2020 was all about COVID. 2021 was recovering from COVID, and the story of the spectacular stock market rise. 2022 is presenting a very gloomy story so far. The year started with dire warnings by the US about a military build-up on the Russia-Ukraine war. No one, no one except the US, believed that Russia would actually wage war against Ukraine. The reactions of many Ukrainians in th e initial days of the war also portrayed a similar feeling.
Sure countries militarize the border. China, India, Pakistan have all been doing it for the past few decades. Does that mean war? In most cases, No. War is expensive, there's usually no longer a clear winner in a war.
How many would say the US won in Afghanistan? The prolonged after-war occupancy takes a heavy toll on a country's economy. In today's world, there is just one economy, maybe two, that can actually have a definitive impact on the world order. The US and China. But that does not mean other countries are just passive bystanders. The Russia-Ukraine war has had several long-term impacts. It is the first time that the US has militarized the Dollar. When the reserve currency is something that one singular country can wield as a weapon of economic warfare, would you really trust that currency as much?
Yes, the United States is the richest country in the world. It has a lot of power, but all of it comes from the USD. The capitalist majority economy of the world is driven by fictitious value of money. With no gold system to limit inflation, it's easy to see how the USD's very existence as the reserve currency remains under threat if a few major economies shun it. Russia is barred from using it to its full extent now. Learning from Russia, China has also taken steps to ensure they slowly move away from the USD.
What happens when the major economies (read Russia, China and maybe India) start moving away from the USD as the reserve currency. Ofcourse, that is still a long time away, but the Russia sanctions are the first step in this future.
Today the world might be more global than ever, but a cost of this globalization has been the rise and fall of powers. Almost every regime has seen its currency devaluate closer to it losing power.
The United States has taken a lot of measures to delay this possibility, but the fact remains that it is nearly inevitable. Or at least, the United States will look to start a new regime if it can overcome the challenges put forth by the Asian economies.
I think one of the biggest changes of this war has to be the reduction of US power in the world. The fact that a single country, along with its allies or partners, can reduce a country's economy to shambles is just obscene. We need a decentralized currency, but govts are not going to give up their hold over the one thing that they can still control. Currency.
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