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Comment by pwaai | Hacker News Reader

> China's ascension to number 1 world economy

My gripe with this is that people seem to take this as a fact that hasn't even occurred with almost 100% certainty that it will happen.

A lot can go wrong in 20 years. So far, all economies that challenged US in the past mysteriously gets IMF'd, pulling the rug out of a credit bubble that they help create by twisting the arms of the central banks that are supposed to be free from this kind of interference:

This documentary about Japanese central bank is eye opening to just how much grip the US hegemony has, one which I fail to see China being able to emulate anytime soon because of the hostage situation that US allies are finding themselves in.

https://www.youtube.com/watch?v=p5Ac7ap_MAY

The theory that states Sadam was whacked because he started to accept euro instead of the petrodollar standard makes an awful lot of sense.

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Japan did not get IMF'ed, as you put it. They simply did not liquidate, liquidate, liquidate. Instead they just extended-and-pretended. Surprise! It didn't work.

IMFing is real, but also only really applicable to smaller economies. All it really is is a bailout of bad-creditors disguised as credit to bad-debtors, leaving the latter in worse shape in the end and without having helped them with immediate problems at all. This only works when the amounts in question can be ponied up by taxpayers in the IMF member countries without causing too much political trouble. When the amounts involved are large enough (e.g., in the case of Japan in '89) this just doesn't even get proposed, not least because there was very little external bad-credit to bailout! We saw some of this game played intra-Eurozone, but in the European case the taxpayer was going to have to bailout the banks no matter what, whereas in the Japan case the problems were entirely domestic.

The idea that Bush went after Hussein because Hussein's reserve currency preferences is utter hogwash. Iraq's economy back then simply wasn't remotely big enough to move that needle and lacked the potential to for decades longer. Moreover, if Iraq preferred the euro then, why not now, and where's the damage to the dollar?? The answer is that it does not matter what choice of reserve currency Iraq, Iran, or Saudi Arabia (say) prefer -- it would have made zero difference in 2003, as it almost certainly didn't. Bush had no shortage of reasons to go after Hussein -- no need to reach for conspiracy theories about that!

Well, one, China is already number 1 in PPP.

Two, they are already setting up parallel institutions just to prevent being IMFd that (see AIIB).

Third, they already have numerous renminbi trading deals with several countries where goods are exchanged without ever being converted into dollars.

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