Daniel Moss: Is America alone? Not yet, but it’s trying

This transaction war is no ordinary emergency of the kind that buffeted capitalism periodically in the past scant generations It s less a storm Singapore s deputy premier asserts and more like a tidal wave When leaders of a flourishing trade-dependent nation talk this way it demands attention And yet for all its power the analogy doesn t quite capture the shift in mood since Donald Trump returned to the White House There s more to the sense of dislocation than mere tariffs it s the undergraduate way they were unveiled and then suspended The independence of the Federal Reserve faces renewed threats The bullishness with which U S markets were regarded has dissipated the dollar has been hammered stocks are down recession fears are up And governing body bonds not usually prone to sharp fluctuations have gyrated in troubling methods Finance ministers in Washington for International Monetary Fund and World Bank meetings must have felt like they landed on another planet Treasury Secretary Scott Bessent pledged qualified backing for the two institutions which were born under U S auspices as World War II neared an end That this was greeted with relief shows how much crockery has been broken The turmoil forces certain uncomfortable questions which though not entirely new tended to be considered something for another day Suddenly the primacy of the dollar and even the relative safety of U S securities are open to debate The wisdom of relying on Washington s guarantees in both the economic and diplomatic fields is getting fresh scrutiny Nothing is long-run anymore Markus K Brunnermeier a nonresident senior fellow at the Peterson Institute for International Economics notified a symposium last week Everybody will just be more flexible Assets perceived to be safe now look shaky To not have a Plan B other than looking to the U S for salvation as during the subprime meltdown and the outbreak of COVID- is to court poor outcomes The gathering s somber tone seems an central marker for assessing Trump s second term In December as investors were trying to get a handle on how it might differ from his first Peterson and the Lee Kuan Yew School of Populace Protocol convened a conference in Singapore One session posed what then seemed like a provocative question What would a world without the U S look like It felt a bit premature and there were no reassuring conclusions American power wasn t going away If Washington s credibility is diminished it s entirely on the president He has deliberately taken an ax to a pre-requisite for influence dependability The disruption Trump has wrought is testimony to the sway America still has But this demonstration of clout deployed to cause harm to both ally and opponent might contain the seeds of diminishment Discussions at last month s event displayed the slippage Warwick McKibbin a professor at the Australian National University who sat on the board of the Reserve Bank floated how much additional protection investors might require to buy Treasuries Would an extra yield of basis points do the trick My attention was really grabbed when the Asian Monetary Fund got a mention That was a concept I hadn t heard about in years The fund was an attempt in the late s to develop a rescue reserve among the region s governments The idea was that they not be so dependent for emergency loans on the International Monetary Fund and its biggest shareholder the U S Treasury Japan was to play a big role and the plan had a number of boosters including Malaysian leader Mahathir Mohamad But without American backing the venture foundered Its struggles ultimately revealed how hard it was to develop a meaningful architecture in the face of U S resistance Hurdles would remain in the present day not least that the dollar for all its flaws has to be part of the arrangement Even China doesn t want a divorce As long as the yuan isn t traded freely there will be considerable limits to just how much it will challenge the greenback assuming Beijing even really wants that The world is still the dollar s and by implication America s to lose It s disconcerting that the alternatives are getting a hearing America isn t yet alone though that s not for want of trying Singapore with its huge container port and world class airport is right to be very worried In this the city-state has plenty of company Daniel Moss is a Bloomberg Opinion columnist covering Asian economies Previously he was executive editor for economics at Bloomberg News Related Articles Sheldon H Jacobson TSA isn t perfect but it s way better than the alternatives Lee Fang Is your favorite influencer s opinion bought and sold Javier Blas It s electricity realism not state denialism Solomon D Stevens Want to do something about polarized society Stop shouting slogans Merrill Grayson Let states take the lead on voter verification