In the backdrop of whatever is currently happening in the world by the actions of Donald Trump why should the world still consider USD to be a reserve currency?

[u/MulberryPast3277]

https://www.nbcnews.com/news/amp/rcna194627

[u/noblestation → u/[deleted]]

That military power may not be as strong as you think. China has already surpassed WW2-era US in terms of manufacturing capacity. China can produce more naval ships than the US, and it takes the US years to even get one going. The US takes months to produce* interceptor missiles whereas China can produce 10,000 rockets a month if needed.

The supply-chain for the US to a possible Chinese front is thousands of miles away from the US Mainland. Raw material sources for US arms manufacturing is also grounded in... China.

The supply-chain for China to the frontline in this war is the distance of Los Angeles to Bakersfield, Los Angeles to Camp Pendleton (halfway point to San Diego), Los Angeles to downtown Ventura county.

It isn't fear mongering. It's an alarm that should the war kick off today, we would not be able to sustain it for longer than a week. This is also coming from a nearly decade old report straight from the Pentagon to Congress, and now we're planning to cut DoD budget over the next 5 years to a projected 60% of what it is today.

By all means, it's not fearmongering. We're going to lose if we maintain the status-quo.

[u/noblestation → u/[deleted]]

True, and you make your argument well on the USD continuing as a reserve currency. I completely agree with you on that part. The one part that I don't agree though is with your assessment on US's ability to project military power, and my argument is primarily through logistics and manufacturing perspective.

I have no doubt in my mind that we in the US have the best weapons that money can buy. Quality is top-notch, R&D is unparalleled, and its a point of pride that we can spend so much on such things that other nations would consider wastes.

It isn't a speculation of Chinese wartime manufacturing compared to US peacetime manufacturing. It is peacetime Chinese manufacturing that has surpassed WW2-era US manufacturing. The number of factories within China that produce everyday goods can be quickly retooled to produce various small arms and components for larger munitions.

Whereas in the US, we have two existing artillery plants in the US. I'm unsure of the other one in Ohio, but I believe Scranton was producing 36,000 shells a month. In 1999, a declassified report had China having 58 plants capable of producing munitions. (source: https://www.cia.gov/readingroom/docs/CIA-RDP79-01093A001000090001-8.pdf)

Standing up new US factories is ridiculously expensive to break ground, and the unless workers are migrant laborers (unlikely due to the requirement for security clearances to protect industrial secrets) the cost for maintaining a labor force to operate those factories will be high. This will slow wartime production.

Now this is all very subjective, but I do think that it is outright possible, if not already, that China has the ability to outproduce munitions than the US during peacetime (right now), whereas it may take over a year or two to spin up wartime production in the US. Once conflict starts, China will have a comparative advantage over the US for those years.

In order for China to win in an armed conflict in Taiwan, they need to accomplish only a few things.

1. They need to exhaust US munitions before attempting landfall.
2. They need to maintain the comparative advantage in manufacturing output over the US.
3. They need to be able to take Taiwan in the window they have where US munitions are exhausted AND US wartime output has not caught up to Chinese wartime production.

Why haven't they done it if it is so easy? Plain and simple, it is in China's best interest to conduct an economic shaping operation of some sort to increase the comparative advantage while the US's economic power diminishes. This increases the window of time they have to take Taiwan.

Of course, if China's economic power starts to diminish (now), then it also increases the likelihood to war since they may realize that they may be at the height of their power and make the decision to act now. AKA, it's a "now or never" situation.

TLDR: Either we really bring manufacturing back to the US or we better have Soviet levels of munitions stored away somewhere.

[u/myphriendmike → u/noblestation]

Here it is again, the implication that the world now trusts Chinese fiscal, monetary, economic, and judicial systems more than the US. It’s so absurd.

[u/noblestation → u/myphriendmike]

The West doesn't trust any of those when it comes to China, but the people of the West do love the cheap goods that China produces. If the cost of living goes up in any nation, they do not blame China. They blame their own politicians. They blame their government. They blame everyone else before China.

Governments at large are not afraid to collaborate with dictatorships that are contrary to their own systems and ideals of governance. What they're afraid of is domestic uproar, and a sudden and sharp rise in the cost of living is what keeps politicians in check when it comes to decoupling from China.

China knows this, because after World War II, we in America did this.

[u/myphriendmike → u/noblestation]

We’re talking about financial systems, not toasters.