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In the 1930s, two political details about the intersection of monetary policy and other kinds of policy were that China was an unstable country with a silver-backed currency and that in the US, the Senate overrepresented the interests of states with big silver mining interests, which made them a valuable constituency that, for historically contingent reasons, aligned with Democrats. One of those reasons was that gold was historically associated with lower inflation, and inflation was a polarized issue when one party had relatively more farmers (selling crops at the market price to pay fixed mortgages) and the other more holders of fixed income. So, a series of decisions by the treasury and Congress pushed silver prices up from the global average of $0.42/oz in 1933 to $0.7757 by 1935.¹ All this activity had a few effects, including making Nevada an easier state to win in 1936 and pushing China into a catastrophic deflationary depression which did not exactly make it easy to fight a civil war and an invasion by Japan.

There are times when countries' exports are more abstract than the goods and services they sell, and really refer to the phenomena that they spread. Many decades later, in the 90s and especially the early 2000s, a reasonably accurate narrative about China was that they were exporting deflation to the developed world: China had a policy mix that made it a great place to add manufacturing capacity, which companies both foreign and domestic did with gusto. They were generally importing the same kinds of capital goods that would appear in factories elsewhere, but staffing them with workers who earned a fraction of the compensation they would in Germany or the US. This was a GDP-weighted view of the world; weighted by population, China was exporting inflation, in raw materials—as the country grew, their demand for copper, iron, fertilizer, and agricultural products did, too.² This was a strange and unsustainable squeeze, where some places saw rising prices because China was stimulating demand, while richer places saw relatively static prices because cheap Chinese exports were helping offset the impact of demand on consumer prices.

At the same time, China was importing a different abstract force: the more their economy was tied to multinationals, the more their businesses had to operate in a way that was compatible with how those multinationals behaved. It's not a requirement that two countries have identical legal systems in order to do business, but it is pretty hard for them to work together if concepts that are standard in one country's system are impossible in another's. This led to some weirdness; the US has ample experience with complicated company structures, where one company encompasses multiple layers of other companies, and even strange workarounds like having the ETF that represents a benchmark for equities last only a certain amount of time past the lifespans of eleven "SPY Kids". They took this concept a lot further with variable interest entities, a complex and rickety structure used to get around Chinese rules against foreign equity ownership, which was only shrugged at rather than endorsed as late as 2023. So one thing the US exported was that if capital markets want access to a particular theme, it will be conjured into existence, even if that means starting new companies or finding ways to circumvent the rules.

But that was exported along with norms about contracts, which seems to have stuck. Globalization makes rule of law contagious, because every contract with an importer or exporter is exposed to all of their contractual relationships with everyone they depend on.

The US has another peculiar role in the abstract-exports business. On one hand, the tech sector exports deflation; the hardware gets cheaper, and software comes in two varieties—the zero marginal cost one, or the one that competes with big chunks of human labor and declines in price by almost half every quarter. On the other hand, the US exports demand, particularly dollar-denominated demand, at times when the world economy needs it. When the dollar (another big and basically abstract American export) is scarce, everyone else in the world has a harder time servicing debt in dollar terms, and the two basic channels they have are selling America goods or letting the US government run up a bigger tab. The US, today, is unique in the extent to which its policies determine what imbalances will show up in the global economy and roughly how they'll be addressed.

There are a few big countries that can do this kind of abstract-exporting globally, and some smaller ones that can do so within an economic bloc. Some of these are temporary—you can only export so much deflation before there's nobody left to buy and the factories are all idle. But some of them seem like they're only going to accelerate: Americans are the Internet's inadvertently conspicuous tourists, always assuming things work like they do at home, because America is the center of gravity for so many Internet phenomena, which means it's overrepresented in the training data for LLMs, which will thus tend to have a more American perspective. We're already seeing bits of this in political speeches, but it will probably show up everywhere. And they'll probably stick around—America has the world's highest cumulative GDP by a long shot, so the American way has had more experience at higher stakes across many domains—it's not the only country that can produce best practices in these domains, just one that punches above its weight. So the next phase is that in addition to the US exporting higher real rates by having a fast-growing economy, the US is exporting baseline assumptions by virtue of producing a disproportionate share of training tokens and then making decisions about how the resulting models behave.

These implicit exports show up in many macro-flavored pieces in The Diff:

• During the pandemic, we looked at the US's status as the world's consumer of last resort ($).

• The long deflation in manufactured goods prices made it hard to measure inflation ($).

• Decentralized software projects are a good example of this dynamic, because they rely on extreme centralization for a few things.

• We've looked at how different kinds of labor get shifted to different geographies ($).

• America is also a big importer, with an edge in talent and capital ($).

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1  One bill was actually passed by Congress on William Jennings Bryan's birthday.

2  At low incomes, total calories produced per person will grow fast even if calorie consumption per person doesn't, because people eat more meat, which requires more calories of grain.