The central banks of India and the UAE set up a swap line, agreeing to exchange, say, a pile of rupees for a pile of dirhams. Then when an Indian refinery needs to buy UAE oil, it pays in rupees to its bank.

Are the swap arrangements temporary or permanent (ie they have to swap back at later date with interest). Because if it’s permanent it becomes more of a Net Transfer (a bit more complicated but it’s similar) , and India would be able basically getting something by giving its own currency, what would UAE do with these Rupees? You might say invest in Indian Govt bonds, but then you get Rupees only. Maybe FDI/FPI, but when India and Russia were trying Rupee-Ruble arrangement in 2022, Russians were reluctant.

On central banks buying gold, framing it as turning dollars into more dollars later is a wild misinterpretation of their motive. They’re not day traders. They’re risk managers. After watching the US freeze half of Russia’s reserves, buying gold is about getting a real asset with no counterparty risk. It’s de-dollarization 101 as opposed to some yield play.

Sure

First off, the whole bond yield thing. It’s not that yields are magically pegged. When a central bank does QE, it’s literally buying up its own debt in massive quantities, which artificially pushes the price up and the yield down. The value gets destroyed over time because that policy, if it goes on too long, invites inflation. Inflation eats the fixed coupon of the bond for breakfast. So the loss is real, either as a capital loss if you sell or as a silent erosion of purchasing power. The stable DXY lately is more about relative misery than dollar strength.

Natural rate of interest is zero if the Government runs a deficit under floating exchange rates, Treasuries are an interest-bearing savings instrument provided by the Fed. Inflation depends on aggregate demand, not on whether numbers exist on computers somewhere.

So the loss is real, either as a capital loss if you sell or as a silent erosion of purchasing power.

If you hold Dollars, the only risk-free interest bearing asset is Treasuries (IOR exists too but only for certain institutions). If you are buying any other currency you are taking exchange rate risk instead of supposed inflation risk.

The services surplus and those rock solid remittances bring in the real dollars year after year. Meanwhile capital flows are fickle money that’s chasing yield, and it can reverse in a heartbeat when global risk sentiment shifts or the Fed hikes rates. That’s a volatile source to depend on for funding something as essential as oil and electronics imports.

That is true. But it doesn’t change the part that any flows are better than no flows since it allows the country to run larger trade deficits than it would be able to without it.

bond yields are pegged, dxy is stable relatively. central banks mainly buy gold to turn dollars into more dollars later. India is only able to trade with Russia (or at the least net import) because it obtains UAE Dirhams, again by exchanging Dollars it has. The question is how India will be able to import as it does now without capital flows, services exports gone and remittances reduced. One way would be for China and others to transfer certain sums of Yuan to India’s account (either for ‘free’ or in exchange for Rupees). That’s what Americans do, they buy Rupee denominated assets, India exports electronic entries and paper which shows up under capital/financial account which finances India’s trade deficit with China and oil exporting countries. Without non-trade components, trade is reduced to barter-like arrangement.

Sources and Uses method can be a good way of looking at it. India’s source of foreign currencies include mainly: Services surplus (IT exports), Net Capital Flows (Financial and Capital Account), Net Transfers (mainly remittances from abroad), Draw upon reserves (they do it when exchange rate is under pressure). It uses these sources to pay for Goods Imports (oil, electronics etc from China, Gulf, Russia etc), Accumulate Reserves (i.e. reserves increase), Net Income (dividends, interest paid on domestic shares which go abroad).

The question then remains how will they earn whatever foreign currency they need to import?

India has one reliable source of foreign currencies, remittances from Gulf and the West. The other half is net capital flows. India’s trade deficit with China exists because of these. There is also very vulnerable services exports (which India has a surplus with the US) which will decline if India tries decoupling further pushing down imports and all.

There are a lot of hopefuls in that, Trump tariffs have been devastating for the economy, yet the Government instead of decoupling and trying to improve domestic demand, doubled down on internal devaluation instead. Will that characteristic change? Maybe depending on the pressure the US puts on capitalist profits.

I don’t think so. The present regime is captured by oligarchs who have financial interests in the US. All the Indian bureaucrats and ministers have their children studying in the US.

The last point I made wrt labor laws is also related since India was doing it because of Trump tariffs, the strategy is to reduce labor costs so capitalists earn more profits and India get to export and receive capital flows (from the US).

India is getting nowhere. It has a top 10% who are the consumer base and rest extremely poor (much worse inequality than China or the US). Real wages even among the salaried have been stuck since like 2010.

More recently, they weakened labor laws and ended rural job guarantee with zero consultation so as to please international capital.

Good related book

https://ipinfo.io/AS12975#block-summary

might be useful

RIPE Atlas is what you are looking for. Not sure about probes in Palestine.

Don’t you Hungary and all the former Eastern Bloc countries are heaven now and definitely not right wing shitholes.

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Maybe in the US but rest of the world has access to budget Chinese smartphones .

And you can work on not being a dick.

Owned by Elon Musk

Fr tho the seller is (likely) Chinese and doesn’t know

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It’s better to jail them, what’s the point of having money in bank accounts if you can’t access it?

That contrast is just

i know i’m being a but i despise the term ‘taxpayer funds’/‘taxpayer money’. besides being completely wrong in nearly all cases, it places taxes above the people, above labor.

‘American taxpayer is paying for the genocide in Gaza’. No, every person/entity using U.S. Dollars is paying for it. Even foreign countries are indirectly paying for it.

if you want the mainstream perspective look up ‘quantity theory of money’. from that it follows, less spending means less money and less inflation. so, spending rules reduce inflation by constraining the Government (but not commercial bank lending).

it can be true (sometimes), if you leave the economy with massive unemployment due to insufficient spending so that people don’t have money, it slows down and eventually shrinks but hey atleast there is ze price stabilité.

if you want non-mainstream macroecon books, these two ones I have read and can recommend. 1 2

Nearly drowned once falling into a lake and not knowing how to swim. I didn’t think about death, it was more “how do I get out”. Luckily someone else got my hand.

Its an ancient argument and your answer is correct.

There is no cock check at restroom doors anyone can enter.