So you’re telling me we got the rest of the world to do the lowest value, lowest profit margin, most capital intensive, and most cyclical parts of economic activity.
And in exchange, they gave our companies the cheapest priced goods in the world to resell and thrive off of. Which then gave our companies the time to pursue the actual high value parts of economic activity (you know, like Silicon Valley, Wall Street, military R&D, etc).
And all we had to do was give them IOU’s for an imaginary currency unit that we would only ever pay them back in worthless real terms in, if we ever repaid them at all.
And… we were the ones that demanded this system come to an end?
...for too long, Americans have been living on borrowed time, consuming like they have endless credit that other nations were prepared to accept (that they won't if it wasn't the United States) and the Fed could keep the money printing machine going, and yet the world was prepared to accept its currency even at elevated levels, no questions asked because the US was safe as. It was a privilege that only the country with the reserve currency could have, a privilege that the US has taken for granted. With that privilege, according to the Triffin rule, it meant that the US was always going to be in trade deficits with others, as others accepted and used its currency in trade lending strength to it. Stronger dollar means more import rather than export.
...now Trump 2.o wants to re-balance its trade deficits with others but does not want to forgo its reserve currency status. They want the cake and eat it too. They want to continue consuming big time, make other nations produce cheaply for it but tariff them and coerce them into producing them locally in the US.
...international response instead shifted in ways Trump 2.0 had not imagined
> new regional cooperations developed to Trump proof themselves, including collaborations (EU-China, Japan/SK-China) unimaginable previously
> new China digital trade payment system equivalent to US Swift to side-step US payment
> the beginning of the end of US Petrodollar system as China formulated a Yuan payment system with Saudi backed by Gold stored in Saudi soil
> Japanese institutions selling down US Treasuries in hundreds of billions of dollars, keeping longer term US yields high
> recent Asian trading houses and institutions selling down hoarded US currency, sending Asian currencies into sudden upward drive
> gradual shift and sell down of US stocks and real estate by foreigners (EU/Asia)
> US Treasury issuance to replace maturities shunned by foreign participants necessitating the Fed to subscribe by and large
> US financial institutions voicing concerns over the potential erosion of the American 'brand' and exceptionalism
> The boycott and shunning of American products and US-bound tourism - the 'silent' cost of Trump 2.0 antics no corporations want to publicly speak of
> The emergence of China's soft power transfer of leadership takes centre stage.
Unimaginable all this in just over a 100 days of a self-destructive US administration!
