view this situation and story, if "US"
| and "USD" were replaced with (presumably emotionally neutral)
| "Tonga" and "pa`anga"?
| bannedbybros wrote:
| kumarvvr wrote:
| Realistically, how much gold does Ghana have to actually sustain
| this long term?
|
| Would they be trading in Gold for other exports?
| missedthecue wrote:
| The are the 6th largest gold producer globally
| latchkey wrote:
| > Ghana produces crude oil, but it has relied on imports for
| refined oil products since its only refinery shut down after an
| explosion in 2017.
|
| Sounds like South Sudan, which Indigo Traveller recently
| visited... tl'dr: it is a huge mess.
|
| https://www.youtube.com/channel/UCXulruMI7BHj3kGyosNa0jA/vid...
| jeffbee wrote:
| "tehran oil bourse" is one of the older kooky internet theories
| about how the whole US dollar system is supported by oil. I
| honestly don't know why these kinds of stories and theories are
| so appealing to a certain kind of internet guy.
| fernandohur wrote:
| Small reminder: ghana's consumption of oil is 0.1% of the worlds
| total oil consumption (Source:
| https://www.worldometers.info/oil/ghana-oil/), essentially a
| rounding error. Take this into account before making any
| statements about the ending dominance of the dollar.
| SQueeeeeL wrote:
| Ahh yes, small changes never preclude larger shifts in large
| geopolitical entities.
|
| But also if anyone tells you they know the future, they're
| probably trying to sell you something. If I were in charge of
| Ghana's finances, I'd be pretty cautious of standing in front
| of any windows for the next few years.
| imtringued wrote:
| Brexit was supposed to be the end of the EU.
| [deleted]
| notahacker wrote:
| Small changes preclude absolutely nothing happening far more
| often, and the imminent demise of the petrodollar has been
| forecast for fifty years involving some much more seismic
| events than a country with gold mines and a severe dollar
| reserve shortage and debt problem proposing that gold might
| solve their problem.
|
| At least the half dozen "gold dinar" projects had a bit of
| global ambition and a theoretical rationale for the religion
| of much of the world's oil exporting economies to
| participate.
| tiahura wrote:
| To all opining about the ongoing demise of the dollar, please
| take a look at a 10 year DXY chart.
|
| Executive summary: It's stronger than ever.
| Rexxar wrote:
| Higher price and higher usage are not the same thing, a less
| used dollar would not necessarily have lower value. The
| evolution of foreign exchange market turnover would be a better
| indicator to look at :
| https://en.wikipedia.org/wiki/Currency_pair#Base_currency //
| https://www.bis.org/statistics/rpfx22_fx.pdf
|
| (it's also increasing in the 3 last years)
| hmate9 wrote:
| 1) it was much stronger in 1985
|
| 2) just because it's strong now doesn't mean it cannot _ever_
| fail. Ray Dalio's new book might interest you as he breaks down
| past world powers and how their currencies (which were global
| reserve currencies at the time) collapsed
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