[HN Gopher] Pozsar's Bretton Woods III: Sometimes Money Can't So...
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Pozsar's Bretton Woods III: Sometimes Money Can't Solve the Problem
Author : 7777777phil
Score : 34 points
Date : 2025-11-19 19:39 UTC (3 hours ago)
(HTM) web link (philippdubach.com)
(TXT) w3m dump (philippdubach.com)
| standardUser wrote:
| Key quote: "Pozsar's argument: the moment Western nations froze
| Russian foreign exchange reserves, the assumed risk-free nature
| of these dollar holdings changed fundamentally. What had been
| viewed as having negligible credit risk suddenly carried
| confiscation risk. For any country potentially facing future
| sanctions, the calculus of holding large dollar reserve positions
| shifted."
|
| My only critique here is that Russia is an outlier, along with
| China, because they both hold large dollar reserves _and_ have a
| contentious relationship with the US. You have to go pretty far
| down the list to find another nation that is likely to face US
| sanctions - and those nations, like Libya and Iran, are already
| heavily sanctioned!
| ruined wrote:
| the set of US adversaries is not presently shrinking, to put it
| mildly
| bryanrasmussen wrote:
| >and have a contentious relationship with the US
|
| I sort of feel many countries that used to not have a
| contentious relationship with the US have one now and thus the
| observation of outlier status doesn't really work anymore.
| alex_c wrote:
| Normally that would be a fair point (and maybe it was valid in
| 2022).
|
| But given the US approach to foreign policy in 2025, one could
| argue that the list of countries that "have a contentious
| relationship with the US" (or, maybe more accurately, the other
| way around) is a lot longer and less clear-cut today than it
| was a few years ago.
| brazukadev wrote:
| Brazil and India and are actually already being targeted by the
| current administration
| bfg_9k wrote:
| Awesome read. I always love Poszar's work, it's a shame that
| these days he's no longer working at CS - since most of his work
| is now stuck behind a paywall.
| RA_Fisher wrote:
| Pozsar assigns far too much weight to Russia. It's an
| economically small country. He should be focused a lot more on
| large American companies that carry actual heft.
| Archelaos wrote:
| According to the article, Russia is just a precursor: "What had
| been viewed as having negligible credit risk suddenly carried
| confiscation risk. For any country potentially facing future
| sanctions, the calculus of holding large dollar reserve
| positions shifted." -- So the question is: what share of the
| global economy do these countries represent? If China is among
| them, this share is considerable.
| doctorpangloss wrote:
| this is a really good article. it makes none of the mistakes of
| thinking Bretton Woods I was a political choice (it uses the
| words "collapse") while separating the difference of the
| financial inevitabilities and political agencies in so called
| Bretton Woods III (that elected leaders do indeed have a choice
| to withhold funds from Russia, but on the other hand, there are
| inevitable financial & economic effects to war, like having to
| commit more money for credit of shipping oil).
|
| someone on here is saying that Russia is an "economically small
| country." This is like saying the learning loss during COVID was
| "not very big." You are not appreciating the consequences of how
| big of a deal war and pulling kids out of school are, all the
| same.
| treis wrote:
| IMHO the fundamental problem is that the world wanted dollars so
| they gave the US gold or stuff for those dollars. If that flow
| ever reverses then there's problems. Bretton woods solved the
| gold issue. The plaza accords solved it when Japan was the
| problem.
|
| Today the solution is that foreign countries but government debt.
| That will last as long as everyone is willing to roll it over.
| It's not clear how or why that stops. But if/when it does it's
| not going to involve the US sending out trillions worth of stuff
| panick21 wrote:
| No the fundamental problems was the econmists at the time
| believe in fixed exchange rates and that's why the got suckered
| into Bretton woods despite it being a crappy deal, specially
| for Britain. I didn't help that the American at the meeting was
| a Soviet spy who wanted to destroy Britain.
|
| And Bretton woods solved nothing at all, it was a system that
| took a very long to implment, much longer then people think and
| was unstable almost as soon as it was implemented.
| gpjanik wrote:
| "Pozsar's argument: the moment Western nations froze Russian
| foreign exchange reserves, the assumed risk-free nature of these
| dollar holdings changed fundamentally. What had been viewed as
| having negligible credit risk suddenly carried confiscation
| risk."
|
| This has nothing to do with dollar. Almost all of the confiscated
| currency was in Europe, and it has to do with invading your
| bank's ally. No country in the world ever assumed that's risk
| free, it wasn't being priced back then and isn't now, because
| nobody except from Russia is stupid enough to do that.
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