Sure: but it'll take years. In the meantime this is Energy War (and also food war) in terms almost unprecedented. The Hormuz Standoff is likely to last many months yet (maybe until the next US Congress is assembled in January 2027?) and all kinds of socio-economic structures will be battered across the globe by then. Replacing oil, gas and chemical nitrates can surely be done but the technological developments, especially in terms of sufficient renewable capacity and much less the very related green hydrogen infrastructure (batteries are not enough at all) are not here yet. The short term "adaptation" can only be massive degrowth, incl. famines surely. It will get much worse before it gets any better.
Indeed. Some parts of the world will be far worse off than other parts, no doubt about it. Adaption isn't a "flip the switch" thing. It will take years; this is what structural transformation is.
And Einar Tangen has related how China hopes to mediate all conflicts by developing a new world order. Since all conflicts eventually end up in negotiations, why not go there first and not kill the young people and waste armaments and create destruction - use diplomacy first. https://www.youtube.com/watch?v=YLYxCt8qXKA
Einar Tangen: China perspective on Iran war & death of US hegemony
This is a very strong piece. The key point is that modern state competition is not an abstract contest over rules. It is a combined contest over rules, geography, energy, finance, industrial resilience, and military capability.
Hormuz shows the structural limit of U.S. maritime power: Washington can write and defend rules, but when those rules must be enforced near an adversary’s coastline, against missiles, mines, drones, fast boats, and local escalation capacity, enforcement becomes a material-cost problem.
That is why this is more than an energy or shipping crisis. It is a test of whether paper rules can still be converted into operational power at acceptable cost.
From a China angle, the lesson is even broader. The countries best positioned for this new environment will be those that can turn vulnerability into system adjustment: strategic reserves, diversified routes, electrification, domestic industrial capacity, alternative payment channels, and the ability to impose reverse compliance risk on U.S. sanctions. The future order will not be decided by paper rules alone. It will be shaped by states that can convert rules, geography, finance, energy, and industry into operational power.
The Americans belief in Iran's need for 'hard currency' is a delusion. Iran has been cut off from the international finance system for many years, so if she obtained dollars, she could do little with them, perhaps use them to bribe Westerners? Over years of sanctions, Iran has learned how to provision herself. Oil sales to China are the means to obtain Chinese products, and so on. I don't know the details. Currency swaps? Barter? No matter, it works and will continue to work regardless of any US blockade.
Building on this interesting discussion, I think a currency’s strength ultimately depends on the authority behind it. The US dollar’s dominance has been closely tied not only to financial systems, but also to the industrial and manufacturing capacity that supported US global leadership.
In this sense, what we may be seeing is less a shift from “paper” to “power”, and more an evolution in where that underlying authority is concentrated. As China becomes increasingly central to global production, it may naturally translate into greater monetary influence over time as well.
... "the global economic system will adapt"...
Sure: but it'll take years. In the meantime this is Energy War (and also food war) in terms almost unprecedented. The Hormuz Standoff is likely to last many months yet (maybe until the next US Congress is assembled in January 2027?) and all kinds of socio-economic structures will be battered across the globe by then. Replacing oil, gas and chemical nitrates can surely be done but the technological developments, especially in terms of sufficient renewable capacity and much less the very related green hydrogen infrastructure (batteries are not enough at all) are not here yet. The short term "adaptation" can only be massive degrowth, incl. famines surely. It will get much worse before it gets any better.
Indeed. Some parts of the world will be far worse off than other parts, no doubt about it. Adaption isn't a "flip the switch" thing. It will take years; this is what structural transformation is.
This is not even about Iran, it's all about China: https://kathleenmccroskey.substack.com/cp/195951035
And Einar Tangen has related how China hopes to mediate all conflicts by developing a new world order. Since all conflicts eventually end up in negotiations, why not go there first and not kill the young people and waste armaments and create destruction - use diplomacy first. https://www.youtube.com/watch?v=YLYxCt8qXKA
Einar Tangen: China perspective on Iran war & death of US hegemony
Sumptuous and masterly argued.
This is a very strong piece. The key point is that modern state competition is not an abstract contest over rules. It is a combined contest over rules, geography, energy, finance, industrial resilience, and military capability.
Hormuz shows the structural limit of U.S. maritime power: Washington can write and defend rules, but when those rules must be enforced near an adversary’s coastline, against missiles, mines, drones, fast boats, and local escalation capacity, enforcement becomes a material-cost problem.
That is why this is more than an energy or shipping crisis. It is a test of whether paper rules can still be converted into operational power at acceptable cost.
From a China angle, the lesson is even broader. The countries best positioned for this new environment will be those that can turn vulnerability into system adjustment: strategic reserves, diversified routes, electrification, domestic industrial capacity, alternative payment channels, and the ability to impose reverse compliance risk on U.S. sanctions. The future order will not be decided by paper rules alone. It will be shaped by states that can convert rules, geography, finance, energy, and industry into operational power.
The Americans belief in Iran's need for 'hard currency' is a delusion. Iran has been cut off from the international finance system for many years, so if she obtained dollars, she could do little with them, perhaps use them to bribe Westerners? Over years of sanctions, Iran has learned how to provision herself. Oil sales to China are the means to obtain Chinese products, and so on. I don't know the details. Currency swaps? Barter? No matter, it works and will continue to work regardless of any US blockade.
Building on this interesting discussion, I think a currency’s strength ultimately depends on the authority behind it. The US dollar’s dominance has been closely tied not only to financial systems, but also to the industrial and manufacturing capacity that supported US global leadership.
In this sense, what we may be seeing is less a shift from “paper” to “power”, and more an evolution in where that underlying authority is concentrated. As China becomes increasingly central to global production, it may naturally translate into greater monetary influence over time as well.
Agree absolutely!