WHY AMERICA HAS NO CHOICE BUT FOREVER WAR
Despite runaway financialization, dollar unipolarity is essential triage for America's deindustrialized economy. US govt is trapped pursuing hegemony to avert catastrophic collapse; thus, forever war.
“Responsible stewards of United States government have no choice but to do everything in their power to fight the tide of a de-dollarized multipolar future.” — Barbara Feinstein (D-CA)
Most neutral economists agree that de-dollarization will be the consequence of the inevitable shift to a multipolar world. It is not by definition a violent or zero sum transition. All nations desire sovereignty, security, and prosperity. Economies evolve over time and domestic progress builds the natural gravity of independence. To be trapped by the vicissitudes of a dollar reserve system run exclusively to serve American interests becomes increasingly untenable - not to mention immoral - as U.S. society is forced to accommodate an ever more militarized economy pursuing an ever more brutalized foreign policy to preserve its privilege on top of the world's financial sovereignty pyramid.
The war industry is an insatiable beast, and its exploitation - once just an irresistible temptation for profit-seeking oligarchs, now the vital and defining ingredient in government spending - is underwritten by military adventurism that's not only destroying what good will America cultivated in the 20th-century but driving foreign state actors to make common cause against the out-of-control tyranny of American “empire”.
To the rest of the world, an equitable reciprocity of trade, security, and cross-pollinating cultural exchange under international law is an obvious and essential stage in national development, facilitating fair trade and encouraging shared peace dividends over heirarchies of war chest nepotism.
But to America’s ruling class, and because of its unique fiscal history since coming off gold in the early 70s, loss of dollar dominance would be - quite literally - an existential threat to the Republic. International law has been supplanted by the so-called rules-based order. Rules as defined solely by the US and its core ‘allies’. Rules designed to serve US interests.
Preventing loss of dollar hegemony is the defining calculus of ALL American foreign policy.
More than anything else in geopolitics, including Russia in Ukraine, Israel in the Middle East, China in Taiwan: the Washington elite fears de-dollarization.
Behind the day-to-day kabuki of politics is the implacable, insoluble contradiction of our “exceptional” nation: the incompatible exigencies of deindustrialized debt, parasitical rentier avarice, and addiction to imperial privilege. Reserve currency dominance (and abuse) is the only way America’s debt and avarice continue to coexist without catastrophic rupture. Its preservation has been a non-negotiable since the Clinton administration.
To this end, as the world tries to evolve naturally towards so-called multipolarity, America’s rentier elites and its neoconservative war hawks chase an increasingly reckless foreign policy to maintain unipolar privilege against rival nations: Russia, China, India, and (surprising to some) Japan, Korea, Germany and the European Union.
America's “full-scale dominance” requires the containment (i.e. subjugation) of rising peers like Russia and China, incentivizing the State Department to double down at every flashpoint, exploiting each conflagration as “necessary opportunities”, gambling the future of the planet. To an observer it may seem inexplicable - to risk nuclear war with Russia or China - but everyone in Congress, the Pentagon, and the Executive has been briefed on the economic reality and consensus is almost unanimous.
The realpolitik brief may go something like this:
By far the world’s largest international debtor is the United States. America’s economy is kept alive by exploiting the unique US dollar inflow from surpluses generated by almost every other country in the world. The dollar’s status as reserve currency lets the US export the pain of Fed money printing. Without this trillion+ dollar annual subsidy, the entire domestic economy collapses. What Paul Volcker began in the 1970s as an ingenious way to maintain unaffordable US military spending has metastasized into an essential crutch propping up an otherwise non-viable economy.
The question no US politician has a better answer for than ‘full scale dominance‘ is how America sustains the $1T+ a year appropriations budget Congress pumps direct from the Treasury into the economy. Deficit be damned, dollar hegemony and the centrality of dollar-based foreign exchange accounts held in the United States makes the debt uncollectible. Recycling dollar surplus from China, Germany, Saudi, Japan, Korea and the rest of the planet – what economist Michael Hudson calls the “ultimate free lunch” – is the foundation of the ‘exceptional’ post-industrial nation. The US Treasury’s owed interest payments and bond maturation debts can be covered simply by the Federal Reserve printing more money. It’s often observed that America cannot cover its ever growing debt; yet to date, because of its unique place in the international monetary system, America never defaults.
But, just as the expense of Cold War militarism in Korea, Vietnam and across the globe forced America to abandon gold-standard for petrodollar economics, giving birth to the monster of neoliberal financialization, the war machine is insatiable. The self-serving mission creep of its military industrial institutions rely on the plunder of ‘forever war’ neo-colonialism and, thanks to the deregulations of the globalist 90s and the prostration of the Obama administration to the rentier banking sector in 2008, the economic trajectory of American society has been a disastrous combination of outward imperialism and inward cannibalism.
Under the hood – beneath a hundred layers of manipulated stockmarket indices, bogus GDP metrics and neoclassical Chicago school bullshit – every quarter since the 1980s has seen more of the productive domestic economy hollowed out, corporatized, institutionalized, financialized, what’s left of productivity rearranging around government-guaranteed contracts e.g. pharma, big tech, energy, and the military industrial complex.
Meantime, the Wall Street-K Street rentier elite grows more bold in its abuse of privilege to dominate financialized global capital, to direct legislation in its favor, to self-enrich through the inexorable acquisitions of its exclusive asset management megaliths. Blackrock, State Street, and Vanguard - nameless faceless consolidations of super wealth - control portfolios of over $30 trillion.
If the world were to dedollarize, America’s near-term future would be nothing less than a catastrophic Mad Max dystopia. No more trillions in triage. No more free money. No more artificial guaranteed liquidity. The collapse would happen fast. Fiat currency would implode. Bankruptcies would spread throughout the entire economy, top to bottom. Hundreds of millions would be impoverished overnight, supply chains would break, savings would evaporate…
What US politician could ever let this happen?
What choice does the United States have but to do everything in its power to fight dedollarized multipolarity?
And yet the rest of the planet can't and won’t accept a financial order subordinated to American debt profligacy forever. Russia, Germany, Japan, Brazil, Saudi Arabia, India and – in particular China, BRICS and the Shanghai Cooperation Organisation – aren’t simply geopolitical competitors to United States trade balance. Their very existence as independent economic power centers is a threat to the continuity of unaccountable dollar hegemony. They are perceived as hostile rivals to be beaten into submission to the rules-based order.
With US government in thrall to a non-productive rentier class, America’s elite is wholly aligned in funding wealth extraction from the world through reserve currency imperialism. America’s “free lunch” economy is locked on a collision course with economic reality - and therefore the world - by forces beyond any American administration’s power to change.
Full-spectrum dominance is prioritized to the exclusion of everything else. Nobody in the American mainstream, media least of all, is willing or able to publicize the problem. There’s not the smallest glimmer of a proposal to descalate the militarism or wean America off the fiat-printed trillions. Nobody can question current strategy or debate new policy that might gradually shift the country away from the unsustainable money spigot. Nothing seems likely to avert the economic - and therefore humanitarian - disaster. For now, however, make hay while the sun shines...