The right frame of comparison is not towards average Joe, but towards governments. Billionaires, for better or worse, are independent power sources, which IMO in grand scheme of things are useful.
I think the problem with modern world is not that some people have lots of money, but that we allowed money to buy pretty much everything else.
Yeah I was gonna offer a similar hot take: in a world where government can have trillions, it's probably good on some level that some people have billions. Checks and balances.
If you want good checks against a government, one dude rich enough to field an army has historically been a bad way to keep the government in existence
Except billionaires are never on the side of the people. They functionally already own the US government, which is how they've been able to amass so much wealth while the rest of the world gets poorer and hotter.
They buy media to push their propaganda, buy politicians... They are not acting as "checks and balances" to power. They are power.
Disputable. One could argue that artificial nature of US cities (i.e. lack of centuries of accumulated decisions) were bigger driver of this than cars themselves.
This is particularly funny if you consider petrodollar to be a bad deal for US, not a good one. Ironically, if yuan becomes new petroleum currency, it might hurt Chinese long term.
USD reserve = print USD for everything liquidity to sustain debt financed existence where Triffin hollows out industry, and financialize everything because having stupid amount of liquidity incentivizes certain behaviors.
Petro-yuan = PRC gives swap lines to trusted partners to buy oil denominated in yuan in exchange for things like resources. Hormuz ships ~1 trillion USD worth energy that needs "swapping" - incidentally PRC imports around ~2-3 trillion, more than enough to cover.
So think petro-yuan = PRC gives trusted countries with resources that PRC bonds credit lines to buy yuan denominated energy (possibly at discount), in return they guarantee PRC resources or other commercial/geopolitical arrangements. It will be narrow, not like USD brrrting reserves.
This benefits PRC because get to have leverage over "need" transactions (countries need energy to survive, it's no negotiate) while US keeps supporting "want" transactions by reserve debt servicing blackhole that US cannot extricate itself from until it debases / technical defaults. PRC best game plan is... assume privileged part of exorbitant privilege, while leaving US the exorbitant.
The problem with that plan is that no one wants to trade hard commodities for a currency that can’t be spent. One part of the dollars appeal is that it spends the world over. The sanctioned countries frequently have more liberal access to dollars than to unsanctioned yuan.
So no one is going to take up a lot of yuan trade unless that changes or they are forced to.
But that puts China in a bind. Liberalizing their currency is going to require very careful and slow actions, China threads this needle now in a very fraught way. If they openly start trading oil at any real size in yuan that will break their peg as you’ll be able to trade through the oil markets.
This is the main reason there isn’t more petro yuan already, it’s bad for China.
> The problem with that plan is that no one wants to trade hard commodities for a currency that can’t be spent. One part of the dollars appeal is that it spends the world over.
> So no one is going to take up a lot of yuan trade unless that changes or they are forced to.
Related on the “forced to”point, this is where Russia is stuck with its crude oil sales to India where the payments have been made to it in Indian Rupees. There’s almost nothing that Russia can do with the Indian Rupee. This is a huge and growing problem because India’s imports from Russia eclipse its exports to Russia by more than 10 times. [1]
Unlike China, a country whose exports to other countries dwarfs their exports. The yuan is much more valuable than the rupee (which is turning to trash with each passing month as a net effect of trade wars and oil crises).
You can buy from China though. And China is the largest import trading partner for the majority of countries in the world. They literally don't need to do anything to prop up a "petro-yuan".
You can’t largely. At least not with offshore yuan. To do that you have to go through the controlled settlement channels to get onshore yuan. That’s tightly controlled to protect the peg.
So no one is going to use a controlled currency for a hard liquid commodity. So if China wants petro yuan they have to liberalize that, which will break their peg.
China could have more international trade in the yuan before all of Americas recent misadventures. But that has cast consequences for their economy, and possibly the ruling elites power structures.
Saudi Arabia was literally negotiating with China for payments in yuan for petroleum way before the war started, in 2023. The Gulf countries' largest trading partner is China - such a transaction is effectively a barter enabling programme. Russia and now Iran already accept yuan.
The mainland vs offshore renminbi restrictions disappear in Hong Kong, Singapore, etc. where most mainland Chinese trading companies and otherwise have offices anyways. Trading offshore to onshore renminbi becomes their problem, one that they are fairly accustomed to.
The negotiations were literally about how to manage the currency risk to Riyadh. And none of the offshore trading houses are handling the currency transactions at the size necessary to handle large oil transactions.
This is as near an iron law as there is economics, you can’t keep a peg and have a large trade in a large liquid commodity market. China is trying to slowly thread this needle and they can get away with it with Iran and Russia because they are approaching vassal status because the petrodollars are closed to them. Everyone in the world can see this and wants to avoid it.
If you are an oil producer what you want is to diversify your currency risk. Right now China is _preventing_ this, because there is no way for them to become a major player in that market without huge impact on their economy and probably their political system.
One big thing that has prevented CNY from becoming a reserve currency is that China has explicitly said it wants to preserve its ability to heavily and suddenly restrict capital flows in and out of China. If all of a sudden you can't redeem CNY outside of China inside it that makes it a very poor storage of value.
Literally buy from PRC... most of worlds largest trade partner. That's why the system should work, it's closed loop. And we know world aktually fine with yuan denominated trade since PRC increased yuan settlement from 10 to >50% in a few years after US went sanction happy. PRC basically super costco, apart from chips and commercial aviation (both coming) they sell everything country needs for modernity, at discount.
They do not need to liberalize currency. They just need to have stuff people want, and leverage to force them to transact in PRC preferred currency. Previously this was hard, PRC had goods, and affordable prices = reduce friction/switching cost vs USD liquidity, but USD liquidity still made USD transaction preferred. PRC had no leverage for others to transact in yuan.
But in persistent high global energy environment, if PRC controls basically global supply of cheap renewables... and 30% of GCC oil vs Iran enforcing petro-yuan, they have stupid leverage to snow ball system. Again key is this for 30% of GCC oil exports if Iran locks down (big if), it's not global petro-yuan, it's Costco membership only access petro-yuan.
30% of global oil is inelastic existential survival leverage, if PRC wanted to charge in blowjobs countries would pay in blowjobs, currency liberalization doesn't matter when selling water in desert.
For that 30% control number to make any sense you have to believe that: the gulf states are going to allow Iran to control their existential oil trade long term, that they will do so in the face of a currency getting manipulated adversarially against them, that no manufacturing bases can be built up to be alternatives and that none of that is going to have major impacts on the economy or political elites in China.
All of that happening with the worlds biggest oil producer, its second biggest manufacturer, who is food independent and has the worlds most powerful military just lets it happen. And no shooting war breaking out between them.
I’m betting on slow currency liberalization and a transition to a multi currency petroleum industry and subsequent inefficiencies in global trade. But feel free to bet how you want.
I am not betting on one or other happening, I am simply stating, the downstream effect of Iran being able to hold onto Hormuz, i.e. by outlasting US political will create conditions for GCC petro-yuan. Which may not be out of question because we're not in nothing ever happens world anymore.
> make any sense
GCC petro-yuan scenario is predicated on BIG IF that Iran can control Hormuz oil. Rest is the downstream logic for ~10 years, i.e. before any alternative buildout/pivot by GCC states to some how insulate... which apart from Saudi, they might not (too small). This also why PRC hasn't exactly enthusiastically signed up despite IR offer, because it would burn GCC bridge when IR fate uncertain. But if alternative is IR can hold hormuz hostage, PRC would rather participate in petro-yuan than not, at which point having priority access to energy, possibly at discount is net win. Note in this case IR as SLOC guard dog actually has leverage over PRC, gating energy access also offer PRC cannot refuse.
> US
Hence big if, if US has appetite and capability to break Iran, and it matters US settlement/conditions, because if US reasserts control over Hormuz oil and tries to throttle PRC oil as victory, then PRC may go all in on Iran support. Situation is fluid, the wild card is in fact US or ISR deciding to simply break GCC oil. There is still plenty of room for escalation and shenanigans.
Yes, but for a consumption addicted society like the US, an abrupt end to the petrodolar would be an incredibly traumatic event.
Think about it, every single mother fucking year, the US roughly buys 1 trillion dollars more on services and goods from the rest of the world, than it sells.
It has this privilege/curse basically because the US dollar IS the world's global commerce and finance currency.
The petrodollar confers a huge advantage to the US, which is the whole point of it. It soaks up liquidity and allows the US to export inflation which allows it to be in the insanely profitable business of printing money. An argument could be made that this is corrupting and economically distorting to society resulting in a net negative but there is no guarantee that the same corruption would undermine China in a timely manner. I think the effect would be rather muted provided that the US remains world hegemon but if the US would lose the petrodollar and credible force projection at the same time we will shift from the current looting stages of collapse to the free for all stage of collapse. Or put another way, from a managed decline to an unmanaged decline.
It's not advantage, it makes for artificial demand for your currency, which completely screws up all the relevant metrics and makes you unable to actually inflate the currency when getting less competitive.
We are assuming a resource curse on steroids, the ability to sell the ‘resource’ is used to distort the economy and pay for the cost of running an empire. The US chooses to do this because it is controlled by those who benefit from this not for the long term benefit of the country.
Saying it’s not an advantage is to assume those in control want to have manufacturing in the US, while such noises are made there is very little action beyond capricious crony capitalism tariffs that no normal business can possibly rely on.
They very much want to have manufacturing, since it’s a requirement for war. They just don’t realize it. Plus, it is a conflict between all the extra money to spend and long term state welfare.
These two statements don’t mesh “They very much want” and “They just don’t realize it.”
It seems both you and I agree that manufacturing is an essential component to war-fighting and the health of a nation, but I think it is safe to say that you and I have effectively no control over what the US does.
>Ironically, if yuan becomes new petroleum currency, it might hurt Chinese long term.
Agreed. Which is why the Chinese do NOT want their currency to become the Petrodollar or world's reserve currency. They know that that is what destroyed US Manufacturing. China wants to maintain their manufacturing dominance. They've seen what de-industrialization has done to the US.
How are you connecting the petrodollar and US manufacturing? US manufacturing was destroyed because companies closed their factories in the US and used factories in China because labor was cheaper and they were less regulated.
Under normal conditions, when your economy becomes less competitive, your currency gets depreciated, increasing competitiveness.
Unless of course everybody is forced to buy your currency to get an essential resource. This causes:
- the currency to maintain value better
- puts you in position of other countries having to maintain a trade surplus with you so they can actually purchase said resource
- the oil producers end up with great amounts of your currency, which they have to spend, getting a political foothold in your country.
Petrodollar almost certainly was devastating to US economy. And like most resource curses, it's like a drug - you need to stop taking it to get better, but it will hurt as hell.
Petrodollar creates demand for dollars. This is demand that no other currency gets. That's why US production is expensive vs other countries. China labor is cheaper and it is less regulated, but the petrodollar exacerbates the problem.
Has anyone ever claimed that wars don't involve mistakes. That wars are not hell, that wars are somehow a good phenomenon associated with the human species? But has anyone not naive argued that wars are not sometimes necessary to achieve objectives?
I genuinely wonder what point you have here other than to remind us of these fundamental human truths. And if so thank you. But I would ask you what would you be doing if you were making the policy decision?
How about not starting a war? Especially as a sudden attack during negotiations? With a country that has been historically bending backwards to find some kind of diplomatic solution?
And since when murdering the leaders repeatedly is a valid war strategy?
Not even mentioning that Chamenei was killed together with a daughter, son in law and a grandson. But who cares about accidental casualties, right? Just one more kid.
> It’s very disputable whether BEVs are industry’s future
As a technology, ICE is pretty much close to its peak. It's very hard to imagine significant improvements in ICE as far as efficiency, weight, and power output goes.
The same cannot be said for batteries and electric motors. We are still quite far from technological limits for the platform. It doesn't seem disputable at all that a platform that can still evolve and improve with significant room for growth will eventually overtake one that has peaked.
Also, oil will only get more expensive in the long term, and electricity is going to get cheaper, with more and more solar panels generating electricity locally "for free".
> oil will only get more expensive in the long term
Will it? Oil price will reach an equilibrium because lower demand due to electrification will lead to lower prices, which will increase higher consumption.
There are enough low cost oil producers like Saudi Arabia to keep the pipes filled with oil at whatever the prevailing market price is.
> As a technology, ICE is pretty much close to its peak. It's very hard to imagine significant improvements in ICE as far as efficiency, weight, and power output goes
What makes you say that? Jet engine manufacturers are constantly making improvements, and one of the biggest recent breakthroughs has been around using proprietary alloys in the construction of some parts to make them lighter and able to operate at hotter temperatures, thus increasing efficiency. I'm not working on any engines, but from a layman's perspective I don't see why there couldn't be material science improvements made to combustion engines.
No, but I think if material science improvements can be made in jet engines, there is no reason to think combustion engines for car are "complete" and nothing around them could be improved. They're much less expensive, but at a much larger volume, and they have at least a few decades of future - even if we assume all of the developed world moves to EVs in the next decade or so, which is unrealistic already, there is all of the rest of the world. Most African countries don't have stable power for all of their populations, EVs are simply not going to work there as the main vehicle type. Then add in trucks, where the weight of the batteries makes them impractical for heavy duty long distance trucking. There are improvements, but it will still be many years before they are available, and decades before they've replaced everything already existing.
> They're much less expensive, but at a much larger volume
It is precisely because they are much less expensive that they've reached a realistic ceiling of advancement. If you're going to produce an ICE that yields a 10% improvement in efficiency, decreased weight, increased reliability, decreased maintenance effort -- but at a cost of an extra $xxxx per unit, then it may as well never happen.
As a logical exercise, let's consider what are some of the top technological advancements in ICE and ICE drivetrain components over the last 20 years. CVTs? Nissan's VVEL? What do you think are noteworthy automotive ICE technological advancements we can look forward to in the consumer space? Where exactly do you see automotive applications of ICE advancing in the next 10 years?
On the other hand, it seems pretty easy to see the exact opposite with electric/hybrid drivetrains. Many innovations and advancements. It's also easy to see the roadmap for advancements (see what the Chinese are doing). Battery swaps? New chemistries? Solid state batteries? Compact axial flux motors? Faster charging electrical architectures? Endless space for technological advancement and growth because it's so early.
You can pretty much see the writing on the wall; sure, one can bury one's head in the sand, but it is almost certain that in say 15-20 years, BEV will become the majority of vehicles on the road even if the US and Germans fight to the very end to keep ICE alive.
Not to mention, those same carbon emission regulations/targets they are lobbying/fighting against did not come about in a vacuum. The regulations were intentionally cranked up to "unachievable" levels for ICE vehicles from groups pushing other technologies.
No it is not. Anything combustion related certainly isn't, as has been proven ad absurdum. All non BEV non combustion alternatives are, optimistically phrased, in their infancy. So yes, BEVs are the future for the next 20-40 years at a minimum.
>It’s very disputable whether BEVs are industry’s future
It is not disputable (unless you're including Old Auto lobbyists I suppose). Without government imposed restrictions keeping the public from buying Chinese BEVs without an outrageous markup (or at all) the ICE industry would already be imploding. The government could and should require that all vehicles be under full control of their owners with no remote telematics required, or even allowed necessarily (and heavily restricted even then). That'd resolve concerns about Chinese kill switches or gathering intel data or whatever. But of course the Western industry hates that too because they want to fully enshittify cars next and turn them into locked-in subscription revenue and advertising data sources. So they can't even compete on trustworthiness. Total embarrassment and also long term ruin.
The present gas price mess and global instability Trump has kicked off is just going to draw an even bigger line under both the personal and the national security value of not being tied to any single source of energy for mechanized transportation. BEVs are simply fundamentally superior particularly in a risky world.
Not to mention, regenerative braking. It recovers something like 30% of energy that was previously just wasted, so in terms of having energy independence, it's worth mentioning.
The main issue IMHO is the monopolization of the industry, especially in the US. Once the giants do layoffs, the rest of the market can't absorb the people effectively, which leads to oversaturated job market.
We can of course discuss how many people got into industry during COVID heyday and whether they should have, but mostly I think it's about those behemoths having disproportionately high impact on the entire labour market.
It's certainly helpful, but has a tendency to go for very non idiomatic patterns (like using exceptions for control flow).
Plus, it has issues which I assume are the effect of reinforcement learning - it struggles with letting things crash and tends to silence things that should never fail silently.
The right frame of comparison is not towards average Joe, but towards governments. Billionaires, for better or worse, are independent power sources, which IMO in grand scheme of things are useful.
I think the problem with modern world is not that some people have lots of money, but that we allowed money to buy pretty much everything else.
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