Subject: Re: OT - De-dollarization
the only people who could even wonder about this development eventually happening , is an American mentality. The lessons of history, the rise and fall of empires, the economic effects of economic and financial colonization push in the direction of dedollarization. the rest of the world has been looking at this since at least the 1970's, the EURO was an initial attempt to create a financially bi-polar world , the heft and weight was not there , and the rest of the world viewed europe as an american possesion whi in Macron's words just yesterday would only and always "follow " the United States.

its what the french admirably class in history and philosophy as the "longue duree". The subsurface movements ahve been visible for 30-50 years at least , whilst most eyes have been on the surface currents and froth of crashing breakers.

Hummingbird has it right. De-dollarization will happen when the US is replaced (by China?) as the global hegemon.

Check out this Fact Sheet on De-dollarization from the Visual Capitalist:

https://www.visualcapitalist.c...

Nearly 60% of all the world's foreign exchange reserves are held in dollars. And what form do those reserves take? Usually US Treasuries. The US debt market is 37% of all global debt, so there are not a lot of places to go and park your money if you want to store value as a central bank. The alternatives are Europe (20%), Japan (16.7%), and, more recently, China (12.8%), but the Chinese government debt market is a third the size of the US. China has the second largest equity market by market cap at $13.4T, but the US is 333% larger, so de-dollarizing equity markets doesn't look doable. Add to that the impact Chinese policy has had on Chinese companies stock prices and you can begin to understand why the de-dollarization project is anemic at best.

The road to de-dollarization requires a road, and with a belt to secure that road you might find the route to de-dollarization. The Chinese are playing a long game of reorienting the global economy from the west to the east, and it looks like they are making some headway in this regard. While we view their forays into trade in Africa and South Asia as a new imperialism (which it might very well be), the leaders of these regions see something that has long been lacking in their relationship with the west: investment. Unlike western imperialism, the Chinese belt and road initiative isn't based on military conquest and brutal colonial exploitation. Rather I see it as an investment in the infrastructure required to reorient economic and political relationships away from the west and toward the east.

https://www.businessinsider.co...

There is a reason China is now playing the role of peace maker between Iran and Saudi Arabia. Their vision of an alternative to US hegemony in South Asia, Africa, and, eventually, Europe, requires peace and stability in the countries they are investing in across the region.

This is a long game, and if it works you will see China gradually shift the center of trade away from the US and toward east Asia. When this happens, and takes root, the dollar will already have gone into crisis, along with the US economy in general. The Biden administration sees this game and is trying to play hardball with China now before they succeed in rerouting economic relations between Africa, South Asia, and Europe. The war in Ukraine is in many ways the first cold war in the emerging war between the US and China over global hegemony. Hopefully the struggle between China and the US for hegemony will not lead to war, but there is little precedent for the peaceful passage of power from one global hegemon to another.

The right wing in the US is acting as a third column in this struggle, undermining the Biden administration and putting forward isolationist candidates. US hegemony will be lost if the global vision of democracy and economic development are lost in the partisan struggle for political domination. US foreign policy in the service of maintaining global hegemony used to be a bipartisan third rail that no party could touch, but with the Trump administration it has become another point of political polarization. At a time when American politics is becoming increasingly mistrustful of democracy, advocating for democracy in the face of China's authoritarian egalitarianism looks hypocritical. Add to that the apparent selflessness of Chinese infrastructural investment around the world and you can see how the US is going to lose this cold war.

Will de-dollarization occur? Yes. But not soon, and not without a lot of much larger political and economic problems taking center stage.