As shown in the charts below, dollar hegemony in its current form is synonymous with anti-mercantilist policy, meaning it hollows out domestic industrial capacity in exchange for widening the external reach of the political+military influence of the country.
As shown in the charts below, dollar hegemony in its current form is synonymous with anti-mercantilist policy, meaning it hollows out domestic industrial capacity in exchange for widening the external reach of the political+military influence of the country.
When people fret about the U.S. one day losing status as the *sole* global reserve currency, what precisely is it that they're afraid to lose? -Our ability to sanction anyone? -Our 750 foreign military bases? -Our artificial import boost, which comes at the cost of our artificial export weakness? Always ask, who specifically benefits or is harmed by a given framework. "The US" is a broad thing. Who specifically in the US?
@LynAldenContact Won't every day Americans suffer?
@RainOnChain Much like an addict coming off of an addiction, at first yes. But the current trend of de-industrialization is not good for blue collar workers, national security, or political unity. It's unsustainable.
@LynAldenContact @RainOnChain Aren't robotics and AI reversing the industrial trend ? The jobs are obviously different but the work is solid middle class. We are building a robotics driven factory in Dallas for drugs in short supply and there are plenty of solid jobs. Isn't the trend to repatriate mfg ?
The *desired* trend is to repatriate mfg. But firms find it hard in practice. Taiwan Semi, for example, identifies how much more expensive it is to build production in the US despite getting subsidies, which led them to ask for more subsidies. Automation narrows the gap compared to what it would be, but there are still on-site technicians and engineers needed. Plus permitting, construction, etc. asia.nikkei.com/Business/Tech/…
TSMC is very unique. They may be the most important company in the world right now. But in terms of breadth and volume of jobs to be created, there is plenty of friction, but don't you think the real question is whether we can lead in robotics, automation , software and AI? Couldnt they be the drivers of economic growth, compensating for the loss of traditional jobs ? And if we do lead, doesn't that make our role as the reserve currency stronger as it takes US Dollars to buy our most advanced tech ? Curious what your thoughts are on this.
I agree TSM is basically #1 importance right now. And it shows how hard it is to expand domestically. Imagine companies in aggregate doing this without subsidies. Individual ones can succeed but on the big scale it's hard. I think the US could/should be a leader in robotics, automation, software, and AI. And on the software side it already is. The hardware implementation side is where the risk is, imo. Lack of on-site engineers, technicians, hard to permit and construct, compared to developed (eg Japan, Germany) and developing country (eg China, Malaysia, Mexico) competitors. That's basically the cost of being hollowed out from having our currency hold an extra monetary premium on it for so long, which boosted our import power but hurt export competiveness. And by not building domestically for a while, graduates didn't generally go into those fields, didn't build expertise in those fields, so the frictions are super high, with difficulty finding the right labor at scale. It's reversible and fixable over time but the monetary system as currently structured has been and remains a big headwind.
Semis are a very unique industry. That said, hard to permit and construct is a real issue. It’s a mess at many levels. But those are fixed costs that can be neutralized with technology, volume and proximity in many industries. And while China has a multiple of engineers compared to us, that’s where immigration is a bigger issue IMO than currency. While I agree with your point that we outsourced the heart of the manufacturing business that would have created a larger middle class, if we can get smart enough to allow an influx of engineers and entrepreneurs , we do have a much more powerful entrepreneurial multiplier than any country on the planet, which I hope and believe can leverage new tech to disintermediate our mistakes of the past. I think that is the unquantifiable, most valuable asset on the American balance sheet. It’s the ultimate magnet for global investment capital, and as such, IMO a strong base for the dollar. Maybe I’m too optimistic. But that’s what makes markets :)
@mcuban @LynAldenContact @RainOnChain It seems like we have a short window to use our desirable immigration status to boost the migration of favorable talent. I wonder @mcuban and @LynAldenContact what would cause this window to close. Lyn has pointed out that there are heavy frictions to building organic talent.
@mcuban @WanbergJohn @LynAldenContact @RainOnChain We need you to run for president!