1.- US economic growth, and the use of USD as an international reserve currency itself.
2.- USD exports balance out with USD capital flow and services surplus, this is a point readily ignored by a lot of the "trade war hawks".
1) Currency and monetary policy can get a bit nuanced and abstract so I'm not gonna be a dick in this discussion. By definition, if a nation is using its own currency to supply the world with an international reserve currency, then it can't both be experiencing healthy economic growth domestically AND sufficiently supplying enough of their currency to foreign for it to function properly as a reserve currency. Refer to the Triffin Dillema I posted earlier
2) The US always has a capital account surplus precisely because the USD is backed by OPEC petro. Oil-exporters invariably end up with an enormous surplus of petrodollars, and much if not most of this surplus is then invested in US securities. So this keeps our capital account strong enough to compensate for our current account deficit so that in the end our balance of payments appears healthy. But while it looks fine on paper, it really is an artificial byproduct of the petrodollar system
Anyways, I'm not sure why we're debating this as if it's actually up for debate. Existence of the US-OPEC petrodollar system is an established fact. This system, where USDs can always be redeemed for petroleum, by definition makes the USD a commodity-backed currency
Because we're the most powerful nation in the history of the planet. Fucking duh. Our economy and military are what make the dollar. Which is obvious when you grow up a little.
Lmao have you actually read the posts itt relevant to what you just said? I'll go slow here...
- The US was insolvent and went into sovereign default, then declared its currency was worthless
- The USD somehow remained the world's reserve currency
Our economy in the 70s was crippled by stagflation, the very worst kind of economic malaise, so no it wasn't our awesome economy inspiring confidence in our now off-gold currency
Chinese exports to the US account for like 3% of their economy, they can take the hit.
Can American companies that have supply chains in China take it though?
Lower figure than I expected, but there's other means of economic warfare. The US has invested something like $500 billion into China the past 7 years. Put the kibash on that shit
We also have allies. I'm pretty sure the US trails only the EU as China's largest importer, Australia is up there too. There's a lot of Western nations who would suffer immensely if China disrupted the petrodollar so the US would have quite the coalition behind it in any action against China
Agriculture makes up 13% of China's GDP. The US pays farmers not to farm. Seems like we could make a dent in their agricultural sector, especially considering we have about 50% more arable land in the US
We could also use biological weapons on their pork herds and wipe out their strategic pork reserve. This would be an absolutely devastating blow to the PRC
Invent some legal fiction to sanction them for cybercrime or something
Finally, if worse came to worse, we could instigate military conflict with North Korea and drown China in NK refugees
