If you search on the Internet for “Why the dollar will never collapse” or, conversely, “Why the dollar will collapse”, well, you’ll get a lot of hits. What you won’t find, unfortunately, is a piece I read in Bloomberg several weeks ago explaining, well, why the almighty dollar remains so goddamned almighty, and which I blithely assumed—for I am nothing if not blithe—that I could easily locate by searching for, well, “dollar”, the only problem being that Bloomberg runs about 100 posts a day that use the word “dollar”.
Well, anyway, the gist of this excellent piece by the nameless analyst was this: the euro can’t replace the dollar because “Europe” really isn’t a country. To the extent that it is anything, it is a quasi German Empire, run for the Germans by the Germans, who get mad when the natives fail to appreciate all the wonderful things that Mother Germany is doing for them. Ungrateful wretches!1
Less figuratively, as Paul Krugman and many others pointed out at the beginning, the euro was a very bad idea, a bad idea compounded by a variety of other sins, so that the EU has become a vast, massively flawed edifice that should be worth keeping if only decisions can be made to correct its faults, but the will to make those decisions seems, says Krugman, almost entirely lacking. And so we have bad ideas like Brexit, whose badness can only be made clear by experience. And experience, though the best teacher, is also the most costly.
Okay, okay, you are no doubt shouting, but what about the renminbi? Well, says my nameless Bloomberg seer, whatever heights the Chinese economy reaches—and it may reach very high—China simply isn’t safe. Recently the Royal Bank of Canada advised its employees to avoid traveling in China, thanks to the arrest of two Canadians in China in late December, seen as a response to Canada’s arrest of Meng Wanzhou, chief financial officer of Huewai, a leading Chinese manufacturer of telecommunications equipment. Two months after the men’s arrest, China still hasn’t bothered to make public the specific allegations against them, if in fact there are any.
I think it’s a bad idea to expect China to implode because of its authoritarian culture. At the same time, the country’s communist party clearly believes that the “secret” of power, of “a China that can stand up”, as Mao put it, is supreme arbitrary power placed in the hands of a small group,2 an authority that will do “whatever needs to be done” when matters seem to get out of hand. Which is one reason lots of people think of China as a place where you can make a lot of money, but no one thinks of it as a safe haven.
But it isn’t only China where the long arm of the law is too long, and too grasping. As the New York Times reports, in an editorial on the arrest of Japanese car executive Carlos Ghosn, “since Nov. 19, Mr. Ghosn has been locked up in a small cell in a Tokyo detention center with a toilet in the corner, endlessly grilled by prosecutors without the right to have his lawyer present. Whatever Mr. Ghosn did or failed to do, this is not how justice is supposed to work.”
The U.S. has many “secrets”. Our “wonderful” institutions are as much the result of luck as “genius”.3 But, shockingly, these days the competition continues to make us look good. Even with Trump in the White House. Oy vey, oy vey, oy vey.
1. The French pretend to equal status by essentially signing off on everything the Germans say, in return for subsidies of French agriculture.
2. Mao was simply echoing his master, Joseph Stalin, who said that it was thanks to communism that he had achieved “a Russia that can stand up”. The Chinese took Stalin very seriously and were disgusted by Khrushchev’s lack of respect for the great man.
3. For one thing, we have a whole hemisphere for ourselves. As Bismarck, hopeless with envy, put it “God takes care of idiots and the United States.” Imagine, having no enemies! But of course Bismarck needed enemies, as an excuse to stay in power.
