Whoever Thought That A Decision Taken In A Closed Room At The U.S. Department Of The Treasury Could Be More Lethal Than A Squadron Of Fighter Jets Will Find In Ulrike Herrmann’s New Book (Money As A Weapon: How The Economy Decides War And Peace Geld Als Waffe: Wie Die Wirtschaft Über Krieg Und Frieden Entscheidet) What Turns His Perceptions Upside Down.
The Economic Journalist At The German Newspaper “Taz”, Presents A Thesis Saying That We Have Entered An Era In Which Money Has Become The First Weapon, And That Wars Are No Longer Decided Only On The Fronts, But In Payment Systems, Semiconductor Markets, Gas Warehouses, And Dollar Clearing Rooms.
The Title Of The Book “Geld Als Waffe” Or “Money As A Weapon” Is Not A Literary Metaphor. Herrmann Deals With It Literally. Since The United States Decided In The Seventies To Tie The World To The Dollar As A Compulsory Breathing System, The American Currency Has Turned From A Mere Unit Of Exchange Into A Coercive Infrastructure. Every Dollar Circulating In The World, Even If It Is Between A German Company And A Brazilian Company, At Some Point Passes Through An American Bank. And This Moment Is The Chokepoint That Washington Has Turned Into A Weapon. This Is The Essence Of What Herrmann Calls “Financial Weaponization”.
Herrmann Begins Her Narrative From Where The Reader Does Not Expect, She Does Not Start From Wall Street, But From Ancient Athens. The “Megara” Sanction Imposed By Athens In 432 BC, By Preventing The City Of Megara From Entering Its Markets And Ports, Was The First Documented Economic Sanction, And Was A Direct Cause Of The Outbreak Of The Peloponnesian War. This Old Game – Suffocating The Opponent Economically To Change His Political Behavior – Has Been Repeated Throughout History, From The Continental Blockade Imposed By Napoleon On Britain, To The British Sanctions On Germany In The First World War. But The Difference, As Herrmann Emphasizes, Is That What Was In The Past A Naval Blockade That Needed Fleets, Has Today Become A Button Press In The Swift System.
The Most Enlightening Section In This Beginning Is Her Deconstruction Of The Myth Of “Innocent Globalization”. We Learned In Economics Colleges That Globalization Is A Network Of Voluntary Exchange That Benefits Everyone. Herrmann Reveals That This Network Was Deliberately Built With A Hierarchical Structure. The United States After 1945 Did Not Only Want To Rebuild Europe With The Marshall Project, But Wanted To Secure A Structural Superiority That Could Not Be Escaped. The International Monetary Fund, The World Bank, And The Swift System Which Was Founded In 1973 In Brussels But Is Actually Subject To Both Belgian And American Law, All Tools That Created An Inescapable Interdependence. And When Richard Nixon Came And Abolished The Dollar’s Link To Gold In 1971, He Was Not Destroying The Bretton Woods System, But Was Liberating The Dollar From Any Restriction, To Become The Absolute Weapon. There Was No Longer A Need To Own Gold To Print The Money With Which The World Buys Oil.
And Herrmann Presents Here A Number That Sums Up Everything: Until Today, Despite All The Talk About The Rise Of The Yuan, 88% Of All Foreign Exchange Transactions In The World Are Still Done With The Dollar On One Side, And 59% Of The World’s Reserves Are Denominated In Dollars. This Is Not Economic Hegemony, This Is The Infrastructure Of The World. And Whoever Controls The Infrastructure Can Cut Off Electricity To Any House He Does Not Like.
The Writer Tells How A Simple Employee At The French Bank “BNP Paribas” Was Forced In 2014 To Pay A Fine Of 9 Billion Dollars Because He Transferred Money To Sudanese And Iranian Companies, Even Though French Law Did Not Prevent Him. Why? Because He Used The Dollar. And Once You Use The Dollar, You Become Subject To The Judge In Manhattan. This Is The Moment Of Realization That Herrmann Wants Both The Arab And European Reader To Reach: American Sanctions Are Not An External Decision That Can Be Ignored, But Are An Internal American Law Applied Outside Borders Thanks To The Dollar.
The Book, Published In Early 2025 By The German House “Piper”, Intersects With A Historical Moment. It Was Written While The War In Ukraine Was Raging, And While Europe Suddenly Discovered That Its Dependence On Cheap Russian Gas Was Not Just An Economic Decision, But Was A Security Gamble. And Here Herrmann Excels In Linking Economy To Geopolitics In A Way Traditional Economists Do Not.
She Does Not Defend Sanctions As A Moral Tool. On The Contrary, She Devotes A Whole Chapter To Deconstructing Their Effectiveness. She Relies On Huge Academic Studies Indicating That 65% Of Sanctions Fail To Achieve Their Declared Goals. Why? Because Targeted Countries Learn To Adapt. Iran Developed A Resistance Economy. Russia Shifted Its Trade To China And India. Even Cuba Endured For Sixty Years. But Herrmann Says The Wrong Question Is: Do Sanctions Change The Regime’s Behavior? The Right Question Is: Do They Prevent It From Waging War? And Here Lies Its Strength As A Deterrence And Attrition Weapon, Not As A Persuasion Weapon.
In The First Chapters, Herrmann Paves The Way For Her Central Idea That Will Be Repeated Later: The Economy Is No Longer A Separate Field From War, But Has Become The War Itself. And She Quotes The Former U.S. Treasury Secretary Henry Paulson: “If You Want To Make A Country Kneel, Do Not Send An Armored Division, But Cut Off Its Dollar”. This Transformation Did Not Happen By Chance. It Is The Result Of The Decline Of Direct Military Power As A Politically Acceptable Tool After The Iraq War, And The Rise Of Tools That Are Less Costly In Human Terms And More Deniable.
Ulrike Herrmann, Who Became Famous For Her Previous Book “The End Of Capitalism” Which Became One Of The Best-Sellers In Germany, Has A Rare Advantage: She Is A Leftist Who Understands Capitalism, And A German Who Understands Her Country’s Complex. Germany Which Built Its Economic Model On Three Pillars: Cheap Energy From Russia, Open Markets In China, And The Security Umbrella From America. And The War In Ukraine Came To Bring Down The Three Pillars At Once. This Is The Implicit Context From Which She Writes. The Book Is Not Directed At Victorious Americans, But At Confused Europeans Who Discovered That The Peace They Lived Was Supported By Cheap Gas And A Strong Dollar.
The Chapter That Ulrike Herrmann Opens After That Is Like Entering The Engine Room In The Basement Of The U.S. Treasury Department, That Room That Journalists Do Not Usually Enter. There, In An Old Building That Looks Boring From The Outside In Washington, There Is A Small Office Called “OFAC” – The Office Of Foreign Assets Control. This Office, Whose Number Of Employees Does Not Exceed A Few Hundred, Has Authority That Often Exceeds The Authority Of The UN Security Council. How? The Answer Lies In Three Words Invented By America And Turned Into A Universal Law: Dollar, Swift, And Secondary Sanctions.
Herrmann Explains That America’s Power Is Not In That It Prevents You From Trading With It, But In That It Prevents You From Trading With Anyone Else. This Is The Essence Of Secondary Sanction. The Primary Sanction Is Simple And Understandable: An American Company Is Prohibited From Dealing With Iran. But The Secondary Sanction Says: A French Or Indian Or Egyptian Company, Even If It Has Never Set Foot In The United States, If It Deals With Iran In Dollars, It Will Be Punished Itself In America. Its Assets There Will Be Frozen, And It Will Be Prevented From The American Market, And Cut Off From The Dollar. And Since No Major Global Company Can Live Without The Dollar, Everyone Complies. Not Out Of Love For America, But Out Of Fear Of It.
And Herrmann Provides An Example Of How This Weapon Works In Reality. In 2018, When Donald Trump Withdrew From The Nuclear Agreement With Iran, He Did Not Need Europe’s Approval. Europe Wanted To Continue The Agreement, And Created Specifically A Financial Mechanism Called “Instex” To Bypass The Dollar And Trade With Iran In Euros. The Idea Was Ambitious: Barter Without Dollars. The Result? Not A Single Operation Of Value Was Implemented. Why? Because Any Major European Company – Siemens, Total, Renault – Calculated The Matter Simply: The Iranian Market Equals 80 Million Consumers, And The American Market Equals 330 Million Consumers With A Financial System That Has No Alternative. So It Chose America. “Instex” Died Before It Was Born, Not Because Of Technical Failure, But Because Of Terror.
And Here Herrmann Enters The Most Technical And Exciting Part: The Swift System. We Hear About Swift As If It Were An Email For Banks. But In Truth It Is The Nervous System Of Global Capitalism. Every Day 42 Million Transfer Messages Pass Through It, Worth More Than 5 Trillion Dollars. Its Headquarters Is In The Town Of La Hulpe, Belgium, And It Is Subject To Belgian And European Law. Theoretically, Europeans Control It. Practically, Herrmann Tells How The U.S. National Security Agency Hacked It After September 11, And How Any American Threat To Impose Sanctions On Swift Itself Is Enough To Make It Expel Any Country Washington Wants. And This Is What Happened With Iran In 2012, And With Some Russian Banks In 2022. Expelling Russia From Swift Was Presented In The Media As A Brave European Decision, But Herrmann Reveals That The Decision Was American Par Excellence, And That Europeans Hesitated For Weeks Because They Know That Cutting Swift From Russia Means Cutting Their Own Money From Their Gas As Well.
The Real Power Of The Dollar, As The Writer Explains, Does Not Lie Only In Being A Reserve Currency, But In Being The Invoicing Currency. Even When Saudi Arabia Sells Oil To Japan, The Invoice Is In Dollars. And Even When Germany Sells Cars To China, Hedging Contracts Are In Dollars. This Creates An Endless Structural Demand For The Dollar, And Allows America To Print Money To Finance Its Deficit Without Its Economy Collapsing. And This Is What The French Call “Exorbitant Privilege”. But Herrmann Turns The Term And Says It Is Not Only An Economic Privilege, But A Military Privilege. America Can Impose Sanctions Without Paying Almost Any Price, Because The Cost Of Printing A Dollar Is Zero, While The Cost Of Bearing The Sanction On The Other Party Is The Collapse Of Its Currency And Rampant Inflation.
The Question That Every Politician In Berlin And Beijing And Moscow Has Been Asking For Twenty Years Is: Why Don’t We Build An Alternative? And Here Herrmann Presents One Of The Most Realistic And Frustrating Chapters Of The Book At Once. Europe Failed, And China Failed, And Russia Failed, And Any Near Attempt Will Fail For A Structural Reason She Explains Accurately.
Europe Tried. The Euro Was Supposed To Be A Competitor To The Dollar. But The Euro, As Herrmann Says, Is A Currency Without A State. There Is Not One European Finance Minister, Nor European Debt Bonds Unified In Sufficient Size, Nor A Deep European Capital Market. When China Buys American Bonds, It Buys Absolute Security Because Behind It Is A Central Bank That Prints Without Limits And A Treasury Backed By Military Power. When You Buy Italian Bonds In Euros, You Buy Political Risk. Therefore, Although The Eurozone Equals America In Size, The Euro’s Share In Global Reserves Does Not Exceed 20% And Is Declining, While The Dollar Is Stable.
China Tried More Seriously. It Launched Its Own “CIPS” System As An Alternative To Swift, And Pushed Towards The Internationalization Of The Yuan, And Concluded Swap Agreements In Local Currencies With Dozens Of Countries. But Herrmann Goes To Beijing And Talks To Chinese Bankers Who Whisper To Her The Truth: The Communist Party Itself Does Not Want A Strong And Free Yuan. Because A Free Yuan Means The Possibility Of Capital Exiting China Freely, And Means Losing Control Over The Exchange Rate Which Is The Basis Of The Chinese Industrial Model. China Wants The Benefits Of The Dollar Without Paying The Price Of Capital Freedom. And This Is Impossible. Therefore The Yuan, Despite All The Propaganda, Still Does Not Constitute More Than 3% Of Global Payments. China Wants The Yuan To Be A Weapon, But It Is Afraid For It To Be A Currency.
As For Russia, Its Story Is The Most Indicative Of The Illusion Of The Alternative. Since The Sanctions Of 2014, Moscow Tried To Build A Financial Fortress: It Reduced Its Holdings Of Dollars, And Increased Gold, And Linked Its Financial System “SPFS” To The Chinese System. And The Kremlin Thought It Was Fortified. And February 2022 Came To Reveal The Bitter Truth That Herrmann Explains With Numbers. Half Of The Russian Central Bank’s Reserves – About 300 Billion Dollars – Were Located In Western Banks And Were Frozen With One Blow. Russia Discovered That Its Reserves Are Not In Moscow, But Are Just Numbers In A Computer In Brussels And Frankfurt. You Cannot Fortify Yourself From The Dollar While You Keep Your Wealth In Dollars And Euros.
Herrmann Says In Summary: Neutrality In The Dollar War Is Impossible. Every Country That Thinks It Can Deal With Everyone, That It Can Buy Weapons From America And Oil From Russia And Technology From China, Will Discover That It Has To Choose A Payment System. And The Payment System Determines Your Camp. Money Is Not Neutral. It Has Not Been So Since 1971. And Whoever Thinks He Can Separate Economy From Politics, Lives In A World That No Longer Exists.
At Five O’Clock In The Morning On The Twenty-Fourth Of February 2022, When Russian Tanks Crossed The Ukrainian Border, There Was Another Race That Started At The Same Moment In Closed Rooms In Washington And Brussels And Berlin. A Race To Formulate What Was Called At The Time “The Mother Of Sanctions”. The Prevailing Idea, Which Was Promoted By The Western Media With Enthusiasm, Was That Russia Would Collapse Economically Within Weeks, And That The Ruble Would Turn Into Toilet Paper, And That Putin Would Find Himself In Front Of Bread Queues In Moscow. Ulrike Herrmann Devotes The Longest And Most Detailed Chapter In Her Book To This Moment Specifically, Not Because She Loves Drama, But Because She Considers That The Russian Experience Is The Largest Laboratory In History For The Idea Of Money As A Weapon, And It Is The Experience That Revealed At Once The Power Of This Weapon And Its Deadly Limits.
At First, The Weapon Seemed To Work With Terrifying Efficiency. 300 Billion Dollars Of The Russian Central Bank’s Reserves Were Frozen, A Decision That Herrmann Describes As “The Financial Nuclear Bomb”. For The First Time In History, The Reserves Of A Major Country From The G7 Are Confiscated. Seven Russian Banks Were Expelled From The Swift System, And A Ban Was Imposed On The Export Of Advanced Technology, And Insurance On Russian Oil Tankers Was Prevented. The Immediate Result Was The Collapse Of The Ruble From 75 Rubles To The Dollar To 135 Rubles In One Week. Moscow Seemed On The Verge Of Collapse. But What Happened After That Is What Matters To Herrmann.
Russia Did Not Collapse. Rather, It Did What The Writer Calls “Primitive War Economy”. The Russian Central Bank Raised The Interest Rate To 20%, And Imposed Strict Restrictions On Capital Outflow, And Forced Exporting Companies To Sell 80% Of Their Foreign Currency Revenues. The Ruble Returned To Become Stronger Than It Was Before The War. The Western Media Mocked That And Considered It Artificial Manipulation, But Herrmann Says The Mockery Was Misplaced. The Ruble Is No Longer A Freely Convertible Currency, But Has Become A War Currency. Its Strength Does Not Reflect The Health Of The Economy, But Reflects That Russia No Longer Imports Anything From The West, So It No Longer Needs Dollars. And This Is The First Lesson: Sanctions That Prevent Import Strengthen The Currency In The Short Term, Because You Do Not Spend Your Dollars.
But The Real Story Was Not In The Currency, But In Oil And Gas. And Here Herrmann Turns The Tables On The European Narrative. Europe Imposed Sanctions On Russia To Punish It, But It Discovered That Russia Is The One That Has A More Deadly Counter-Weapon: Gas. Germany, Which Herrmann Built Her Book From Its Perspective, Is The Clearest Example. The German Model Which Was Taught In Universities As An Example Of Success, Was Based On A Simple And Dangerous Equation: Importing Very Cheap Russian Gas, And Converting It Into Expensive Chemical And Industrial Products, And Selling Them To China. When Russia Cut Off Gas, Not Only Did Heating Stop In German Homes, But Oxygen Was Cut Off From Factories. The Giant Chemical Company “BASF”, Which Alone Consumed More Gas Than The Country Of Switzerland, Was Forced To Close Factories And Announce That It Will No Longer Invest In Germany Again. Herrmann Quotes A German Economist Saying: “We Imposed Sanctions On Russia, So We Punished Ourselves”.
And Here The Writer Reaches Her Analysis Of The “Oil Price Cap” Imposed By The G7 In December 2022. The Idea Was Smart Theoretically: Preventing Russia From Selling Oil For More Than 60 Dollars Per Barrel, By Preventing Western Insurance On Any Tanker Selling At A Higher Price. Herrmann Explains How This Mechanism Was A Legal Victory And An Economic Failure. Russia Simply Built A Shadow Fleet Of 600 Old Tankers It Buys From Greece, And Insured Them In Moscow, And Sold Its Oil To India And China At A Discount, But At A Price That Always Remained Above The Cap. India, Which Used To Import 1% Of Its Oil From Russia Before The War, Became Importing 40% Of It, And Refining It And Selling It To Europe As An Indian Product. Russian Oil Did Not Disappear From The Market, But Changed Its Passport. And The Result Is That Russia In 2023 Achieved A Record Trade Surplus, While Germany Paid 100 Billion Euros Extra As An Energy Bill.
So Did The Sanctions Fail? Herrmann Rejects This Simplification. And Says That The Question Of Failure And Success Must Be Measured By A Different Measure: Did The Sanctions Prevent The Russian War Machine? Here Comes Her Complex Answer. In The Short Term, No. Russia Was Able To Finance The War Because Energy Prices Rose Due To The Sanctions Themselves. But In The Medium And Long Term, Sanctions Work Like Slow Poison. Herrmann Prevents With Numbers: Car Production In Russia Collapsed By 67% In 2022 Because It Cannot Import Electronic Chips. The Company “AvtoVAZ” Which Makes Lada Cars, Was Forced To Produce Cars Without Airbags And ABS System. The Russian Aviation Industry Eroded Because It Cannot Import Spare Parts For Boeing And Airbus. The Russian Tanks That Are Destroyed In Ukraine Are Compensated By Old Tanks From The Sixties Taken Out Of Warehouses, Because Factories Cannot Produce Modern Tanks Without Western Components.
The Financial Weapon, As Herrmann Sees It, Does Not Kill Immediately, But Causes Chronic Technological Poverty. Russia Has Turned From An Industrial Economy Into What She Calls “A Gas Station With Missiles”. It Can Sell Oil And Gas, But It Cannot Build The Future. And This Is The Real Goal Of Western Sanctions, Not To Bring Down Putin Tomorrow, But To Deprive Russia Of Being A Superpower After Ten Years.
But The Price Paid By Europe, Especially Germany, Was Huge. Herrmann Does Not Hide Her Anger At The Way The German Government Dealt With The Crisis. She Says That Berlin Knew Since 2014 That Its Dependence On Russia Was Dangerous, But It Enjoyed Cheap Prosperity. And When The Moment Of Truth Came, The Burden Was Loaded Onto The Ordinary Citizen Through Inflation, While American Energy Companies Made Huge Profits By Selling Liquefied Gas To Europe At Four Times Its Price In America. The Financial Weapon, When Used Against A Major Supplier, Backfires On Those Who Use It If They Do Not Have A Ready Alternative. And Europe Did Not Have An Alternative.
Herrmann Concludes This Chapter With A Summary That The Sanctions Are No Longer A Tool For Changing The System, But A Tool For Managing Conflict. America No Longer Wants To Change Russia’s Behavior, But Wants To Bleed It Slowly, While Keeping Russian Oil In The Market So That The Global Price Does Not Rise And Harm America Itself. It Is A Delicate And Suspicious Balance Between Punishment And Containment, A Balance Managed From OFAC Offices And Not From Defense Ministries.
If Russia Is The Laboratory In Which The West Tested The Money Weapon, Then China Is The Real Target For Which This Weapon Was Made. This Is The Pivotal Transformation Imposed By Ulrike Herrmann In The Middle Of Her Book, And Transfers The Reader With Her From The Gas Fields Of Siberia To Sterile Clean Rooms In Taiwan, Where The Most Important Thing In The World Today Is Made: Semiconductors. Whoever Understands The Chip War, Understands Why Washington Considers That Its Battle With Moscow Is Just A Rehearsal, And That The Decisive Battle With Beijing Has Already Begun Without A Single Bullet Being Fired.
Herrmann Begins The Chinese Chapter With A Picture That Seems Far From Economics: Xi Jinping’s Speech At The Twentieth Conference Of The Communist Party In October 2022. The Man Who Got An Unprecedented Third Term Did Not Talk About Communism, But Talked About One Word Repeated 32 Times: “Security”. Food Security, Energy Security, Technological Security. Why Does The Leader Of A Country That Exports To The Whole World Care About Security? Because Xi, As Herrmann Explains In Depth, Understood The Russian Lesson Before It Happened. He Understood That Integration Into Globalization Led By America Is A Fatal Weakness. And That China Which Imports 80% Of Its Advanced Chips From Abroad, Can Be Strangled In One Night By A Decision From OFAC, Just As Russia Was Strangled.
And Here Herrmann Returns To The Roots Of The Chinese Project That Worried America More Than Any Army: “Made In China 2025”. The Plan Announced By Beijing In 2015 Was Not Just An Industrial Plan, But Was A Declaration Of Independence. Its Goal Is For China To Move From The World’s Cheap Factory That Assembles The iPhone, To The World’s Inventor Who Makes The iPhone Itself. Ten Sectors Defined By The Plan, From Robots To Electric Cars To Aircraft, But One Sector Was Its Beating Heart: Semiconductors. China Spends 150 Billion Dollars As Direct Support For The Chip Industry, Because It Knows That Whoever Does Not Make Chips, Does Not Make The Future.
Herrmann Tells How Washington Woke Up Late But Violently. In 2018, When America Imposed Sanctions On The Chinese Company “ZTE” And Prevented It From Buying Qualcomm Chips, The Company Collapsed In A Week. That Was The Moment Of Shock In Beijing. They Realized That Their Giant Companies Are Just Huge Bodies Without A Brain, And The Brain Is Located In California And Taiwan. And From Here The Real Chip War Began.
The Most Exciting Chapter In The Book Is Her Detailed Description Of How The New American Strangulation Machine Works. America Does Not Own Many Advanced Chip Factories, But It Owns Something More Important: Chip-Making Tools. There Are Only Three Companies In The World That Can Make Advanced Lithography Printing Machines That Print Circuits A Few Nanometers In Size: The Dutch Company ASML. And This Company, Although Dutch, Uses American Patents And American Components. So Washington Issued A Law Preventing ASML From Selling Its Latest Machines To China. Not Because The Machine Is American, But Because It Has An American Part. This Is The Logic Of Secondary Sanctions In Its Technological Version: If Your Product Has 10% American Technology, You Are Subject To America.
And Herrmann Explains How This War Turned From Chips Into A Complete System. In October 2022, The Biden Administration Issued What The Writer Calls “The Harshest Technological Sanctions In History”. It Did Not Only Prevent The Export Of Advanced Chips To China, But Prevented Any American Citizen Or Resident From Working In Chinese Chip Factories. Overnight, Hundreds Of American Engineers And Chinese Holding Green Cards Resigned From Chinese Companies, And Projects Stopped. The Goal Was No Longer To Slow Down China, But To Break Its Knees.
Why All This Horror Of Chips? Herrmann Answers With The Story Of One Company: Huawei. In 2019, Huawei Was About To Become The Largest Phone Company In The World, Surpassing Samsung And Apple. And It Was Building Fifth Generation Networks In 170 Countries. For Washington, This Was Not Commercial Competition, But An Existential National Security Threat. Whoever Controls Fifth Generation Networks, Controls The World’s Data. So America Imposed A Complete Ban On Huawei, And Prevented Any Factory In The World That Uses American Technology From Making Chips For It. The Taiwanese Company TSMC, Which Was Making All Of Huawei’s Advanced Chips, Was Forced To Cut Off The Relationship Immediately. Huawei Did Not Die, But It Retreated Five Years Back, And Was Forced To Sell Its Trademark ” Honor” To Survive.
And Here Herrmann Reaches The Essence Of The Chinese Dilemma, China Is Very Strong And Very Weak At The Same Time. Strong Because It Controls 60% Of The World’s Production Of Rare Minerals That Enter Into Everything, From Batteries To Missiles, And Because It Is The Largest Market For Electric Cars, And Because It Owns Supply Chains That Cannot Be Dispensed With. But Very Weak Because It Cannot Make One Advanced Machine Without The West. And This Weakness Is What America Targets.
Taiwan Is The Knot Of This War. Herrmann Explains That A Small Island Whose Area Is Smaller Than Sinai, Produces 92% Of The World’s Most Advanced Chips (Less Than 7 Nanometers). TSMC Alone Produces Chips For Apple And Nvidia And Qualcomm. The Whole World Is Hostage To One Factory In The Taiwanese City Of Hsinchu. Therefore, The War On Taiwan Is Not A War On Democracy As The Media Portrays It, But Is A War On The Factory. America Does Not Defend Taiwan Out Of Love For Taiwan, But Because If It Falls Into China’s Hands, Then China Will Own The Key To Global Technology. And China Does Not Want To Invade Taiwan Only To Recover Land It Considers Part Of It, But Because It Wants The Factory.
Herrmann Quotes An American Official Saying Frankly: “We Do Not Want To Destroy China, We Just Want To Keep It Two Technological Generations Behind Us”. This Is The New Containment Strategy. America No Longer Wants To Change The Chinese System, But Wants To Freeze It. It Wants It As A Cheap Factory For Simple Goods, But Not As A Laboratory That Competes With It In Artificial Intelligence And Quantum Computers.
And The Writer Concludes This Chapter With A Question That Concerns Europe And The Arab World Directly: What Will Happen When All Countries Of The World Are Forced To Choose? America Has Begun To Ask Its Allies Clearly: Either You Are With Us In The Chip War, Or You Are Against Us. The Netherlands Prevented ASML, Germany Prevented The Sale Of A Chip Factory To A Chinese Company, And Even The Gulf Countries That Invest In Artificial Intelligence, Were Asked Not To Use Huawei Chips. The World That Was Talking About “Non-Alignment” Finds Itself Facing A Technological Division In Which Neutrality Is Impossible. Either An American Operating System, Or A Chinese Operating System.
We Now Reach The Chapter That Every Reader Who Read Newspaper Headlines In The Past Two Years Awaits: “The Dollar Is Dying, BRICS Is Coming, The Yuan Will Replace It, The World Is Abandoning America”. These Headlines That Fill YouTube Channels And Facebook Pages, Ulrike Herrmann Deconstructs In The Last Chapter Of Her Book And Her Conclusion, Is That The American Money Weapon Cannot Be Easily Defused, And That All Talk About The End Of The Dollar Is A Comfortable Illusion More Than An Economic Truth, And That The World Is Not Heading Towards A New Currency, But Towards A World Divided Monetarily And Technologically That Will Be Poorer And More Dangerous For Everyone.
Herrmann Begins From The Biggest Illusion: The BRICS Group. The Idea That Brazil And Russia And India And China And South Africa, And With Them Now Egypt And Saudi Arabia And Iran, Can Create A Unified Currency That Competes With The Dollar. The Writer Explains Why This Idea Is Impossible Economically Before It Is Impossible Politically. A Unified Currency Needs Unified Trust, And A Unified Central Bank, And A Unified Bond Market, And Freedom Of Capital Movement. The Eurozone, Whose Countries Are Culturally And Politically Similar And Have A Unified Parliament, Failed To Create A Unified Bond Market After 25 Years. So How Can Countries That Do Not Trust Each Other, Among Them Border Wars Like China And India, And Contradictory Economies Like Saudi Arabia And Brazil, Create A Currency? What Brings BRICS Together Is Its Hatred Of The Dollar, Not Its Love For Each Other. And Hatred Does Not Make A Currency.
Then She Moves To The Yuan. And Here Herrmann Presents An Analysis That Is The Most Convincing In The Whole Book. Why Can’t The Yuan Replace The Dollar Even If China Wanted It? Because China Itself Does Not Want It. The Dollar Is Strong Because It Is Free. You Can Buy Anything With It, And Take It Out Of America At Any Moment, And Sue The American Government In An American Court If It Confiscates Your Money. The Yuan Is Not Like That. It Is A Fully Controlled Currency. The Chinese Government Determines Its Price Every Morning, And Prevents The Exit Of More Than 50 Thousand Dollars Annually For Any Citizen, And Imprisons Those Who Manipulate It. No Sane Global Investor Will Put His Reserves Which Are The Security Of His People In A Currency He Cannot Take Out When He Wants. China Wants The Benefits Of Being A Reserve Currency – To Print Money And The World Buys It – Without Paying The Price: Freedom Of Capital, Rule Of Law, And Independence Of The Central Bank. And This, As Herrmann Says, Is Like Wanting To Swim Without Getting Wet.
And She Adds A Number That Ends The Controversy: The Yuan’s Share In Global Payments Via Swift Does Not Exceed 4.5%, Even After All The Propaganda. Even The Euro’s Share Is Also Declining. The Dollar Still Dominates 58% Of Reserves, And It Is A Number Stable For 20 Years. Why? Because Crises Increase Demand For The Dollar, Not Decrease It. When The War In Ukraine Broke Out, The World Did Not Flee To The Yuan, But Fled To The Dollar. And When The Silicon Valley Bank Collapsed, The World Fled To U.S. Treasury Bonds. The Dollar Is The Safe Haven Because Behind It Is An Army That Protects It And A Judiciary That Protects Property.
What About Gold And Bitcoin? Herrmann Devotes Sarcastic Pages To Them. Gold, Which Russia And China Buy In Bulk, Is Not Suitable As A Payment System. You Cannot Pay For An Oil Shipment With A Gold Bar That Must Be Transported By Plane. And Gold Itself Is Priced In Dollars. As For Bitcoin, The Writer Considers It “A Speculation Tool For Financial Teenagers”, Not A Currency. Its Price Fluctuates 10% In One Day, And There Is No Central Bank To Guarantee It, And Its Consumption Of Electricity Makes It Unusable As A Global Currency. You Cannot Build A Global Financial System On Something That Consumes More Electricity Than The Country Of Argentina.
So What Is The Future That Herrmann Draws? Not The End Of The Dollar, But The Division Of The World Into Two Blocs. A Dollar Bloc Led By America And Europe And Japan, And An Unofficial Yuan Bloc Led By China And Russia And Iran, Dealing In Barter And Local Currencies And Gold, But It Will Remain Small And Inefficient. And She Calls This “The End Of Globalization As We Knew It”. Globalization Which Said That Trade Brings Peace, Is Over. Now Trade Itself Has Become A Battlefield. German Companies That Were Proud That They Manufacture In China For The World, Are Now Forced To Build Two Factories: One For The West, And One For China, Because America Prevents Them From Exporting Certain Technology To China. The Cost Will Double, And Efficiency Will Decrease, And Inflation Will Remain.
And Here Herrmann Reaches Her Most Important Moral And Political Criticism, Which Makes Her Book More Than Just An Economics Book. The Money Weapon Is Effective, But It Is Undemocratic And Unjust. Sanctions Do Not Hurt Putin And Xi, But Hurt The Ordinary Citizen In Tehran And Moscow, While Elites Always Find A Way To Circumvent. Also The Dollar Weapon Gives America A Power That No One Has Granted It, A Power That Allows It To Impose Its Laws On The World Without Passing Through The United Nations. The World Governed By OFAC Is Not A Multipolar World, But A Unipolar World With A Financial Cover.
The Published Opinions Do Not Necessarily Represent The Opinion Of Nile Post.
