01-01-2020, 12:48 PM
(01-01-2020, 10:46 AM)John J. Xenakis Wrote: It seems every year for the last 20-30 years, someone has been talking
about replacing the dollar as a reserve currency -- Iran, China, the
euro, etc. That would be like trying to replace the Titanic with
a rowboat. The US dollar has far too much mass and momentum to be
replaced in any time span less than a few decades.
It's not just figurative "mass and momentum", either.
The US has the only navy capable of guaranteeing sea lanes world wide. While we currently guarantee them for everyone, we don't have to do that. I could easily imagine a situation where the US tacitly permits pirates open season on nondollar trade.
China is currently trying to develop the capability to protect her own transport lanes to Europe. However, that's not sustainable, because China has no domestic need for more than a coastal navy. Even if Xi manages to build a blue water navy, the next leader, or the next, will decide it's a waste of money and take it out of commission.
The US, however, needs a blue water navy capable of controlling most of the world's oceans - north and south Pacific, north and south Atlantic - just to keep its own coasts connected. Once that navy exists, it's relatively easy for the US to patrol all of the world's oceans, and reap the benefits of controlling the world's reserve currency.
