"Every perception is to some degree an act of creation, and every act of memory is to some degree an act of imagination."

-- Gerald Edelman, Second Nature: Brain Science and Human Knowledge
The Capital War2 The Capital WarThe Capital WarChapter 7: US-China Relations and Wars2020-10-18JournalBecause financial market sanctions are so effective they naturally lead those countries that are most likely to be harmed by them to work on approaches either to get around them (e.g., by developing an alternative payment system) or to undermine the United States’ power to impose them. For example, Russia and China, which both are encountering these sanctions and are at much greater risk of encountering more of them, are each now developing and cooperating with the other to develop an alternative payment system.  China’s central bank will soon be the first major central bank to propose a digital currency, which will make it more attractive to use.  Whatever progress will be made to have China’s currency as a broadly accepted reserve currency at the expense of the dollar will take time and should be viewed as part of the big decoupling phase of the relationship that will take place over the next five years. Continue reading…