The Collapse of the American Empire, Part II: Economics
(ERIC STRIKER) If we were to pinpoint the key to America’s success through the two World Wars and the standoff with the Soviet Union, it would be its vibrant economy and impressive manufacturing capabilities.
This self-evident economic prowess has been reduced to that of an enigma. A substantial portion of the American empire’s value today is imaginary.
If we relied solely on the academic discipline of economics for interpretation, it would be difficult to reason how a heavily financialized nation can convince other countries to continue producing real, physical products for a heavily indebted nation’s citizens to sell to one another and consume at rates not balanced out by net exports.
It is a struggle to rationalize — though economists, through repetition and assertion, try — how the New York Stock Exchange can be worth $32.7 trillion dollars when there are only $2.3 trillion dollars in circulation if it isn’t a glorified Ponzi scheme riddled with securities and accounting fraud.
There are maybe plausible, albeit farfetched, explications for how WeWork’s stock value rose from $4.4 billion to $47 billion in a three-month time span, but we are left at a loss for words when investigating how 50% of this company’s reported wealth vanished from the national economy in one day.
All roads lead back to the US dollar, the world’s reserve currency, and another enigma to unravel. From 2008 to 2011, it was discovered that the Federal Reserve wired $16 trillion dollars of cheap credit they imagined into existence to prop up several banks and corporations around the world — a story the private, runaway cash-printing entity fought to keep secret from the public.
For years, the dollar flourished under a regime of 0% percent interest rates, massive trade deficits, and record levels of federal borrowing and spending. The US dollar remains a juggernaut, and inflation — while being felt more so today — is not causing the apocalyptic balance of payments crises seen in recent years in Argentina or Greece.
The reasons for this go beyond conventional economics, which generally lack an examination of power and politics. The real force behind the omnipotent dollar derives from imperial conquest and the establishment of economic rules and institutions that the victors created after World War II. Some call this system post-industrialism, globalism, or neo-liberalism, but it all describes the same program: the world must trade in US dollars, denominate their debts in US dollars, liberalize its markets and continue borrowing under often usurious conditions from US bankers.
This new order was established at the 1944 Bretton Woods conference. At that meeting of 44 nations, two Jews — Harry Dexter White and Henry Morgenthau — established the International Monetary Fund (IMF), which would act as a predatory, Dollar-centered loan structure for all of humanity.
Not everyone was keen on this radical transfer of power, including members of the Grand Alliance. At Bretton Woods, White and Morgenthau encountered resistance from British economist John Maynard Keynes, who suggested the establishment of a global central bank that would issue a neutral currency, the Bancor, to avoid the predictable abuse of the power of currency monopoly that Washington and New York would go on to enjoy under the IMF system. Though Keynes was far better known, more internationally respected and more persuasive in the debate against White and Morgenthau, his idea was discarded due to the fact that, through the Lend-Lease Act, America became the British empire’s creditor. The Soviet Union adamantly refused to sign this agreement, but its economy was devastated by the war so it also lacked leverage. With the German Mark and French Franc destroyed or in the gutter, the exhausted and broken European superpowers had no choice but to agree to dollar dictatorship.
It was here that White and Morgenthau, strongly motivated by their Jewish ethnic identity, forged a skeleton key that would enable the Jewish-dominated world of high finance to crowned king of the world.
Keynes’ worst fears came true as soon as the war ended. The United States suddenly cut off all of Britain’s credit lines after VJ Day and demanded re-negotiations in exchange for continuing to aid the militarily sapped and bankrupt supposed ally. The extortionary terms of the new loan included muscling the British empire’s vast protected markets open for US corporations to take over, neutralizing the Pound Sterling through attacks on its convertibility, and various reforms aimed at dismantling the UK’s empire and the living standards of British workers. The Anglo-American loan, as it came to be known, now required interest to be paid as well as an agreement that would allow US military bases to be housed on British territories. The House of Lords protested this takeover by US-based money and military power, but the ailing and demoralized Keynes was forced by the fragile Labour government of Clement Atlee to eventually capitulate. It took 50 years for the UK to pay off these debts.
Washington found itself in possession of infinite opportunities after the military subjugation of industrial powerhouses Germany and Japan, the safe and sound American manufacturing base, and the transformation of Britain into a vassal state. The “rules-based liberal order” — where Washington makes the rules and breaks them whenever it sees fit — was born.
Under the initial Bretton Woods agreement, Washington promised that the new economic order would peg the dollar’s value to gold to prevent its exploitative use. This would not last.
The gold-backed dollar was a source of consternation for New York and Washington throughout its run, but things came to a head by the 1960s.
In the lead up to his overthrow during the infamous Jewish-led color revolution of 1968, General Charles De Gaulle sought to re-assert French sovereignty against the “exorbitant privilege” of the US dollar by dumping his nation’s dollar supply for its value in gold. Though De Gaulle was brought down in 1969, his rebellion against the dollar successfully depleted the US Treasury’s gold reserves. This culminated in a run on the US dollar — the “Nixon Shock” — which forced the desperate White House to arbitrarily end the Bretton Woods gold standard in 1971 to avoid economic collapse.
Since then, the dollar has counter-intuitively grown in prominence. America’s post-industrial, finance-driven economy has led to grave economic suffering for the working and middle class at home, but it simultaneously provides a tempting “get rich quick” incentive for the oligarchs of the world. Foreigners now possess 40% of equity in the US, which makes acquiescing to Washington and New York’s political and imperial whims a price many are willing to pay.
For risk-averse foreign governments and elites, it is also profitable and safe to purchase American debt. When a debtor owns the machine that can print the money he owes, it’s a sound bet to assume creditors will be paid back, at interest. In China’s case, keeping the US dollar strong while devaluing the Yuan by purchasing Washington’s debt has traditionally served as a win-win keeping American consumer demand for Chinese goods high.
As plutocratic forces in Washington grow more aggressive and misanthropic, multiple nations are beginning to reexamine their entente with the American empire. The politicization and weaponization of the US dollar and American power over financial institutions, as seen in recent years with total sanctions regiments and asset freezes aimed at countries such as Iran and Russia, is leading many to question their relationship with the US economy.
It is a matter of time before America’s growing list of enemies decide to pull the rug out from underneath US economy. Such a maneuver could cause chaos in global finance and trade, but the gravest consequences will be reserved for America’s ruling class at home as living standards for ordinary people free fall.
Unprecedented interest rates have given the appearance of the dollar as being stronger than ever before, but this is an illusion built through the cannibalization of Europe and Japan. On its own merits, the deindustrialized American economy is neither competitive or sustainable.
Declining Living Standards
It is well-established that one of the major sources of political instability (populism, hopelessness, revolution, etc) is wealth inequality. Today, the United States has the most lopsided wealth distribution in the developed world, with a Gini Coefficient of 41.5 (compared to the two “second world” rivals: 36 in Russia and 38.2 in China).
The true state of the US economy is hidden under piles of cooked books and over-the-top propaganda headlines like “America’s astonishing economic growth goes up another gear,” but this can barely hide the mounting anecdotes gaining 10s of millions of views, like women with popular TikTok channels declaring that the new “American dream” is to emigrate.
Part of the mass disillusionment with the US economy is rooted in how it is structured in 2024 compared to the middle-class golden age of the 1950s. The general perception is that living standards have gotten worse for the majority of people.
In the immediate aftermath of World War II, the US economy comprised 45% of the world’s GDP, largely propelled by the production of high quality physical goods. Today, this share of the world’s wealth has fallen to 25%, which is still impressive, but the distribution of this economic activity has changed.
The radical financialization of the economy spurred by the theories of Jewish economist Milton Friedman during the 1980s ushered in a new system that began centralizing economic and political power in the hands of non-productive forces in the Finance, Insurance, and Real Estate (FIRE).
According to data collected by Greta Krippner, in 1954 nearly 40% of America’s working population was employed in the manufacturing sector versus roughly 5% participating in FIRE activity. The US had already surpassed the British Empire economically following World War I, and the global need for American products made the country an exporting superpower after World War II.
During this same period, this 40% of workers in the manufacturing sector created 35% of the US GDP, while the FIRE market added up to about 13% of the economy.
This influence on the economy allowed America’s workers to hold significant leverage over capital. In 1954, 35% of US wage and salary workers were in a labor union.
Following the implementation of Friedmanism during the “Reagan Revolution,” this socio-economic synergy was flipped on its head.
In 2022, the Bureau of Labor Statistics reported that a mere 12.8% of American workers are employed in the goods-producing sector (construction, mining, and manufacturing). On the other hand, a whopping 70% of Americans now work in the service industry, compared to 15% in 1954.
Less than 10% of US workers (approximately 30 million) are employed in both the FIRE market and professional business services that serve it (accountants, lawyers, consultants, financial advisors, etc). Yet percentage of the GDP controlled by this sector has shot up dramatically from 13% to now 33%.
Government spending (11.6%) has now outgrown manufacturing (11%) in terms of contribution to the GDP. This is strongly correlated with the collapse in unionization rates, which have fallen to 10%, though even here, about half of organized labor is composed of public sector unions siphoning taxpayer money. Other factors, such as mass immigration and outsourcing — staples of anti-democratic and unpatriotic neo-liberal policymaking — also play a substantial role in undercutting labor power.
This inequality is only compounded by the US ruling elite’s finance-first economic plan. Last month, it was reported that 10% of Americans own 93% of all stocks. When it comes to the balance sheets, the US tax code punishes productive work (income tax) while incentivizing speculative activities (low capital gains taxes), meaning that the rich get richer while the working class gets poorer.
The stagnation in wealth-generation for salaried and wage employees in conjunction with FIRE’s Fed-backed morally hazardous activity has made basic necessities like housing and food increasingly difficult for ordinary people to afford.
On paper, American workers are among the wealthiest on the planet, with a median income between $55 and $60 thousand dollars a year. But this is a political number created by omission rather than a reflection of real-world living standards.
For example, a worker making $50,000 dollars a year only takes home about $39,129 after taxes. US employees in the middle bracket ($50 to $100,000) pay 22% in income tax, which is lower than the OECD average (34%), but in return for paying 1/3 more, citizens in other developed nations enjoy high quality public transportation, universal health care, and free education, while American workers are expected to pay for all of this out of pocket, often through high-interest loans and credit cards. The result is that the average household in the United States owes $128,824 ($17.3 trillion overall), with a rising chunk of this coming from the overreliance on credit cards to make ends meet.
In order for an American household to be plausibly “middle-class,” two incomes are a requirement, but this is no guarantee. In 2019, it was discovered that 44% of Americans work at jobs that pay $18,000 dollars a year or less. For this population — the working poor and indigent — the state provides food, Social Security Insurance, welfare payouts, and health care subsidies, further stressing the balance of payments problem.
This has led to an awkward development, where countries perceived as second world, including US rival Russia, have started catching up to America’s long admired standard of living.
When adjusted for purchasing power parity (PPP), a Russian worker making the median Moscow salary of $19,200 a year can afford the same lifestyle as an American worker making $72,000 a year in a major American city (Chicago, Los Angeles, New York, etc).
Russian workers pay a 13% flat tax on their income, which in return gets them great public transportation and universal health care. According to 2017 statistics, Russia has a unionization rate almost three times higher than the US at 27.5%. Russian workers enjoy 28 days of paid vacation time every year, compared to an average of 11 days for their American counterparts. 23% of Russian workers are employed in goods-producing fields, with an additional 5.8% participating in the agriculture sector (Russian agricultural production has doubled since the start of Western sanctions in 2022).
The lopsided distribution of wealth is still an issue in Russia, but Vladimir Putin’s reign has drastically improved the situation. Of the highly Jewish “Seven Oligarchs” who at one point in the 1990s controlled half of Russia’s wealth and pretty much all of its media, the majority of these figures have either been jailed or forced into exile by the Putin government.
Defenders of Washington’s economic dominance over the world will often cite the billion or so people lifted from poverty since 1990. Yet the bulk of this work in combating destitution has happened in China, where 800 million people have been brought out of poverty. Much of this growth in real wealth has been driven by Chinese manufacturing, which employs 28% of workers. The doubling of the Chinese middle class from 2012 to 2022 has allowed the state to begin reorienting its economy towards domestic consumption as the trade war with the US intensifies.
Size, Trade Balance and Debt
US-based media outlets have been breathlessly predicting the looming collapse of the Chinese economy, but in 2023 China enjoyed GDP growth of 5.2%, compared to the US’ 2.5%.
Among those betting on China’s economy continuing to grow at double the rate of America are the US’ highly unpatriotic industrialists. Tim Cook of Apple, Elon Musk of Tesla, and others spent 2023 visiting China to announce expansions of their economic participation in the country despite Beijing’s efforts to closely monitor and regulate foreign investments.
For Western capitalists, losing access to the Chinese market is unthinkable. When adjusting GDP for Purchasing Power Parity, the Chinese economy has long surpassed the US. In 2023, China stood at $30.3 trillion, while the US is second at $25.4 trillion.
A lesser-known fact is that last year, the World Bank reported that Russia’s sanctioned economy ($5.32 trillion) quietly passed Germany ($5.30 trillion) to become the largest economy in Europe and the fifth largest on the planet. If Russia overtakes stagnant Japan ($5.7 trillion) in the next year or two, three of the four largest economies in the world will belong to BRICS.
Upon closer examination, it should be noted that there are serious differences in the health of these respective economies. China, whose economic system is planned around exporting more than it imports, currently enjoys a $877 billion dollar trade surplus, while the resource rich Russians were $140 billion in the black thanks to pivoting their oil market towards Asia. By contrast, the United States suffered a $773 billion dollar trade deficit in 2023, though this is still a relative improvement from the nearly trillion dollar hole from the previous year.
Debt is currently at 112% of the American GDP, compared to 66.5% in China and 15.1% in Russia. America’s most important Asian protectorate, the Japanese economic juggernaut, is being propped up by an increasingly unviable debt that is 232% of its GDP.
While the “exorbitant privilege” of the US dollar may allow America to import significantly more than it exports, its hollowed-out manufacturing base places it at a serious disadvantage in an age of Great Power competition.
Between China’s vast realized manufacturing potential and Russia’s plentiful natural resources, we are arriving at a point where sanctions and trade wars launched by the G7 hurt the aggressors more than the target.
According to the Supply Chain Vulnerability Index, the United States is the world’s most susceptible to interruptions in global trade. This interdependence, where the US consumes without producing, reveals a massive disparity with the fully self-sufficient Chinese. Trump-era tariffs on $300 billion in Chinese goods continued by the Biden administration have caused far more damage to American capitalists than to Chinese enterprises.
This dynamic is also being felt in the realm of kinetic conflicts, as seen with developments in the Ukraine war. Russian industry’s ability to simultaneously weather global sanctions and rapidly produce weapons has bewildered NATO. The Atlanticist bloc is unable to continue providing the Zelensky regime with the arms necessary to retain Ukraine’s artificial military peer status it enjoyed against Russia in 2022 and part of 2023.
Dethroning King Dollar
America’s unusually powerful dollar is a source of misery for both ordinary Americans and much of the world.
The high exchange rate of dollars (and to a lesser extent Euros) compared to other world currencies is a primary driver of mass immigration from the global south to the West, as migrants’ remittances go far in the economies of their homelands. Immigrants paying large sums of cash to smugglers to bring them to the West are often prospecting for dollars and Euros — an investment that would not be worthwhile if these currencies were weakened down to a more realistic and competitive rate of exchange.
Domestically, outside of the record profits enjoyed by the top seven firms (largely overvalued tech firms and unproductive data-mining operations like Meta and Google) in the S&P 500, America’s generally unprofitable businesses have been hit hard by interest rate raise. The lack of cheap credit flow caused a 13-year high in bankruptcies in 2023, as well as the largest bank failure since the 2008 crisis.
Connected to this is the incentive to keep wages as low as possible in the West as well as to outsource, due to American capitalist’s need to keep prices on its brands (Teslas, iPhones, etc) accessible for the upper middle classes of the less developed world. While imports are cheap due to this relationship, the downside is that Americans struggle to buy basic necessities that must be sourced at home.
At the 1971 G10 meeting, US Treasury Secretary John Connally told European “allies” that the US dollar is “our currency, and your problem.” The strong dollar allows Washington to avoid the political problems wrought by runaway inflation by forcing Europe and East Asia to endure these consequences instead. Resource poor industrial nations such as Japan and Germany are forced to import raw materials — usually in dollars — which has (alongside cutting off raw materials through the sanctioning of Russia) jacked up the price of their manufacturing to the point of causing massive contractions in both economies.
In other words, the dollar hurts almost every stakeholder save for the predominately Jewish US elite. In recent years, they tore off their mask off by utilizing control over the world reserve currency and financial institutions to mount geopolitical attacks intended to starve Iran and Russia into collapse.
For much of the world’s elite, American assets (stocks, real estate, etc) are attractive due to their high rate of quick profitability. This has traditionally given the US a high degree of economic leverage over foreign lands, but the war in Ukraine has made many countries reconsider their investments. In fact, one could argue that they are looking for an escape route.
In 2022, the United States and its G7 subjects unilaterally confiscated $300 billion dollars in Russian assets held in their territories upon instruction from Washington and New York. This was paired with deplatforming Moscow from the US-controlled SWIFT. The goal of this endeavor was economic sabotage: make it impossible for Russia to meet its financial obligations and thus “turn the Ruble into rubble.” Frustrated by the lack of desired results, America’s vindictive Jewish Treasury Secretary Janet Yellen recently floated the idea of giving all the money stolen from Russia to Ukraine.
Naturally, most of the world — the majority who have refused to participate in sanctions on Russia — has been disquieted by this weaponization of US economic might. Energy and manufacturing superpowers Russia, China, and Iran have already largely de-dollarized in their bilateral trade, mostly out of necessity, but what should be more alarming for Washington policymakers is that now nations integral to the dollar’s success such as France and Saudi Arabia are starting to sign trade agreements paid for through currency swaps and Yuans.
The most acute threat to US financial dominance is coming from BRICS, which this year officially added five new members. Three of these new participants — Iran, Saudi Arabia, and the United Arab Emirates — are oil producing powers. When tallied together, BRICS members will now control over 30% of the global energy market, overshadowing the US at 21%. BRICS will also consume 31% of the world’s energy (India’s energy dependence is the primary reason it has refused to sanction Russia), which in this realm alone creates huge incentives for them to ditch the dollar.
Iraq, which produces an additional 5% of the world’s oil supply, is also eager to join BRICS, but this effort has been blocked by the US military occupation of their country. Under present day circumstances, Iraq’s oil economy is entirely managed by the New York Federal Reserve. If Iraq and Iran work together to expel the US military out of the country, it is unlikely that Baghdad will remain in Washington’s sphere of influence.
BRICS nations have expressed interest in creating new money to trade in, backed by a basket of their local currencies and their respective resource and manufacturing capacities. Today, G7 nations only contribute approximately 30% of the world’s economic activity when adjusted for PPP.
There are several barriers and irreconcilable differences among the BRICS nations, however. The United States can do what it likes in its part of the increasingly multi-polar order due to its powerful military and financial stranglehold over the European, Japanese, Taiwanese and Korean economies, while among the BRICS, no country is interested in or capable of this type of hegemony. Rumors are spreading that there are plans to unveil a dollar-killer at the BRICS conference hosted in Russia this year, but this should be taken with a grain of salt.
In general, a BRICS currency is not really necessary, and it would be foolish to take the prevalence of the US dollar for granted regardless of what transpires next. Rather than a single opposing currency, it is more feasible that the world will increase bilateral trade via national currencies until the dollar dies from a thousand cuts.
American policymakers’ procrastinated rush to reshore and nearshore industry to the United States is a hint that Washington is planning for the worst.
Bidenomics: Why Reshoring Will Fail
Most of America’s imperial woes could be fixed by pursuing a policy of autarky. With its vast population, physical safety from rivals, and large population this is within the realm of possibility, so the question is one of will.
Enter Bidenomics, a collection of legislative bills worth $100s of billions of dollars intended to depart from the neoliberal “Washington consensus” and blow the cobwebs off American industry. So far, this project has produced paltry results.
Take for example the 2022 CHIPS and Science Act. In the interest of defeating China in the global A.I. and semiconductor fields, the US government is providing massive subsidies and tax breaks to companies such as Intel, TSMC, Nvidia, etc to invest in Research & Development, bring production to the US, and leave China in the dust .
The limitations of America’s shareholder-centered capitalist economy are coming to the fore. In Nvidia’s case, the company has embarked on a massive $25 billion dollar stock buyback scheme, causing some analysts to warn about the company’s surging stock value, which is fake and delinked from its profitability. The CHIPS act bans companies from stealing tax-payer provided subsidies through this type of speculative activity, but there are no strings attached after they have invested the bare minimum. This means they are playing on the stock market in the interest of self-dealing over making a good faith effort to invest in development in hopes of long-term profits.
Nvidia has even been spending money looking for ways around US semiconductors sanctions on China (the world’s top consumer of such devices), leading to the absurdity of public subsidies potentially being used to come up with workarounds that continue aiding the America government’s enemies.
Intel is another offender in stock buybacks. From 2022 to 2023, the company increased its stock buyback regiment by 91%, or $5.5 billion. Part of this cycle of greed and stagnation is being driven by leaches aggressively seeking to short Intel stock, which has proven quite volatile. The Chinese state has neutralized the economy-retarding effects of short-selling by simply banning it, but such an assertive move by the state in America requires exercising power over finance our plutocracy does not have.
As for Taiwan Semiconductor Manufacturing Company’s game changing $40 billion dollar facility in Phoenix, the celebrations came before any results. The entire project has suffered from significant delays from top to bottom. TSMC recently announced that it will not be able to start semiconductor production until 2025 due to a lack of qualified labor.
Part of the economic challenge facing America is a relative lack of STEM graduates. According to Charles Murray’s Facing Reality, white Americans have an average IQ of 103, while Mesoamericans are at 94 and blacks at 91. Using this data, we can conclude that drastic changes in the racial makeup of the United States in the last 40 years have basically lowered the national IQ.
But IQ does not need to be destiny. Iran’s IQ lower than the US’ (98), but the Iranian state has invested heavily in identifying and educating gifted students in order to survive ceaseless attacks on its sovereignty and murders of its scientists by the Zionist world order. The result of this prudent policy is reflected in Iran’s unexpected and sudden rise as a producer of sophisticated weapons, including hypersonic missiles. Currently, 41% of Chinese students graduate in STEM, 37% in Russia, and 33% in Iran, while the US lags behind at 20%.
The contempt the heavily Jewish American elite hold for white Americans must also be factored in. One example is the bizarre provision in the CHIPS Act instructing beneficiaries to boycott suppliers and workers of European descent. In higher education, which in the US is a costly, for-profit enterprise, virtually all engineering scholarships require applicants to be minority or female.
The US Supreme Court’s decision to reverse Affirmative Action in higher learning last year appears to be tailored towards trying to bring white people back into the house to fight Russia, Iran and China. How far this will go in practice is unknown, as most American elite universities appear ideologically committed to excluding non-Jewish white people and there are few legal resources for white students to access.
We see identical problems in the manufacturing area, where state funded largesse leads to an initial expansion of industrial activity only to fizzle out soon after. It seems that no matter how much money the government spends, it simply has no mechanism for forcing capitalists to invest in increasing production or grow markets outside of burdensome fields (such as tech and finance).
This is an outgrowth of the intrinsic corruption that plagues every liberal capitalist system.
For China and Russia, the economies are centrally planned around self-reliance to different degrees. Both countries have corruption, but they aggressively pursue it, including regularly meting out the death penalty to oligarchs and compromised state officials in the Chinese case.
The United States radically diverges. In America it is legal for officials to receive payoffs from the financial sector (through “lobbying,” PACs and other practices banned in competing states), thus reducing state independence and making it difficult for political representatives to discipline capital.
It is impossible to speculate how much securities and accounting fraud is happening in the US economy as we speak, but the current record low rate of white collar criminal prosecutions should be interpreted as a wink to Wall Street.
How much longer will the world put up with this, is the question. Just one gust of wind could bring the entire economic house of cards down and launch America into completely unchartered, perilous waters. A rational managerial class would’ve accepted that the tables have turned and started mending relations with China, Iran and Russia.
Instead, the Washington-New York-California oligarchy is doubling down on denial and intensifying their threatening actions against both the people of the world and those of us who have the misfortune of being under them.
(Republished from Substack by permission of author or representative)
