Sikh radicalism and votebank politics in Canada

 

Never go to bed on an argument … and 19 other relationship ‘rules’ unpicked by experts

Is it wrong to flirt with other people? Do you have to agree on politics? And is it all about sex? Therapists examine the truths and myths of relationship lore - Joanna Moorhead in The Guardian

1 It’s not all about sex


TRUE “For most people, a satisfying sexual relationship is an important part of a good relationship,” says Susanna Abse, psychoanalytic therapist and author of Tell Me the Truth About Love: 13 Tales from Couple Therapy. “While sex may not be the most important thing, it’s certainly an indicator of chemistry, and it matters – especially at the start. Also, if you’re having bad sex with someone in the beginning, why would you want to carry on?”

2 Your partner should know what you feel/need

FALSE This is one of those saccharine myths we’ve been sold by romantic fairytales. However close you are to someone, says Joanna Harrison, divorce lawyer-turned-couples-therapist and author of Five Arguments All Couples (Need to) Have, you’ll never be able to second-guess them on everything. “And why would you want to? That would be boring. Also, people change; we’re all evolving.” What matters is that you each share what you’re feeling, you listen to one another, and you try to see things from your partner’s point of view.

3 No relationship can survive an affair

FALSE There are many kinds of affair, and this, says Abse, is key. “An affair can be an exit strategy, sure. But it can also be a protest – a way of bringing your partner’s attention to something that isn’t working for you in the relationship. If it’s that kind of affair, and you can work through why it happened with your partner, you can move on from it – providing apologies are given, reparations are made and forgiveness is forthcoming.”
If you’re having bad sex with someone in the beginning, why would you want to carry on?

4 A relationship is stronger if you share a bed

FALSE The important thing isn’t whether you share a bed – it’s talking about why if you don’t, says Harrison. “Whether it’s down to snoring or young kids, sleeping in separate beds reduces the intimate time you get together. So you need to discuss how you can compensate.” Make love on the sofa in the evening when the kids have gone to sleep. If snoring has driven you to separate rooms, at least have your morning tea in bed together.

5 Never go to bed on an argument

FALSE So often, says Terrence Real, family therapist and author of Us: Getting Past You and Me to Build a More Loving Relationship, rows happen because one or both partners have been drinking, or they’re not feeling good, or it’s late and you’re both tired. “What I say is: you’re not going to resolve anything tonight. Go to bed, and the next morning have a cup of tea together and talk it through.” All relationships are about the cycle of closeness, disruption and return to closeness. “Our culture worships the harmony phase, but a good relationship thrives on surviving the mess. The work of intimacy is the collision of imperfections, and how we manage those.”

6 It’s wrong to flirt with other people

TRUE You can be playful with someone, says Real, “but if you look into their eyes, there’s a difference between the shades being down – ‘shop closed’ – and the signal ‘come hither’. And if you’re using the sexual energy between you and someone else to feel excited, that’s like a mini-affair.” The rule is this, says Real: if your partner could hear you, and the way you’re speaking would upset them, it’s not OK.

7 People can’t change

FALSE. “I’m in the personality transplant business,” says Real. “Therapy is about understanding why we behave as we do, and making conscious decisions to change things in order to hang on to someone we care about.” Relate therapist Simone Bose, who runs her own practice, agrees that people can change, but they have to want to, and that means confronting aspects of themselves that might be uncomfortable or painful. “What’s hardest is overcoming the defensive mechanism you have as default,” she says.

  

8 Having arguments doesn’t have to be bad


TRUE If an argument escalates to violence or one partner feeling unsafe, that’s wrong, and you need expert help. But as you learn the landscape of your partner, says Harrison, arguments show you’re working each other out. “You’re finding out what your partner is passionate about, and sharing that. So these disagreements are full of useful information about what matters to each of you. If couples stop talking about what they care about, and sometimes arguing about it, they can start to feel disconnected.”

9 The ‘one’ is out there somewhere

FALSE “This is demonstrably nonsense: you only have to look at the people who find love again after losing their partner,” says Real. “We tend to fall in love with a person who we subliminally believe is going to heal us, give us what we didn’t get in our early life. Relationships tend to replay situations we’ve been in before. We fall in love with what completes us, in other words. And it’s this feeling – that we ‘fit together’ – that makes us feel we’ve found ‘the one’.” A successful relationship comes down to rewriting the script, so you’re not playing out things that went wrong in the past.

10 Once a cheater, always a cheater

TRUE and FALSE What’s most interesting about cheating, says Real, isn’t why someone does it – that’s obvious (it’s exciting, it’s sexy, it’s a thrill). No: the interesting thing is why someone doesn’t do it. “Cheating is always selfish: it’s always about overriding what you should do. So if you’ve learned from it and moved on, then no, you won’t necessarily be a cheater again. But your partner might never feel 100% assured you won’t do it again. It’s important to understand that.”

11 Marriage is just a piece of paper

FALSE “The question I’d ask a couple,” says Real, “is: who is your community? Who is supporting you, and how have you signalled you need that support, that you value it for your relationship?” Few rituals are left in modern life, he says, and a marriage ceremony is one that includes others as well as the couple themselves. “There’s something transformative about it being an experience embedded in the community,” he says. “That’s why it mattered to fight for the legal right for gay couples to marry.”

12 If a relationship needs therapy, it’s too late

FALSE Individuals are complicated, and partners who love one another and can see there’s potential for an ongoing relationship can also see there are stumbling blocks, says Bose. Having therapy, especially quite early on in a relationship, can ensure they get across those hurdles without the relationship being damaged. On the other hand, she cautions against therapy that goes on and on. “Some couples are scared to leave – you’ve got to be able to carry on without that crutch.”

13 You should always own up if you cheat

TRUE and FALSE You should usually confess, but not always, says Abse. “If we’re talking about a one-night stand on a business trip, maybe it’s OK, and better not to share it with your partner. But if you’ve had a longer-term relationship with someone else and you never reveal it to your partner, you’re avoiding something. It’s going to leave you in a sad place because you’ll have lost that sense that you and your partner share your deepest feelings.”

14 You have to agree on politics

FALSE If politics matters deeply to you then yes, says Bose, you need to be aligned. But if it doesn’t, voting for different political parties probably won’t unseat your relationship to any extent. “Much more important is sharing the same values: what’s important to you, what you truly believe matters. If you don’t agree on values, it seeps into your everyday life and can affect your relationship at a very deep level.”

15 Relationship problems always come down to money or sex

FALSE “In fact, they always come down to one thing: communication,” says Harrison. “Money and sex are taboo subjects in many families, and we all bring our family baggage to any relationship. But the issues aren’t about these things per se, they’re about being able to talk about these things – and everything else that matters.”

16 It’s always obvious when a relationship is over

FALSE Even for an experienced therapist like Joanna Harrison, it’s often not clear whether a couple are going to make it through. “Individuals have different thresholds for what they can deal with in a relationship,” she says. “There are no absolutes, no moment where it has to be all over.”

17 You need to have lots in common

FALSE In fact, says Abse, unconsciously we’re looking for someone who has attributes we’re lacking – because being with them helps us to learn different ways, and to grow our characters. “So if you’re a shy kind of person, you might find yourself attracted to someone gregarious.” It also means you can rely on the other person for those things – it’s the yin/yang thing. “A relationship is often more interesting and dynamic where there are challenges and differences.”

18 You need regular date nights

FALSE It’s not date nights that matter, says Harrison, it’s time together. So you don’t have to spend money or go out or have a treat (though that might be lovely). The bit your relationship needs is time shared as a couple: snuggled together on the sofa watching TV or a walk in the park can be every bit as good as a pricey meal out.

19 A baby will jeopardise your relationship

TRUE It’s tempting to hope a child who shares your genes, who you created together, will bond you and keep your relationship going. But, says Abse, relationship satisfaction goes down in the early weeks, months and years after the arrival of a baby. “Having a baby changes everything – you can’t underestimate that. You lose freedom, you lose autonomy, you lose intimacy. It’s a really challenging time for a couple.”

20 You can have a good sex life for ever

FALSE Viagra has sold us this idea, says Abse, and sure, in theory there’s no reason why sex should ever stop. But in the real world, things are different. “I’m wary of putting pressure on older people,” she says. “The reality is, for most long-term couples, sex drops off after their 50s or 60s. Those who carry on usually shift from swinging from the chandeliers to a more gentle, slow sex that might not involve penetration. It can be very intimate, but not all couples want it.”

What an amusement park can teach us about central banks

Tim Harford in The FT

To Tivoli Gardens in the heart of Copenhagen, one of the world’s oldest amusement parks. It was founded 180 years ago, and its creator George Carstensen secured the land by petitioning King Christian VIII, arguing, “When the people are amusing themselves, they do not think about politics.” 

In Tivoli, I don’t think about politics either. But during the wait to ride the Demon and the Star Flyer, I can’t help but think about economics. Specifically, I think about Robert Lucas’s charming speech, “What Economists Do”. It was delivered as a commencement address in 1988, seven years before the hugely influential macroeconomist was awarded the Nobel memorial prize. 

I revisited the speech when news reached me of Robert Lucas’s recent death at the age of 85. “We are basically storytellers,” wrote Lucas, “creators of make-believe economic systems.” 

To illustrate his point, he told a story about a depression in an amusement park. In Lucas’s imaginary park, people buy a wad of tickets at the entry kiosk and spend them on anything from rollercoaster rides to hotdogs. Each attraction is run as an independent business, while the ticket desk serves as a central bank. 

On a slow day, the ride owners will send their workers home. Both employment (hours worked) and the number of tickets bought (call that GDP if you wish) will vary depending on school holidays, the weather and chance. 

Should we call a slow Monday in March a depression? No, said Lucas. “By an economic depression, we mean something that ought not to happen, something pathological.” 

So then imagine that the central bank — sorry, the ticket kiosk — decides to crack down on fun by squeezing the money supply. Instead of issuing 100 tickets for DKr100, the kiosk charges DKr100 for 80 tickets. Importantly, it doesn’t tell the businesses in the park that it has decided to make this change. Without their consent or knowledge, it has effectively raised all their prices. What happens? 

Some customers grit their teeth and spend a bit more to ensure they get all the tickets they would have expected anyway. Others buy fewer tickets. Some walk away without buying any. 

Inside the park, tumbleweed. There are fewer customers, and they bring sandwiches rather than buying hotdogs. They spend less on the rides and take more time to enjoy freebies such as walking around the lake. Operators who had been planning to expand in the face of long queues will now not be so sure. Other operators who had worried that their ride was going out of style see gloomy confirmation and may close permanently to cut their losses. The amusement park as a whole will lose its mojo, with physical capacity, output and employment shrinking to match a misunderstood fall in demand. 

As Lucas explained, this slump “is indeed a kind of pathology. Customers are arriving, eager to spend . . . Concessionaires are ready and waiting to service them.” All the pieces are in place, but they don’t fit together because of a monetary policy mistake. 

Eventually, the park should recover its equilibrium. The ride owners can ask for fewer tickets per ride; the customers will come to realise that 80 tickets will buy as much as 100 tickets did before the price change. The amusement park will be lively again. But all this will take time, and permanent harm may have been done. 

Flip the story around: what if the central bank — sorry, the ticket kiosk — gets excited and hands out too many tickets instead? In effect, the kiosk has slashed all the prices without telling the concession-holders. Expecting bargains, people cram into the park. The hotdog stand runs out of hotdogs; the mustard and ketchup run dry. Park-goers spend most of their time queueing rather than rollercoasting. The businesses inside may call up extra staff, even borrow money to expand. Yet eventually they will realise the double-handfuls of tickets they’ve taken in aren’t worth as much as they expected. 

These stories tell us how a central bank might engineer a recession — or cause shortages and inflation. I find them a delightful window into how economies work. 

True, there are other types of recession. In my book The Undercover Economist Strikes Back, I told a true story about a recession in a prisoner-of-war camp in the 1940s, as described by one of the POWs, the economist R­­­­­­­­­­­­­­­A Radford. 

The camp, like the amusement park, had a simple economy. It was fuelled by the supply of packages from the Red Cross, the contents of which were then traded: the Sikh prisoners didn’t want razor blades or beef, the French were desperate for coffee, the English craved tea. 

The prison-camp recession occurred, not because the money supply was constricted, but because the Red Cross parcels stopped arriving — what an economist might call an “exogenous shock”. (For a real-world example, imagine a war interrupting the supply of oil, natural gas and food. It shouldn’t be too much of a stretch to do that.) 

These little stories teach us that sometimes an economy can be dragged down by a simple mistake in monetary policy, while sometimes a recession occurs because the economy has hit an implacable obstacle. One job of a good central bank is to make sure that it perceives the difference, something central bankers are puzzling over right now. 

The disadvantage with such stories, admitted Lucas, “is that we are not really interested in understanding and preventing depressions in hypothetical amusement parks . . . the analogy that one person finds persuasive, his neighbour may well find ridiculous.” 

So then what to do? “Keep trying to tell better and better stories . . . it is fun and interesting and, really, there is no practical alternative.”

McCarthyism rises in Labour as it readies for power

Having examined how the North of Tyne mayor was barred from standing again, I see something akin to McCarthyism writes Aditya Chakrabortty in The Guardian 


I first met the man who has been all over this week’s political headlines four years ago, 300 miles up the A1 from Westminster. It was a bitterly cold Saturday morning in the Northumberland coastal town of Newbiggin and Jamie Driscoll was asking for votes. He’d just caused a minor political earthquake by winning Labour members’ support to run for the new position of mayor of North of Tyne. The cert for that role had been Nick Forbes, Newcastle council leader and longtime big beast – not Driscoll, who had been a local councillor for a few months and who, on winning the selection, had had to rush out to buy his only suit.

I watched this stubbly, scruffy, upbeat outsider doorknock around an estate of small houses and exotic garden statuettes, to a reaction chillier than the wind whipping in from the North Sea. For decades, this had been Labour country, where that political tradition ran through the local economy, its institutions and people’s very identities. But over the past 50 years all that had been destroyed and now it was the land of Vote Leave, desolate and nihilistic. If residents spoke to canvassers at all, it was to spit out statements like “I don’t follow politics”.


After more slammed doors, one activist sighed: “Policy doesn’t matter here. They’ve forgotten what government can do.” For all Driscoll’s ideas and energy, I wrote at the time, his biggest challenge would be closing the vast gulf between the governed and their governors.

That tableau has come to mind many times since the Labour party barred Driscoll from standing for re-election. No more will he trigger democratic earthquakes. Instead, he has become fodder for lobby journalists. When I met him in Newcastle this week, he was slaloming between interviews for Radio 4, ITV, national newspapers, Newsnight and more. The ending of his political career has done more for his national profile than four years in office. I listened as each outlet demanded its shot of Westminster caffeine. Hardly anyone asked what it meant for the north-east, for local democracy, for the people in Newbiggin and anyone else who long ago tuned out all politicians as fraudulent liars only in it for themselves.

And why wouldn’t they? I have chased down and sifted through evidence, much of it never revealed before, and it points to a stitch-up bigger than anything on the Great Sewing Bee. The jumped-up outsider, Driscoll, has been tossed in the bin – but he is merely collateral damage in a one-sided Labour factional fight, whose actors appear not to give a damn for people’s reputations or for the public they’re meant to serve.


Let’s work backwards. Labour officials blocked Driscoll last Friday, soon after he’d been interviewed by a panel drawn largely from the party’s national executive committee. The email he received reads: “[T]he NEC panel has determined that you will not be progressing further as a candidate in this process.” But while the party gave no official reason to the candidate, its enforcers were happy to brief lobby journalists – who in turn quoted anonymous sources that it was because in March he had appeared at a Newcastle theatre with Ken Loach to discuss his films. The renowned director had been expelled as a Labour member in 2021.

Jamie Driscoll addresses the Transport for the North conference in March. Photograph: Ian Forsyth/Getty Images

On Sunday, Labour frontbencher Jonathan Reynolds told Sky News that Driscoll was excluded for sharing a platform with “someone who themselves has been expelled for their views on antisemitism” – a line swiftly amplified by the media, yet not quite true. I asked Loach’s office to forward his letters of expulsion, which say only that he is “ineligible” due to his support of “a political organisation other than an official Labour group”. That was Labour Against the Witchhunt, which did claim allegations of Labour antisemitism were “politically motivated”. Reynolds was conflating the two. I asked how many other journalists had sought clarification. The answer was one.

A column about Driscoll is not the place to litigate Ken Loach’s views, even if I disagree with much of what he says about Labour’s treatment of antisemitism. It barely needs saying that sitting on stage with a director to discuss their films does not mean you share all their opinions. Far more troubling for British democracy is how anonymous, factional briefings are simply machine-pressed into newspaper “facts” then spewed out on TV.

“They were always looking to get me,” Driscoll claimed this week. I have read emails dating back to 2020 where the new metro mayor asks Labour officials for the party’s local membership lists used by councillors, MPs and mayors as standard. But not here: IT issues meant the lists supposedly weren’t shareable. Until this year that is, when he was told the upcoming mayoral contest meant he could only access lists “if you make a confirmation that you are not seeking the selection”. Another email, sent by Driscoll last month to party officials, notes that a local constituency party has been told by a senior official to disinvite him from speaking.


Asked for comment, Labour didn’t reply – but this is petty, attritional stuff, which is what happens when politics is evacuated of ideas and arguments and becomes simply about who is in whose good books. Cliqueishness is hardly exclusive to Keir Starmer’s Labour, but it is starker now because instead of real politics all this lot have is office politics. 

Which brings us back to the much-discussed NEC panel, supposedly to divine his suitability to stand. I have viewed footage of the entire hour on Zoom, which discusses nothing of Driscoll’s beliefs or achievements. Three of the five panel members are from groups on the right of the party, and all anyone wants to know is why he spoke to Loach. They refer to the director’s “controversial views” and quote the Jewish Chronicle’s coverage. How, they ask, might the event be viewed by a “hostile media”?

Driscoll replies that Holocaust denial is “abhorrent” and that he has signed up to the International Holocaust Remembrance Alliance’s definition of antisemitism. He recalls how he used to fight fascists in the street. None of it is good enough.

A rather bumptious young man informs the mayor that “you can’t separate someone’s views from their work”. The twentysomething declares that Driscoll shouldn’t have discussed the films but instead attacked Loach’s politics. On that basis, Starmer ought to be disqualified for appearing with Loach on the BBC’s Question Time – and so too should the shadow foreign secretary, David Lammy, who in 2019 wrote a paean in this paper to Loach’s Sorry We Missed You, praising the way it “brings across how the right to a family life has been eroded in modern Britain”.

We all know that a week is a long time in Starmer’s politics, but he did once proclaim a proud regionalism. Now what’s left?

Attacking McCarthyism, Ed Murrow told his TV audience: “We must not confuse dissent with disloyalty. We must remember always that accusation is not proof and that conviction depends upon evidence and due process of law. We will not walk in fear, one of another.”

By these standards, Driscoll is a victim of McCarthyism. The office he holds is now a mere electoral toy to be enjoyed by a favoured faction. And those people in Newbiggin and Ashington and anyone else who might be looking on with half an eye will see nothing but machine politicians serving themselves. This was the swamp out of which Nigel Farage emerged.

Will a desperate Pakistan initiate a new war?

 

Richard Dawkins Interview

 

A history of global reserve currencies

Michael Pettis in The FT

The US dollar, analysts often propose, is the latest in a 600-year history of global reserve currencies. Each of its predecessor currencies was eventually replaced by another, and in the same way the dollar will eventually be replaced by one or more currencies.  

The problem with this argument, however, is that there is no such history. The role of the US dollar in the global system of trade and capital flows is unprecedented, mainly because of the unprecedented role the US economy plays in global trade and capital imbalances. The fact that so many analysts base their claims on this putative history only shows just how confused the discussion has been.  

It’s not that there haven’t been other important currencies before the dollar. The history of the world is replete with famous currencies, but these played a very different role in the flow of capital and goods across international borders. Trade before the days of dollar dominance was ultimately settled in gold or silver. A country’s currency could only be a “major” trade currency to the extent that its gold and silver coins were widely accepted as unadulterated or, by the 19th century, if the convertibility of its paper claims into gold or silver was highly credible.  

This is not just a technical difference. A world in which trade is denominated in gold or silver, or in claims that are easily and quickly convertible into gold and silver, creates very different conditions from those today. Consider the widely-held belief that sterling once ruled the world in much the same way the dollar does today.  

It simply isn’t true. While sterling was indeed used more than other currencies in Europe to settle trade, and the credibility of its conversion into gold was hard-earned by the Bank of England after the Napoleonic wars, whenever sterling claims rose relative to the amount of gold held by the Bank of England, its credibility was undermined. In that case foreigners tended to reverse their use of sterling, forcing the Bank of England to raise interest rates and adjust demand to regain gold reserves.¹ 

This does not happen to the US dollar. Trade conditions under gold- or silver-standards are dramatically different from those in a dollar world in at least three important ways. First, trade imbalances in the former must be consistent with the ability of economies to absorb gold and silver inflows and outflows. This means that while small imbalances were possible to the extent that they allowed wealthier economies to fund productive investment in developing economies, this was not the case for large, persistent trade imbalances — except under extraordinary circumstances.²  

Second, and much more importantly, as trade imbalances reverse, the contraction in demand required in deficit countries is matched by an expansion in demand in surplus countries. That is because while monetary outflows in deficit countries force them to curtail domestic demand to stem the outflows, the corresponding inflows into the surplus countries cause an automatic expansion of domestic money and credit that, in turn, boosts domestic demand. Under the gold- and silver-standards, in other words, trade imbalances did not put downward pressure on global demand, and so global trade expansion typically led to global demand expansion. 

And third, under gold and silver standards it was trade that drove the capital account, not vice versa as it is today. While traders chose which currency it was most convenient in which to trade, shifting from the use of one currency to another had barely any impact on the underlying structure of trade. 

None of these conditions hold in our dollar-based global trading system because of the transformational role played by the US economy. Because of its deep and flexible financial system, and its well-governed asset markets, the US — and other anglophone economies with similar conditions, eg the UK, Canada, and Australia — are the preferred location into which surplus countries dump their excess savings. 

Contrary to traditional trade theory, in which a well-functioning trading system might involve small, manageable capital flows from advanced, capital-intensive economies to capital-poor developing economies with high investment needs, nearly 70-80 per cent of all the excess savings — from both advanced and developing economies — is directed into the wealthy anglophone economies. These in turn have to run the corresponding deficits of which the US alone typically absorbs more than half. As I have discussed elsewhere, this creates major economic distortions for the US and the other anglophone economies, whose financial sectors benefit especially at the expense of their manufacturing sectors. 

It is only because the US and, to a lesser extent, the anglophone economies, are willing to export unlimited claims on their domestic assets — in the form of stocks, bonds, factories, urban real estate, agricultural property, etc — that the surplus economies of the world are able to implement the mercantilist policies that systematically suppress domestic demand to subsidise their manufacturing competitiveness. This is precisely what John Maynard Keynes warned about, unsuccessfully, in 1944. He argued that a dollar standard would lead to a world in which surplus and deficit countries would adjust asymmetrically, as the former suppressed domestic demand and exported the resulting demand deficiency. 

The point is that dollar dominance isn’t simply about choosing to denominate trading activities in dollars the way one might have chosen, in the 19th century, between gold-backed franc, gold-backed sterling, or Mexican silver pesos. It is about the role the US economy plays in absorbing global savings imbalances. This doesn’t mean, by the way, that the US must run permanent deficits, as many seem to believe. It just means that it must accommodate whatever imbalances the rest of the world creates. 

In the fifty years characterised by the two world wars, for example, the US ran persistent surpluses as it exported savings. Because Europe and Asia at the time urgently needed foreign savings to help rebuild their war-torn economies, it was the huge US surpluses that put the dollar at the centre of the global trading system during that period. 

By the 1960s and 1970s, however, Europe and Asia had largely rebuilt their economies and, rather than continue to absorb foreign savings, they wanted to absorb foreign demand to propel domestic growth further. Absorbing foreign demand means exporting domestic savings, and because of its huge domestic consumer markets and safe, profitable and liquid asset markets, the obvious choice was the US. Probably because of the exigencies of the cold war, Washington encouraged them to do so. Only later did this choice congeal into an economic ideology that saw unfettered capital flows as a way to strengthen the power of American finance. 

This is why the end of dollar dominance doesn’t mean a global trading system that simply and non-disruptively shifts from denominating trade in dollars to denominating it in some other currency. It means instead the end of the current global trading system — Ie the end of the willingness and ability of the anglophone economies to absorb up to 70-80 per cent of global trade surpluses, the end of large, persistent trade and capital flow imbalances, and, above all, the end of mercantilist policies that allow surplus countries to become competitive at the expense of foreign manufacturers and domestic demand. 

The end of dollar dominance would be a good thing for the global economy, and especially for the US economy (albeit not, perhaps, for US geopolitical power), but it can’t happen without a transformation of the structure of global trade, and it probably won’t happen until the US refuses to continue absorbing global imbalances as it has for the past several decades. However it happens, a world in which trade isn’t structured around the dollar will require a massive transformation of the structure of global trade — and for surplus countries like Brazil, Germany, Saudi Arabi, and China, this is likely to be a very disruptive transformation. 

1. Nor was sterling even the leading trade currency in the 18th and 19th centuries. More widely used in much of Asia and the Americas were Mexican silver pesos, whose purity and standardisation were much valued by traders and so formed the bulk of trade settlements. 

2. One can argue that the closest comparison to today was 17th century Spain, when Spain ran large, persistent trade deficits, but of course these were the automatic consequences of huge inflows of American silver, and Spain didn’t accommodate foreign imbalances so much as create them, to the benefit especially of England and the Netherlands. In a recent conversation George Magnus also noted how the famous sterling balances of the 1940s illustrated another — very different — example in which the structure of trade could not be separated from the use of its underlying currency.