What would Trump the Clump do if governments around the world grow a spine and chase down these American tech companies that for years been underpaying or even not paying any taxes and simultaneously run bottom of the harbor scheme to muscle down their obvious tax avoidance with the direct and knowing assistance of global law and accounting firms, none of which, like Trump and his transactional regime, cannot be trusted?
Will Trump the Clump become even more transactional and slap even higher tariffs in retaliation? If he did, that would surely draw the threat of an American and global recession even closer. I do not think we are there -- yet. It'll take a complete routing of the US share-markets to bring recession to the US and thus the world in more than a thud. It's not even clear just how much tariffs will cost American consumers -- upwards of US$2,100. Of course the filthy rich like Trump's crony Elon Musk won't feel any of it -- unless his entire Tesla business collapses in a heap.
Good to see, though, that people around the world are boycotting Tesla in droves. Pity those whom Tesla employs but, hey, them are the breaks. But I'll bet London to a brick Trump the Clump will find a way to bail out Musk and Tesla. After all, Trump owes crony Musk for the amount of money he had "donated" to the Trump campaign. Then again, who trusts Trump the Clump? Even his old man wouldn't trust him.
I doubt the tariffs will bring new wealth to the US. It'll bring more revenues, for sure, but that depends on what tariffs [alone] will do to the US's real economy. On that note, I have equal doubts that the US can become a manufacturing center again. That horse bolted decades ago. Even Ronald Reagan couldn't fix the problem. And US farms are slowly dying out too.
Nor do I think the US's voracious over-consumption can be tamed, at least not for long, and we'll all be back to square one. But which time let's hope sensible Americans will tell Trump in 2029 he can take a flying leap off a SpaceX rocket that malfunctions mid-flight.
I cannot see Trump and his blithering Goons fixing America's decades-old economic problems. That includes its fiscal side. Jerome Powell has his work cut out again: if the economy enters recession, and inflation rises, cutting the Fed's cash rate can not be held for as long the Covid-era cuts were; i.e. no chance of zero to negative interest rate in real terms because that will bleed to US economy towards haemorrhage if the dollar falls sharply. If it does, and, say, Asia, Europea, Canada and South America adjust their currencies, it will give the latter countries an edge over the US dollar hegemony. [This is not an argument for the rest of the world to de-dollarize; it won't happen, and it won't work.]
And since US manufacturing revival will likely take a decade or two to come on stream, Americans will still be importing. And if tariffs stay where they are, or go higher, you'll see a dog chasing its own tail, as we did with inflation and interest rate policies.
Add to this the slash-and-burn by Musk and his DOGE babies of the federal bureaucracy: what if unemployment skyrockets and jobless claims hit the stratosphere and (a) there's no money in the till to pay unemployment insurance and (b) it takes months upon months for people to see even a cent from the employment insurance and social security?
Agree with most of what you say, cogent and to the point as always! However, not convinced the dollar hegemony will last... it won't be this decade or maybe even the next one, but its supremacy will surely fade when the ROTW loses (more) faith in it.
There are multiple avenues opening up for de-dollarisation and wouldn't count out at least one of them working.
There'll be a tipping point, with first a slow decline and then a collapse, just as when empires fall...
One could right several books on the rise and decline of empires, which in many ways for many people is a sort of sexy topic. One could also rise, and no a few have, on the decline of the United States -- also another sexy topic. And there have been a few pieces on US dollar hegemony and de-dollarization. Mancur Olson is worth cent and second reading his wonderful take on the rise and decline of empires and for that matter nation-states. And there have been, in the same breath, interesting work on whether "globalization" of the neoliberal kind has withered the nation-state, for which I think there is little convincing evidence.
The US has been in gradual decline since at least the mid-1960s, and commensurate with its ballooning deficits and debts. As it stands now, it's impossible for the US to (a) return to a trade surplus (b) balance its budget and (c) pay off much less pay down its debt. Here's the rub: China, which bought and holds some US3-4 trillion dollars of American debt, does not want to sell off that debt holding. If if had wanted to, it would have done this a long time ago. It makes no sense to bring down the US economy when it provides China its revenues, when China does not have a balance of payments problem. The US does but since the US dollar is the world's reserve currency it can, for example, keep printing dollars to its heart's content and live very well. If you look at the US economy over the last (even) three years after the Wuhan Covid hit the world, it is doing better than even China had expected and in fact China has been mighty happy that it has. I'm guessing you know why, Pleiades. The world's production is magnetized towards the world's biggest consumer market -- the US. There is a huge madness of Americans' over-consuming, even at the worst of recent times have shown. Even the likes of Temu, Shein and Alibaba prayed to ten financial/economic gods simultaneously for manic US consumerism. But the US dollar has stayed high, and US inflation has come right down, and the rest of the world, when it comes to their currencies, have had to make various domestic adjustments.
At some point, the US dollar will come down, as it did a few days ago, but it has not undermined dollar hegemony. Because exporters to the US will make whatever adjustments to their currencies to maintain some degree of competitiveness. The problem, as several countries, particularly in Asia, are discovering is that their economies of scale are slack and have been slack because of the vast amounts of state subsidies (such as in China and, say, Malaysia) that keep pouring into the manufacturing sectors, more scope for the state to eep control over the factors of production (there is no such thing as a free market and there is no such thing as free trade; these are myths), and now, the in face of tariffs, have to make probably painful adjustments at the domestic level. The argument that they should redirect their exports to "new" markets" is, in my view, knee-jerk, unschooled and reactionary than rational and lends to a false kind of internationalism. I think you know why.
There's also the argument that China can lead the way towards breaking US dollar hegemony. This kind of talk is at least a decade old and talk of de-dollarization in the West goes back at least two decades. And nothing has come to any of it. China's yuan is somedays a managed float and some days pegged to the US dollar. It has not unhinged itself from the US dollar because, I suggest, it cannot. It has more to do with the limits of yuan manipulation by the Chinese state in conjunction with the falling competitiveness of the Chinese economy (as Japan found out in 1989/90 despite the Plaza and Louvre accords). South Korea, too, is in a difficult place as is Taiwan and, perhaps soon, Singapore.
Something else: the idea that China can lead the rest of the world towards breaking US dollar hegemony ignores the realities that the rest of the world is not a homogenous entity, any more than Asia -- whatever Asia is -- is homogeneous. It ignores national interests, national security, geopolitics, suspicions of one another, even jealousies, and all, particularly in Northeast and Southeast Asia, playing "catch-up economics". That's one level of analysis. I haven't even begun to touch of the other level -- domestic political economies.
I hope this makes sense, as it's pretty late in the night to be thinking and writing heavy stuff. All the best to you.
What would Trump the Clump do if governments around the world grow a spine and chase down these American tech companies that for years been underpaying or even not paying any taxes and simultaneously run bottom of the harbor scheme to muscle down their obvious tax avoidance with the direct and knowing assistance of global law and accounting firms, none of which, like Trump and his transactional regime, cannot be trusted?
Will Trump the Clump become even more transactional and slap even higher tariffs in retaliation? If he did, that would surely draw the threat of an American and global recession even closer. I do not think we are there -- yet. It'll take a complete routing of the US share-markets to bring recession to the US and thus the world in more than a thud. It's not even clear just how much tariffs will cost American consumers -- upwards of US$2,100. Of course the filthy rich like Trump's crony Elon Musk won't feel any of it -- unless his entire Tesla business collapses in a heap.
Good to see, though, that people around the world are boycotting Tesla in droves. Pity those whom Tesla employs but, hey, them are the breaks. But I'll bet London to a brick Trump the Clump will find a way to bail out Musk and Tesla. After all, Trump owes crony Musk for the amount of money he had "donated" to the Trump campaign. Then again, who trusts Trump the Clump? Even his old man wouldn't trust him.
I doubt the tariffs will bring new wealth to the US. It'll bring more revenues, for sure, but that depends on what tariffs [alone] will do to the US's real economy. On that note, I have equal doubts that the US can become a manufacturing center again. That horse bolted decades ago. Even Ronald Reagan couldn't fix the problem. And US farms are slowly dying out too.
Nor do I think the US's voracious over-consumption can be tamed, at least not for long, and we'll all be back to square one. But which time let's hope sensible Americans will tell Trump in 2029 he can take a flying leap off a SpaceX rocket that malfunctions mid-flight.
I cannot see Trump and his blithering Goons fixing America's decades-old economic problems. That includes its fiscal side. Jerome Powell has his work cut out again: if the economy enters recession, and inflation rises, cutting the Fed's cash rate can not be held for as long the Covid-era cuts were; i.e. no chance of zero to negative interest rate in real terms because that will bleed to US economy towards haemorrhage if the dollar falls sharply. If it does, and, say, Asia, Europea, Canada and South America adjust their currencies, it will give the latter countries an edge over the US dollar hegemony. [This is not an argument for the rest of the world to de-dollarize; it won't happen, and it won't work.]
And since US manufacturing revival will likely take a decade or two to come on stream, Americans will still be importing. And if tariffs stay where they are, or go higher, you'll see a dog chasing its own tail, as we did with inflation and interest rate policies.
Add to this the slash-and-burn by Musk and his DOGE babies of the federal bureaucracy: what if unemployment skyrockets and jobless claims hit the stratosphere and (a) there's no money in the till to pay unemployment insurance and (b) it takes months upon months for people to see even a cent from the employment insurance and social security?
And on and on it goes ...
Agree with most of what you say, cogent and to the point as always! However, not convinced the dollar hegemony will last... it won't be this decade or maybe even the next one, but its supremacy will surely fade when the ROTW loses (more) faith in it.
There are multiple avenues opening up for de-dollarisation and wouldn't count out at least one of them working.
There'll be a tipping point, with first a slow decline and then a collapse, just as when empires fall...
We live in interesting times, at least!
Thanks for your response. Always appreciate feedback. I have responded to your comment below, Pleiades.
One could right several books on the rise and decline of empires, which in many ways for many people is a sort of sexy topic. One could also rise, and no a few have, on the decline of the United States -- also another sexy topic. And there have been a few pieces on US dollar hegemony and de-dollarization. Mancur Olson is worth cent and second reading his wonderful take on the rise and decline of empires and for that matter nation-states. And there have been, in the same breath, interesting work on whether "globalization" of the neoliberal kind has withered the nation-state, for which I think there is little convincing evidence.
The US has been in gradual decline since at least the mid-1960s, and commensurate with its ballooning deficits and debts. As it stands now, it's impossible for the US to (a) return to a trade surplus (b) balance its budget and (c) pay off much less pay down its debt. Here's the rub: China, which bought and holds some US3-4 trillion dollars of American debt, does not want to sell off that debt holding. If if had wanted to, it would have done this a long time ago. It makes no sense to bring down the US economy when it provides China its revenues, when China does not have a balance of payments problem. The US does but since the US dollar is the world's reserve currency it can, for example, keep printing dollars to its heart's content and live very well. If you look at the US economy over the last (even) three years after the Wuhan Covid hit the world, it is doing better than even China had expected and in fact China has been mighty happy that it has. I'm guessing you know why, Pleiades. The world's production is magnetized towards the world's biggest consumer market -- the US. There is a huge madness of Americans' over-consuming, even at the worst of recent times have shown. Even the likes of Temu, Shein and Alibaba prayed to ten financial/economic gods simultaneously for manic US consumerism. But the US dollar has stayed high, and US inflation has come right down, and the rest of the world, when it comes to their currencies, have had to make various domestic adjustments.
At some point, the US dollar will come down, as it did a few days ago, but it has not undermined dollar hegemony. Because exporters to the US will make whatever adjustments to their currencies to maintain some degree of competitiveness. The problem, as several countries, particularly in Asia, are discovering is that their economies of scale are slack and have been slack because of the vast amounts of state subsidies (such as in China and, say, Malaysia) that keep pouring into the manufacturing sectors, more scope for the state to eep control over the factors of production (there is no such thing as a free market and there is no such thing as free trade; these are myths), and now, the in face of tariffs, have to make probably painful adjustments at the domestic level. The argument that they should redirect their exports to "new" markets" is, in my view, knee-jerk, unschooled and reactionary than rational and lends to a false kind of internationalism. I think you know why.
There's also the argument that China can lead the way towards breaking US dollar hegemony. This kind of talk is at least a decade old and talk of de-dollarization in the West goes back at least two decades. And nothing has come to any of it. China's yuan is somedays a managed float and some days pegged to the US dollar. It has not unhinged itself from the US dollar because, I suggest, it cannot. It has more to do with the limits of yuan manipulation by the Chinese state in conjunction with the falling competitiveness of the Chinese economy (as Japan found out in 1989/90 despite the Plaza and Louvre accords). South Korea, too, is in a difficult place as is Taiwan and, perhaps soon, Singapore.
Something else: the idea that China can lead the rest of the world towards breaking US dollar hegemony ignores the realities that the rest of the world is not a homogenous entity, any more than Asia -- whatever Asia is -- is homogeneous. It ignores national interests, national security, geopolitics, suspicions of one another, even jealousies, and all, particularly in Northeast and Southeast Asia, playing "catch-up economics". That's one level of analysis. I haven't even begun to touch of the other level -- domestic political economies.
I hope this makes sense, as it's pretty late in the night to be thinking and writing heavy stuff. All the best to you.