America Is in Big Trouble

What creates wealth is the real economy, like agriculture, manufacturing, mining, energy and construction. The trade, professional service and financial sectors only provide assistance in exchange for a piece of the pie. They do not generate real wealth by themselves (see Mammonism).

Today's American economy is overwhelmingly capitalized and service-oriented. Except for a few remaining high-tech and military industries, most of the manufacturing has moved to countries with low production costs. The US economy has undergone severe deindustrialization over the past few decades. It is now dominated by financial capitalism that relies on financial operations to reap the wealth of the world, while its productivity has long been unable to support its hegemony. Our apparent strength is built on finance rather than real economy. Although this economy is now only 1.5 times what it was 20 years ago, the amount of dollars issued in one year is now five times that of 20 years ago; the national debt is now 7 times what it was 20 years ago, exceeding $34 trillion; private lending has reached another $30 trillion. Much of the money flows abroad through purchases of foreign goods, loans to other countries, sales of US bonds, and payments to our debt creditors, as the US dollar as the world reserve currency is demanded by all countries. It is estimated that there are more than $100 trillion dollars in circulation abroad.

Such unscrupulous issuance of US dollar triggered worldwide inflation, doubling the price of food, four and a half times the price of oil, and tripling the price of iron ore. The world reserve currency status of the dollar allows the United States to manipulate the world economy with its monetary policy, such as using monetary easing (reducing interest rate and increasing dollar supply) to stimulate borrowing, and monetary tightening (increasing interest rate and reducing dollar supply) to make the dollar appreciate relative to other currencies, causing the repatriation of capital to the US and the contraction of other economies. This enables US financial oligarchs to acquire foreign assets and stocks at a discount price. Monetary policy is often operated in conjunction with other means, such as provoking tensions, unrest and color revolutions under the pretext of human rights etc. to worsen the investment climate in other countries, so that the US can harvest their wealth and profit from arms sales and wars. Of course, the beneficiaries are the US special interests, not the American people.

The current world economic order established by US special interests is unfair and immoral from the standpoint of developing countries. To maintain this order, the US special interests have made unremitting efforts to stifle the growth of rival economies, such as UK, Germany, USSR and Japan in the past, and Russia, Europe and China today. They have instigated the Russia-Ukraine conflict to contain Russia while creating a security crisis for Europe, cut off cheap Russian energy supply to the continent, seized the European market with expensive American energy, which sparked severe inflation that affected people's lives, a dramatic increase in the cost of production that damaged the European economy, and a significant capital outflow from the region, further eroded Europe's strategic autonomy, tied Europe to the American chariot against the rising East, and made Europe more dependent on the US for security. They are now using Japan, South Korea, Taiwan, the Philippines, India, Australia, and NATO’s eastward expansion in the Indo-Pacific region to contain China.

American oligarchs' determination to maintain their global hegemony contradicts the aspirations of other nations to develop their own economies. Most countries desire a cooperative, equitable, and peaceful environment for development that benefits all parties. The US policy of prioritizing America's interests, promoting unipolar hegemony, and asserting extraterritorial jurisdiction has encountered opposition from developing countries worldwide.

Faced with mounting debt, inflation and financial crises that a hollowed-out economy must face, US policymakers are caught in growing anxiety. But, instead of resolving deep-seated structural and institutional problems within the United States itself, they resorted to high-handed tactics to pass on the crises, including continuously raising the debt ceiling, forcing other countries to buy more US treasuries with no intention of repaying the debt, flexing military muscles, provoking regional conflicts, launching cognitive, trade, technological, and financial wars, using US domestic law to exercise long-arm jurisdiction over other countries, imposing unilateral sanctions to suppress foreign governments and companies, freezing and confiscating foreign overseas assets, weaponizing the US dollar and the SWIFT system, sabotaging civilian infrastructures of other countries, and engaging in embargo, decoupling, clique and isolation, etc. These tactics aimed at containing other economies also caused serious damage to our own, ruined America's reputation as a fair player, weakened its international influence, damaged the credibility of the dollar, further isolated America itself, and is causing a global sell-off of US treasuries and de-dollarization that will ultimately end US hegemony. To make matters worse, uncontrollable inflation in the US has forced the Federal Reserve to raise interest rates aggressively, triggering the current wave of bank failures and a global economic downturn, causing turmoil in the financial markets of many countries, especially heavily indebted countries.

For its own self-interest, the United States has become a source of instability in the world. Of course, its vested interests will not stop being the troublemaker. Some think they can harvest others nations' wealth forever just by keeping the money printing presses running. Others are willing to start another world war to maintain their primacy. On the surface, it is the capitalization and financialization of the economy that have led to America's crises, but the root of the problem lies deeply in the ideologies that the American plutocrats believe, that is, capitalism, Darwinism, Machiavellianism, the law of the jungle, and zero-sum game (see Philosophies that Separate Two Worlds). It's just that they forget that their hegemony built on mounting debt rather than real ecomony is not sustainable. Most tango dancers do not embrace the ideologies of the American oligarchs, I believe, because these ideologies contradict the spirit of tango, but we cannot but be wary of the negative influence of these ideologies on our life and tango.

The world that the majority of nations seek is a democratic world where all countries have the same opportunity to develop their economies and advance the lives of their people through win-win cooperation. US policy makers must abandon their selfish, bullying and myopic approach if they truly believe in democracy. The American electorate deserves leaders who demonstrate greater moral principles. Otherwise, America will ultimately face the repercussions of its behaviors (see The Vicious Circle of Regime Change).

P.S.
The following video explains the American monetary system, from Bretton Woods agreement, decoupling of USD to gold, USD pegging to oil, consumer capitalism, vendor financing, outsourcing manufacturing, job losses, big trade deficits, increasing inequality, huge military, lots of wars, uncontrolled money printing, and having more and more debt, to devaluation of USD and inflation. The speaker attributes this doomed system to dollar as the world reserve currency and suggests that these will all end when a new currency regime emerges. The question is, will the vested interests in the US allow that to happen before the empire collapses?