You've got to hand it to Iran: that's masterful asymmetric warfare. If they pull this off and suddenly oil transiting through Hormuz is traded in Yuan, we're talking potentially close to $1 trillion less in annual demand for dollars (
https://x.com/RnaudBertrand/status/2032730192289181773
You've got to hand it to Iran: that's masterful asymmetric warfare.
If they pull this off and suddenly oil transiting through Hormuz is traded in Yuan, we're talking potentially close to $1 trillion less in annual demand for dollars (20% of the world's oil + LNG). It'd be insanely impressive to achieve this simply by controlling a 30-mile strait with a few missiles and drones.
And it'd have compounding effects: $1 trillion less in demand for dollars means less foreign buying of US Treasuries, higher borrowing costs in the U.S., more inflation, etc.
Heck even if this doesn't materialize, the mere fact they're suggesting it and that it's taken seriously by mainstream media like CNN is impactful in and of itself: at the end of the day dollar supremacy is also very much based on inertia. But inertia works both ways: once enough people start questioning it, the questioning itself becomes self-reinforcing.
Imagine you're a central banker and you're seeing this: you're undoubtedly telling yourself "mmm, maybe it's time to hold a bit more yuan, just in case."
It's also pretty ironic: the U.S. has weaponized the dollar against others countless times - including, of course, against Iran - but I can't think of a precedent of a country actively at war with the U.S. using the dollar's dominance as a weapon against them. Literally flipping the playbook, which sets an interesting precedent.
All in all, in this war you really have the feeling to witness Sun Tzu's maxim about "knowing the enemy and knowing yourself" in real time: Trump obviously completely failed to understand what he was getting into.
Iran, on the other hand, clearly studied its enemy's vulnerabilities, be it hitting Gulf countries until they question whether being a U.S. ally protects or endangers them, choking oil supply to inflict economic pain the US can't bomb its way out of, or now attacking the dollar itself.
The U.S. only has bombs to reply, but hard to see how they could bomb their way out of problems that were entirely predictable consequences of their bombing in the first place, if anyone had spent five minutes thinking about what Iran might do in response.
posted by Satish Sharma at
14:12
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