InterOuts

Fiscal Nightmares, Courtesy of the USA for the Rest of the World.

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The news that ‘officially’ the United States of America, the nation whose currency, the US Dollar is the Reserve currency for almost all of the world, is in debt to the small sum of 37 Trillion Dollars has caused a shift in the financial planning and currency reserves of many countries around the globe. Gold has increased in price dramatically over the past few months due to increased demand and there is a distinct lack of interest in the US Treasury Bond market by buyers. The BRICs nations whose membership has swelled very fast to include economic giants like Indonesia, is preparing to shift gear and possibly introduce a BRICs currency backed up by gold among basket of other commodities. China quietly announced that it was backing its currency, the Yuan with gold, following in Zimbabwe’s footsteps making it the second country to do so. Given the following figures, the decline of the almighty dollar is now a certainty. The BRICs nations now account for 60 Trillion dollars in terms of global GDP PPP and the figures are astounding. BRICs accounts for 46 % of GDP PPP ( G7 = 29%), 55% of the world’s population (G7 = 10%), 45% of global oil production (G7 = 29%), 50% of global GDP growth (G7 = 20%), 46% of global electricity production (G7 = 29%), 79% of global aluminium production (G7 = 1.3%), 62% of global steel production (G7 = 17%) and 40% of global manufacturing (G7=17%). These figures are an approximation given how much the G7 nations have massaged their ‘official’ figures for decades. Leaving the Gold Standard opened the doors of fiscal perception and creative accounting became the byword. The vaunted economic ‘miracle’ west , the G7, is no longer in first place and is frankly lagging so far behind as to be unable to catch up in the short term and certainly only in the medium term (4-5 years) and the long term(8 years+). To this rosy fiscal picture of the USA’s economy must be added the fact that ‘unofficially’ official, the USA is indebted to the tune of 100 Trillion Dollars + for both Medicaid and Social Security, a fact that neither Congress or the Senate will discuss openly though there is much behind the scenes wringing of hands. It is not possible for the USA to pay the interest on these sums as the interest on the 37 Trillion Dollar debts alone is 1.4 Trillion US Dollars and the tax income annually a mere 890 +/- Billion US Dollars.

The option of resolving this by the usual methods is not feasible as printing more fiat money will weaken the exchange value of the Dollar further diminishing its power so making it harder to sell US Treasury Bonds as they will cost more for the USA to service in payments. It will further inflate the interest on the debts and cause rising inflation at home, a situation the US Administration want to avoid at all cost. Obviously, it is only part of the problem the USA faces but it underpins the others as it oversees and produces the money to be able to provide governance in whatever form they decide, be it hegemony masquerading as ‘democracy’. This is the USA’s problem. However, it affects every single nation on the globe as all make use of the financial payment systems like Swift and financial instruments like the Stock Markets, Banks, Finance Houses, Insurance and Pension providers and inter-nation Transactional Services as well as US Treasury Bonds to back their own currencies and allow solvency in financial dealings. So if the US Dollar falls heavily, then because at the end of the line all financial dealings are measured in Dollars, all nations will find themselves in the situation where all financial dealings are undervalued. This will leave them short as the money they receive is less than was calculated and agreed. Underfunded and unable in many instances to meet their commitments, how will they settle their debts? They too will need funding via borrowing so the demand for loans will push the price of borrowing sky high making them even more vulnerable financially and economically. The countries which will be relatively unaffected are few and are mainly the BRICs nations like Russia, China and India with a few others whose economies are neither tied to western financial systems or dependent on western markets to sell their goods and services. For the rest of the globe, the outcome is of very divisive social and political upheaval with more extreme positions being taken because they government will find itself unable to fulfil its ‘normal’ duties towards its citizens as it will not have the required income and its population will be far from happy with the situation.

If only raising the price or cost of an item was the answer, it would be easily settled but in doing so, the market shrinks as demand falls and a cycle of increased prices and costs versus decreasing demand ensues. As an economy shrinks, there is a tipping point where it becomes unviable to continue supplying a good or service when demand falls too low. Less work= less income= less purchasing ability= less demand= less work. The cycle goes on until a cataclysmic event occurs or a change takes place which though of benefit to some is not the case for most countries and their people. The political issues at the heart of this are quite unpalatable as the west blithely prates on about ‘Rules Based Order’ which means their hegemony continues and their method of resolve is brutally extreme be it financial, economic, social or pure and simple bullying tactics using military might. The options for the globe are acquiesce or fight, no other avenues exist. Otherwise, poverty, hunger and long term downgrading of the nation in its entirety ensues, keeping them low on the food chain for a very long time and making it difficult to move forward and grow. The purported aim of every nation on earth is peace and prosperity for all its citizens with a fair and open system of government to enable that. The daily battle to remain stable and move forward carries enormous risks that all governments face and whose people deal with at the most basic of levels. This is now being stretched beyond the point of return with most, if not the majority of global nations indebted to a level where a little bit more instability will force them to default on their debts. Defaulting only takes into account being unable to pay the interest on the ‘loan’, not the fact that the capital sum also must be paid at some point. For most nations including the G7 and its main protagonist the USA, there is no viable way that they can realistically repay the capital sum owed without returning almost to the Stone Age.

We can raise the spectre of ethics, morality, humanity and the usual tired platitudes can flow on with much wittering about how terrible it is. To what end? Has the West so taken leave of its senses that it will follow the path that leads inevitably to War as the option of belt tightening and hard work over a lengthy time period is not seen as viable? Does it honestly believe that it is entitled to rule the world and demand obescience and tribute? The USA, the United Kingdom, the European Union and other western aligned allies like Japan, South Korea, and Argentina following this line seem set on proving by force ultimately that they are in charge and the world must obey. But even pure simple adolescent logic will deduce that they cannot win a War against the rest of the globe using conventional means only. So it leaves MAD (Mutually Assured Destruction) as the only possible end game by involving Nuclear weapons since the USA’s hegemony (which is backed up and fully agreed upon by the so called ‘allies’)is clearly not just on the wane but about to cease completely. That will mean not that the USA and the West will live within their means but that since their true level of production is so abysmally low, they will slide into poverty and obscurity.

So what is the foreseeable outcome, one which we all are subject to? The current US President, Donald Trump is clearly as off the wall as his predecessor Joe Biden was, as so many of his pronouncements and edicts are not logical and he constantly reverses his decisions in a very short space of time. Both his implementation of tariffs, the reversal of them, then re-implementation of them again, as well as supplying, then stopping supplying, then supplying weapons to Ukraine show the inconstancy of his decisions and their illogicality. It is obvious the USA is clutching at straws much as a drowning man would, but the problem with the end of empire is that it always ends with insane extreme levels of violence and barbarity as the empire tries to remain on top and in control. If the USA in its desperation to remain top dog is basically dumb enough to resort to nuclear weapons, it will find itself wiped off the face of the earth as despite their so called secure bunkers for the elite, once they emerge, they will be detected and annihilated. Both Russia and China have categorically and repeatedly stated over decades that they will not use nuclear weapons as a first strike, pre-emptively or in retaliation and have stuck to this. If the United States of America foolishly thinks they will not retaliate, and that if they do, it will still survive and remain in charge of what remains, then we are facing a situation where logic, common sense and cold hard reality are absent from the lexicon the USA employs. This present President of the USA who can only be termed as mentally absent given his erratic actions is surely but inevitably moving us towards WW3 and all the horrors that will ensue. It is very sad that a once great nation like the United States of America has sunk to such a level of depravity ethically, morally and humanely. This was ‘the Land of the Free’, the upholder of democracy which even though that was tainted, was an example for many men to aspire to for whatever reason motivated them. So much for the vaunted western civilization, finally it has proved itself to have been built on the blood, sweat and tears of the oppressed and to be a hollow shell of anything more than pillage, theft, subjugation and pure unadulterated murder, mayhem and barbarity.

We need help to avoid this but the likelihood of its arrival is close to zero. As a famous quote put it "No one saves us but ourselves. No one can and no one may. We ourselves must walk the path." (Anon).