Before Nord Stream bombing, yes.
After Nord Stream bombing:
Because if countries around the world stop using the dollar as their trade currency the US stops being able to print money infinitely and will see inflation, potentially to hyperinflation.
This is not true. As long as there are countries willing to sell their goods in US dollars, the US government will always be able to afford that.
The question is why would countries want to sell their goods to the US? The answer is because they cannot find another buyer elsewhere. The last 50 years of global economy has been shaped in such a way that allows the US to run huge trade deficits, and in turn, many of the developing countries followed the IMF “export led growth” model and rely on selling cheap goods to wealthy foreign countries to finance their internal development.
The only way for exports to stop flowing to the US is if there is another country, or another bloc of countries, willing to step up and run trade deficits (in another currency) in order to absorb the surplus export capacity in the Global South. Otherwise, goods aren’t going to stop flowing to the US simply because they have nowhere else to go. Demands don’t magically appear just because one country decides to spend less.
In fact, Trump’s global tariff is to deliberately start a mercantilist war among the exporting economies until their economies have been wrecked (and ripe for IMF harvest), or they eventually strike a deal with Trump by giving the US something it deems lucrative. This is why nearly every country is still looking to secure a trade deal with Trump, no matter how reluctant they all seem to be.
As to the issue of why countries trade in another currency, that’s because they want to shield themselves from US sanctions, which can be easily seized when they’re using the dollar, as exemplified by the US blocking Russia’s access to SWIFT. However, accumulating local currencies also presents its own problems: what are you going to do with them? If China is accumulating Indonesian rupiah, then they can only spend it on Indonesian goods, or else they’d have to sell it for dollars anyway and that screws up the exchange rate and adds more, not less, to the instability of the global financial system. This was the hard lesson that Russia learned when it sold huge volumes of oil to India but couldn’t find a use for the excess amount of Indian rupees they had accumulated.
Nonetheless, even if the countries trade in their respective currencies, if the trade flow in aggregate does not change, as long as there is no change in demand from the other countries.
Remember, the reason we have cheap goods is because there is a surplus in global capacity, and this is deliberately so to keep the export economies in competition with one another to drive their prices down. The only way to break this deadlock is if additional demands are created to shift those flows away from the US. This is what we call “de-dollarization” that Russia has been pushing for but few major countries (especially China) seem interested in.
For example, if China starts a Chinese-style Marshall Plan by flooding the Global South countries with yuan, which in turn creates a strong domestic consumer base that can absorb the global export capacities, then yes, it will work against the US favor.
Otherwise multilateral trade in their respective currencies will serve to provide additional protections against US sanctions, but without a change in global demand, it will not fundamentally challenge US hegemony. We are very far from that.
It doesn’t though.
Bonds were necessary in the fixed exchange rate regimes to take money out of the circulation every time the government spends, otherwise there would be too much money in the system and the exchange rate gets wrecked.
In the floating exchange rate system today, there is no longer a need for governments to issue bonds because exchange rate… floats.
US treasuries are simply savings instruments that allow rich people to earn interests (free money), and it also serves to drain excess reserves in the banking system to target a particular interest rates (though there are other ways).
Every time the US government spends, that $$$ exists permanently in the system until all of them have been taxed back (destroyed at the Treasury), and those $$$ that have not been taxed back and remained circulating in the system (private sector) is registered as National Debt.
In fact, following this logic, the US National Debt is simply a measure of the collective desire of the world to save in US dollars. If nobody wants to save, then all of the $$$ will get taxed back and the National Debt falls down to zero.
Let me give you a very simplified example of how this works:
Country A wants to import consumer gadgets from Country B, so it deficit spends A$1000 and give it to Country B. In return, Country B ships consumer gadgets to Country A.
How did Country B get paid in A$? Simple, Country B’s exporter and Country A’s importer both have bank accounts in Country A, and both banks have special reserve accounts within the Central Bank of A, so they have access to the special reserves pool held within the Central Bank of A.
To initiate payment, the reserves are transferred from the importer’s bank (reserves -A$1000) to the exporter’s bank (reserves +A$1000), and the corresponding deposits account of the importer is debited (balance -$A1000) and the exporter credited (balance +$A1000).
Now that Country B’s exporter have +$A1000, they have to make a decision, and there are really only two decisions: SPEND or SAVE.
Let’s walk through the sub-options here:
Let’s say Country B chooses option 2 and uses that A$1000 to import raw materials from Country C, then the bag is simply passed along to Country C.
Country C then chooses to import medical devices from Country D, and the A$1000 is now passed to Country D.
Finally, Country D chooses to SAVE that A$1000 instead of spending that money, and so it purchases the government bond from Country A, effectively closing the loop.
(NOTE: in the real world, this cannot go on forever because at every transaction point, a % of the original A$1000 is taxed away, so unless someone decides to save at some point, all of that will eventually be taxed away and the deficit spending aka National Debt of Country A will be zero.)
From the perspective of mainstream economics, it would appear that Country A borrowed A$1000 from Country D, then used that to import from Country B.
It would seem that if Country D hadn’t lent to Country A, it would not have been able to afford the consumer gadgets from Country B. But this is getting it entirely backwards.
If you have followed the flow of the money above, it is very clear that Countries A, B, C all received real goods, while Country D received a financial asset.
Country A had to spend first before Country D can “lend” that money (the same money that came out and went back to the same Treasury of Country A, after going for a ride across Countries B, C and D). At every point, each of the countries will have to make a decision from the number of options listed above: to SPEND or to SAVE. Along the way, Countries A, B, C chose to enjoy actual goods, while Country D is satisfied with saving the money in the form of an interest-bearing savings instrument.
Also if you have been paying attention, none of the money ever leaves the Central Bank of A. It is simply shifting reserves inside the Central Bank, while the banks credit a corresponding amount of money (matched 1:1 to the government money) they received in the reserves to the deposits accounts in the outside world.
So what if nobody wants to save in A$? Then everyone will simply pass the bag along. At each point, some of the A$ will be taxed back into the Treasury of Country A, until all of that is eventually taxed away. When that happens, the deficit of Country A falls to zero, and so did its National Debt.
In the real world, what will happen if every foreign country stops buying US treasuries is that the exchange rate of the dollar will fall, because other countries are no longer propping up the dollar exchange rate. When that happens, new problems will then arise: the exchange rate of the exporting country will become stronger in relative terms, their exports are now more expensive, and the exporting country will have to decide how to maintain the volume and competitiveness of its exports, either by adjusting the exchange rate, lower production costs/wages paid to workers, eat the losses, or find a new buyer to sell their goods to.
I like Roberts’ writings but he really needs to stop talking about things that are only applicable to the gold standard era (almost all of his critique on MMT is moot because of his inability to understand how floating exchange rate system works), because it really makes him sound like he doesn’t understand how international trade and finance work, and this is especially so on topics about China.
Yea, but it hits a bit different when your (former) country makes shit like this:
Pure embodiment of Brutalism.
Destroyed the entire Russian aviation sector just to lick Obama’s boots by promising to buy Boeing planes from America.
Refused to veto NATO invasion of Libya at the UNSC (Resolution 1973), despite Putin’s plea. The first known public spat between Putin and Medvedev.
Regarding the Russia-China lunar base, it’s just another way for Russia to continue to work on its cool projects through Chinese investment, given that Russia is running out of its money for its space program.
One example is the Zeus TEM, a nuclear propulsion space tug that will enable deep space exploration limited by current chemical rockets. A lot of the work associated with this project has already begun and it would be a waste to discontinue.
This has been in the talks for quite some time now.
From Vedomosti, April 2023:
Borisov: Russia to Use Nuclear Tugboat in Joint Project with China
Roscosmos CEO Yuri Borisov said that Russia will use the nuclear tug Zeus in a joint project with China.
"We are planning to implement it [the nuclear tug] in practice by 2030. This is one of the products that will help in the expansion of the Moon, we are planning to use it in a joint project with China," Borisov said at the educational marathon "Knowledge First" ( quoted by TASS).
In other words, it’s a win-win cooperation between Russia and China - Russia gets to extend the life of its cutting edge projects using Chinese money, while China also gets access to Russian technology in return.
The lunar base itself may or may not happen, but at least there is a common future goal that promotes and facilitates cooperation between the institutions of both countries.
According to the recent Gallup poll, there are more Republicans who like China than Russia.
I doubt Putin is that popular among the MAGA chuds in spite of what media is trying to portray.
The double circulation strategy is something the chinese government has talked about directly.
The Dual Circulation Strategy was proposed in 2020 after Trump’s 2018 trade war, in order to balance both domestic consumption and external trade.
It is all but considered a failure now, with 2024 ending in record $1 trillion trade surplus and a deflationary CPI. In other words, reliance on export has since gone up, and domestic consumption remains vastly inadequate to drive growth at home.
I really think Covid (which hastened the property price falling) screwed a lot of things up.
We can work less but at the same time also reallocate the labor and resources toward providing robust social welfare and support for the working people.
Once people feel that they no longer have to hoard savings because loss income from unemployment can be easily replenished from robust social safety nets and helping them to find new jobs, they’ll spend and consume more, which stimulates the economy and creates more jobs, solving the unemployment problem itself.
We’ve been through this before, none of this means anything without taking into account the role of debt.
Household debt leverage of US vs China vs Japan (debt to disposable income ratio)
US = purple, China = red, Japan = brown
Notice that China’s household debt leverage had exceeded that of US and Japan around 2018-2019. It matches perfectly with the charts you’re showing there, which used the change from 2008 as the starting point.
So, there is nothing unusual about China’s increasing consumption when people can afford to take on more debt i.e. when the economy is good. However, with exports being stifled by potential tariffs, when over-investments in property market imploding, with local governments saddled with unprecedented debt, it becomes inevitable that consumption becomes the only channel for where the economy must flow (if you’ve been reading anything I’ve written before, you know the drill).
The government knows this, that’s why for the first time, they have been prioritizing consumption as a national priority, and many subsidies have been given out to promote consumption.
However, as can be seen from the latest CPI data, we’re still having deflation:
So, the question is: how can we have deflation if consumption is indeed, as you said, been rising? It doesn’t even pass the smell test.
And we all know that a deflationary spiral is bad - much worse than inflation, and why the government is doing all it can to try to promote consumption.
Furthermore, unemployment has gone up - especially youth unemployment (see below).
Urban unemployment as of March 2025:
Compare March 2025 with December 2024:
Total unemployment: 5.2% <- 5.1%
Age 15-24 (non-students): 16.5% <- 15.7%
Age 25-29 (non-students): 7.2% <- 6.6%
Age 30-59 (non-students): 4.1% <- 3.9%
Once again, the growth in the economy, if true, does not match the unemployment data.
As I have said before, China cannot subsidize its way out of the consumption problem. Because the real problem - the elephant in the room that nobody wants to address - is wealth inequality.
When trade revenues are good, when investments in property and stock markets are booming, one can easily paper over the wealth inequality problem, because everyone seems to be getting wealthier, we have millions and millions of people being lifted out of poverty.
But now that exports and investment can no longer sustain economic growth, and when consumption has to take up the role of economic driver, all the ills of wealth inequality now begin to manifest themselves.
Moon of Alabama is having some hot take today in light of the Denmark raising retirement age: Chinese Work Less For Longer Retirements
China’s new retirement age for males born in 1970/12 is 61.5, and females is 55.25. With life expectancy 81.5 🇩🇰 vs 79 🇨🇳 and China’s much longer working hours (2450 hrs vs 🇩🇰 1563), Chinese work 4600 hours for 1 year of retirement, while Danes need to work for 6500 hours.
This calculation assumed Chinese start working at 20 years old and Danes start at 22 years old to account for higher education level in Denmark. Average retirement age 58.4 is assumed in China, just an average of male/female retirement ages.
So 🇨🇳 worked for 38.4 * 2450=94000 hrs in exchange of 20.6 yrs; 🇩🇰 worked for 48 * 1563=75000 hrs, retire for 11.5 yrs.
Obviously, the austerity policy in Europe is bad and the raising of retirement age is inevitable with the impending economic difficulties under neoliberalism, but the comparison with China (of all countries!) is quite another level of galaxy brain.
Average annual work hours by country:
(Top entry is Chinese internet companies that implement 996 work hours)
If you are between 20-40 years old, would you rather:
or
Which one will you choose?
The effect was more pronounced in countries with larger Communist Parties. Capitalism did not reduce working hours on its own.
Saw this on twitter.
Link to the book pdf: Reforming to Survive: The Bolshevik Origins of Social Policies
A bit late to the topic here, but I know this was extensively discussed when it happened during the short India-Pakistan conflict: did the Pakistani air force destroy India’s S-400 batteries using Chinese-made missiles?
If so, that pretty much settled the score between Russian and Chinese military equipments? If the Russian S-400s can be so easily destroyed by Chinese missiles, then it’s pretty much game over for Russia as a major arms dealer?
I sort of see this as a “proxy war” between Russia and China in their competition to carve out the share as global arms suppliers. It is one of last remaining major industries for Russia and I can see how losing that market in the world will be harmful to their economy.