The petrodollar survived because everybody needed oil and oil only priced in one currency. The technodollar thesis works for the same reason stated differently: everybody needs the chips, the models, the infrastructure, and right now those only price in one currency too. What Iran actually broke is the assumption that the system was permanent. Systems that feel permanent stop being defended until the moment they aren't.
The problem that I have with most discussions regarding the dollar losing its reserve currency status is this question. What will take its place? China is on the road to demographic collapse. The population in China will decline by half over the next 50 years. I am not sure that China as the country we understand to today will be around in 50 years. Russia has even a worse demographic problem. The capital markets in Japan are not deep enough. Europe has the same problem. While there is a single currency, there is no single capital markets. I would frame the issue this way. There is a 10 to maybe 20 year period where the dollar as a percentage of world trade will likely decline. After that, the US (and maybe India) will be the only game in town.
I agree. As the text suggest, I don’t think USD will lose it all. If oil disappeara today, USD will stay as the reserve currency for at least some more time. What I want to emphasize is that this is where the US hegemony can be shaken, China and Russia know this, and they are actively trying to undermine it. This can play out in many different ways, but so far they have managed to erode dollar’s share of global trade.
"how many groundbreaking technologies of the last 50 years came first from China? None."
This seems a bit of a stretch. Consumer drones (DJI) and mobile payments seem to be decent examples. More obscure but still ground breaking - quantum communication satellites.
I think China leaned more into these technologies, but they were first developed by American innovators. Mobile payments definitely came from America first.
The petrodollar survived because everybody needed oil and oil only priced in one currency. The technodollar thesis works for the same reason stated differently: everybody needs the chips, the models, the infrastructure, and right now those only price in one currency too. What Iran actually broke is the assumption that the system was permanent. Systems that feel permanent stop being defended until the moment they aren't.
Exactly.
The problem that I have with most discussions regarding the dollar losing its reserve currency status is this question. What will take its place? China is on the road to demographic collapse. The population in China will decline by half over the next 50 years. I am not sure that China as the country we understand to today will be around in 50 years. Russia has even a worse demographic problem. The capital markets in Japan are not deep enough. Europe has the same problem. While there is a single currency, there is no single capital markets. I would frame the issue this way. There is a 10 to maybe 20 year period where the dollar as a percentage of world trade will likely decline. After that, the US (and maybe India) will be the only game in town.
I agree. As the text suggest, I don’t think USD will lose it all. If oil disappeara today, USD will stay as the reserve currency for at least some more time. What I want to emphasize is that this is where the US hegemony can be shaken, China and Russia know this, and they are actively trying to undermine it. This can play out in many different ways, but so far they have managed to erode dollar’s share of global trade.
"how many groundbreaking technologies of the last 50 years came first from China? None."
This seems a bit of a stretch. Consumer drones (DJI) and mobile payments seem to be decent examples. More obscure but still ground breaking - quantum communication satellites.
I think China leaned more into these technologies, but they were first developed by American innovators. Mobile payments definitely came from America first.