Why would you not if you don't incur in external debt doing so?
The real wealth is not dollars or pounds or whatever, the real wealth is goods and services.
Having access to goods and service is what gives you a better living standard, the money is just a way to exchange them and to store value.
The US has the privilege of having high international demand for its currency, as it is the default global reserve currency. Of course, it incurs some costs, like having to have the most powerful military in the world, being implicitly responsible for making sure navigation waters are free and unimpeded for commerce, and having to try to keep the powder keg from where most of the energy that runs the world comes from, the middle east, from exploding.
In exchange, if you want more oil? more steel? more children toys? more paint? more chips? You can just use your dollars to buy it, and thus making sure your citizens have access to an unimaginable amount of stuff and services.
You can make the world work for you in exchange for dollars. And the world can buy your advanced tech and services with those dollars, and can use those dollars to also buy things they need from other countries without a lot of the complication of multiple exchange rates and/or barter schemes.
And the best part? Your government can run a lot of programs and not care much about raising taxes, because all those sellers after they use part of the dollars for buying stuff from you and between themselves, will usually have some extra dollars that they are going to save for a rainy day. And what is the best way to keep those dollars safe? Well, buying american treasury bonds!
Yeah, you can exaggerate a little bit and end up deindustrializing yourself too much, or go too hard on the consumption frenzy thing and end up with too much trash, environmental issues and household debt. But those are problems that come from the abuse, from the over enthusiastic use of this privilege. And I hope they can be solved (don't ask my how).
The system actually works for anyone involved. Nobody is really interested on this de-dolarization stuff as long as America also doesn't abuse its power too much.
International commerce is a complex machine, and everybody depends on it, everyone know that changing the current system too much would disrupt international commerce for years. Yeah, in the long run, everything would converge to some new equilibrium, but nobody fucking knows what that equilibrium would be, if it would be stable, and crucially, how much time it would take for it to be achieved. As Keynes taught: In the long run we will be all dead.
No country wants their dollar reserves to become dust, especially not china, they sweated a lot to accumulate all those nice treasury bonds.
> Having access to goods and service is what gives you a better living standard
I think the good faith critique is access to imports can be taken away by the other country if they want. eg. rare earth metals. So being too heavily reliant on imports without the capacity to produce domestically is less long run access
I mean China has cut off rare earths from time to time, and from time to time we don't see crippling shortages but a rather quick supply response.
If you're concerned about short / medium term timeframes, I've yet to see a broad analysis that showed stockpiling (can even do it privately!) being insufficient.
Yes. Too much of a good thing, or a good thing at the wrong place or instant of time, ends up not being a good thing.
I would recommend against having sex in a subway station at rush hour, or drinking French Cognac during a job interview, although both are good things.
We can and should discuss how much trade deficit, and the nature of it, but in essence, it is still a good thing if you don't owe to other countries money in a currency you don't control to have this deficit.
Except the US has a realistic protectionist policy it can use: defence production. It's an industry which is diverse, naturally demands locality, but can also provide an export market.
And very much was a core US growth export till very recently.
Control trumps access trumps ownership. If the asset is on US soil under US regulations it's controlled by the outputs of the US political system. Any failure of those assets to actually benefit the local population is a failure of the US political system.
In a simplified sense, all assets start their lives as goods, either tradable goods, goods that are used to build more goods, future goods, or things that represent ownership or an interest in any of them.
Land is a bit more complicated. But even land value is conditional in what you can use it for.
By assets I mean things that are durable and can be held and used for long periods of time, some times spanning generations. Yes, land is the ultimate example.
In a more general sense it can also be systems of law (and consistency of adherence and enforcement) that provide the stability and infrastructure for the trade of goods and services. There is a reason that famines are associated with wars: trade in food collapses when stability disappears.
> Why would you not if you don't incur in external debt doing so?
you described economic Neoliberalism since 1968, in a nutshell. However, its most important consequence - impoverishment of the low-income and very low-income native population and its inevitable supplementation by emigrants, is destabilizing the very nations who championed it.
Secondarily, militarism (NATO, Israel, Taiwan, Korea, etc.) needed to maintain the pecking order is under great strain and requires considerable counterproductive expenditures (Palestine, Iraq, Libya, Lebanon, Ukraine, Afghanistan, Serbia, etc.) just as the native populations age rapidly.
Thirdly, de-dollarization has its own dynamics and is driven by politically motivated economic sanctions enforced by high seas naval interdictions, Russian asset seizures, Chinese exclusionary trade rules, & global criminal gangs like the Kushner's crime family extortion of Qatar in 2017. Rise of BRICs+(25 countries waitlisted), Alt-SWIFT payment systems (BRICS Pay, CIPS) are supplementing USD, the very foundation of the Neoliberal economics.
> Why would you not if you don't incur in external debt doing so?
Don't you, though? If you're in a trade deficit with another country that means they end up holding a bunch of your currency. That's basically a debt, right? They have the ability to get goods from you whenever they want, without having to give you any in return (just giving the currency back).
The real wealth is not dollars or pounds or whatever, the real wealth is goods and services.
Having access to goods and service is what gives you a better living standard, the money is just a way to exchange them and to store value.
The US has the privilege of having high international demand for its currency, as it is the default global reserve currency. Of course, it incurs some costs, like having to have the most powerful military in the world, being implicitly responsible for making sure navigation waters are free and unimpeded for commerce, and having to try to keep the powder keg from where most of the energy that runs the world comes from, the middle east, from exploding.
In exchange, if you want more oil? more steel? more children toys? more paint? more chips? You can just use your dollars to buy it, and thus making sure your citizens have access to an unimaginable amount of stuff and services.
You can make the world work for you in exchange for dollars. And the world can buy your advanced tech and services with those dollars, and can use those dollars to also buy things they need from other countries without a lot of the complication of multiple exchange rates and/or barter schemes.
And the best part? Your government can run a lot of programs and not care much about raising taxes, because all those sellers after they use part of the dollars for buying stuff from you and between themselves, will usually have some extra dollars that they are going to save for a rainy day. And what is the best way to keep those dollars safe? Well, buying american treasury bonds!
Yeah, you can exaggerate a little bit and end up deindustrializing yourself too much, or go too hard on the consumption frenzy thing and end up with too much trash, environmental issues and household debt. But those are problems that come from the abuse, from the over enthusiastic use of this privilege. And I hope they can be solved (don't ask my how).
The system actually works for anyone involved. Nobody is really interested on this de-dolarization stuff as long as America also doesn't abuse its power too much.
International commerce is a complex machine, and everybody depends on it, everyone know that changing the current system too much would disrupt international commerce for years. Yeah, in the long run, everything would converge to some new equilibrium, but nobody fucking knows what that equilibrium would be, if it would be stable, and crucially, how much time it would take for it to be achieved. As Keynes taught: In the long run we will be all dead.
No country wants their dollar reserves to become dust, especially not china, they sweated a lot to accumulate all those nice treasury bonds.