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Jintao on the dollar

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In the Daily Mail:

China’s president today raised grave questions over the future of the dollar by claiming it should no longer be used as the world’s reserve currency.

Hu Jintao said that using the American currency as the default for international trade and investment was a ‘product of the past’.

In unusually frank comments he said that even though the arrangement had stood in place since the end of Second World War, now was the time to reassess.

China claims that America keeping its interest rates low is causing inflation around the world, including to its own currency, the yuan.

In the interview Mr Hu issued a veiled attack when he said that U.S. monetary policy ‘has a major impact on global liquidity and capital flows and therefore, the liquidity of the U.S. dollar should be kept at a reasonable and stable level’.

But he added: ‘The current international currency system is the product of the past’.
 
While I agree that there probably will be a point in time where the USD is not the sole, dominant currency, I think it will always be a safe haven. What does Mr. Jintao suggest to replace the dollar?

The Yuan would have to trade freely for it to supplant the dollar. The Euro doesn't look like an enticing option right now. It isn't going to be the Yen.

These comments are simply China flexing its muscle. US Senators crap all over the Yuan and China for not letting their currency appreciate, it is only fair that China gets in some jabs.

For all the fear and hoopla about China, it is still a developing nation. If anything, the USA should welcome a religiously moderate and secular nation gaining strength. If China wants to become a great nation it can step up to the plate and start sharing the burden the USA has shouldered for years.
 
One reason the $ is the defauilt currency is the lack of plausible competition.

Although it is not run well (however you define that), the $ is too global to be easily manipulated for the benefit of an organisaiton favoured by any one country. You can image how China and the EU feel about that, they both want markets to be "responsible", ie nice to companies with good political clout.
It's easy to see a situation where a state-linked company agrees to buy raw materials, and forwar sells the output, then maniuplates the currency to their advantage. Extraordinarily hard to do that with the $.

He's right that today is a product of the past, I'm not sure that qualifies as a deep insight.

As a huge player in the world's markets for everything, it follows that the US currency will be the default.
What if China took that place ?
If we leave aside Chinese meddling with the currency, there will be a huge time lag before people trust it. So to extend Jintao's idea, tomorrow will also be a function of the past.

An interesting point is what the $ doesn't do for people who use it as a reference for deals, since it is pretty volatile when measured against any given currency, which is far from ideal. Also it has suffered inflation and various legal shit.

One can imagine some form of SDR, based upon a basket of currencies that will have less volatility than the $, and where the impact of inflation in any one country will be diluted. As it happens SDRs are used in some transactions, but that is sufficiently rare that I expect >50% of the people in this finance group have never even heard of it.

To me that implies that there is not much demand for it.

That can change of course, extreme $ volatility or inflation could drive people to another currency.

When the $ and £ were going through bad patches in the 1970s, the Swiss Franc gained a certain popularity, which also correlated in time with gold being seen as a safe haven.
One could imagine a currency specifically set up for commodities, being linked to some basket of oil, iron ore, gold, etc, and backed by physical stores of it. That would only happen if the USA went through very bad times, China merely outgrowing the USA does not count.

The Euro is hardly a model of long term stability, although it's still not all that likely to fall apart, (I give it 10% over the next 5 years) A Euro zone fission is vastly more likely than the formation of a new Confederate republic in the USA.

China's long term stability sucks as well, when the leaders in a country are old enough to be the grandparents of the US president, and where some parts of it are dirt poor, but having their homes stolen by an urban elite, you don't get stability over the 20 year horizon. Rapid economic growth always leads to political change, sometimes good change, sometimes bad, but history admits of no exceptions to that.

America may not be universally loved or trusted, but it has reasonably reliable habits, that is far short of optimal, but reliability is the key term, and no one is anywhere near that yet.
 
One reason the $ is the defauilt currency is the lack of plausible competition.

The USD could lose its role and not be replaced by any currency. There are precedents for this: in the interwar years 1919-1939, sterling was no longer the global reserve but the dollar did not supplant it (though the US was clearly the world's largest economy). There were spheres of influence, bilateral agreements, barter arrangements.

Only with Bretton Woods in the postwar era was a new global arrangement imposed on the world, with the dollar as global reserve. At that time, however, the US had 50% of the world's GDP; the industries of Europe and Japan were decimated; and the dollar was backed by gold. By the late '60s, Bretton Woods was beginning to show signs of strain: Europe and Japan were competing with the US industrially, and US deficits were prompting holders of dollars to buy gold, leading to a drain on the US government's gold reserves.

We are still living in the aftermath of Bretton Woods: an unstable arrangement where the dollar is fiat, where the US economy has been eviscerated, where the US continues to rack up fiscal and current account deficits and is hence dependent on foreign states to buy US debt -- yet the dollar manages to remain global reserve. It's unsustainable: a line I've adamently maintained for years.

America may not be universally loved or trusted, but it has reasonably reliable habits, that is far short of optimal, but reliability is the key term, and no one is anywhere near that yet.

There's no reason to think that. The reliability -- if it ever had it -- has gone out the window as a deepening crisis has forced desperate measures. The old rules are out. People holding dollars and dollar-denominated debt look askance at quantitative easing. They're even more uncomfortable with the avalanche of dollars in global markets, pushing up equity prices and causing inflation.
 
The world is free to invest in Euros, Yen, Australian Dollars, etc. Whenever their is a crisis, people flock to the USD. Yes, we are coming out of or still in a recession, but we were experiencing what the majority of the world was experiencing. Our debt levels are still not critical and it seems as if we finally have some political will to start tightening the belt. Once Afghanistan winds down we will have a huge reduction in current spending.

The USA is the largest economy in the world. The dollar is stable, dependable and predictable, as mentioned below. The Euro is a complete mess right now and China isn't exactly stepping up to the plate to fill our shoes. I still don't see a viable candidate.

People buy our debt because they want to. We are zero risk of defaulting. Our tax levels are pretty low (although I think they are horribly high) and we could easily raise revenue and trim fat with little effort. We continue to be a global educator and employer and I think we are finally getting the message with spending. Lets not forget that even Europe is cutting spending and reducing some of their lavish social programs.
 
The USA is the largest economy in the world. The dollar is stable, dependable and predictable, as mentioned below. The Euro is a complete mess right now and China isn't exactly stepping up to the plate to fill our shoes. I still don't see a viable candidate.

People buy our debt because they want to. We are zero risk of defaulting. Our tax levels are pretty low (although I think they are horribly high) and we could easily raise revenue and trim fat with little effort. We continue to be a global educator and employer and I think we are finally getting the message with spending. Lets not forget that even Europe is cutting spending and reducing some of their lavish social programs.

I am speechless....what are you smoking?
 
I am speechless....what are you smoking?

Well, the debt is dollar-denominated -- which the US government can print at will. So the risk of default is nil. Typically defaults occur when countries can't service debt in a currency other than their own (like Argentina in 2000). But while the risk of default is nil, there are questions about the, er, purchasing power of the dollar. Anyone holding dollar-denominated debt has to be worried about this. No-one really wants to acquire more dollar-denominated paper assets. This is a nagging problem for the US, which is running on persistent deficits. But this problem of an empire running on deficits will only be solved at a geopolitical level. The most basic equation of all (but not taught to quants) is: military power supports acceptance of the dollar as reserve; and the dollar as reserve allows military power to be projected worldwide. The collapse of the two will occur in tandem.
 
The Euro is a complete mess right now

Indeed. I think these are birthing pains though. You only have to look at the history of currency in the US between say 1800 and 1940 to see the mechanisms that were put in place (and financial crises) that lead to a stable currency.

The EU will get its game together eventually but I don't see it in the near future.
 
I am speechless....what are you smoking?

Actually the question is, what are you listening to? Mass media panic much? The dollar is fine. It may not be as great as it ever have been, but it is fine. It will remain the world currency of choice for quite some time. The US is in no big financial trouble, just a simple recession that has been blown way out of proportions in the media. Trust me, the US is not concerned about defaulting. Not even close.
 
1) The USA military is far from collapsing.

2) Countries are buying the dollar because we are transparent and it is safe.

3) The USA has no "empire". The Romans had an empire. We have some bases around the world. The USA has left Iraq. We want to leave Afghanistan. No more countries or states are flying the American flag. Calling what we have an empire is an insult to the world.

4) The USA is running a deficit. We had a surplus a short time ago. A little fiscal discipline and a rebound in the economy and we can right the ship. The rest of the world is going through some issues right now also. It isn't like the USA is the only one hurting.

5) China is a great country, but has many problems. The country is largely poor towards the inner part, has serious environmental issues and a horrible male/female imbalance. I am sure it will preserver, but there will be rocky roads a head. China will have a bubble and it will burst.

6) China holds a lot of our debt. We buy and employ their goods and people. It is a reciprocal deal. China is growing stronger and is flexing their muscle. Rightly so. No problem here. They are testing their first stealth airplane. We have a fleet of 3rd generation craft. They are testing their first aircraft carrier. We have a fleet and are implementing rail gun systems. People need to put things in perspective.


I honestly think we would all be better off not watching the news. It is generally garbage.
 
1) The USA military is far from collapsing.

2) Countries are buying the dollar because we are transparent and it is safe.

3) The USA has no "empire". The Romans had an empire. We have some bases around the world. The USA has left Iraq. We want to leave Afghanistan. No more countries or states are flying the American flag. Calling what we have an empire is an insult to the world.

4) The USA is running a deficit. We had a surplus a short time ago. A little fiscal discipline and a rebound in the economy and we can right the ship. The rest of the world is going through some issues right now also. It isn't like the USA is the only one hurting.

5) China is a great country, but has many problems. The country is largely poor towards the inner part, has serious environmental issues and a horrible male/female imbalance. I am sure it will preserver, but there will be rocky roads a head. China will have a bubble and it will burst.

6) China holds a lot of our debt. We buy and employ their goods and people. It is a reciprocal deal. China is growing stronger and is flexing their muscle. Rightly so. No problem here. They are testing their first stealth airplane. We have a fleet of 3rd generation craft. They are testing their first aircraft carrier. We have a fleet and are implementing rail gun systems. People need to put things in perspective.


I honestly think we would all be better off not watching the news. It is generally garbage.

I am not quite familiar with the history of USD and thus, might be wrong. But I don't believe the USD is popular simply because the world has faith in the US system, but also because the world has too - as the USD is the only standard unit of currency for commodities such as gold and petroleum. (imagine everything you need to survive are valued using USD. actually. you dont need to....THIS IS THE REALITY.)
I think it all starts after WWII - when America basically sets all the rules of international banking (America loaned a lot of money to European countries so I guess the Europeans cant really say no)
And the dominance of USD has contributed tremendously to the prosperity of US economy - granting it the ability to borrow as much it wants.
As to the Empire thing, the US doesnt have "some" military bases - it has over 700 oversea military bases. That plus a military budget that almost match that of the rest of the world combined, you can see the concern.
I do agree with your last comment, but I think you meant 4th gen stealth fighter, not 3rd gen.
 
Anthony is wholly incorrect that there is zero chance of America defaulting, that's not a forecast, that's an observation. Recall how very very close the US came to defaulting under Clinton, when they could not get a budget passed. That's not so long ago, and given that the US has an even more partisan political setup now, not so unlikely.
The idea that any state is permanent, is of course naive. Go read any history book and you will quickly spot that they come and go. America may often think of itself as a 'new' country, but is in fact nearly the oldest in the world. That speaks well of it's stability, but the mean time between failure of countries is <50 years. The USA has managed 234, when you have a mean of 50, which tends to zero by 250, do your own maths on how likely it is that any state can be 100% reliable over (say) 10 years. Obviously the odds of the USA defaulting in 10 years are small, but far from zero either. >10 years the numbers go up quite hard, pensions/demographics look vicious.

BBW is right, we could have a period where there is no dominant currency, it's not that unlikely either. I can't get my head around whether that is good or bad.

I then read Anthony's rather parochial analysis of the USAs strengths, which are mostly y wrong both in detail and in concept.

>1) The USA military is far from collapsing.
It's close to losing a war, that will have bad effects. The US military is of course huge, but that is both good and bad. You really really need to read up on how the US military went truly bad in the 1970s. It was bigger then than now, but had just lost a war. Not saying this will happen, saying it is not zero probability either.

[2) Countries are buying the dollar because we are transparent and it is safe.
Do you read any newspapers, or watch any TV other than Fox ? Even Fox would not agree with you on that. The US body politic is wholly corrupt. So corrupt that the strength of a politician is measured by the volume of bribes he has taken, and it is so corrupt that the politicians themselves publish the levels of cash taken to impress people. Some individual senators in the US have accepted more bribes in the guise of "contributions" than all three m ain British parties spent in the recent national elections, put together with about 2,500 candidates. In the UK an MP has been sent to prison for a dodgy expense claim of $20K, in the USA he'd get more bribes than that per day.

3) The USA has no "empire".
That's just so far from true, that I wonder at this point if I am making the mistake of responding to what was intended as a joke ?
Look at Korea, that's exactly the sort of strategic heel that did for the British empire, defending client states that were far away from the homeland.
Ditto Taiwan and Japan. If you look at the Pacific in general one sees a US Empire in all but name. Then there'e Puerto Rico, which although facing no real threats holds pretty much the same position in the US imperial system as Australia or Canada did under the British.
The USA has bases in >30 countries nearly as many as the British did at their peak.
The stated purpose of the Iraq and Afghan wars is to create "friendly states". The Romans, British, French and Swedes all did the same thing. I suspect that your understanding of history is so weak you don't even know the Swedes had an empire did you ?
A useful test for Imperial tendencies is if you go to war to defend a country that many of your population could not place on a map. Fighting to defend the homeland against invasion ain't imperial, but when you have to put a map on the screen to show journalists it's location, it is.
A war in Korea or Taiwan would be hugely expensive for the USA, both in money and men, utterly dwarfing the cost of both Moslem wars put together. It's been 40 years since the US has fought an enemy who could fight back. It's an open question how well it could cope.
 
Anthony is wholly incorrect that there is zero chance of America defaulting, that's not a forecast, that's an observation. Recall how very very close the US came to defaulting under Clinton, when they could not get a budget passed. That's not so long ago, and given that the US has an even more partisan political setup now, not so unlikely.
The idea that any state is permanent, is of course naive. Go read any history book and you will quickly spot that they come and go. America may often think of itself as a 'new' country, but is in fact nearly the oldest in the world. That speaks well of it's stability, but the mean time between failure of countries is <50 years. The USA has managed 234, when you have a mean of 50, which tends to zero by 250, do your own maths on how likely it is that any state can be 100% reliable over (say) 10 years. Obviously the odds of the USA defaulting in 10 years are small, but far from zero either. >10 years the numbers go up quite hard, pensions/demographics look vicious.

BBW is right, we could have a period where there is no dominant currency, it's not that unlikely either. I can't get my head around whether that is good or bad.

I then read Anthony's rather parochial analysis of the USAs strengths, which are mostly y wrong both in detail and in concept.

>1) The USA military is far from collapsing.
It's close to losing a war, that will have bad effects. The US military is of course huge, but that is both good and bad. You really really need to read up on how the US military went truly bad in the 1970s. It was bigger then than now, but had just lost a war. Not saying this will happen, saying it is not zero probability either.

[2) Countries are buying the dollar because we are transparent and it is safe.
Do you read any newspapers, or watch any TV other than Fox ? Even Fox would not agree with you on that. The US body politic is wholly corrupt. So corrupt that the strength of a politician is measured by the volume of bribes he has taken, and it is so corrupt that the politicians themselves publish the levels of cash taken to impress people. Some individual senators in the US have accepted more bribes in the guise of "contributions" than all three m ain British parties spent in the recent national elections, put together with about 2,500 candidates. In the UK an MP has been sent to prison for a dodgy expense claim of $20K, in the USA he'd get more bribes than that per day.

3) The USA has no "empire".
That's just so far from true, that I wonder at this point if I am making the mistake of responding to what was intended as a joke ?
Look at Korea, that's exactly the sort of strategic heel that did for the British empire, defending client states that were far away from the homeland.
Ditto Taiwan and Japan. If you look at the Pacific in general one sees a US Empire in all but name. Then there'e Puerto Rico, which although facing no real threats holds pretty much the same position in the US imperial system as Australia or Canada did under the British.
The USA has bases in >30 countries nearly as many as the British did at their peak.
The stated purpose of the Iraq and Afghan wars is to create "friendly states". The Romans, British, French and Swedes all did the same thing. I suspect that your understanding of history is so weak you don't even know the Swedes had an empire did you ?
A useful test for Imperial tendencies is if you go to war to defend a country that many of your population could not place on a map. Fighting to defend the homeland against invasion ain't imperial, but when you have to put a map on the screen to show journalists it's location, it is.
A war in Korea or Taiwan would be hugely expensive for the USA, both in money and men, utterly dwarfing the cost of both Moslem wars put together. It's been 40 years since the US has fought an enemy who could fight back. It's an open question how well it could cope.
I'm going to have to disagree with you. Most of what you say (excluding your actual factual statements, which would be few) is wrong and obviously influenced by mass media - which isn't a good thing.

The USD is at a near-zero risk of defaulting in the next 2 decades. It just won't happen. As has already been stated in this thread, we have enjoyed tax rates much lower than the rest of the world for quite some time, and these can be raised to bring in more capital. Our budget could use some reform. There is wasted capital, that in a time of drastic need, could be pumped out. We will be fine.

Our politicians are not as corrupt as the media would have you believe.

As for the wars, we are not close to "losing." In my opinion, they were both idiotic moves in the first place, and I will admit I consider them not winnable. However, warfare has changed. We no longer fight Nations. We are fighting a guerrilla force. A withdrawal may seem like a loss for the US, but in all reality that wouldn't be the end of the "war." It would just change the front, from the Middle East to US bases in Europe and eventually at home.
 
Domini, you're a smart guy, but dead wrong on this.


1)The USA could "technically" default, but it is not going to do that. We sometimes use things as leverage. The USA needs to correct things, but we are not near collapse. Not saying it could never happen, but compared to other currencies, we are still the safest.

2) How are we losing the way? It has been an 8+ year engagement, two countries and we have lost less men than we did in one battle in WW2. Get real. We are basically getting tired of Afghanistan and will leave because we are sick of the place. People who say we are losing the war are people who plug their ear and make noise when you talk to them and when the other person gives up they say they lost. Get real.

Either way, suppose we "lose". We lost because we are tired of the place. We haven't lost machines, a lot of people or anything really.

The Germans lost in WW2. The Japanese lost in WW2. We are simply moving on. Don't worry, in 20 years we will be back.

3) I didn't realize that the USA "forced" the world to buy the dollar. Here I am thinking that investors around the world bought and sold what they wanted. Thanks for clearing that up. I never watch Fox News, but even if I did, is that supposed to be some kind of an insult? Who cares what people watch. Is your opinion supposed to be better than mine? Are you trying to tell me that we send Marines to France and tell French investors to buy the USD "or else"?

The dollar is safe. It is established. It is far less risk of collapsing than the Euro, Ruble, and the Yen. Our economy is still very strong. We have a stable political system. Please tell me why the USD would not be the currency of choice right now? I NEVER ever said it would be forever. In fact, I mentioned in my first post that it would probably be supplanted some time in the future.

3) The USA has ZERO empire. Fact. We have bases that other countries allow. Are you comparing our bases in Japan and German with the Britain colonizing India? We have a relationship with Korea? Do we demand money from that country? Do we elect their leaders? Get real.The USA has strategic interests around the world. All countries do. Many countries has bases, a colony is something much more.


You know why have so many bases? Because we liberated a large chunk of this world. The UK and all of Europe owe us a debt of gratitude. Same goes for almost all of Asia. What is going on in the Middle East is horrible, but I wonder why everyone is so outraged right now and not when Saddam was gassing ethnic Kurds. What about when the Taliban was stoning women and acting in the most barbaric way.

Oh thats right, the only time something is horrible is when the USA is involved. Saddam was an angel of God and the evil USA ruined things.
 
FYI Dom, try and leave the pompous attitude at home. My analysis was not "parochial" and I find the term rather insulting. You want to attack my stance, fine. Trying to demean my opinion as if I am a twelve year old talking out of my league is not what I come to this site for.
 
3) The USA has ZERO empire. Fact. We have bases that other countries allow. Are you comparing our bases in Japan and German with the Britain colonizing India? We have a relationship with Korea? Do we demand money from that country? Do we elect their leaders? Get real.The USA has strategic interests around the world. All countries do. Many countries has bases, a colony is something much more.

You know why have so many bases? Because we liberated a large chunk of this world. The UK and all of Europe owe us a debt of gratitude. Same goes for almost all of Asia. What is going on in the Middle East is horrible, but I wonder why everyone is so outraged right now and not when Saddam was gassing ethnic Kurds. What about when the Taliban was stoning women and acting in the most barbaric way.

What world are you living in? Even neocons in the Bush era were happy to use the word "empire." As for bases, when the Japanese wanted to "renegotiate" the base in Okinawa a year or two back, the US government twisted their arm. And the Japanese "subsidise" the base.

As for forcing others to buy the dollar, Kissinger threatened the oil states with military invasion back in the mid-70s if they didn't recycle their oil dollars through the New York banks into US Treasuries. Japan -- as a US vassal -- is literally forced to use its trade surplus to buy US Treasuries (in the same way that India's trade surplus was used to balance Britain's chronic trade deficits). The US is (rightfully) paranoid about countries opting out of the dollar-based global trading system. The dollar-based global trading system and the network of US bases abroad support each other.

There are so many mistakes in what you write, one doesn't know where to begin. Or whether it's even worth the effort.
 
Yes, a base in Japan is the same as a full colony. Makes so much sense. Sure, we twisted their arm. Can we not try and influence something that will hurt us? Did we force Japan to keep the base. Did we threaten military action? Please. Colony means control.

So Kissinger in the 70's is relevant now? Japan is forced to buy the dollar? Man, I love the USA, but you are making us sound even more amazing!

Please friend, don't bother wasting your time. Go back to reading socialist websites lol.
 
Anthony, you may be right, in fact you are very probably right, that the US will not commit a technical default. I'm rejecting your assertion that the probability is zero.

Ditto Afghanistan, like most people I expect the US will shore up the current fradulent government, give them some guns, then walk away. Any subsequent collapse will be spun as not the fault of the people who made that decision.
You mention the comparative casualties, and that's a critical point. Does the US have the stomach to lose 10,000 people in a day ? Individual German Uboats killed more Americans than died in 9/11 and the US still has not recovered from that. I think for the 'right' fight it would, but that's a variable and thus a source of uncertainty. An effective artillery barrage from North Korea could quickly kill thousands of US troops, what then ?
British US bases are from a time when both countries were fighting the same enemy, or getting ready to do so. That's exactly how Imperial Canadian bases got started.
There is really very little difference between the old Imperial British bases in (for instance) Australia and Japan. Oz was a tier one democracy who freely accepted those bases in return for protection, indeed a big rift between Oz and Britain was that they didn't get *enough* military there. Canada also had British bases, some of which had been created to defend it against American Imperial ambitions, when it tried and failed to extend it's empire by force. You do know why the White House is white don't you ? Please tell me you do.

Anthony you need to understand how Empires work. In the British model, countries mostly occupied by white people were allowed to choose their own leaders. That was of course racist, but mirrors modern US policy perfectly. Llook at the colour of the non-democratic regimes supported by the US, and the democratic ones, quite a sharp distinction, with the Japanese counted as 'white' just as they were under S.African Apartheid.

You genuinely seem to think that Japan gave the US bases voluntarily ?
Does the word Hiroshima ring any bells ? Fire bombing of Tokyo ?
Japan was never exactly asked if it wanted US bases, and their popularity is not all that great, even if they are important. A free vote on the subject might be really scary.
I don't recall Hitler or Mussolini sending emails to the US government asking them if they would kindly come and set up some bases in Germany and Italy to help the Luftwaffe defend the Reich. Note that France didn't get US bases, because it was liberated, not conquered. Stuff you get by conquering counts as Imperial in my book.

Other US bases are actually British Imperial bases that the Brits could not afford to run any more of were swapped for equipment. Some still are legally Imperial possessions.

I've talked of the British Empire here because it is recent.
But a critical reason for the fall of the Roman and British Empires was 100% contrary to Anthony's position. The huge cost of maintaining a defence of such a large area was unacceptable, and ultimately proved to be unsustainable. The US has been lucky that it is currently fighting shit gangs in places it can afford to walk away from. It also has allies who although much less powerful do help take the strain.
If it had to fight against a determined, reasonably well armed attack from N. Korea, it would be tough, and given it's behaviour recently, would have fewer allies than it did in the first Korean war.
The US/S.Korea would of course win, but what if N. Korea went the same way as Iraq ?

Given that both parties in the US strongly advocate war against Iran if it does not give up its nukes, it is easy to see a war in two vastly different areas, and any insurgent in Iraq or Afghanistan, would bee encouraged to renew their attack.
That's before we think about 'complications' if China got involved, or Pakistan which is a nuclear armed failing state started falling completely into chaos.

There are scary parallels between the fall of the Soviet Empire and situations faced by the USA, a wounded economy, a nasty war in Afghanistan, and a corrupt political establishment.
 
Ditto Afghanistan, like most people I expect the US will shore up the current fradulent government, give them some guns, then walk away. Any subsequent collapse will be spun as not the fault of the people who made that decision.

Dominic, the US wants permanent bases being set up there, as in Iraq. If a puppet government can guarantee those bases, the US will "walk away." If the puppet regime fails, it will need to be "liberated" and "democratised" again (because of, er, the way they treat their women). Same thing in Iraq, but on a bigger scale. The US imperial aims to establish beachheads in Eurasia remain the same as they were in Bush's days. The "grand strategy" has not changed. The USA is not walking away from the Middle East: military involvement in the region has been a linchpin of US policy since the time of Roosevelt. In addition, encircling China is a key imperative. No moral judgement here: this is realpolitik.

In the British model, countries mostly occupied by white people were allowed to choose their own leaders. That was of course racist, but mirrors modern US policy perfectly. Llook at the colour of the non-democratic regimes supported by the US, and the democratic ones, quite a sharp distinction, with the Japanese counted as 'white' just as they were under S.African Apartheid.

These countries -- Canada, Australia, New Zealand -- were to be given, or were given, dominion status. Even India was eventually to receive dominion status -- a non-white country. The Brits were more ambivalent about their empire than the Americans. For instance, Brigadier Dyer was forced to resign after the Amritsar massacre in 1919. Much worse things have been done by the Americans in Iraq and Afghanistan (which they've, er, liberated), but no military officers have ever been held to account (instead whistle-blowers are pounced on, and the barrage of disinformation from American media is staggering). These, then, are some of the differences in imperial structure.

It also has allies who although much less powerful do help take the strain.

They're vassals, Dominic. And they're chafing at the bit at their subaltern status. US foreign policy in a nutshell is, "Do what we tell you, or else ..."

Agree with the rest of your post.
 
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