Excellent and thorough description of the predicaments faced by the US and Trump admin. I also see his statements as bluster to establish negotiating position. He always does this, always has. He did it long before running for office.
The reshoring of semiconductors began with Trump admin, initially by dictating that all US government and government contractor tech contain chips from approved locales, i.e. NOT China. I think Trump is part of the Fortress America faction of the Deep State, probably so is a somewhat reluctant at first Elon. This is absolutely vital to long term interests of the US AND benefits Americans in the long run.
Other factors that affect all these dynamics, movement into viable USD alternatives for wealth preservation, money transfers, etc. such as XRP, BTC, ETH and even PMs actually bolsters, at least in the medium term, USD because it is needed to make the trade initially. So all these alternatives should rise, but so will USD during the transition, which could take many years.
And USD are also created completely or largely outside control of the Fed. USD accounts in larger foreign banks can create USD the same way commercial banks do in the US. This is a factor that is overlooked by the Fed, or at least they rarely if ever comment on it.
With Navarro, Bessent and others in his cabinet, I think he will have top notch advisers who will not merely be looking out for the banksters.
But as you say, all of this is a delicate operation, no matter how brilliantly it is handled, there will be significant shocks inside and especially outside the US. Tensions will rise. And to Hell with the economists who selectively quote Smith, Riccardo et al. None of the classical economists would approve of the trading status of the current US/China trade. Mercantilist does not begin to describe communist China. They are far beyond that.
I would love to see as complete a decoupling from China as much as possible. China is a gangster regime that was made powerful by nefarious leaders in the West who knew exactly what they were doing at the time. I personally opposed the opening of trade with China, I was living here at that time as saw first hand how they did business. I was hardly alone. Many people who dealt directly with Chinese companies were saying it was a huge mistake, but of course greed wins ultimately and the commies played their cards perfectly. If the West were as good at the long game as China, we'd be living in a very different world. But I am now convinced that the demise of the West was intentional from both sides. Americans were betrayed deliberately and maliciously by the worst people on the planet, not just the Bushes, Clintons, et al, but corporate leaders, especially the bankster class.
The US and Russia should be natural allies. But once again, greed won. Instead of a healthy long term relationship that could diminish and perhaps oust the CCP, the Ivy League psychopaths decided that the Russians had no right to determine how exploit the vast resources under their control. This is ultimately how we got into this nonsense, gross and probably deliberate mishandling of the collapse of the USSR. But that is another story altogether and I've vented long enough here.
Thanks Bill, this means a lot coming from you. About China I wholeheartedly agree. Interestingly I had lunch yesterday with a colleague who left China - Shanghai to be exact - only two years ago.
He left because the covid response terrified him and the economy since has been terrible for guys like him (we're software devs). He said many people can't get jobs and have moved back to their rural communities because even if they can get jobs they pay less than half what their parents get in old age pensions (~$2k USD/month). So they move home and care for their parents and everyone lives off the pension money until the parents die. After that I don't know what they'll do.
He instead picked up and left with his wife and mother and will never go back. The stories he told me about his family going back to the Cultural Revolution days were simply horrifying. He is an only child since he was born during the monstrous one child policy period.
My other Chinese colleagues all agree with your assessment as well -- that China is a gangser state and cannot be trusted. As I noted in the piece no one wants to be controlled by China and any BRICS currency would be heavily weighted in their favor giving them economic dominance.
One thing I wanted to clarify is your assertion that foreign banks can print USD. I've read that before but could only find info on foreign banks that obtain bank reserves from the Fed's discount window -- as I mention in the piece. Do you have a good source for that?
In any event we certainly live in interesting times. At least we can say that.
George Gammon and especially Jeff Snyder often talk about money creation and particularly the myths about it. I had assumed that money outside the system was created in the conventional way and simply ended up in foreign markets for many reasons including to facilitate trade, but Snyder has changed my opinion on this. He explains in videos he has done with George how the Fed effectively lost control of eorodollar creation. I think he is correct. It would explain much if true.
I do know that fractional reserve lending is nonsense. Banks, through an oddly complex process, borrow "reserves" from their central bank but these don't precede money creation. The banks create money on their keyboards when they loan it and only later figure out how much in reserves they will need to borrow.
They don't lend out, e.g., 10% of all savings account holdings as the fractional reserve believers think. One of the good things about Modern Monetary Theory is it, at root, is really just an accurate description of the monetary processes modern banks use. Mainstream econ textbooks explain it all completely wrong. Just like they pretend humans once had a barter economy when that was never really a thing.
Going to school for mainstream econ these days provides one with a completely false picture of finance and economics. Their fake math models don't even include debt dynamics or concepts like market domination. It's training for a brahmin class who will bloodlessly follow its rituals that all somehow coincide with whatever makes big banks fatter. And if the novitiates go to the "best" schools they can someday work for the high priest at the Federal Reserve.
Well written and interesting comment! I think the authors essay is well reasoned, but it operates squarely within the existing paradigm of centralized global economic control and the dollar’s singular reserve currency status, albeit with adjustments like reshoring and selective tariffs. This pathway risks perpetuating the very system that has created the challenges we face today: a tightly controlled global economic architecture that consolidates power and denies meaningful political and economic agency to nations and regions and localities alike.
The Old Republic offers a different paradigm, one based wound geographic and societal diffusion of capital access and decision making related to its deployment. It integrated regional autonomy with a strong unifying framework, enabling diverse, self-sustaining economic ecosystems that collectively supported national prosperity. This model didn’t require a single reserve currency or global economic program to maintain stability. Instead, it encouraged local innovation, diversified trade, and democratic participation in economic decisions, all while fostering robust internal and external commerce.
Contrary to the view that the US must remain "king" of a centralized system, we can embrace a multipolar economic world where nations balance cooperation and competition without imposing a hegemonic structure. This does not mean chaos or inefficiency but instead a more equitable distribution of political and economic agency, enabling both innovation and resilience. Planetary economic programs that centrally control policy are unnecessary and counterproductive. Regional trade networks, mutual investments, and diversified systems can ensure stability and growth without the monopolistic grip of a single currency or centralized economic authority.
By rethinking the fundamentals of our system, diffusing economic power and decision-making while maintaining strategic coordination, we could unlock a genuinely transformative path. The Old Republic thrived by enabling decentralized yet cohesive governance; this principle could redefine global economics for the better.
Well written. Your essay is well reasoned, but it operates squarely within the existing paradigm of centralized global economic control and the dollar’s singular reserve currency status, albeit with adjustments like reshoring and selective tariffs. This pathway risks perpetuating the very system that has created the challenges we face today: a tightly controlled global economic architecture that consolidates power and denies meaningful political and economic agency to nations and regions and localities alike.
The Old Republic offers a different paradigm, one based wound geographic and societal diffusion of capital access and decision making related to its deployment. It integrated regional autonomy with a strong unifying framework, enabling diverse, self-sustaining economic ecosystems that collectively supported national prosperity. This model didn’t require a single reserve currency or global economic program to maintain stability. Instead, it encouraged local innovation, diversified trade, and democratic participation in economic decisions, all while fostering robust internal and external commerce.
Contrary to the view that the US must remain "king" of a centralized system, we can embrace a multipolar economic world where nations balance cooperation and competition without imposing a hegemonic structure. This does not mean chaos or inefficiency but instead a more equitable distribution of political and economic agency, enabling both innovation and resilience. Planetary economic programs that centrally control policy are unnecessary and counterproductive. Regional trade networks, mutual investments, and diversified systems can ensure stability and growth without the monopolistic grip of a single currency or centralized economic authority.
By rethinking the fundamentals of our system, diffusing economic power and decision-making while maintaining strategic coordination, we could unlock a genuinely transformative path. The Old Republic thrived by enabling decentralized yet cohesive governance; this principle could redefine global economics for the better.
The dollar has been strong despite our current account deficits because our principal export is Treasury bonds. This is why our manufacturing sector has been hollowed out. We need a weaker dollar but we won't get one. The T-Bond is the only realistic reserve asset available in the world, at least until the JGB becomes a globally traded asset.
Excellent and thorough description of the predicaments faced by the US and Trump admin. I also see his statements as bluster to establish negotiating position. He always does this, always has. He did it long before running for office.
The reshoring of semiconductors began with Trump admin, initially by dictating that all US government and government contractor tech contain chips from approved locales, i.e. NOT China. I think Trump is part of the Fortress America faction of the Deep State, probably so is a somewhat reluctant at first Elon. This is absolutely vital to long term interests of the US AND benefits Americans in the long run.
Other factors that affect all these dynamics, movement into viable USD alternatives for wealth preservation, money transfers, etc. such as XRP, BTC, ETH and even PMs actually bolsters, at least in the medium term, USD because it is needed to make the trade initially. So all these alternatives should rise, but so will USD during the transition, which could take many years.
And USD are also created completely or largely outside control of the Fed. USD accounts in larger foreign banks can create USD the same way commercial banks do in the US. This is a factor that is overlooked by the Fed, or at least they rarely if ever comment on it.
With Navarro, Bessent and others in his cabinet, I think he will have top notch advisers who will not merely be looking out for the banksters.
But as you say, all of this is a delicate operation, no matter how brilliantly it is handled, there will be significant shocks inside and especially outside the US. Tensions will rise. And to Hell with the economists who selectively quote Smith, Riccardo et al. None of the classical economists would approve of the trading status of the current US/China trade. Mercantilist does not begin to describe communist China. They are far beyond that.
I would love to see as complete a decoupling from China as much as possible. China is a gangster regime that was made powerful by nefarious leaders in the West who knew exactly what they were doing at the time. I personally opposed the opening of trade with China, I was living here at that time as saw first hand how they did business. I was hardly alone. Many people who dealt directly with Chinese companies were saying it was a huge mistake, but of course greed wins ultimately and the commies played their cards perfectly. If the West were as good at the long game as China, we'd be living in a very different world. But I am now convinced that the demise of the West was intentional from both sides. Americans were betrayed deliberately and maliciously by the worst people on the planet, not just the Bushes, Clintons, et al, but corporate leaders, especially the bankster class.
The US and Russia should be natural allies. But once again, greed won. Instead of a healthy long term relationship that could diminish and perhaps oust the CCP, the Ivy League psychopaths decided that the Russians had no right to determine how exploit the vast resources under their control. This is ultimately how we got into this nonsense, gross and probably deliberate mishandling of the collapse of the USSR. But that is another story altogether and I've vented long enough here.
Great stuff. Thank you for posting it.
Thanks Bill, this means a lot coming from you. About China I wholeheartedly agree. Interestingly I had lunch yesterday with a colleague who left China - Shanghai to be exact - only two years ago.
He left because the covid response terrified him and the economy since has been terrible for guys like him (we're software devs). He said many people can't get jobs and have moved back to their rural communities because even if they can get jobs they pay less than half what their parents get in old age pensions (~$2k USD/month). So they move home and care for their parents and everyone lives off the pension money until the parents die. After that I don't know what they'll do.
He instead picked up and left with his wife and mother and will never go back. The stories he told me about his family going back to the Cultural Revolution days were simply horrifying. He is an only child since he was born during the monstrous one child policy period.
My other Chinese colleagues all agree with your assessment as well -- that China is a gangser state and cannot be trusted. As I noted in the piece no one wants to be controlled by China and any BRICS currency would be heavily weighted in their favor giving them economic dominance.
One thing I wanted to clarify is your assertion that foreign banks can print USD. I've read that before but could only find info on foreign banks that obtain bank reserves from the Fed's discount window -- as I mention in the piece. Do you have a good source for that?
In any event we certainly live in interesting times. At least we can say that.
https://www.georgegammon.com/everything-you-have-been-told-about-money-creation-is-wrong/
George Gammon and especially Jeff Snyder often talk about money creation and particularly the myths about it. I had assumed that money outside the system was created in the conventional way and simply ended up in foreign markets for many reasons including to facilitate trade, but Snyder has changed my opinion on this. He explains in videos he has done with George how the Fed effectively lost control of eorodollar creation. I think he is correct. It would explain much if true.
Cheers, I will read.
I do know that fractional reserve lending is nonsense. Banks, through an oddly complex process, borrow "reserves" from their central bank but these don't precede money creation. The banks create money on their keyboards when they loan it and only later figure out how much in reserves they will need to borrow.
They don't lend out, e.g., 10% of all savings account holdings as the fractional reserve believers think. One of the good things about Modern Monetary Theory is it, at root, is really just an accurate description of the monetary processes modern banks use. Mainstream econ textbooks explain it all completely wrong. Just like they pretend humans once had a barter economy when that was never really a thing.
Going to school for mainstream econ these days provides one with a completely false picture of finance and economics. Their fake math models don't even include debt dynamics or concepts like market domination. It's training for a brahmin class who will bloodlessly follow its rituals that all somehow coincide with whatever makes big banks fatter. And if the novitiates go to the "best" schools they can someday work for the high priest at the Federal Reserve.
yep, that's everyone working at the Fed in a nutshell. too bad they are not literally in a nutshell so we could toss them into the Potomac.
Well written and interesting comment! I think the authors essay is well reasoned, but it operates squarely within the existing paradigm of centralized global economic control and the dollar’s singular reserve currency status, albeit with adjustments like reshoring and selective tariffs. This pathway risks perpetuating the very system that has created the challenges we face today: a tightly controlled global economic architecture that consolidates power and denies meaningful political and economic agency to nations and regions and localities alike.
The Old Republic offers a different paradigm, one based wound geographic and societal diffusion of capital access and decision making related to its deployment. It integrated regional autonomy with a strong unifying framework, enabling diverse, self-sustaining economic ecosystems that collectively supported national prosperity. This model didn’t require a single reserve currency or global economic program to maintain stability. Instead, it encouraged local innovation, diversified trade, and democratic participation in economic decisions, all while fostering robust internal and external commerce.
Contrary to the view that the US must remain "king" of a centralized system, we can embrace a multipolar economic world where nations balance cooperation and competition without imposing a hegemonic structure. This does not mean chaos or inefficiency but instead a more equitable distribution of political and economic agency, enabling both innovation and resilience. Planetary economic programs that centrally control policy are unnecessary and counterproductive. Regional trade networks, mutual investments, and diversified systems can ensure stability and growth without the monopolistic grip of a single currency or centralized economic authority.
By rethinking the fundamentals of our system, diffusing economic power and decision-making while maintaining strategic coordination, we could unlock a genuinely transformative path. The Old Republic thrived by enabling decentralized yet cohesive governance; this principle could redefine global economics for the better.
«So what Michael did in Super Imperialism was important for me. I elaborate on this argument in my Geopolitical Economy, which was published in 2013. In this book, I basically show — one of the best ways of introducing this book is like this: You may have heard people say that the dollar was once hegemonic and it is no longer so. You may have heard other people say that the dollar has always been hegemonic and will always remain so. But you’ve never heard people say that the dollar never really managed stable hegemony. And that is the argument of Geopolitical Economy.» © Radhika Desai
Well written. Your essay is well reasoned, but it operates squarely within the existing paradigm of centralized global economic control and the dollar’s singular reserve currency status, albeit with adjustments like reshoring and selective tariffs. This pathway risks perpetuating the very system that has created the challenges we face today: a tightly controlled global economic architecture that consolidates power and denies meaningful political and economic agency to nations and regions and localities alike.
The Old Republic offers a different paradigm, one based wound geographic and societal diffusion of capital access and decision making related to its deployment. It integrated regional autonomy with a strong unifying framework, enabling diverse, self-sustaining economic ecosystems that collectively supported national prosperity. This model didn’t require a single reserve currency or global economic program to maintain stability. Instead, it encouraged local innovation, diversified trade, and democratic participation in economic decisions, all while fostering robust internal and external commerce.
Contrary to the view that the US must remain "king" of a centralized system, we can embrace a multipolar economic world where nations balance cooperation and competition without imposing a hegemonic structure. This does not mean chaos or inefficiency but instead a more equitable distribution of political and economic agency, enabling both innovation and resilience. Planetary economic programs that centrally control policy are unnecessary and counterproductive. Regional trade networks, mutual investments, and diversified systems can ensure stability and growth without the monopolistic grip of a single currency or centralized economic authority.
By rethinking the fundamentals of our system, diffusing economic power and decision-making while maintaining strategic coordination, we could unlock a genuinely transformative path. The Old Republic thrived by enabling decentralized yet cohesive governance; this principle could redefine global economics for the better.
The dollar has been strong despite our current account deficits because our principal export is Treasury bonds. This is why our manufacturing sector has been hollowed out. We need a weaker dollar but we won't get one. The T-Bond is the only realistic reserve asset available in the world, at least until the JGB becomes a globally traded asset.