Asset seizures in future wars-

[raharris1973]

In the world wars, normal rules of international finance and trade went out the window when the shooting started. The US in particular gained alot of properties and patents when they seized German companies in WWI.

Who controls the physical and electronic holdings of US Treasuries owned by Chinese banks and citizens? In other words, in a future US-Chinese War, could the Chinese use their US-held securities or attempt to redeem them all at once, as a way of inflicting economic damage, or could the US say, "F-U, we're at war and your assets here are nationalized." Which country owns more physical capital stock in the other? That's the one that would lose more from war, because physical property can always be nationalized in war.

Likewise, if Arab public opinion ever caused a concerted effort to exert financial pressure on the US over its mideast policies, could the US neutralize those measures with emergency financial decrees on fund transfers?

[Wozza]

This is an excellent question. Disappointing that no-one replied.

As advanced economies become more service oriented there resources become ever more intangible, and so in a certain sense more vulnerable.

For example, selling financial service is very lucrative, however, come a war the export market goes and the people and facilities cannot be converted to arms production - unlike for instance German toy factories in 1914.

However these are still skilled people who must be able to contribute to an economy in some way. Perhaps we will find out how when the time comes...

[Hendryk]

Who controls the physical and electronic holdings of US Treasuries owned by Chinese banks and citizens? In other words, in a future US-Chinese War, could the Chinese use their US-held securities or attempt to redeem them all at once, as a way of inflicting economic damage, or could the US say, "F-U, we're at war and your assets here are nationalized." Which country owns more physical capital stock in the other? That's the one that would lose more from war, because physical property can always be nationalized in war.
This is the reason the US will never go to war against China. In diplomatic circles, the situation is known as THOBIAV, which is an acronym for "they have our balls in a vise" :D

[Wozza]

This is the reason the US will never go to war against China. In diplomatic circles, the situation is known as THOBIAV, which is an acronym for "they have our balls in a vise" :D

I should have thought it makes perfect sense to go to war with a creditor.
In fact the case for economic determinism of this type in war is extremely weak indeed.

US investments are mostly in Japan and Europe, and that is reciprocated.

[Hendryk]

I should have thought it makes perfect sense to go to war with a creditor.
In fact the case for economic determinism of this type in war is extremely weak indeed.
But this is a new situation. Until the late modern era, the established dominant power was the creditor nation, and the troublemaking challengers were the debtors. Here we have a dominant superpower whose economy is dependent on the continued goodwill of long-term strategic competitors.

[Wozza]

But this is a new situation. Until the late modern era, the established dominant power was the creditor nation, and the troublemaking challengers were the debtors. Here we have a dominant superpower whose economy is dependent on the continued goodwill of long-term strategic competitors.

Hmm, not really, it is a large economy, relatively little of which is open to trade.
All the Chinese could do is dump dollars on the international markets, temporarily lowering the price, this would have relatively little effect on the US economy, of course the Chinese would have just made a huge loss from its dollar holdings, have nowhere to export, not much cash to import with and a billion or so mouths to feed. Who is vulnerable?
The world's huge dollar holdings are a sign of US strength - people are taking fundamentally worthless scraps of paper for tangible investments in the US economy - who is in trouble in war time?

[raharris1973]

god protects drunks, fools and the United States of America.

Likewise, Argentina will always be vulnerable to international financial panics, even if they get all the economic fundamentals right, because investors are aware of their unlucky history. Even people who know their fundamentals are right may sell off due to the "greater fool" theory.

[Grey Wolf]

Doesn't it depend on who owns the banks ?

I know in WW1, there were a lot of people who feared that any British involvement in the war would crash the British financial system. Lloyd George as Chancellor of the Exchequer met with the relevant British bankers and worked his magic and it didn't

The same would be for the USA - if it looked to collapse or go skew-whiff, the government and the banks would find agreements that prevented it from doing so

Enemies owed money don't really count as they can't actually get it from you. A dangerous neutral who has a hold on you would be more of a problem

Grey Wolf
gosh my testicles can talk !