Comments by "Fredinno" (@innosam123) on "Whatifalthist"
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StrategicFooyoo China needs foreign currency (like any nation without a hard currency), and they’ve got that from exports and debt. Exports to the rest of the world collapse due to trade sanctions, and all of a sudden foreign currency debt levels explode, or the Chinese starve. (They have to import food to feed themselves despite using excessive inputs of pesticide and fertilizer, causing water pollution to get even worse.)
Chinese foreign currency debt is 2 trillion. Or 13% of GDP.
Most Western nations are inherently considered hard currencies and are trusted in international trade. Unlike the Yuan.
The USA negotiating with the Fed is not necessarily default.
Also, note that the president can appoint the Fed Chairman.
Also, note that the reason the Fed doesn’t directly fund the US government has to do with legal handicaps the Federal Government gave the Federal Reserve*. It’s currently *illegal for the Fed to print money and just give it to the government (effectively being the same as a US Treasury banknote).
Also, note every developed economy is attempting to fight *deflation* due to the baby boomer retirees. Instead of the inflation being pumped into QE, some could be given directly to the government.
Also note that implementing a 5% VAT could raise $355 billion/year (excluding rebates, adding rebates would likely increase the real rate to something like 7%). https://www.brookings.edu/wp-content/uploads/2016/06/0721_vat_for_us_gale.pdf
A Carbon Tax would raise ~$250 billion/year. That would cut the deficit by 2/3rds. Both are supported by economists as good ways to reduce the deficit ASAP.
Both could easily be implemented by a competent Democratic Administration (like the Clinton Administration did in the 90s). The reason the deficit is so high is the inability for Republicans to actually cut spending.
Few nations have ‘funded’ its future liabilities. Not Canada. Not the EU. Not Japan. Not China. Not Russia. Literally every country WITH pensions has massive unfounded liabilities.
https://www.weforum.org/press/2017/05/global-pension-timebomb-funding-gap-set-to-dwarf-world-gdp
China in particular is nearly as bad as the US.
If the US is fucked, so is everyone else.
Assuming the CCP isn’t sacked after being in the world to the brink of a nuclear war?
The biggest issue with ANY nuclear tactical use is that it risks easily turning into a nuclear war. China attacks American boats with nukes, the US retaliates by nuking Chinese shipyards and naval bases. The Chinese retaliate by attacking US cities, because they think those shipyards were too close to population centres or because hitting land was a red line. Then the world ends.
There’s the other thing that if a world war actually started and tactical nuclear weapons became a risk, the US military would dust off SDI’s Brilliant Pebbles (which was actually somewhat affordable- a couple hundred billion), which would give the US all the leverage in a nuclear exchange. It hasn’t happened yet because that hasn’t been a threat since the USSR collapsed. Launch and satellite costs have also fallen since the 80s.
Of course, so could China. But then, neither side can effectively use nuclear missiles to gain an advantage on each other.
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One interesting side note when doing my own research: Japan’s birth rate is close to the highest amongst similarly industrialized Eastern Asian nations (despite a very aged population- the primary difference between Japan and everyone else is that Japan had a baby bust at the end of WW2 because everyone there thought their world was ending) and is (very slowly) increasing since 2015, with the possibility of reaching replacement by 2100 (which makes sense to eventually happen, as everyone who’s not willing to give birth die out or get replaced by cultural groups with higher birth rates - something which is kind of happening in Israel with the Orthodox Jews)
Also, its economy is more adapted to bad demographics than anyone else in the region (or the world, really), and has a semi- independent foreign policy with the ability to do what it wants without American approval. So you could see Japan being able to carve somewhat of its own sphere of influence, especially if China ends up failing in its own bid to become superpower.
The bad demographics also had pretty good timing for making Japan no longer a threat to the US right when Japan needed to ally against China.
Japan could become a sleeper power/black swan power, becoming a major player, despite everyone counting it out as a lost power since the 90s, the same way people counted it out after its defeat in WW2.
Either way, the 21st century is a bad time to be a Korean.
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@harshjain3122 Thanks.
1. I don’t doubt the US could keep forces in the Middle East if they wanted to- the issue is that there’s no obvious reason to.
Afghanistan survived so so long because it was a base against the terrorist-infested region. Arguably, the garrison (which was indeed a garrison, it was well below 10,000 men even before peace negotiations began, which is the size of a large US garrison, like Thule) was useful enough to keep, but… too late now.
Oil is not a good reason to now either.
The US also never was very involved in Africa.
The thing is that it probably won’t matter until as such Turkey or Iran start to become major powers, or India becomes a larger threat than China. The only other theoretical currency competitor is crypto, and it won’t matter if it is forced to go underground because every major economy put massive restrictions on it.
Gold has existed as an option since Nixon went off the Gold Standard. If people wanted to trade solely in Gold, they’ve had almost 50 years to do so.
Yuan… That’s like going from fighting a bear to taking a dunk in lava. Getting money into China is easy. Getting money out of China… is harder. Especially nowadays.
2. https://tradingeconomics.com/united-states/manufacturing-production
https://tradingeconomics.com/united-states/manufacturing-pmi
Note the comparison between 2008, 2000, and today. This is despite inflation panic and mass supply shortages.
Most stuff that made sense to outsource (textiles, etc.) were already outsourced long ago.
Also, the decline of US manufacturing accelerated enormously after 2001…at the same time China joined the WTO. This appears to be unique to China, as things like NAFTA (1994) have little correlation with a sustained pattern of decline. This is consistent with many studies on the subject-China is infamous for effectively product dumping things like steel (which makes no sense to outsource, it’s heavy AF and low value/ton) onto the global market.
The reversal should reverse the previous trend…in theory.
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