It's not that it's fake. It's that it has a distinct style.
I once thought that AI image/video would quickly become unidentifiable, but the surprising thing (so far) is that every new model release is followed by two reactions: "This is incredible" to "I recognize this style. It's AI. They're all the same."
It takes only a few weeks. I've been amazed with our mind's ability to move the goalpost.
I love my whoop band. Has noticeably made my day to day life happier than before I owned it. The insights pushed me to sleep much better, which makes each day brighter and less overwhelming. The insights also pushed me to up my cardio fitness metrics in general, which has made me overall more athletic and capable on strenuous hikes, trips, and activities.
YMMV but for me it might be my favorite product I own
> it’s far too early to claim a discovery, physicists warn...“How do you even make sense of one event?” muses Tom Shutt, a particle astrophysicist at SLAC National Accelerator Laboratory and co-founder of the LZ project. “We just decided we should publish and think really, really, really hard about what that event could be.”
Very hard to manage jumping the gun by reporters. Sounds like they saw some new data. No idea what it is.
I have claude just label at the top of all the notes it's generated "Generated by Claude". I also put them into specific claude folders. I agree with the downsides of not being able to distinguish your own writing from an AI's in the future, but don't see why it's a unsolvable problem.
Strauss Zelnick the TakeTwo CEO has talked about how there’s two periods to go hard at your career ambitions: before kids and then after they are older and have their own lives. In between, my frame on this personally has always been that no matter how much money I make in the future, one day I would spend all of it to have another day with my kids at the age they are right now. And so for a period, that’s the focus. It won’t be forever but it is right now.
It's true. The negative takeaway is that is no matter what miracles come in the far future (free energy, perfect health care, infinite resources, infinite intelligence), people will eternally be wanting, take things for granted, focused mainly on the things they don't have and can't do. It's the human condition.
The US wields incredible negotiating power and hegemony because the dollar is the world’s reserve currency. Like the British pound and the Dutch guilder before it, if that loses reserve currency status it will be harder to borrow on favorable terms, which would affect the entire US economy. This is a big step in that perhaps starting to happen over the next few decades.
One consequence of the transition to renewable energy and electrified transport, is that oil imports will start to decline. And the dollar is of course the currency of choice for that.
The US economy and other countries that export fossil fuels will feel the impact over the next decade or so. The energy transition might go a lot quicker than people seem to expect. Currently about 20% of global car sales is electric. In some countries it's well over 50%. China of course being one of them. And they are making rapid progress with electrifying freight as well. This is already impacting their fossil fuel imports. They still import a lot.
One effect that I think people underestimate is that while it will take a long time for all the ICE vehicles to disappear, the new ones do most of the driving. So, new EVs have a relatively large impact on fuel consumption and imports pretty early on. E.g. Chinese diesel imports apparently already are being impacted by their rapid deployment of tens of thousands of electrical trucks. Soon hundreds of thousands. That's already a third of the market in China and will probably head for well over 50% in a few short years. The EU is not that far behind.
The ripple effect that's going to have on oil trading, refinery capacity, etc. is going to be substantial. Of course current geopolitics is speeding things up massively. LNG and oil scarcity is causing a lot of issues globally and countries are accelerating moves to reduce their dependence on that.
Demand destruction will collapse profits and accelerate the oil/dollar downfall. Saudi Arabia can profitably pump oil probably under $10/barrel. If demand drops, thats where oil should be.
China with [EVs|Solar|BESS|Turbines] will replace all of the fossil fuel countries (US, middle-east, Russia). This is probably the biggest transition in the history of mankind. This is energy production, storage and all the appliances that use electricity. After this, its incredibly hard for any other country to compete.
> China with [EVs|Solar|BESS|Turbines] will replace all of the fossil fuel countries (US, middle-east, Russia)
I dont agree with china having the same position as the FF exporters. Simply because with renewables, you export the means to produce energy rather than the energy itself. So in terms of monetary value, china will be selling alot less panels than the FF countries sell oil. And other countries can also manufactor renewables tech themselves, while with oil they couldnt materialize it under their feet
Basically i think the paradigm of the energy trade being cornered for politcal controll wont exost with renewables. Renewables are decentralized and so not controllable
ACtually no , even with the export of primary goods that go into the manufactue of renewables like solar the price differential still favours China. A recent example is the boom of local solar manufacture in India whil relies on solar modules imported from china.The assembled panes are still 2X the price of a similar fullly aseembled one from China.
And not due too subsidies of labour - a lot of the value chain is highly automated and densely colocated diffrerent from other industrail setups where complimentary industries are geographically separeted which increase final costt by adding unreliable transport and delays into the mix.
So at scale and with high volume will continue to be the dominated by China , wear and tear even with renewables will continue to favour the first mover as tech evolves over time.The solar modules/batteries of 10-15 years ago are not the same effficency as those of today.
China indeed makes very cheap solar panels, inverters and batteries, but that just means that they take up a smaller share of the cost of a complete installation, which also includes labor and additional hardware for the mounting system. So solar panels doubling in price won't double the cost of new solar capacity, let alone the cost of electricity from existing installations. That reduces the political leverage a lot compared to oil, where a supply disruption affects prices on fairly short time scales.
Yep exactly , also they are perfectly content to keep selling at the razor thin margins for commodities rather than attach political costs.Unless and only when their red lines are touch see Lithuania(hosting a Taiwan quasi consulate) and recently Panama(after rescinding the port concessions and confisicating the operations).
Im sure theirs still market dominance to be had. But it wont be at the level that the US has with oil. This isnt just market dominance, its complete economic dominance. The US can controll all money because oil is sold in dollars. That wont be true for solar panels, simply because a country couldnt afford to go a week without oil imports, but a country could go years without solar panel imports, given how existing panels will still work and new panels can be manufactored domestically if needed (even if they are expensive). You cant jist manufactor oil, you meed to buy it
People will remember but they wont submit. The US got countries to submit to them becuase of the economic sanctions made possible by cornering the energy trade. I dont think we'll see that again given renewables becoming the meta
In yiur example, cuba will remember china's help, but china will have to keep being nice to keep that loyalty, which means conprimising with cuba rather that forcing it like the US could do
From one of the GP comments, it's about preserving the petrodollar and reserve currency status as a whole. That's a way wider scope than a few companies. P
Theyre holding on for dear life but its futile i think. Renewables will be the future and they wont have that political leverage attached. Geopolitics is about to become more equitable. Itll be interesting to see what that looks like. Idk if itll more or less peaceful. I'd bet less honestly
Coal in China has many applications beyond simply burning it to produce electricity.
Coal 2025 report
"China consumes 30% more coal than the rest of the world put together. It also produces more coal than all other countries combined, and it is the world’s largest importer. This dominance by a single country makes global coal markets very dependent on developments in China, notably those related to economic growth, government policies, energy markets, weather conditions and dynamics in the Chinese domestic coal sector."
In terms of reducing oil consumption China is pursuing two strategies:
1. Electrification of transport
2. Producing synthetic gasoline/diesel/chemicals from coal.
"The sector last year turned 276 million tons of coal - equivalent to almost a year of European coal use - into chemicals, oil and gas, according to the China National Petroleum and Chemical Planning Institute."
"China’s power sector is undergoing a visible transformation. Electricity demand rose by 5% between 2024 and 2025, reaching 10,368 TWh, yet coal-fired generation declined by 113 TWh to 6,294 TWh in a year, reducing its share in the power mix. The entire increment in electricity demand was absorbed by nuclear and renewable sources, whose combined output rose by 617 TWh. On paper, this reflects a decisive shift away from coal and toward low-carbon energy. In practice, however, coal is not disappearing from China’s industry – it is being redirected."
"Coal-to-liquids (CTL) and coal-to-chemicals (CTC) technologies provide the missing link. Using Fischer-Tropsch synthesis, coal can be converted into synthetic liquid fuels such as diesel, gasoline, and naphtha, as well as petrochemical feedstocks including olefins for plastics production. China and South Africa are the only countries operating CTL and CTC at an industrial scale. China alone consumes hundreds of millions of tonnes of coal annually (380 million tonnes as reported by the IEA) for chemical and synthetic fuel production. It is important to note that the largest part of this demand goes into the CTC industry. China has effectively replaced gas as its main feedstock for ammonia and methanol production with raw coal, to the extent that roughly 80% of these chemicals’ output is now fed by coal."
What this means is China can flatten the demand much faster as they have a way to create synthetic oil. They may continue to buy oil as long as prices are reasonable.
This reminds me of The Prize: The Epic Quest for Oil, Money, and Power
Book by Daniel Yergin. Germany created synthetic oil but it was too expensive, resource-intensive, they couldn't make enough of it economically at the scale they needed. They had no choice but to go to war for fossil fuels which they don't have access to.
I wonder how the unit economics are working out for China.
I don't think that Germany had no choice, because Germany scaled synthetic oil production a lot during WWII:
"Being petroleum-poor but coal-rich, Germany used the process during World War II to produce ersatz (replacement) fuels. FT production accounted for an estimated 9% of German war production of fuels and 25% of the automobile fuel."
Saudi Arabia needs oil prices at ~$86.60/barrel to balance their budget, per Bloomberg. It is not the marginal cost to pump a barrel, but what a country needs to support their sticky spending from previously assured energy exports. Governments will collapse long before we approach low single digit oil prices on the global market.
> China with [EVs|Solar|BESS|Turbines] will replace all of the fossil fuel countries (US, middle-east, Russia). This is probably the biggest transition in the history of mankind. This is energy production, storage and all the appliances that use electricity. After this, its incredibly hard for any other country to compete.
Strongly agree. China is replacing petrostate economic demand with demand for their clean tech products, which keeps their deflationary economy afloat, provides them soft power, and will transition the yuan to a global reserve currency. Today countries by dollars to by petroleum ("petrodollar"); tomorrow, countries will want yuan to buy "manufacturing fiat," to trade with the world's factory (China is 1/3rd of global manufacturing capacity, as of this comment). Stocks of assets vs flows of energy.
Indeed. Electricity will be the only abstraction layer of energy, all end uses (transportation, cooking, heating, cooling, appliances) will switch to electricity.
Electricity can be generated from any source (dirty + clean), but the abstraction layer of electricity will allow the grid to continuously increase the clean fuels. It helps that the cleanest is also the cheapest. Solar panels are cheap as dirt. In 1975, a solar PV module cost $128.27 per watt. In 2026 it costs $0.1 - $0.2 per watt, a thousand times cheaper. In 1975, only satellites could afford solar. Today, its the cheapest source of energy.
China will be an electrostate. Are there any other electrostates? Maybe Bhutan, Costa Rica, but they are too small.
> China will be an electrostate. Are there any other electrostates? Maybe Bhutan, Costa Rica, but they are too small.
China for sure. The rest will come as they replace the last of coal and fossil gas with anything low carbon, solar, wind hydro, as well as the necessary battery storage and transmission for energy orchestration and agility. Like Norway is already at 100% of EV sales and other countries are still close to 0%, we're simply observing a global energy transition horse race. Exciting time to be on the timeline imho.
You are assuming that carbon negative countries are all electrostates. That's not true at all. Buthan and Panama which are carbon negative are very far from being electrostates. Costa Rica is not even carbon negative nor an electrostate. Carbon negative countries and Costa Rica due to their low GDP are very far behind on electrification.
Just look up the percentage of new car sales that are electric on each of those countries. It's around 5%. The reason? They cost 35,000 dollars at the low end even for a Chinese SUV whereas the average new car uses gasoline and costs 16,000 dollars for a Chinese SUV.
according to these countries' censuses, Cooking with electricity and drying clothes in a clothes dryer are rather rare too, around 10% or lower. although clothes dryers are more common in apartment buildings, apartments are only around 10% of all houses. Most people cook with small government subsidized 25 pound LPG tanks. Water heaters are used by 5% of the population because the water is actually desirable cold and not hot because the air is hot instead of cold and there is no winter.
They are carbon negative because their population is small enough to have most of the country still covered in virgin jungles and forests. They are big enough to offset the carbon emissions of their small populations. The ratio of forest to population works out to make the country carbon negative.
Also due to low GDP, they don't consume much energy and houses are small. For example most people don't run AC most the time unlike the US or don't have AC at all. Houses are usually 50 to 100 square meters. Electric service is 120 amps at 120 volts split phase. That's just 14 kilowatts. Running AC even for 8 hours a day can cost half the average monthly wage.
Everything is within walking distance and highly centralized in cities. Even suburbs are high density with almost no outdoor space.
China is currently pursuing all types of energy/solutions. They are not stuck on any particular one, is that because they’re run by engineers instead of lawyers/MBA’s…
Sure. What difference does it make if they're 1.2b or 800m? It's still huge by any metric. The current US administration is definitely clearly working in their favour. That's part of why Detusche Bank is a yuan clearing house now.
China's population is declining while building and operating the largest fleet of manufacturing robotics in the world. The US population is not declining as quickly while having limited capability to do anything. A recent example is $500M of taxpayer dollars spent on a munition manufacturing facility that did not build a single munition.
The US has coasted just about as far as it can go on it's exorbitant privilege while failing to invest in the future.
TLDR China builds, and will continue to build long into the future, the US prospers (for now) from financialization but cannot build, nor has the will to attempt to.
> Frankfurt, May 05, 2026 — China has launched its 15th Five-Year Plan by placing robotics at the heart of its modern industrial system. The aim is to pivot its AI research towards physical applications with robots as main drivers for economic growth. This is a next step in the country´s strong automation development: China´s manufacturing industry already has an operational stock of around 2 million units — approximately 4.5 times more than the global no. 2, Japan. 54% of annual industrial robots installed worldwide were deployed in China. This is according to the World Robotics 2025 Report, presented by the International Federation of Robotics (IFR).
That sounds like a wish? China has 1.3 billion people in an area the size of 1/3 of the United States (basically the area from the Atlantic Ocean to the Mississippi river Florida to Maine). Imagine if the United States had 1.3 billion people just in that area with the rest of the country being the equivalent of the Tibetan Plateau). One could argue that you would need/want to have fewer people not more.
I am arguing that population is not a component of success criteria, but steady state manufacturing capacity is. China has it, the US doesn't, China continues to cultivate and prioritize it, the US doesn't. If I want to build something of high value at scale, am I going to do it in the US or China? The answer to that remains clear, I'm on the next flight to Shenzhen.
For example, China can build ~20M EVs a year, the US ~1-3M per year, as of this comment.
> As the world’s largest manufacturer of clean technologies, data on China’s cleantech exports provide an important early insight into the pace and scale of the energy transition. In 2024, China produced around 80% of the world’s solar PV modules and battery cells, and 70% of electric vehicles.
This is actually not the first major energy transition.
The world moved from coal to oil for transport and shipping fairly quickly due to the higher energy density and significantly easier handling of liquid vs solid fuels. Using pipes and tubes was a huge labor savings compared to having people shovel coal into a hard to control boiler.
Automatic mechanical stokers replaced people with shovels long ago. Nobody has shoveled coal in a boiler room since the era of the Titanic. Oil is still easier to handle in ships (or really any transport) though.
Were these ever particularly common on steam ships? They were definitely a thing on trains, but I thought they more or less only showed up as the transition to oil fired boilers was getting going anyway.
Saudi Arabia can profit at those prices, but it can't sustain its living standards at those prices unless they pump like crazy. I recall reading that it was around 40 bucks a barrel where things would start looking not ideal for the princes.
But, how much of the extracted oil becomes ICE fuel? Because other transports cannot be converted that quick (air, sea...) and most if not all petrochemical industries will still need to exist even if all cars drive electric. So how big will be the effect of crashing fuel demand?
You mean a good amount of the 46% consumed by road transports. So my napkin says, when we all switch to driving EV the oil demand will drop by 15%. It's something for sure, but not overly dramatic (to me).
Every 24 months of EV production in China destroys 1 million barrels a day of global oil demand, as of this comment, at current rates of EV production. We should expect these rates of production will continue to increase. Total annual light vehicle sales are ~90M units. Globally, over 1-in-5 (22%) of new cars sold were electric in 2024. This share was 92% in Norway, and in China, it was almost 50%. In 2025, it was 1-in-4 (25%). The world has 20-30M units/year of EV manufacturing capacity, as of this comment. Light vehicles and heavy vehicles are solved for with battery electric, I argue, based on all available data.
Aviation and petrochemical use cases are unlikely to disappear in our lifetimes, but that is a small slice of today's oil demand (lets call it ~15-20% for the sake of argument), and will be the remainder as renewables and batteries eat global energy demand. ~40% of marine shipping disappears when you're not moving energy around the world, the remaining half can burn renewable energy produced ammonia or methanol for fuel. Like bankruptcy, the change happens slowly, and then all of a sudden. China now has more power than OPEC because of the facts in this comment and their vast strategic petroleum reserves.
It is understandable to say "this flywheel is spinning slowly" before it is spinning very fast, while you're watching it spool.
There's no reason to separate cars from trucks and buses. Everything is getting electrified. In jurisdictions where Buy America Act doesn't apply (i.e. the world outside the US), electric buses are already the default.
Moreover, it takes a lot of oil to refine and transport oil. If there's no demand for road transport, then the corresponding demand for refining and transport will disappear as well.
Finally, coal is already replacing oil in the chemical industry. Not because it's cleaner, but because it's cheaper and more available.
I separated cars and heavy vehicles because that's what the GP post asked about.
Copenhagen, where I live, has had a fully electric public bus fleet since 4 months ago when the last two bus lines were converted. The harbour ferries are also electric, and obviously the trains and metro. Garbage trucks and delivery trucks (e.g. delivering beer) are increasingly electric.
About 6% is for plastics. That isn't going away anytime soon, but it also doesn't release much carbon, it's mostly just changing form from liquid to solid.
This, and it's murky because a good chunk of that used directly by ICE will move over to power generation to power EVs -- it's not as if we're anywhere close to 100% renewable power even just for EVs here.
For both transport and home heating you need to remember that the electricity is hugely more efficient in these roles. So not only is some of that electricity from a renewable source, you also need much much less electricity than you did liquid fuel in the first place because it was more efficient.
Oil and gas is more valuable for other uses besides burning it up into thin air. Humans have just been pretty sloppy any country that has plenty of oil and gas won’t go broke.
Look closely at China, they are pursuing all forms of energy Solar, Wind, Gas, Oil, Nuclear and even new Thorium reactors (Courtesy of Oak Ridge, Tennessee) and all forms of batteries Lithium/Sodium ion they are not resting on their laurels anywhere they are willing to use anything, and are open to any solution that works.
The Chinese are not limiting themselves to just one solution or two they are pursuing all types of technology all types of energy they seem to have an open mind is this where/becuase the oligarchs don’t get to call the shots in their system?
China installed mora solar than the US has in 2025. They're currently building 35 or so new reactors, at paces nobody else can. This will change quickly.
Uh, that chart shows they source a greater percentage of their power from renewables than we do with the exception of nuclear and biofuels. Their wind, solar and hydropower bars are all wider, and they're building more nuclear.
They just don't have our easy-access shale fields. If it wasn't for fracking our coal percentage would likely be just as high
For example, if every road vehicle became an EV tomorrow, global oil demand would drop from 100M barrels per day ("Mbpd") to... ~60M. And that assumes EV replacements for things we don't have EV replacements for yet, like long haul trucking. We also have avgas, for which there's no replacement, and global shipping.
But beyond fuel there's a significant range of non-fuel usages (eg industrial, plastics, construction).
There's another factor here too and that is that the oil economy props up the weapons economy. Nobody goes to war over a solar panel [1]. That sounds like a good thing (and it is) but you have to realize there are forces who like that oil drives war became war is a huge profit opportunity.
> In some countries it's well over 50%. China of course being one of them
As always with these stats, I like to check whether that includes plug in hybrids, and it does. Those are still mostly dependent on fossil fuels, although they use less. Pure BEV adoption seems to depend on your radius from Norway: https://www.autonergy.co/blog/global-ev-adoption-leaderboard...
(France should really be doing better, after all migration away from fossil fuels was a motive behind the Pompidou/Messmer nuclear buildout in the 70s!)
> Those are still mostly dependent on fossil fuels, although they use less.
I don't think the word "mostly" belongs in that sentence - "partially" might work.
It depends significantly on how far you drive - I know 4 people with Plug-in hybrids. They all use ~0 fossil fuels most of the time, and only have to fill their gas tank when they go on a longer driving trip (roughly every 4-6 weeks or whatever). Considering how fuel inefficient city driving is, it's enough to eliminate at least half, maybe 2/3 of their fuel consumption.
Thats personal vehicles. But if China is going full speed with electric trucks, that will be the fastest gamechanger. Diesel trucks run 300K miles, under 5mpg, consume a gazillion gallons. Electric truck fuel costs are probably 10%.
Its really sad that India is pro fossil fuel, it has an opportunity to follow China's strategy.
India is pro-coal (has local sources), but anti-oil (import dependence). It is only pro-coal because there's no other alternatives at cost/scale for baseload generation.
India is literally following China's "anything but oil and gas", which encourages renewables, nuclear and coal.
In fact, the Chinese coal lobby is partially responsible for the push for electric trucks. The alternatives are diesel and LNG - both competitors to coal.
I don’t know what you mean by India is pro fossil fuel. It’s aggressively building out solar and has multiple nuclear reactors being simultaneously constructed. It would love to be an electrostate but is doing everything it can to satisfy its populations energy needs in the meantime which means they can’t just stop using coal and oil.
Those numbers are from before Mr Trump decided to do his very best to convince the world to stop using oil. Which happened to coincide beautifully with VW group, Stellantis and Chinese firms having an all out price war on smaller EVs, which have until now been the underserved segment of the market. In Denmark it’s certainly not 36%, its probably closer to 90% of new cars being EVs, it’s simply financial suicide to buy a new ICE car here.
> it’s simply financial suicide to buy a new ICE car here
That's a result of tax policy much more than the fundamental economics of ICE vs EV. Petrol is highly taxed. ICE cars are highly taxed. EV cars are probably exempted, or at least taxed less.
Sure, but the fundamentals are moving in same direction, partly thanks to Trump. Electricity is getting cheaper and EVs have 90+ efficiency, gas is getting more expensive. You could also say that petrol is fundamentally way to cheap because so far it has been exempt from paying for all the damage it causes.
I had never considered the demand destruction effect of EVs on fuel like that. It makes sense though, because the biggest users will justify switching to electric faster because the payoff time is quicker.
I don't think it's common knowledge how much they dropped imports since the Iran / straight of hormuz crisis.
Back at the start of that conflict there were a lot of breathless takes about what catastrophe was in store in a few weeks time, and what materialised was bad but not in anything like the same league as what was predicted.
The thing that wasn't accounted for in the analysis at the time was just how rapidly and by how much China could suppress its appetite for oil imports.
They had basically been planning for this shortfall for ever as a likely outcome of sanctions/blockades during an invasion of Taiwan.
Curtailing imports so much is a smart soft power move in not only does it ingratiate countries that would suffer most from the price spike but it could soften the resolve of Taiwan in showing that one of the largest penalties that would result from the invasion isn't nearly as punishing which in turn makes Taiwan's porcupine strategy less viable.
Along with US own goals like the thoroughly bungled and unplanned invasion, tariffs, corruption (both business crimes and more moral crimes like pedophilia or disregard for following legal process) it's made most of the west rate China above USA in favourability [latest Pew research poll].
I'll be surprised if renewables overtakes oil for energy production anytime soon. I could see nuclear doing that, but I never can get past the challenges of maintenance and replacement costs for solar panels, turbines, and especially for storage.
I will be very happy to be proven wrong here over time though. New battery technology could make a big improvement. And I keep hearing that AI will give us answers to all our technical challenges and lead to an age of abundance where we all make a high income, so there's that too.
> but I never can get past the challenges of maintenance and replacement costs for solar panels
Maintenance? Compared to fossil fuels that require a complex global supply chain just to burn the damn thing you spent so much effort digging up? And large, complex power plants with a large number of moving pieces and complex machinery? Which also require big water supplies?
Solar is the most modular, easy to install, scalable, and cheapest energy source on the planet. And dare I say most reliable, because it practically doesn’t need any major scheduled or non-scheduled maintenance over several decades, other than cleaning it like a window. And get this, once it’s installed, what are the operating costs? They just sit there, on land (which could be taken from ethanol production), any give you free electricity for 30+ years.
Other power sources seem and overly complex in comparison, and it especially seems crazy to use anything that relies on finding, digging up, shipping, and then burning fuel, when such an alternative exists.
Current battery technology is very solid, increasingly cheaper (solar+battery already cheaper than most others), and only getting better.
Are we using that much oil for energy? The leading non renewable power source now is natural gas or similar, which I didn't think interacted much with the oil market. So even without nuclear, if the future is natural gas pipelines for baseload oil would still be mostly a manufacturing and vehicle fuel deal.
My understanding is that the shift towards natural gas is largely because it is a very cheap byproduct of fracking (for oil). It happens to be "greener" when burned so gets green-washed also.
I wonder what would happen if oil demand was significantly reduced, thus reducing fracking.
Ah yes, nuclear is known for having cheap replacement costs, especially Fukushima was known for being particularly cheap.
Solar power is the worst, it gets more expensive every year.
Regarding batteries... It's over for sodium based batteries (the ones promising us cheap battery storage) because dry coated Lithium ion batteries are coming onto the market which means sodium batteries are an economic dead end.
> One consequence of the transition to renewable energy and electrified transport, is that oil imports will start to decline
Unless Jevons Paradox. Cheaper energy might mean more oil use. 1) Never underestimate the world's hunger for energy; renewables and electrification have huge disadvantages (you can't get close to the energy density of gas/diesel). 2) Oil is used for most products. 3) Even if its use declined, that would raise the price without making it less important.
EVs don’t need renewables. What makes them attractive despite the bad marketing in the West is that they can be powered by anything that can create electricity, like coal; which is something China has a lot of
The transition to EVs is key to the national security of many countries that currently do not have energy security like China and even most if not all member countries in the EU.
China doesn't have a lot of coal, at least not relevant to their energy requirements. They still have to import a huge amount and remain vulnerable from an energy security perspective.
Russia is a big place with limited internal transportation. Land routes from Russia can only supply a fraction of China's fossil fuel import requirements. Much of it still has to come via vulnerable merchant ships. China still lacks the capability to protect their sea lines of communication, although that might change in a few years.
The other thing to keep in mind is the Chinese, quite reasonably, don't have a lot of faith that the Russian government they make deals with and invest in now will be the same one honouring those deals and investments next decade. Russia has a lot of risk, a lot of problems and not a lot of cash.
I think what's missing here is the second order effects. refiners will adjust their crack, use blending etc but that's just a rounding error.
you're still going to have demand for the other ~60% of the barrel, so refiners are going to have ~40% of the barrel to find a market for, EV's are going to look a lot less appealing when gallon of gas is <$1 (or ~$8 an mmbtu), and when its that price, people will find all sorts of uses for it (that's like ~1/2 the price of europe/parts of asia), all of a sudden people are going to be burning gasoline for power etc.
it'll be a roller coaster for sure, but i think there are going to a lot of interesting substations and knock on effects.
A lot of especially the US market needs high oil prices to justify production cost. Some refiners might actually reduce capacity rather than sell below cost levels or at lower margins.
The reality is probably going to be lots of price uncertainty (even more than today) and increasingly flaky supply chains as refiners and oil producers gradually reduce capacity to keep prices high enough to stay in business. As that happens, investments in refineries become more risky as well. Because if you can't rely on lucrative fuel sales anymore, that's a big problem for long term viability of a refinery.
Before cars started burning petrol at scale, refiners were occasionally dumping fuel in rivers. It was just a worthless by product. All the money was in things like kerosene.
There is no need of large powerplants. Thats the legacy grid, only to make Warren Buffet rich. New grid (that needs to be built) will have solar panels, BESS + EVs for storage, either off-grid or a small community grid. The new grid is distributed and indestructible.
Following Hurricane Sandy, many were left without power and ultimately even gas was strictly rationed. So it's not out of the ordinary to imagine an event like that happening.
This is a good point, Florida EV drivers have already found that EVs are more resilient in a natural disaster because the grid infrastructure supporting the fast chargers comes back online much faster than service is restored to gas stations.
EVs that have Vehicle-to-Load (V2L) capability are also useful in a natural disaster: You can use the EV as a big battery on wheels to power some electrical appliances - e.g. keep a fridge going or a light on, until the grid is back.
This is a good point for sure. I can run my house for most of a week off my Lightning. I wish my Model 3 had the same ability, maybe some day this will be a standard option on all EVs. It's such an obvious use case for a huge battery on wheels.
In Phoenix we all live in the shadow of the Palo Verde nuclear generation plant. And once on the radio I heard some pundits discussing contingencies if PV should glitch out and have a life-threatening disaster. And they matter-of-factly said, "you're gonna be walking." And that would be the truth; in a full-scale evacuation of a city like Phoenix, the freeways are not built to accommodate traffic like that, and yours truly has no car anyway, so I would be packing light and walking in the opposite direction, and/or ignoring the orders, to meet whatever fate awaits.
But I bet there would be a lot of bicycle and vehicle theft going on, in such an event.
AFAICT americans are left on their own in the face of any kind of disaster. But, to be fair, in Europe we don't (yet) have the kinds of disasters that they have, so I can't say if europeans are left on their own or not.
Oh yea, that's what I meant, sorry for not being clear.
And we do have all kinds of disasters, but the state not only effectively intervenes, but also supports the aftermath and reconstruction. In America there are some crazy examples of towns just being left straight out abandoned afterwards, because tehre's no such thing as government reconstruction support.
I know I have a problem with "suspension of disbelief" but I find it always weird in those dystopian movies where they all drive monster trucks on an apparently endless supply of scavenged fuel and spare parts. But I'm positive exactly this Hollywood spirit is what fuels (pun intended) most of those hyper-optimistic answers.
I love disaster movies and they ocassionally lean into the idea of traffic being kind of bad in the event of a disaster. Deep Impact had a protagonist escaping biblical level tsunamis on a dirt bike.
> If a large power plant is destroyed how are you going to charge your electric car to escape?
Solar panels and home battery storage. This is also going to seriously screw over electrical grid and especially powerplant operators... residential will, at least in suburban and rural areas, not need a grid any more except during prolonged phases of low solar yield.
What's good in Gasoline cars? If a refinery is destroyed how are you going to fuel your gasoline car to escape? It's not like you can charge it from a standard wall outlet or rooftop solar like a regular EV.
* Ask the people in Crimea how they are dealing with this exact scenario.
* Petroleum refineries are large, fixed, and highly flammable by nature.
A reasonable scenario might be a cyberattack taking down large portions of the grid for a prolonged time. It's not impossible to achieve something like that, Stuxnet proved the concept of corrupting PLCs driving powerplants ages ago.
Alternatively, even outside a cyberwar scenario, bad weather has been shown to take down power grids for entire regions for days, sometimes weeks.
> repairs potentially taking up to six months. The strike adds to Kyiv’s escalating campaign against Russia’s oil industry and a growing fuel crunch across the country.
But search again tomorrow and there will be new examples. Refineries and other oil infrastructure are large, located in well-known fixed locations and are highly flammable. This campaign demonstrates what a weak spot they are for a petrostate.
> bad weather has been shown to take down power grids for entire regions for days, sometimes weeks
Where I live, we have typhoons which depending on the direction they arrive in can result in all the gas stations being out of gas for 2+ days. Meanwhile the grid keeps on ticking.
If they've taken down large portions of the grid for a prolonged period of time you're also not going to have much gasoline left.
> bad weather has been shown to take down power grids for entire regions for days, sometimes weeks
Once again, as someone who actually lived through those scenarios multiple times, when the gas pumps go down you're usually shit outta luck on getting gas.
When the grid goes down for days, the gas you have in your gas car + any random fuel tanks you have in your garage is what you have. Don't expect anything else unless you plan to take it at gunpoint.
Yes, buy crude on the black market and build your own refinery. Or you can run your own DIY fracking rig in your backyard. There must be some yt videos.
Are you thinking that there are no wars and power plants do not get destroyed? If you live in a non-nuclear country the chances are non-zero and it is not smart to depend on large, centralized, easy to destroy power plants. It actually dumb to build those large plants instead of decentralized smaller plants.
For example, a president of a certain country threatened to make a "power plant day" in another certain country.
Why are power plants considered centralised but the extraction, transport and refining of oil isn't?
With the renewable power revolution, do you think solar panels and batteries are going to be more or less centralised than oil extraction, transport and refining?
Are you familiar with how easy it is to repair the electrical grid after damage, compared to what happens to oil wells whose operations are stopped?
> Are you thinking that there are no wars and power plants do not get destroyed?
OK, but is the argument that oil refineries don't get the same treatment in war? They're also "large, centralized, easy to destroy". In fact highly flammable. It has been happening, not theoretically but actually.
You can store it but not very long, thats btw one reason why its not useful for private people to participate in wholesale/corp market: Even if you would get a small fraction discount for ordering large amount, you cant store that large amount long enough in your basement before it gets unusable (esp. Diesel).
Huh, I knew petrol was bad, but I thought diesel was fine to store at home? Not that I ever have, the brief period when I had use of a car I was living in a 38 m^2 (or so) flat.
> And your gasoline pump works perfectly fine without power?
Most decent emergency / contingency plans will have the fire department, police or whatever local group show up at one or two designated gas stations to provide power, or require these stations to have on-site emergency power.
As someone who has actually lived through multiple major catastrophes where fuel couldn't get delivered for days and electricity was out for days, when the pumps stop working there is no gas. Don't assume the gasoline the police and fire department have will be there for you. It's there for the first responders. They don't have infinite supply. Their supply is extra expensive to handle compared to when things were working. You've now got many thousands of families all trying to get to the two or three operating fuel stations...trust me they're not open to the public! When you're out of gas, you're out of gas.
Meanwhile, those with solar panels not reliant on grid-tie, they can continue to charge their vehicles.
If it was that easy, Ukraine would have already brought Russia to its knees.
Because the Russian government is still telling themselves they can win and don't even bother trying to negotiate with Ukraine but instead the USA, this must not be the case.
> Most decent emergency / contingency plans will have the fire department, police or whatever local group show up at one or two designated gas stations to provide power, or require these stations to have on-site emergency power.
while traveling i got caught up in this. no restaurants, no credit cards working, no grocery stores, no cell connection, no navigation with phone, no gas station. the goddam list goes on. fortunately this was less than 16 hours.
As a local, it was actually rather fun. And my kid was amazed. For a traveler it must have sucked, though (and also for some people with special needs, and in places where it's actually common, etc.).
The only place I've been where that might happen is rural mountainous Mexico where the "gas station" is a huachicolero funneling fuel into your car from a plastic water bottle next to a construction paper sign with "GAS" scribbled on it.
Everywhere else, gas stations aren't open if there's no power because nothing works, not even the cash register.
But I'm starting to see the uni freshman libertarian vibes here having been there once myself.
How many shops will be open without power? No till, no light, no refrigerator... not sure how much will help you having cash, beyond a couple of very basic needs - I can't even tell which, nor can you, it's gonna be an adventure either way.
Bread needs power to get made, and with no electricity the gas pumps that no longer work are not filling up any delivery trucks either.
Fortunately PV and wind and local batteries are getting deployed everywhere fast and electric trucks are starting to become a thing. Some places might even have enough for basic logistics in a war that cuts out their oil supply like wars tend to because they're obvious weak points.
> If you used cash as a reasonable person you would not even notice that cards aren't working.
lol. i see. gas stations were closed since pumps were out. similar story with other facilities. luckily, gas station snack shops accepted cash, so buying some water/snacks was possible.
cash is of no use if facilities are not open. now that everything has been spelled out, i'm sure you are able to comprehend ;)
I did a lazy ask google, and it thinks less than 3% of crude oil is used for energy. The vast bulk of oil being used: 'transportation (gasoline, diesel, jet fuel), heavy machinery, and non-energy uses like asphalt and plastics rather than power plants'.
That is of course, one of the big problems of 'going green' - electricity production is low hanging fruit and understood by the general public.
When that's 'solved' (solar, wind, geo, nuclear), how do we solve the other 97%?
Oil really isn't going anywhere. It will be a slow tail, perhaps too slow to stop emissions.
We knew how to make synthetic hydrocarbon one hundred years ago. Nazi Germany used the Fischer Tropsch process to make synthetic fuel after the Royal Navy blockaded their oil import. The only reason we're still digging up fossil fuel is because it's cheap. According to some calculation, green hydrocarbon from atmospheric CO2 and electrolytic hydrogen could be commercially viable when fossil petroleum reaches $200/barrel , which is really not that far off.
The yuan will never become a reserve currency as long as China maintain tight currency controls around importing and exporting it. It's very difficult to (legally) send CNY out or China.
The euro is in a much better position to be adopted as an alternative, but its share of global reserves has been flat at around 20% for years.
Prior to Bretton Woods countries were well aware that no single country could be entrusted with the power granted in being the global reserve currency. It's too much power that's too tempting to abuse. But they also learned from the collapse of Bretton Woods that even orchestrated agreements with built-in penalties just don't work, because countries can simply ignore them when beneficial.
So I think we're headed to a future where no currency will dominate. This is probably also why the dollar's decline doesn't have any clear successor filling the vacuum. If anything, countries are accumulating far larger stores of gold. I expect this is also why BRICS is having difficulty creating their own trading currency. No countries can, or should, trust other ones which complicates matters greatly.
> Prior to Bretton Woods countries were well aware that no single country could be entrusted with the power granted in being the global reserve currency.
That's a misleading statement. First of all at the beginning of the 20th century the British pound was clearly the global currency - where a lot of the international commerce happened. Then towards the 1930s and later on the Dollar took over that role. But that role carried much less weight back then - globalization was still in its infancy and a "global reserve currency" as we understand it today simply didn't exist back then. Right now some Dutch pensioners money is invested in American, Canadian, Australian, German, etc. companies. And the parts for most consumer goods are coming from all over the world. Pre Bretton Woods basically none of this existed. This global financial system we speak of today is unprecedented and only exists since the late 70s - where most countries abandoned their currency controls (apart from the US and CH which never really had them).
I agree that speaking of a global reserve currency is putting the cart before the horse, but I think the meaning was also clear. It was obvious that the 'foundational' currency within Bretton Woods was going to give its creator something that could be easily weaponized against other countries. And so they sought to make it 'impossible' to do that, but ultimately did so in a naive way - 'Here's all this power - please honor these rules that will punish you if you abuse it.'
This is exactly my take. Except I think there was never an interest by China to make the yuan the new global reserve currency but instead slow walk it back to a gold standard, and that's what has been happening since 2008.
If a single country's currency is the global reserve currency, all you're finding out is whose thumb you're under.
The amount of money in the world is also minuscule relative to the size of the world economy. Such is the nature of widescale financialization that the market capitalization of various financial assets greatly exceeds the amount of money in the world. When you think about it, it sometimes makes you wonder if people will look back at this time with some degree of bemusement. I mean it's easy to understand how, and even why, we ended up here. But it's still a nonsensical place to be nonetheless.
Your comment makes no sense. There's no need for a larger money supply. The current situation is sensible (at least to anyone who understands basic finance).
I'm not saying there's need for a larger monetary supply. I'm saying that the world economy's 'value' is heavily driven by financialization, which is increasingly disconnected from reality, even more so as governments have gradually descended to 'stock market = economy' which leads directly to Goodhart's Law, and will eventually culminate in a 'correction.'
So for instance yeah the US only has about 1PE (Peak Elon) of gold, but the entire global level of US reserves are only about 5PE!
So what. The amount of physical gold held by the USA (or any other country) is almost entirely irrelevant to the real economy. It's a pointless relic of the past. We could sell off all of our gold so that people could make jewelry out of it and nothing would change.
You misunderstood something: that 5 "PE" I'm speaking of isn't gold, but the entire global reserves of USD. That has a tremendous impact on the economy of the world and is arguably the sole source of the US' economic power. The financialization is 'worth' many times more than 5PE, but it has very little connection to the "real economy."
Foreign USD reserve holdings have very little to do with the US' economic power. Where are you coming up with this nonsense? Even if every other country sold off their USD reserves we would still the same assets, same population, same intellectual capital, same natural resources, same legal system, etc.
The value of currencies when unbacked by anything is solely a product of supply and demand. The USD being used as a standard for trade drives significant demand which helps to stabilize the value of the dollar, and also aids in things like our ability to export our inflation (as well as threaten other nations with sanctions/etc). However that demand itself is not inherent, and only maintained with significant effort - and having the USD as the standard for settlement of trade has been a major part of this game.
Even the gradual decline in the dollar dominance is causing significant issues with exporting inflation, amongst other things we used to be able to take for granted. It's also the reason that long-term interest rates on government debt are now hovering around 5%. As demand for the dollar declines, the interest the government needs to offer to make US debt enticing grows. When paired with deficit spending you get a vicious cycle: you need more money because you're getting drowned in debt, but you now pay more for that money which means you need even more money.
So for instance you know the US budget, right? Those thousands of pages Congress agrees to spend each year? Education, military, infrastructure, and all of those things we typically associate with government spending? That's only discretionary spending. Lots of other things, like interest on the debt, is considered mandatory and spent automatically. We're now reaching the point where interest payments will soon be costing us more than the entire discretionary budget. And that's in the current situation where the USD still has quite high demand. You just hand-waving away everything that sustains that demand would cause a catastrophic and rapid collapse in the US economy.
No, and I dont think China wants the Yuan to be the reserve currency. But this is a good step in allowing better currency trading/exchange. Which can make imports between the EU and China cheaper.
The yuan doesn't need to become a reserve currency for it to impact the US dollar. 15%+ of global trade is Chinese import/export. China is the biggest buyer and seller to most countries.
The United States is currently doing most of the damage to itself China or the EU really don’t have to do anything. Americans are shooting themselves in the foot.
One piece of good news is what the Norwegians are continuing to do with the Norwegian sovereign fund thinking ahead… one country took the resources from the north sea, and came up with a plan the other across the north sea squandered everything.
>> The yuan will never become a reserve currency as long as China maintain tight currency controls around importing and exporting it. It's very difficult to (legally) send CNY out or China.
Did you read the article? It seems that may be changing.
China doesn’t broadly want a weaker dollar, at least not against the yuan. Until very recently they actively worked to strengthen the dollar in the pair.
Chinese currency policy is broadly about controlling their domestic population not about foreign policy. Between keeping their domestic manufacturing industry going and keeping their more affluent populations power in check you’ll find most of the motivation for what they do on currency policy.
This move gives one less reason to allow a currency transaction and thus one less way for domestic manufacturers (and importantly their management) to get around those capital controls.
As European Chinese business increased that became more important and Duetche is dominant in fx, being able to handle effectively everything now means European businesses won’t complain either.
"weakening" and "strengthening" often confuses lay peeps really hard on this subject, as a plain source of confusion. "cheaper" and "more expensive" are frankly better words
Does the world still require a reserve currency? Spreading risk across the Dollar, Yuan, and Euros seems more logical. While the hurdles and friction associated with foreign exchange (FX) and international transfers were significant when reserve currencies were crucial, they are not as big an issue today.
It's like 6-7 CNY to USD right now. If that goes to 1 or 2 (if the CNY rises dramatically in price wrt the USD), then everything imported from China to the US explodes in price. Explosion in price, the imports reduce dramatically. So Chinese exports, which comprise like a quarter of their GDP, implode.
> The euro is in a much better position to be adopted as an alternative, but its share of global reserves has been flat at around 20% for years.
The Euro is only 25 years old: it would be pure folly to make the "reserve currency" something that recent.
Then... One country of the eurozone already partially defaulted on its public debt (Greece, in 2015). And France is running an insane deficit: so bad that there are now talks of the International Monetary Fund taking control of France's public finances. France had to raise the yield on its debt to its highest level since nearly 20 years. France cannot reach the "only 5% of GDP" in yearly public deficit, on top of an already insane public debt: it is snowballing and the only outcomes are going to be miserable for the people (and for the EUR).
An economist, before the EUR began circulating, explained by which mechanisms the EUR would lead to Spain, Greece and then France default on their public debts. That economist explained how the EUR would lead to "too many secondary houses in Spain" and "too many public servants in France". When Greece did default on its debt, that economist said: "I was only wrong on the order on which these countries would default".
One would be crazy to make a reserve currency a currency that's a mix up of countries that have different productivity and different fiscal laws.
The EUR is one of the worst currency ever conceived and it could turn out to also be one of the shortest lived currency.
So someone predicted Greece will default, because they had an abnormal amount of debt, and they did default (albeit in a controlled manner) after the 2008 crisis. And because of that you think Spain and Portugal will default?
No, and with absolute certainty not because of the second houses or public servants. That's armchair economy talk from someone that got one predictable thing right once.
Look at Michael Burry (the 2008 bubbly guy, whatever his name is). He keeps screaming "bubble" every once in a while, never got anything right again.
> That economist explained how the EUR would lead to "too many secondary houses in Spain" and "too many public servants in France".
The part relating to France is the usual small-state BS that has thoroughly corrupted modern "economics". France's problem more is its power generation, they rely on nuclear power, a lot of their fleet is noticeably aged and desperately needs replacement, but such replacement is incredibly expensive. On top of that, French military expenditure is ridiculous, they still dream of being an empire, maintain nuclear weapons and aircraft carriers, that make sharing vessels or aircraft with other European countries a pain - as evidenced by FCAS collapsing, the French wanted to use us Germans as paypigs for their pet project suited to carrier deployments.
Chinese nuclear power currently, and soon they will have Thorium Nuclear reactor power… China is pursuing all energy avenues. They are even building multiple Hydro electric dams on the Tibetan Plateau.
Amazing what you can do when you’re not policing all over the place of course it doesn’t hurt when other countries want to sub out work too.
This whole house of card is very modern, there was no such thing as "Reserve currency" not even the British pound, it was the most traded currency.
but holding a currency's (debt) as a foreign reserve instead of gold is very recent phenomena, even central banks reserves or their function is also rather modern phenomena.
while Yuan usage in trade will reduce the US influence, the amount of assets held in dollar nominated investments is so so much bigger, and this will very slowly change if it will at all.
Very telling that even top economists are unable to imagine a world without a reserve currency when that is the state of nature (even in antiquity there were multiple currencies, not just gold)
The pound did act that way to some extent, but only within the Sterling Area and only between 1931 to 1972.
Prior to that, people might have talked about the pound as if it were a reserve currency in the same way the USD is today but, as you say, actual foreign reserves were based on gold.
If you are trying to apply lessons from the gold standard era to lessons in the current era of non-convertible fiat currencies, then you are going to draw the exact opposite of the correct conclusions. There is a fundamental difference in how global capital flows work when the world uses specie flows versus when the world does not.
Here is one hint. The reason why currencies like the Spanish dollar or Dutch guilder became standards were primarily questions of prestige and minting quality as you held those currencies in your own possession. But everyone could recognize a guilder and so when dealing with a foreigner, it was easier to have them.
In that type of environment, being a global export power meant that you were a global gold issuer because you sold your goods to the rest of the world, got their gold (or silver), melted it down, and issued your own stamped gold or silver coins, that circulated all over the world.
If that is your mental model of foreign trade today, then please read a bit further in your history books, because we live in the world of non-convertible fiat money. This means that when China sells $100 of stuff to America, it doesn't get to take that money home, the money is kept in an American bank account, with the name of that chinese seller as the beneficiary of the account. It's a non-convertible currency. A dollar is always a dollar, China can't melt it down and convert it to a Yuan.
So now, to be the reserve currency doesn't mean that your specialized minting tech is being stored in central banks all over the world, it means that central banks all over the world have deposit accounts in your banking system. And that can only happen by being the world's largest importer, the exact opposite of the situation in the age of the Dutch trading empire. Your entire analysis is backwards.
I think this has the causality reversed. The dollar is the world's reserve currency because the US wields incredible negotiating power and has been the de facto military hegemony in the past few decades.
It seems likely that the dominance the US has enjoyed in the recent past will diminish somewhat as other blocks with larger population bases catch up on the technology and industrialization fronts, and eventually start flexing their industrial might to create peer-level militaries.
The US is the reserve currency because of Bretton Woods. [1] Under the Bretton Woods agreements participating countries were to peg their currency to the dollar and the dollar, in turn, would be directly convertible to gold. The idea was to make it impossible for countries to artificially manipulate the value of their currency, and thus ease international trade standards.
The US' barrier to exploitation was on the gold clause. If we printed too many dollars, then other countries could do a gold call with the increasingly worthless dollars, get valuable gold in exchange, take the currency out of play, and the issue would be fixed. So punishment and self interest in a quite well designed system, kind of. The problem is we just printed a bunch of money anyhow and then when France decided to make a gold call with their reserves, we shrugged, defaulted, and just broke the agreement.
So this started the modern economic era in 1971 where currencies became completely detached and free floating. At that point about 85% of global reserves were USD. Countries began rapidly dumping the dollar and USD inflation began skyrocketing. In 1980 inflation in the US was at 13.5%! This era continued til around around 1990 with the USD falling to 47% of reserves, but then in 1991 the USSR collapsed leaving the US not only as the sole 'king' of the world, but also to former Soviet nations dollarizing once the dust had settled. This continued up til 2001 (USD at 72%) when there was both the dotcom bubble and the clear rise of China and Russia as global powers. We've now been on a steady decline since, with the USD currently down to about 56% of reserves.
Originally, yes. The US dollar did become a reserve currency because because of the circumstantially huge negotiating power of the USofA, however, as it stands now, the negotiating power is dependent on the dollar being reserve currency. The US is running on a consistent trade deficit, which is supported by the dollars covering economic growth outside of US.
When self-supporting systems are thrown off-balance, the sign in the feedback loop tends to reverse.
The US military may be ossifying into a paper tiger, but I'd say Iran mainly shows Trump is a coward and an idiot.
From what I hear, what Trump did with Iran was burn through the US stockpile of certain fancy special-purpose wepons you're really only meant to use to punch a hole for your conventional forces to enter by. Trump is not willing to send in those conventional forces, because many of those personel will die. Trump may not care about the lives of the US personel per se, but with the mid-terms coming up he will care about the impact of those deaths on the election result.
Also: Gulf Wars I and II had a lot of build-up and prep, moving forces into the area; this was diving straight in because someone (my Israeli namesake) flattered Trump's ego.
Now I also think it's not even controversial to say that drone warfare is radically changing the nature of engagements. I don't believe the US could take on present-day Iran, owing to Iran's production of militarily relevant quantities of cheap and good-enough drones; a saturation attack can drain the defensive capabilities of warships, and while the exact performance is classified, a slow upgrade cycle would probably allow a saturation attack to overwhelm the *sensor* capabilities from not too long ago.
Laser defence systems may change that, but those aren't all-weather solutions, and the sea is the exact worse case for this. And I don't know if anyone's thinking about saturation attacks with submersible drones.
We could take on Iran with Russia, China, Pakistan, Afghanistan, and all the other Stan’s being the supply lines some what similar to Vietnam with six additional countries added, with the Iranians who appear to have the willingness to fight to the end.
How does it work long-term for the USA? In time the United States would have to build up to half a million men on the ground. The United States at its peak in Vietnam for example had over half a million men on the ground.
The biggest reason the Ukrainians are holding their own first and foremost is they are willing to fight, second is the supply lines. Vietnam won because they were willing to fight and they had China and Russia as their supply lines.
Afghanistan against the Russians, and Afghanistan against America was the same. The Afghans were willing to fight as long as they had material coming in from the USA and the same was true when they were getting all their supplies from the Chinese, Pakistan, when they were fighting us.
Supplies are important, but what’s more important is whether or not a group of people have the heart to fight to the end no matter what.
I think this means that the US is going to get stuck there for a very, very long time, as there are downsides to all options including pulling out, which may in turn survive a change of president.
On the other hand, all it takes is a president who doesn't care about the downsides, or thinks the downsides are worth the cost, and suddenly Iran's free to toll the strait, and a whole bunch of other straits get tolled in turn. If Iran gets away with it, I wouldn't be surprised if Israel finds Gibraltar closed to their shipping, though Suez would likely remain open to them for the foreseeable future.
I very much hope that Trump doesn't take the literally nuclear option here. A different Pandora's box to letting Iran take their toll, and a much worse one for everyone.
USD exorbitant privilege is mostly just exorbitant now that sanction evasion solved problem due to US going ham. Central banks pulling out of treasuries, rates increase selling to institutional vs marginal buyers, USD just terminal debt serving sink hole now. Ironically PRC can now lend out USD from their reserves and trade surplus at better rates than FED... the answer to USD in meantime for PRC is PRC USD, every dollar PRC recycles their USD is a dollar not buying treasuries that makes USD reserve more onerous to maintain.
LBH PRC not dumb enough to dig itself into Triffin deindustrialization hole US has. IMO Yuan positioning itself to be better than a reserve currency, it'll be premium currency for PRC tech stack (everything do be primogem) once PRC overtake west in critical strategic goods - ultimately, whoever controls discounted society sustaining tech / commodities stack long term controls payment preference. In meantime, PRC more than fine USD continue it's decline into debt serviced casino where somehow now house net loses until US inevitably have to debase/inflate away leaving others holding bag. There's really no alternative scenario (i.e. default) for USD at this point. Downstream of that is FX re reevaluations etc, i.e. PRC nominal > US nominal is not going to take years, is not dependant on PRC vs US growth, in the end it will take a few months of FX swing outside of either party's controls.
how could yuan be a reserve currency when its not even legal for its citizens to move it out of the country beyond $50k a year. they have extreme currency controls
Most central banks in the world hold their USD reserve in the Federal Reserve. There's no need at all for a the currency to be exportable, for it to function as a reserve currency.
Do you actually believe that the Central Bank of India is hauling Benjamins in wheelbarrow through the Delhi international?
Losing the reserve currency doesn't happen in a vacuum. It happened to the British and Dutch because their empires were dismantled.
So, yeah, it could happen to the US, slowly, over time (it already is). But nobody wakes up tomorrow and says they no longer want USD. Where are you parking the money, yuan?
It seems that people forecasting the collapse of the dollar are mostly doing it from a social perspective i.e. "America is collapsing under the weight of private healthcare, anti-immigration, tariffs, and the erosion of our allies; the dollar is done for"
But the reality is that financial markets don't really have a soul, and just care about economics. By all accounts, the American economy is doing excellent right now and dollars are still in heavy demand.
Its international strength is collapsing due to weight of Iran war, being untrustworthy partner, rupture from allies who supported it before and China going up. That means countries doing different long term strategic decisions, because they have no other reasonable choice.
Overall and overtime, that will weaken demand for dollar and what kind of trades other countries are willing to enter.
But what holds the USD as the reserve currency any more besides network effect inertia? It used to be the most stable country and one of the most prosperous. Both no longer true.
This is why people, organizations, and nations really should be holding multiple currencies.
Holding only Yuan isn't necessarily going to save you from what's coming.
I completely understand the growing need to reduce the US dollar dependency. But these drawdowns should happen in an orderly fashion, with due consideration to addressing issues inherent in the old global financial order.
Clearly, in hindsight, being completely dependent on a single currency was one of those issues. It would be folly to replicate that environment with a different currency.
I'm less familiar with Dutch history - but that happened to the British Empire because its situation went from being the world's obvious #1, to barely avoiding national bankruptcy, due to the staggering costs of WWI and WWII.
FWIW, "dismantled" generally implies a personal outside actor, with the intention and power to take things apart. Vs. the British Empire crumbled mostly because Britain's & Europe's relative power / prestige / image, post-WWII, were just smouldering ashes of what they'd been before WWI. That had obvious feedback loops with ambitious "native" leaders, nationalistic memes, and the just-won "moral crusade" to liberate Europe from evil Fascist occupation.
EDIT: The post-WWII revelations & condemnations of Nazi atrocities, plus how well the "yellow" Japanese had done against European/"white" powers, were pretty much fatal to (then prevalent) meme of white people enjoying "natural" moral and military superiority over non-whites. Which meme was an important foundation stone of most of the Empires which crumbled in the decades after WWII.
It seems worth mentioning that this allows DB to allow Yuan transactions to happen, bypassing any US sanctions. Since DB is not doing this without agreement from the German government and the ECB, this can be taken as an indication that they intend to do business with China the US does not approve of. At least, they want the option.
(and yes, it does not mean that the US is entirely without options to hinder China trade, just makes things harder. In this case, a lot harder)
> this can be taken as an indication that they intend to do business with China the US does not approve of. At least, they want the option.
Indeed, it also acts as a counter balance/hedge against the US's demands in the future.
The problem for Europe is simply that we need to trade with both sides fairly openly or our entire economic model collapses - We are massively dependent on US technology and Chinese industrial capacity - too dependent frankly.
As other people on this thread will point out the Yuan is not close to replacing the dollar, nor is any other aspect of the Chinese financial system highly competitive, even with the staggering rise of corruption in the US.
But this is yet another indicator of the loss of soft power, which is much farther gone than, I'd say, 90% of Americans realize.
The supposedly smart people in the tech industry should be alarmed by the loss of soft power. A lot of tech revenue comes from overseas, but if US technology is seen to be the tool of an unreliable, belligerent, corrupt, authoritarian government, that revenue will evaporate, and it will happen faster than, for example, fundamental international finance changes. And yet these supposedly smart people have lined up behind our government.
It's a variation of the maxim "Don't make the customer think", what you want them to do should be the default action and you want them to do without thinking.
For some people in Europe now, they think about whether the thing they are buying/subscribing to is in the US or owned by a US company in a way that simply didn't happen in the recent past.
The US is also has very large investment markets that are attractive to investors worldwide. Countries that export to the US can build up large US investments, and not just bonds either. (Flip side of trade deficit.)
It’s very unlikely that the USD will lose its status particularly to the Yuan. You can do that mental calculation yourself. Would you convert all of your lifesavings from USD to Yuans today or in the next 10 years? The answer is probably “not a chance”. The reason is simple, liquidity and trust. China has no comparable open and independent financial institutions international central banks can trust, nor can they have them without surrendering control over their monetary policy. So as long as there’s no alternative to the USD (BRICS will likely fail), it will continue being the default global currency for reserves, debt and trade.
>Would you convert all of your lifesavings from USD to Yuans today or in the next 10 years?
I don't own and dollars and I have no plans to keep dollars now or in 10 years. I own some stock, mostly total world ETFs (traded in EUR, but a significant part of their holdings is obviously American). So does it really matter?
Economic stability alone is not enough for a currency to be an important store of wealth. China doesn’t have a free floating exchange, it has very strict capital controls and lacks political and legal predictability. You need very specific institutional foundations to have a currency like the USD, which the Chinese political system rejects. The US has an independent legal system. If you have a dispute with the US government you can take it to an independent court. In China, you have no way to sue the CPP. China is a single party socialist republic with all the political authority concentrated at the top, so one high impact event like the sudden dead of Xi Jinping could send its economy into fallout because of political uncertainty. In the US the system is explicitly designed to absorb this type of shocks. So for these and many other reasons the Yuan under the current Chinese political system will never be a serious contender to the USD as global currency, it’s just way too much institutional risk for foreign investors. It’s also very unlikely the CPP will ever pick a Yuan rivaling the USD vs political control over their domestic policy. They can’t have both.
How come Deutsche Bank, a German bank, is the first bank doing this? And why now? Is it because the less friendly political stance towards Europe from the US side that the tables have turned a bit?
I also wonder how much political backing a bank needs to offer a service with the implications towards the status of an allied currency as reserve currency status - small as it may be for now.
The US wields incredible negotiating power period. In way too many fields.
It worked when the country wanted to be a globalist force and lead by example (albeit it was partially pretending to set an example, US exceptionalism is ingrained in US culture and politics).
It doesn't work in an anti-globalist world, especially one in which allies are bullied.
One advantage America has, and will remain having as an advantage as long as its broken: it borrows a lot of dollars. So if China wants to save a few billion dollars, it is super easy to do it by just bidding for US treasuries, rather than trying to convert it to yuan and somehow putting it in its own economy where it won't cause overheating.
America is essentially just a debtor of last resort, that is the superpower of the dollar.
This is not yet about making the renminbi a full reserve currency. China still imposes exchange controls. There's historical reluctance in China to expose the internal economy to external market forces. And a lot of rich people in China who would like to get more money out. This lack of free convertibility limits the use of the renminbi outside China.
That horse has already bolted and bought a whole new stable with blackjack and hookers in a foreign country.
The US is in for a hard couple decades ahead given they aren't leading innovation, manufacturing, finance, geopolitics, and even their military power is now in question.
My observation is that the Globalization that started from the late 80s/early 90s following the fall of the USSR and the opening of China gives tremendous wealth to the elites based in the US and the EU.
However, its foundation was laid decades ago in the ruins of Western Europe, where financial and intelligence power combine to rule over the Western world. The immense wealth was but a mundane by-product that corrupted the mind.
Fast forward to today, it takes a lot of effort to reverse the trend and remake the US into an industrial superpower.
Being the reserve currency means the rest of the world accumulates your liabilities as their savings, i.e. it means you are the world's largest debtor, and the world's largest net importer. That is how the rest of the world accumulates your currency - because they sell more to you than they buy from you, allowing them to accumulate your fiat.
So this "reserve currency" status is a great burden to US industry, which is why China has created a web of laws that effectively make it illegal to be a reserve currency. The entire east asian bloc has industrialized based on an export led growth model -- that is, exporting more than they import, and thus being accumulators of other nation's currencies. It's not that they need to accumulate dollars, they just need to accumulate some other country's currency, otherwise it's mathematically impossible to run a trade surplus.
A lot of people don't understand this distinction between positive and negative -- e.g. accumulating the currency of other nations and other nations accumulating your currency. These people hold to what I call the fallacy of "the equality of all good things". These are the same people that argue for a "strong dollar" and also "strong exports", when actually these are opposites. I think of this as a form of tribalism, where the analysis is limited to "our guy good, their guy bad. X good, Y bad".
Such people are resistant to trade offs, e.g. you get the advantage of cheap consumer goods by being a net importer, but you have the disadvantage of losing jobs and industries to those nations that are willing to have expensive consumer goods for their populations in order to export more and import less.
In any case, continuing with lists of fallacies, we can say that America having a "strong economy" has little to do with its reserve currency status. Rather, it needs
1) a large bond market
2) investor rights protections
3) a legal framework allowing foreign capital inflows and outflows, with little friction.
4) A relatively stable currency.
To see how important this is, take the example of Russia, which decided that it will sell its oil to India by accumulating rupees. That's great, there was much celebrating "multipolarity" but the fact of the matter is the Rupee has lost over 20% of its value (in dollar terms) since Russia started accumulating it, and India has laws blocking Russia from selling its rupee holdings for other currencies, it can only use those Rupees to purchase Indian goods and take them back to Russia. So now Russia has tons of rupees it can't use except to buy Indian goods, and has started requiring India to pay with Quatari Riyal, as Quatar as more investor friendly laws. Also, there is not that much you can buy with Riyal, when you have two hundred billion dollars of value a year you want to park in some foreign jurisdiction, Quatar just can't absorb that. China isn't willing to accept it. India will accept it but not let you take it out. Where are you gonna put it?
So we see, we have already left the world of "America declining! The Dollar is collapsing!", because like it or not, even though America has tarnished its reputation of respecting investor rights, it's still miles ahead of any alternative when you need to park overseas earnings.
China blocks foreign capital inflows. Europe suffers from all the problems that the US does and even moreso as they are now openly seizing foreign ships and the bank accounts of private citizens - for example freezing bank accounts of people with Russian sounding last names - and Europe has even more barriers to moving money in and out.
So in which jurisdiction will you park your overseas earnings if not the US?
There is no alternative. No alternative is even beginning to appear over the horizon.
While I am holding forth on all these fallacies, another one is what I call the "balloon theory" of trust. This is the assumption that because the US, which used to be a high trust, investor-rights respecting nation, but has begun losing those investor rights credentials after seizing the sovereign assets of Afghanistan, Iran, Venezuela, Syria, as well as other official enemies - that because of this, some other nation must magically arise that will have that reputation for respecting foreign investor rights. E.g. that trust is a balloon, and if you squeeze one part of it, another must by necessity expand. This also comes from tribalism, e.g. the view that if your enemies suffer that you must benefit. But trust isn't like that, it could just be that as the US begins to look less attractive, then no other nation will take its place, and this will create real problems for the export-led growth economies in Asia, as they need some nation whose currency they can accumulate in order to run the trade surpluses needed for them to maintain domestic employment.
re: "you either have strong currency or strong exports"
if i understood correctly, you are stating that the only way to have strong exports is by having cheaper labor ("... losing jobs and industries to those nations that are willing to have expensive consumer goods for their populations in order to export more and import less.")
well, that is one (easy) way to do it, but it's not the only one. for example, you could have more productive labor. i think the fact that underdeveloped countries are still net importers of complex goods such as cars and computers, despite having the cheapest labor, supports this.
also if you allow for some poetry, i guess we could say that trust is like a baloon in the sense that a tiny hole can destroy it completely and abruptly
No, you did not understand correctly if your eyes read "cheap currency" and your mind read "cheap labor". Something went wrong between the text processing unit and the meaning processing unit. Perhaps your meaning processing unit is overwhelmed with all sorts of preconceived notions and voices that are interfering with your text processing unit.
Look, this is not hard. You have two countries, one makes bad apples and the other makes fantastic, amazing, glorious apples. One was seeded by Johnny Appleseed and the other by Johnny Rottenseed. The only labor involved is picking the apples, which both countries do equally well. Does that mean that the GA (Glorious Apple) country will run a surplus against the BA (Bad Apple) country?
No, it will not.
Trade will still be balanced, because the exchange rate will adjust so that neither country is running a surplus or a deficit. Maybe one Glorious Apple is worth 10 Bad Apples. Then the Bad Apple country will import 100 glorious apples and export 1000 Bad Apples.
So the terms of trade, the ratio of GA/BA rises, so that total trade is balanced. It is balanced when one glorious apple dollar is worth 10 bad apple dollars.
The only way that this will not happen is when someone interferes with the exchange rate. Now, if someone interferes, say by making it illegal to sell more than 5 Bad Apples for 1 Glorious Apple, then Glorious Apples will look amazingly cheap to the Bad Apple people, but the Bad Apples will look awfully expensive to the Glorious Apple people, and so this artificial strengthening of the Bad Apple currency will create a huge trade deficit, as people rush to dispose themselves of their bad apples and obtain the superior and affordable glorious apples.
On the other hand, suppose that we see the Bad Apple country running a deficit against the Glorious Apple country. What can we surmise? That for some reason, the investment demand for Bad Apple currency is high, causing people to want to accumulate Bad Apple dollars, even though the Apples made there kinda suck. That investment demand is what creates the trade deficit, by inflating the value of the Bad Apple. And it is the only thing that can cause that deficit.
Nowhere anywhere here does the price of labor enter into the picture. That is a you story -- I would try to fix that meaning processing unit.
> you did not understand correctly if your eyes read "cheap currency" and your mind read "cheap labor".
i actually read "expensive consumer goods for their populations" and concluded "cheap labor", as i pointed out. suppose you ask citizens from nation A and nation B how many hours they'd have to work to be able to buy a certain good. if both answer the same number, then how can you say that the good is more expensive in any one of the nations? and if citizen from nation A answers a larger number than citizen from nation B, so that the good is more expensive in nation A, then how does A not have cheaper labor than B, as one unit of the same good literally buys your more labor from A than from B?
i'm still digesting your apple example.
i'd be interested if you could cite a real case of this happening, because it doesn't agree with everything that i have seen. for example, sometimes the apple business in BA will simply die. this is what i was getting at when i mentioned that "underdeveloped countries are still net importers of complex goods". if you take a mildly complex good like refrigerators or office chairs, chances are that a random not-so-developed country has some local manufacturers. but they're just struggling, not exporting proportionally larger quantities. indeed the only way they'd export K>1 refrigerators for every Samsung imported is if there were 0 exports and 0 imports (so the country is so poor no one has a good refrigerator).
also, suppose that BA produces a total of N apples per year per capita. if the people in GA work the same hours, then GA produces the same number, N, of apples per year per capita, because they are both equally good at picking apples. since trade is balanced, it does not affect the level of value/utility/wealth on each side, whatever the amount of trade. so in the end, for the same hours worked, BA has a total product of N bad apples per year per capita, which is 10 times less than GA, which has a total product of N good apples per year per capita. people in BA are poorer.
assuming people in this economy just buy/sell work and apples, the people in BA must work for less value, i.e. they are cheaper labor. if labor in BA is more or less than 10x cheaper than in GA, then apple orchards will simply close in BA and reopen in GA or vice-versa until it gets 10x cheaper, at which point there's no point in switching. this is moreover compatible with the real anecdotal examples i mentioned i have seen.
At this point it is not a question of whether this will happen but only when. Next to digital currencies and the yuan, Trump has successfully killed the Petrodollar.
The free influx of money, and particularly investor money that gave the US an evergreen advantage will seize. Slow at first, then more and more as time moves on.
The world /is/ peaceful right now... relatively that is.
Not to say there isn't war, but they're small wars with a million deaths being a big one.
More people died in Second World War[1] than in all wars since then combined.
If not for the Russian Civil War and WW2, the same would probably true for the Great War.
War is terrible, but the fraction of people who died in wars the last 75 years is substantially smaller than the 75 years before that and I do think that is worth celebrating.
I am not confident this will hold for the next 75 years
Now I know I'm the big bad military guy saying this, but just give it a chance.
Do you think that maybe the reluctance to engage in large wars over the last 75 years is a benefit of the nuclear deterrent rather than political ideologies, or world view narratives, or hegemons?
Just kind of noticing that the 75 year figure you put out there kind of dovetails nicely with the existence of the nuclear deterrent in multiple global arsenals.
Obviously, I believe in the nuclear deterrent. Just wondering if there are other people out there willing to admit that it has been the best tool in mankind's toolbox for obliging people to talk to each other rather than go to war.
As long as it works... and maybe one day it will no longer work and then at least we can point back to discussions such as these and say 'you were right, up to a point'.
The problem with weapons is that usually weapons end up being used. And with the US now no longer working against proliferation the risks are going up.
Please, for the love of God, speak to someone who is actually from a war torn country and understand how privileged all of us have been to live in the west. Even the wars we have been part of in the middle east have been minor disruptions to the Pax Americana: we really don't feel the effect of the wars we are in.(another problem in of itself).
99% of us got to grow up without the fear of military violence, and go about our lives.
In real life, there is no maintenance hatch to punch out , because the elevator manufacturer doesn’t want to be liable for people falling down an elevator shaft or being crushed.
If you somehow manage to get on top of the elevator cab (indeed as the sibling comment points out, there is no escape hatch at the top), you will generally see a small control panel with a switch to put it in inspection mode. That turns off autonomous control and from there the cab will stay where it is unless you manually action the up/down switches (assuming the "safety chain" isn't broken - which if the elevator suddenly stops, it may be - so even those won't do anything then).
I once thought that AI image/video would quickly become unidentifiable, but the surprising thing (so far) is that every new model release is followed by two reactions: "This is incredible" to "I recognize this style. It's AI. They're all the same."
It takes only a few weeks. I've been amazed with our mind's ability to move the goalpost.
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