(I can’t believe I need to mention this but an invasion is always wrong and Putin is a bad man just that there needs to be more nuance on complex discussions)
Experts will tell you the dollar is here to stay, and probabilistically speaking, they’re right. But this is the first domino on the path to the collapse of US supremacy.
In business, you are told to not make enemies. The same stance in politics would be isolationism until a threshold. What is this threshold is an art not a science. My threshold in the recent era would be hard genocide (more than forced sterilization but rather systematic murder) such as the Rwandan genocide in 1994. I’d also say that whatever the case is, it would have unanimous condemnation. Not a single nation was in favor of the Rwandan genocide or neutral about it. That is a nuance-less discussion. When something is as complicated as the Russian situation, taking a side isolates us on the world stage.
We have never seen the weaponization of money on this scale before. As with any trump card, you only get to play the card once. Now, China will make it a priority to not be dependent on any US infrastructure especially to not rely on USD before going for Taiwan. It’s a turning point in monetary history: the end of USD hegemony & the acceleration towards a bipolar monetary order. Ukraine good (look they adopted a puppy, and the leader is a hero praised by every media source), Russia bad (and funding an insurgency would be good, it would never be like the Taliban) is the nuance-less take analogous to “shut down the economy and wear a face mask or you’re killing grandma.”
This isn’t hypothetical. Chinese SWIFT (CIPS) equivalent stocks have been rallying because Russia might join that system at least until it has a way to be non-reliant on any system. China-Russia trade stocks are also up.
Russia also continues its alliance with OPEC and increased its energy deals with China. They have the goal to end USD sovereignty as the reserve currency and the petrodollar. Even if we conquered Russia, we would still end up the loser if we lose dollar hegemony. Putin signed a decree prohibiting the export of foreign currency in excess of $10,000 from Russia and 80% of all reserves must be in rubles (meaning the Gazoprom deal with China would have to be in rubles). Other countries may follow suit.
EU countries have removed Russia from SWIFT and blocked offshore accounts, even though they are still incredibly dependent on Russia for energy. Are they going to be paying Russia in crypto? That's going to do wonders for their currencies. Russia will no longer accept dollars for their commodities, and therefore commodity prices of all kinds — not just natural gas and oil, but also wheat, aluminum, etc. — will have to be paid for in rubles, digital renminbi, or crypto. Therefore the global commodities markets will sell their dollars, weakening Americas currency, making the US’ MMT an impossibility. Imagine the end of both Pax Americana and Dollar Hegemony in the same decade.
Not only will it be a multi-polar monetary order (or hopefully the fully decentralized crypto world), but all other application-layer technologies (social media, p2p apps like Uber, etc.) will also be country by country centralization instead of a cabal in Silicon Valley dictating the “truth” to disparate cultures.
India was disgusted by Trump's removal from Twitter. China has already created its own intranet. Contrary to the goal of a more open world, this splits the world up and closes societies. Perhaps some of the country’s infrastructure will integrate but no major power will be able to control another. It is the end of Pax Americana. It is the start of a new world era, not the end of history as Fukuyama hoped.*
*That is, the end-point of mankind's ideological evolution and the universalization of Western liberal democracy as the final form of human government is not the case anymore. Perhaps Chinese authoritarianism becomes more prevalent because while the West is forcing its values onto other countries that some countries may hate (e.g. neutering masculinity) China is strengthening its populace. Maybe other countries prefer the Chinese method. An open liberal society with intermingled technological platforms is also not possible anymore, each country will want to have its own control. Almost paradoxically, the fight to liberalize the world has done the opposite. Fukuyama also believed in democratic peace theory, that is, democracies don’t fight each other which is demonstrably false.
With both Brazil and India remaining neutral it seems the BRIC nations are all neutral on this invasion. The West may be in trouble.
If anyone can join your club, it has no prestige. The EU had strict standards to join with Portugal taking 8 years and Turkey waiting for over 30. Yet Ukraine is getting fast-tracked despite being far less developed economically or even democratically (edit: they didn’t get fast tracked).
Anyway as I mentioned, it's either toothless sanctions that don't hurt Putin's war machine in any way or it forces Russia to join China's orbit. It’s a Catch-22.
(mostly joking) Maybe it’s something more. Russia famously paid off its IMF and Paris and London club debt famously paid off its IMF and Paris and London club debt (this article has good info but is pretty anti-semitic sadly). Is revenge for that worth the cost of either WWIII or the loss of dollar hegemony? (don’t take that part too seriously) Our myopic leaders are too dumb to understand. (this is serious)
It’s game over for Putin. If the protests no in Russia that have no bearing on any country’s decision about Ukraine wasn’t enough, the West has revealed yet another secret weapon.
And if that doesn’t stop them, this will.
Maybe we shouldn’t stop Putin but rather give him the Nobel Prize in medicine because he single-handedly cured COVID-19.