The fate of the world's currencies in the wake of the demise of the dollar. - page 83
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Why are you banging on the open door? It goes without saying that it would be foolish to deny that the US economy and technological level is much higher than that of the Russian Federation. There are reasons related to the history of development of these two countries. However, the United States has its own internal problems, and some countries are starting to catch up with it economically and militarily. Russia has a huge potential for development, high intellectual and scientific, energy and raw material resources. Russia maintains a high level of defence capability, which allows it (among the few countries that can afford it) to pursue an independent policy. Russia is one of the leaders in nuclear power, arms production and sales, grain production and sales, and space technology production. Russia has achieved food independence in recent years and exports pork and chicken. So you don't have to worry about Russia, it has a great future ahead of it. The only negative scenario for Russia could be if shitcats come to power. But this is unlikely, because thanks to Gorbachev and Yeltsin and the results of their rule, the people have been well inoculated to avoid repeating such mistakes.
Now for the US economy. As you know, it suffers from the following chronic diseases - a) a trade deficit; b) a budget deficit; c) a growing national debt; e) a rapidly aging population.
Each of these diseases on its own is not fatal, nor are they fatal in combination, as long as there is an oxygen cushion in the form of the dollar's status as the world's reserve currency. But if that cushion stops working, irreparable things can happen.
In a bit more detail, the U.S. trade deficit. Each year, America buys $700 billion more goods abroad than it sells abroad, in other words, it borrows imported goods and has been doing so for more than 40 years. The U.S. pays off
indirectly by selling debt and by the widespread use of the dollar in trade and investment around the world, i.e. the status of the dollar.
US budget deficits. The government has systematically, over the years, spent far more than it collects in taxes. For example, in 2018 the deficit was almost $800 billion, in 2019 it will be close to a trillion dollars. The main idea is to boost the economy while the cost of debt servicing is low. And it is small because of the dollar's status as a reserve currency. In general the idea makes sense - who would give me a trillion quid at 1% per annum! But what happens if the cost of servicing the debt goes up dramatically?
Growing national debt. Because of chronic budget deficits and various economic stimulus programs, the U.S. national debt has reached astronomical levels of over $21 trillion and continues to grow. According to forecasts in about 6-9 years the national debt will exceed
If the cost of servicing it rises sharply, it will become a major problem - it is one thing to spend 1-2% of $20 trillion and quite another to spend 7-8% of $30 trillion.
A rapidly aging population. The US population is aging rapidly, and this is due to medical advances, and demographics and the trend towards childlessness. This is a very painful and significant problem for the government in its own right. The growing number of pensioners reduces the tax revenue, increases the burden on social and medical programmes and most importantly accelerates the growth of the yield on the state securities. That's because around 40% of US public debt is managed by various pension funds. That is, the government borrowed money from future pensioners and when they retire it must pay them back. As long as the dollar is the world's reserve currency, it is not that critical, but once the throne begins to wobble, problems begin to mount like an avalanche.
Ugh! Tired of writing. To be continued in future episodes...
An economy does not need to be competitive to do away with the dollar, just self-sufficient.
...
Another anecdote, but a little longer. Any Amazon, African, Brazilian, etc. tribe has a self-sufficient economy.
For such a "self-sufficient" but non-competitive economy to abandon the dollar, you have to build a tall, tall (and with all the other, long known attributes) fence around it.
...Russia maintains its defence capacity at a high level, which allows it...
...to continue to maintain its serfdom at a level not inferior to the Middle Ages... ...that's all.
...to continue to maintain serfdom in it at a level not inferior to the Middle Ages... that's all.
And where is it?
And where is it?
In his head.
in his head.
(Probably a grantee.)