They'll diversity into Gold, rare-earth metals (they're only getting more important), CIPS, Yuan, Euro. That diversification helps everyone else, but will hurt the US, which hurts financial markets, and thus everyone else. And once they're all divested, the diversification will add risk and losses. Can't be helped though, they still need security. So we're looking at a generation of slow global decline, probably propped up slightly by the industrialization of AI (which of course China is leading the world in, as nobody cares about "better", they care about "cheaper"). China is the real winner, because all they need is oil, and their partners will make sure they get a steady supply (because it's in their partners' interests; that's what having allies is all about).
US can't stop this; their military isn't equipped to fight wars on multiple fronts, their lumbering, expensive weapons can't be sustained in a protracted conflict, their wars aren't popular at home, and they don't have the manpower. Even when they eventually start the draft back up it'll take years to build up their warfighting capabilities, and by then the world will have diversified enough that they can take the hit. (The US will try a World War anyway to try and retain the Empire, because their leaders are psychotic morons and their people are compliant, but they'll still lose. (Historic parallel: Sparta. Great military, but tiny, so most of their power came from wealth and tenant states; eventually the rest of the mediterranean got tired of their shit (installing dictatorships, alienating allies) and their empire died. Hell, even their Navy was paid for by Persia - foreign investment used to weaken rivals via proxy war))
I don't think this is avoidable. Nobody trusts the US now. The divestment has already begun. Countries aren't suddenly going to change their minds - even if Trump doesn't overthrow the government to cement this new status quo in 2028 (which he 100% will), the next President could be another Trump. Nobody wants to be subject to their insane policies (foreign & fiscal) anymore. So the US isn't a secure place for cash. Nations aren't just going to shrug and ignore it, they're going to act to protect their interests.
>That diversification helps everyone else, but will hurt the US, which hurts financial markets, and thus everyone else.
These are huge jumps in logic, I'm not even sure where to begin. I guess the most glaring question is: If other countries are actively diversifying from US assets as you claim, why would they still be so hurt by a US financial market downturn?
>And once they're all divested, the diversification will add risk and losses.
Since when does diversification ADD risk, and how would losses be incurred?
>which of course China is leading the world in, as nobody cares about "better", they care about "cheaper"
Also a huge claim to make. You'll find plenty of people who want the best models and are pretty price-insensitive, especially among those who get the most economic value out of AI.
> To be honest this comment kind of reads like anti-US fanfiction.
About the weak diversification argument: If people really do invest much less into US assets, then other available high quality assets will also become more expensive and result in lower yields. In turn, the US assets will appear "cheap" and attract new capital. This feels like a mirror of the global soybean trade. If China says they won't buy US soybeans (primary used to feed hogs), but buy Canadian or Brazilian, then other buyers just shift where they buy from. In the end, the global demand for soybeans has not fallen, rather a brief game of musical chairs was played.
It's not a claim, it's been reported for years. US foreign exchange reserves are at a 30-year low. Central banks have bought ~900 tonnes of gold in 2025, nearly matching the historic high during the pandemic. Central banks' holdings in gold now surpass US Treasury holdings (and we all know that gold is nearly 5x its price from last year). Poland, Turkey, India, Czech Republic have all been hoarding gold instead of dollars. France repatriated its gold. Saudi Arabia didn't renew their oil-for-tbills protectionist agreement with US in 2024. Big oil deals are now being done in Rupees and Yuan. Canada dumped its US treasuries. BRICS is already operating a new banking system independent of the US dollar. mBridge and CIPS allows China to settle payments with other countries solely in Yuan. Japan made a $75BN swap deal with India to deal in Rupees if it needs to avoid the dollar, with similar deals with Indonesia and Thailand. Japan is also working with UAE on non-dollar oil deals in the future.
> If other countries are actively diversifying from US assets as you claim, why would they still be so hurt by a US financial market downturn?
Because the global economy is one gigantic system of systems standing on top of the US financial system. When the US has a gigantic economic shock it ripples worldwide. But de-dollarization is gradual, so it will be a gradual drawdown in international economies.
> Since when does diversification ADD risk, and how would losses be incurred?
The US is where people put their money because putting it elsewhere was riskier. But now the US might be more risky. So you diversify... to the places that were risky before. So you can only move to risky places. That risk eventually leads to some loss. It's a "least-worst option" situation, but the end result isn't going to be great.
> You'll find plenty of people who want the best models and are pretty price-insensitive
That's now how capitalism works, that's how rich people work. The echo chamber of HN is full of upper-middle-class people with disposable incomes that are happy to waste money to feel emotionally better about their choices. But businesses aren't emotional, they're competitive. They want lower costs and higher profits. That means spending less. If a business can use a model that's 1/6th the price to get approximately the same results, they're going to do that, in order to gain a competitive edge. China is the place you go when you want to cut costs.