The dangerous situation we are in is that entities outside of the USA hold significantly more US assets than US entities own assets outside the USA.
So if the USA declares "ownership be damned", it would be a net win for the USA.
Or in simpler terms: The USA has been giving out IOUs for real goods for decades. It is now tempting to default on those IOUs. The USA did this before. Up until 1971, a dollar certified a claim to gold. Then the USA simply canceled that promise.
The current ramp up to AI dominance might be what holds the USA back from breaking more ties with the world. It is a race that must be won. And investments from abroad help. But when the whole world is operated by US AI factories things might look different. When every task around the world is performed by intelligence generated in the USA, just like every computer is run by US software now - there might be little incentive left to "pay the rent" for the rest of the world that now sits around idle, fiddling their thumbs.
> The dangerous situation we are in is that entities outside of the USA hold way more US assets than US entities own assets outside the USA.
The dangerous situation we are in is that the US is berating and betraying its closest historical allies, eroding its credibility and soft power, and weakening its leverage at a time when threats to the Western order that has existed since the end of WW2 are growing rapidly.
Incidentally, the orange man in charge loves to tout "deals" in which foreign countries agree to invest substantial sums in the US, so any actions that lead foreign countries to believe their investments might be nationalized banana republic-style won't help the administration's efforts to attract investment and onshoring.
I would guess that most of those announced deals will never come to fruition. He loves to pat himself on the back, and everybody seems willing to go along with it, until they actually have to spend money.
Given the last 19 months of tariff chaos while Republicans control all branches of government, I don't see any reason to think they're concerned about that.
Plus the whole "assassinate the Iranian president in the middle of negotiations to start a war across a major global trade-route" thing.
> So if the USA declares "ownership be damned", it would be a net win for the USA.
This opinion is very naive. The moment the US declares "ownership be damned", the US dolar stops being the currency used in things like the oil market and it's value tanks. The world will scramble to use an alternative currency, which will end up being either the euro or the yuan. This effectively marks the end of US as a world power.
> Or Bitcoin. Of which almost half is already under US control.
This sort of opinion is laughably out of touch. Listen to yourself: oil markets will move away from the US dolar due to how the US governments destroying its value, and instead will move to bitcoin because... The US controls it?
Are you aware you are posting these outlandish opinions on how the world trusts the US with it's currency in a discussion where literally European countries are pulling their gold reserves out of the US because they no longer trust the US?
It's not going to be a net win for anyone. A country that needs to keep borrowing to stay afloat is not going to improve its position by effectively defaulting on its debt, regardless of the exact method or type of assets involved.
The USA might hold a majority of the worlds value generation in a few decades. If AI generated in the USA powers everything. Then the USA does not need to borrow anymore.
That outcome seems unlikely. Both that AI will remain dominated by USA for a few decades, and that they will use newfound profits to eliminate budget deficit.
And why would they want to default on their debts in this hypothetical future where they've "made it", raking in AI profits from everyone. They would work hard to preserve that world order and not shake things up unnecessarily.
The USA has managed to dominate software for decades now. Why would it change? Take a look at the current datacenter investments in the USA vs other countries. It looks very much like the USA will even extend its lead.
> why would they want to default on their debts
So they don't have to share the AI profits with foreigners who hold shares in the AI companies.
> So they don't have to share the AI profits with foreigners who hold shares in the AI companies.
They can do it now. They don't, because it's not worth it. It won't be worth it in the future either. They'll have yet more to lose. Especially in this hypothetical scenario where their massive AI exports are what's paying for their economy – good luck getting your counter-parties to pay for your exports after you have decimated their economies and soured relationships over a one-time boost that will cover what, a couple years of US government spending at best?
> The USA has managed to dominate software for decades now. Why would it change? Take a look at the current datacenter investments in the USA vs other countries. It looks very much like the USA will even extend its lead.
- Because USA managed to dominate other industries for decades as well, only to lose them for one reason or another?
- Because China has shown its ability to dominate in other complex modern industries like EVs and drones... and software is not special, and they're already starting to out-compete US with cheaper open-weight AI models?
- Because trust in America has already shaken, and work to get off US software in other countries has already started, even if it's slow and will take a long time?
- Because the contents of datacenters have a useful life of only a few years, and over-spending hundreds of billions on first-generation inefficient datacenters may sooner result in a financial crash wiping out most of the industry, than build a meaningful long term moat?
- Because US doesn't even produce the chips that power said datacenters, whereas China, their main geopolitical competitor, is working full time to develop their own chips, while militarily posturing against the island next door where all America-bound chips are made, at a time when US ability and will to do anything about that seem to be at an all-time low?
- Because after enough iterations, the AI race may eventually boil down to in large part to competition on the cost of electricity, in which US is at a disadvantage?
US is not going to willingly default on its debt or violate investors' property rights. That's just a fantasy that got nothing going for it.
> good luck getting your counter-parties to pay for your exports
It's not a matter of choice. Once a country runs on US artificial intelligence, it can't just say "Well, let's do things manually again". People won't know how to do it anymore. There will be no more keyboards, steering wheels or cash registers to operate.
It's true that China might offer an alternative. But changing a country from being run by US AI to being run by Chinese AI is not a small feat and comes with its own issues.
> US doesn't even produce the chips
TSMC is running and expanding a factory in Arizona. Budget: $265 billion. Intel, Samsung and Miron are also building capacity in the USA.
yes. but most of it is not to other countries. Most government debt (over 80% globally) is privately owned through sovereign debt instruments like bonds.
So if the USA declares "ownership be damned", it would be a net win for the USA.
Or in simpler terms: The USA has been giving out IOUs for real goods for decades. It is now tempting to default on those IOUs. The USA did this before. Up until 1971, a dollar certified a claim to gold. Then the USA simply canceled that promise.
The current ramp up to AI dominance might be what holds the USA back from breaking more ties with the world. It is a race that must be won. And investments from abroad help. But when the whole world is operated by US AI factories things might look different. When every task around the world is performed by intelligence generated in the USA, just like every computer is run by US software now - there might be little incentive left to "pay the rent" for the rest of the world that now sits around idle, fiddling their thumbs.