Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Category: End of American Empire Page 3 of 7

The US Continues to Accelerate Its Decline (+Iran)

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On June 18, 2025

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I wavered between writing another Iran war update and this article, so I’ll say a few things about the Iranian war. There’s evidence that Israeli intelligence networks in Iran and elsewhere are being compromised fast. It appears that:

 

That India, a Hindu/Brahmin supremacist state which is increasingly treating its minorities the way Israel used to treat Palestinians before it went full genocidal, is allied this deeply with Israel is not a surprise. That they were willing to flush their intelligence network down the drain for Israel shows that they’re as stupid as the US.

This will, of course, lead to Indian tech and guest workers being unwelcome, and a massive crash in foreign earnings sent back to India.

Meanwhile, the US is sending vast numbers of planes and supplies to the Middle East. Only B-2 bombers can deliver munitions powerful enough to actually crack Iran’s underground nuclear enrichment. Trump is screaming “unconditional surrender,” the propaganda operation is in full echo of the Iraq war, and it certainly looks like the US is going to enter the war, though Trump is so fickle that nothing is certain until it happens.

Still, my guess is that TACO (Trump Always Chickens Out) rankles with Trump, and since he’s too gutless to stand firm on tariffs, he’ll start a war.

Likewise, as Bush Jr. understood, war-time Presidents are popular. Trump’s polls are atrocious, and he will expect a rally around effect from being a war President to repair them and save him in the mid-terms.

Now, to the larger picture. A US war against Iran, combined with Ukraine and all the munitions sent to Israel, means that the US will not be able to directly fight China or Russia for years.

The non-secret weakness of the US military is how little munitions they are able to produce, a weakness which extends throughout NATO. Western militaries are expeditionary forces, even the American one, intended for fighting non-peer adversaries who are expected to collapse quickly. This means that production of war materials is low.

For example, the US produces the following quantities of air defense missiles every year:

  • Patriot: 500-550, expected to go up to 650 by 2027 (the rate of increase is itself pathetic.)
  • SM-6 (Aegis naval AD): 125-150 a year
  • SM-3 (Aegis again): 20-50  a year
  • Stinger (man-pad AD, important in Ukraine): 600-700 a year.
  • AIM-120 AMRAAM (middle-range A-A): 800-1,000
  • Sidewinder (short-range A-A): 1600-1800 a year
  • THAAD (Air ground for intercepting short- to medium-range ballistic systems; Israel uses these, Ukraine doesn’t): 50-100/year

Numbers for offensive missiles are similar:

  • Tomahawk missiles (sea-launched vs. ground targets): 68-100/year
  • JASSM missiles (long-range precision cruise missile): 200-300/year
  • Javelin anti-tank (man-portable): 1,200-1,500/year
  • MGM-400 ATACMS (ground-to-ground, launched from HIMARS and MLRS launchers): 50-100/year
  • Hellfire (short-range air-to-ground, laser-guided, launched from helicopters): 500-1000/year

Exact numbers are hard to determine for obvious reasons. Stockpiles of most of these missiles (but not all) have been drawn down vastly throughout the Ukraine and Israeli-everyone wars. If Iran is attacked, multiple years’ worth of production will be used up.

This means that China will have complete dominance in the their part of the Pacific, definitely around Taiwan and the first island chain, for years. Indeed, by the time the US re-stockpiles, China will be so far ahead in numbers of missiles that it will be hopeless, and that’s before we get to the fact that China can replenish stocks much faster than the US.

All of this goes without even discussing drones, where China’s lead is astronomical.

Empires do not go gentle into that good night. What the US is doing and enabling is monstrous.

But it is also accelerating American decline.

That is in foreign affairs. Domestically, Trump is systematically destroying the basis of American advancement in tech and science. The idea that private enterprise, which does not do basic research, can make up the difference is ludicrous to anyone who knows how science and tech works. Indeed, the current AI boom is based on university research from the 80s (Granted, it’s from research in Canada (!), a country the US has decided to turn from an ally into an opponent.)

Trump is also dismantling the social welfare system, turning the US into a police state (and not the sort-of-good kind, yes, they exist, China is one of them), massively increasing inequality and basically destroying any remaining social solidarity between Americans.

I can’t think of a more destructive US President except maybe Reagan (but that was long term). Even Herbert Hoover looks good. (He didn’t cause the stock market crash, he just responded badly.) Trump is just so actively malign. He’s not a Russian agent, but the cold war KGB couldn’t have put someone in place who was more damaging, even in their wildest dreams.

So, all of this is awful. But the US’s days are numbered, truly. Unless you are very old, or die an early death, you will see the end of the American Empire and even of American hegemony over the Americas.

***

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The End of America as the Essential Consumer Nation

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On May 26, 2025

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For ages, everyone needed access to the American market. I used to call the US, “the consumer of last resort.” If you wanted to get rich, if you wanted to industrialize, if you wanted to scale, you needed the American market. Europe sold to the US, Japan sold to the US, South Korean and China sold to the US. This requirement is why Japan was forced to sign the Plaza Accords, which basically destroyed their future. Oh, life in Japan is fine now, but it’s no longer the roaring Tiger of the 80s.

But the US has lost its place, which is why China was able to laugh in its face when Trump tried to use tariffs against it. His assumption was that China needed the American market. This was true 20 years ago, maybe true ten years ago, but it’s not true now.

But wait… there’s more!

Not so pretty, is it? And unlike America, Chinese consumers aren’t in debt. Their market isn’t based on a deck of cards or predatory lending meant to lock consumers into never ending debt payments.

Looks a lot like America in the 50s and 60s, actually.

China’s growing fast, and certain respects, they’re growing smart.

China is building nuclear plants 2 to 4 times faster than the West and 3 to 7 times cheaper”

Further, China is building far more renewable energy than anyone else, and MAGidiots beliefs aside, it’s working out just fine for them. Ninety percent of new power in China is renewable.

You can see this on this lovely map:

Indeed, for the first time ever, China’s increasing energy demand happened at the same time as a reduction in CO2 production. If there’s a hope for us on climate change (there really isn’t, but still) it’s that China is the primary industrial power AND its leaders and population aren’t idiots who think climate change is a hoax or that it’s real but ignoring it is good for the economy.

Now this isn’t to say that China’s all wonderful or anything. They have high speed trains and they’re electrifying based on renewable energy and to a much lesser extent nuclear fast, but they still have an insane car-centric society.

Still, they’re more sane than any other major country, by a fair margin.

China is now the world’s largest consumer, industrial producer, ship builder, drone maker, auto manufacturer, leads in about 80% of tech fields, produces more scientific papers and patents than any other country, has 8 of the world’s top 10 research universities (Harvard is the only American university on the list, at , but…. recent events are not promising), the most electricity production and the cleanest energy mix of any major country.

The idea that China and the US have a serious rivalry is laughable. The US has lost. It’s like Britain in 1920. It’s all over, except, possibly, for the shooting.

 

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America’s Military Power Is a Legacy Asset

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On May 19, 2025

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Chinese and American flags flying together

Since the industrial revolution, military power has been largely a function of three factors:

  1. Technology
  2. Industrial Capacity
  3. Population

As time goes by, population becomes less important (see, rise of drones), but it still matters. Think of it as something like Tech x IndCap x (Pop x .5).

The US has a powerful military, though most of the technology is one or two generations old. The general consensus is that Pakistan’s Chinese jets (themselves last-gen tech) out-performed India’s Western jets.

At this point, China is ahead in about 80 percent of tech fields. China has 31 percent of world industrial capacity, and the US about 16 percent, meaning that China has about twice as much. Further, China owns the entire supply chain for many of its technologies, whereas the US’s supply chain is reliant on China.

Finally, of course, China’s share of world industrial capacity is increasing.

A lot of civilian industry can easily be turned into military tech. This is what made the US “the arsenal of democracy” in World War II.

China has about 230x the shipbuilding capacity of the US.

China produces about 20K civilian drones a day. The US produces about 20K civilian drones a year.

The US and Canada combined produce about 12 million cars a year. China produces about 30 million cars a year.

So in a real war, where civilian industry is retooled for military production, well, China is well ahead. In the case of drones and ships, ludicrously ahead.

The US finds itself in a similar position to Japan on the eve of the Pacific War. Japan had a powerful fleet and air force, but it couldn’t replace equipment losses to match the rate of the US, let alone expand its arsenal. If it isn’t a “short victorious war,” the US loses, unless it goes nuclear, in which case everyone loses.

This imbalance is only going to get worse. China has a ridiculously small army of about two million, with a million paramilitary. When you consider its population of 1.4 billion, well, again, China is similar to the US before WW2; an industrial behemoth with an undersize military, but which can be expected to ramp up — fast.

(These numbers are better if one includes South Korea and Japan, or even the EU, but then one has to add Russia to the Chinese side. And the way the US is acting, it’s less and less clear its allies will support it in a shooting war, especially if it starts the war. Never thought I’d say that about Japan, but Trump has really shit the bed with his insane trade war.)

All of this is going to get worse and worse for the US. China is increasing its tech and industrial lead, while the US is systematically de-funding its research sector even as erratic economic policy makes long-term investment in new industrial capacity difficult. China’s civilian airline industry is taking off, its car industry is expanding as the West’s collapse, and it’s the only real player in the drone space.

China doesn’t want a war for the simple reason that the longer they put one off, the easier it will be if it happens — and the less likely it will be to happen, because Americans will be unable to sustain the delusion that they have any chance of winning said war.

The American era is over. It’s even likely that the US will lose control of South America, which it has had since the late 19th century. (Yes, there were theoretically independent nations in South America. Theoretically.) It will be pushed back to its North American stronghold, where it even seems to be attempting to lose effective control of Mexico and Canada, which is an entirely self-inflicted wound, as both nations wanted to stay under the US wing.

Just as the sun set on the British Empire, today it is at the horizon for America, and the long European supremacy is nearly over. The world returns to its normal state, where the Middle Kingdom is the most important and prosperous country in the world.

 

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“Art of the Cave”: Trump Walks Back China Tariffs For 90 Days

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On May 12, 2025

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Well, maybe. Who the hell knows what he’ll do. Anyway, tariffs are back to 30% on China and 10% on America.

This is exactly what China demanded, for tariffs to go back to what they were before April 2nd.

There will still be a two month trade burp. Ships weren’t leaving China for the US at all, literally zero. Lot of freight companies are about to make a mint, though. So expect some shortages, but nothing worse than Covid, and hopefully lasting less time.

The fundamental problem remains, however, which is that there’s no certainty around any of this, so business people can’t make long term plans, including plans to build or relocate manufacturing. Trump and the US can’t be trusted to stay steady on policy, so avoiding making big plans involving the US makes sense.

The Great Power picture is clearer, however. The US tried to impose its will on China and failed. China wouldn’t negotiate till its pre-conditions were met. The world has two great powers, with the EU bidding to become the third (I think they’ll fail, but that’s what the rearmament is about.)

And, in economic terms, China is by far the pre-eminent great power. It isn’t even close. The era of American hegemony is officially over. The US tried to impose its will on the world and failed.

This blog has always been free to read, but it isn’t free to produce. If you’d like to support my writing, I’d appreciate it. You can donate or subscribe by clicking on this link.

 

Canada’s Future & The New Carney Government

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On April 29, 2025

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Mark Carney

Carney has won a minority government. He will have to govern with the support of the NDP. The NDP was slaughtered in this election, and there were a few ridings where people strategically voting for the Liberals actually led to the Conservatives winning. Iit’s worth pointing out that the Conservatives increased their seat count, which is why Poilievre is sticking around as leader, despite losing the election and his own seat. (A loyal MP will stand down and let him run in a by-election in a safe riding.)

The NDP lost their official party status in this election and their vote percentage was cut in about half by strategic voting. They need to bargain hard with Carney in exchange for support and be willing to walk away. The most important thing, for them and Canada, is to change the voting system. Proportional would be ideal, but it’s unlikely the Liberals would go for it. They would probably go for ranked ballots, assuming, probably correctly, that they’ll be the most common second choice.

But it would also benefit the NDP and make it less likely for radical conservatives of the current variety to get into power.

If I were the NDP, I’d go to the wall for this. There’s likely to be more polarized elections in the future, because the Conservatives remain a Trumpist style party and a lot of natural NDP voters will keep going Liberal to try and block them. If they want to get back up to near 20% of the vote, this is necessary.

Now as to Canada’s future: it’s going to depend on whether Carney can actually deliver. If he can make Canadians better off and win another election, Poilievre is toast and Trump style conservatism will be discredited in Canada. If he doesn’t deliver: if effective wages don’t rise and if rent and housing prices don’t go down, then Poilievre or his successor’s Conservative party WILL win the next election, just based on disgruntled voters.

Carney’s talked a fair bit of sense: doubling building housing, pivoting to new trade partners and creating vertically integrated industries within Canada. If he can pull it off, he’ll go down as one of Canada’s greatest Prime Ministers. But, at the end of the day, Carney is a neoliberal, and his impulse to always cut taxes on the rich and so on is going to hold him back.

He also needs a full term to pull it off. A lot of pain is coming down the pike and the next couple years will be ugly.

And that means he needs to keep the NDP happy. If they stop supporting him before he turns things around (assuming he can) he’s toast, and the Conservatives are in. So the NDP may as well force him to do some other things: pharmacare and universal dental, probably.

It’s going to be an interesting few years for everyone. Carney was right when he said:

America wants our land, our resources, our water, our country. But these are not idle threats. President Trump is trying to break us so that America can own us. That will never, that will never ever happen...

…

Our old relationship with the United States, a relationship based on steadily increasing integration, is over. The system of open global trade anchored by the United States, a system that Canada has relied on since the Second World War, a system that well not perfect has helped deliver prosperity for a country for decades, is over. 

But it’s also our new reality.

We are over the shock of the American betrayal, but we should never forget the lessons. We have to look out for ourselves and above all we have to take care of each other.

The old system is over. Carney’s problem is that he doesn’t see that for a ton of Canadians the old system hasn’t been delivering for a long time.

Every country in the world will have to adapt to the new economic landscape. Some will succeed, others like Britain, will fail. It remains to be seen if Canada is one which adapts well. What is certain is that if Poilievre gets in, he will usher in a new era even worse than the old neoliberal one. He will be prostrate before the US, will slash the civil service, healthcare and so on and will turbocharge the oligarchy.

So Carney’s it. He wouldn’t have been my first choice, but if he doesn’t pull it off, no one will.

This blog has always been free to read, but it isn’t free to produce. If you’d like to support my writing, I’d appreciate it. You can donate or subscribe by clicking on this link.

Trump Has Made It Impossible For America To Resist China

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On April 24, 2025

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Chinese and American flags flying together

For a long time I thought the new world order would be a perverse mirror of the Cold War: two blocs facing off, periphery war, minimal trade between them (There was some trade, mostly in commodities.) The difference this time would be that the US was leading the weaker block, not the stronger.

Trump has made this very unlikely. His tariffs and threats have broken the unanimity of the alliance and vassal circle. The EU is in China right now seeking to cut a trade deal with the possible of end of many sanctions on the table. Canada’s presumptive PM has said the old order is dead. When China cut off US LNG who stepped into the gap? Australia and Canada. Even Japan, the most loyal of vassals, has noted that you can’t make a deal with Trump, because blackmailers always come back for more.

With the EU, Japan, South Korea, and the Anglosphere, the US had a credible trade and military bloc. Without them, there’s no goddamn way. They don’t even have to go over to China’s bloc, they just have to be neutral.

And that’s the way this is tending, economically, with signs that military is to follow. The EU is attempting to remilitarize and it is trying to stay away from American weapons as much as possible. Canada is reconsidering both Aegis and F-35s. And so on. Without allies to buy its weapons, the US mil-industry complex will wither. If Japan isn’t considering getting its own nuclear deterrent, it would be geostrategic malfeasance.

Trump thought that the US was still the essential nation. That if it put the pressure on, everyone else had to buckle. But those days are gone, and Trump’s stupidity is not only going to cost the US its empire, its dollar privilege and inflated standard of living, it is costing the US even its leadership position.

This is likely a good thing for the world, overall, though lack of some sort of secondary great power able to resist China somewhat will have costs.

But Americans will regret it bitterly.

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The Proximate Cause Of Revolutions Is Inability To Tax & The US Is Well Down The Road

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On April 21, 2025

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Top Tax Rates

—And thus, inability to run the state.

In the modern world this causes a great deal of confusion. I guarantee some MMT follower is gleefully planning a comment saying “a state’s ability to spend is not based on taxation.”

Technically true, practically false. A state which uses its own currency can always, in theory, print money.

But taxation is best understood more primaly than “the people send us money, we spend it.” Rather it is the amount of the economy which the government can control.

Every country has an economy. The economy is what the people of the nation actually do. Dig stuff up, refine stuff, grow stuff, manufacture, stuff, take money from idiots as consultants, waste everyone’s time with advertisements, destroy the digital commons, and so on.

Near adjacent to the economy is what it could do if we wanted it to, because we know how to do whatever it is and we can easily get the resources: so we could easily build more homes, for example, or train more doctors or nurses, or hire more Professors or build out more solar power and so on.

The final part of the economy is what you can get from other nations. Call this the external economy. Does someone else make it, will they sell it to you, can  you afford it? Most of the time countries won’t sell other countries nukes, for example, and for much of history countries tried not to sell other countries the knowledge required to make advanced techs. When they didn’t prevent this, they paid big time: Britain was de-facto subjugated by America and America is now losing its Empire.

This is why being the richest King in Africa in 1850, even if you had been richer than England, would have done you very little good. You could not buy what you needed: industry, and even if you could buy a few weapons and machines you couldn’t maintain and repair them.

Taxation is the ability to command the resources of other people. That is all it is.

Now, in the US and the West generally, since some point in the sixties, the state has been increasingly losing the ability to tax the rich. The rich insist on controlling more of the nation’s wealth and economic activity and every decade they have increased that control. Every time something is privatized, that’s the state losing power to tax—to control a piece of the economy. Every tax decrease on the rich is, obviously, a reduction in ability to tax the rich.

The amount of control the State has has been reduced, and amount of control the rich have has been increased. This is an effective loss of the ability to tax.

What is happening right now is that the US is losing the ability to tax the rest of the world. Dollar privilege was “we’ll take American money and make what Americans want for them.” It was the ability of America to direct other people’s economies to do what America wanted. The vast power this implies is mind-boggling.

It is that ability to control other nations’ economies which made the US an Empire, even if it directly militarily occupied few countries. It didn’t need to. It could still tell them what to do.

Since the US didn’t need to make and dig everything, it didn’t: it just made everyone else do that. This was, in many ways a bad idea, but it did mean that the US got the benefits of industry without a lot of the downsides.

So, since JFK and especially since Carter/Reagan, the US has been losing its ability to tax the rich. It has increasingly chosen to tax the rest of the world, moving industry, in particular, to other countries. Those countries made what the US needed, and sold it to them in US dollars, of which they were willing to accept nearly infinite amounts even though, in most cases, they didn’t need nearly as much from the US as the US did from them. (What they did need, in the early and middle years, was capital goods and knowledge, almost infinitely precious, though. Now with China leading in 80% of fields, well, not so much.)

Right now a huge tax cut for the rich is being paid for by cutting 800 billion from Medicaid, even as DOGE savagely cuts a federal civil service which has not grown in nominal numbers in sixty years, and thus has really already been contracting. State capacity is being savaged and services and jobs are being removed from the lower and middle classes.

Now let’s bring this back to the original topic: revolutions happen when states can’t command enough of the internal or external economy. It does not matter how much you can print or tax in nominal terms. In the Weimar Republic people would take a wheelbarrow full of cash to the store: all that matters is what you can actually command/buy with the money. For a long time the US dollar could buy pretty much anything.

But what happens when it doesn’t? What happens when you give it to cops and bureaucrats and soldiers and brown shirts like ICE and it doesn’t buy what they need, or even what they want?

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Trump’s Liberation Day: This Boy Could Fuck Up Boiling Water

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On April 3, 2025

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So, Trump’s tariffs are out. He claims they’re half of what each country tariffs the US, but in fact they appear to have been determined by dividing how much the US sells to a country by how much that country sells to the US.

In other words, the more your trade surplus is, proportionally, the higher the tariffs.

This isn’t, on the face of it, necessarily stupid. But… it’s being done very stupidly.

The first problem is the most fundamental: much of what the US buys it can’t make or grow or dig up itself. New capacity takes time, so in cases where the US could in theory make whatever it is, tariffs should either be phased in, or there should be a delay “in two years the tariff will be X%.” As it stands, in a lot of cases, all this is going to do is make Americans pay a lot more.

Then there are things that the US can’t produce itself, or produce enough of. Potash from Canada, for example. The US can’t produce enough. Period. And farmers MUST have it.

So this means that there’s going to be a massive economic shock: prices will go up and/or profits will go down and the US government will need to provide massive subsidies to some industries at the same time as Trump’s budget plan massively cuts revenue due to tax cuts for the rich.

The tariffs on each country should have been individually determined based on what America buys from them, and what America sells to them. If it’s something the US can’t make, or given opportunity costs shouldn’t make (do you want to build more power plants for AI, or use it for aluminum?) then those things shouldn’t be tariffed. And if you’re buying what you really need from them, and can’t make yourself or shouldn’t (Canadian potash and aluminum, for example) then why are you tariffing? The Canadian example is a good one: Canada imports more manufactured goods from the US than it exports to America. Tariffs encourage Canada to buy less goods and re-industrialize, reducing demand for American goods and encouraging American de-industrialization.

Instead of selling goods to Canada, made using Canadian primary and secondary resources like wood and aluminum and hydro power, America is encouraging Canada to use its own resources to make its own goods. I mean, as a Canadian I think this is great and I’m very grateful to Trump, but this is stupid, really stupid, of Trump for America.

The second issue is that that one goal is to get foreign companies to buy American goods. But most American goods aren’t price competitive, especially not with China. Add on top of that the retaliatory tariffs which most countries are going to respond with, and the likely end result of this isn’t countries buying more American goods, it’s them buying less.

Now some countries are in a different situation. The EU, for example, is very vulnerable here. They have a massive trade surplus with the US, and it’s in goods and their goods are more expensive than Chinese goods, so they’re fucked: who are they going to sell to if they won’t sell to America?

The EU trade surplus is about 600 billion. America sells the EU more services than vice versa, by about 100 billion, however, so the combined services and trade surplus is around 500 billion. Yet if you drill down to balance of payments overall, it’s closer to 200 billion: the US gets a lot of investment income and other streams from Europe, for example, all those patent and copyright payments, 30% at app stores, etc, etc…

A 200 billion dollar balance of payments deficit is about 1.2% of the EU’s GDP. The correct action for the EU is to hit the US hard on services and income: tax the hell out of that and just get rid of it it in some places. Break the DMCA and set up their own app stores, for example. The screams from Silicon Valley would set off Richter 7 earthquakes.

Let’s look at another country. Japan, has a 68 billion goods trade surplus, about a 25 billion services deficit, and actually gets about 50 billion in misc payments from the US. They’re rolling in it and actually much more vulnerable than the EU because of all that payment income, which is easily disrupted. It’s hard for them to retaliate and not come out hurting bad. But there are reports they’re coordinating their response with South Korea and China, and if true, it makes sense, since they have little leverage alone.

China’s trade surplus with the US is now about 1.8% of GDP. Most Americans think it’s still 2008. It’s not. China will be fine and that’s why their official response has been, in essence, “if you want a trade war, let’s have a trade war.”

Generally speaking the correct response for most countries (but not Japan!) is going to be to go after payments: copyright, patents, app stores  and so on, and to tax services.

And this leads to third issue: hitting everyone at once. This allows coordination. If the US had just hit a few countries, everyone else would keep their heads down and hope to be ignored. One country, alone, breaking patents say, or getting rid of DMCA compliance and breaking US app stores, would be crushed. But if it’s done in a coordinated fashion, the US is toast. They can’t sanction everyone, the US financial system will just be treated as damaged and routed around. A universal clearing currency is NOT needed. In fact, for a variety of reasons, it’s one of the worst things possible. Make the deals in local currencies. Done.

Additional add-ons to all of this include the probability of a lot of free capital flows going away. Countries that want to re-industrialize with domestically controlled supply chains, and many now will, need to keep capital at home and the retaliation against the US is going to be against a capital flow/investment system which has, with a few exceptions like Japan, mostly favored the US.

I can’t even imagine how much US property in other countries is likely to wind up forced to sell to locals, or even nationalized outright.

All of this leads to the fact that this will speed up the loss of dollar privilege, and with the loss of dollar privilege and everyone reluctant to sell to America, well, there’s no way that the US standard of living doesn’t get hit hard.

There’s a lot more to say on this. The US is counting on countries needing to sell to it. The Chinese have far more manufacturing capacity than anyone else and a cheaper cost structure. This leaves places like the EU fucked, hard. They can’t really sell to the US profitably. They can’t sell to China because their goods are too expensive. They don’t have a lot of resources to sell except food.

The correct response is to move to internal demand and collapse the cost structure (rent, housing prizes, all monopoly pricing, etc…) but neoliberal policies don’t allow that, so they’re going to try military Keynesianism, but that won’t work well either.

Truly screwed if they don’t get their heads out of their asses and ditch neoliberal bullshit, start taxing the rich, and figure out their energy situation.

But, they, they have it coming.

Long story short: the US is going to be hit by a huge inflationary shock, a decline in standard of living and, unless other countries are stupid, lose most of its overseas rentier monopoly income. The EU is in for a world of hurt, but has options. China will feel it, but they’ll be fine, they don’t need the US as a market any more.

In the longer term this might lead to improvements in the US economy: it will force reshoring, it’s just doing it in the stupidest way possible. But the US risks winding up in semi-autarchy, with an oligarch controlled economy, authoritarian but ineffective politics (think Yeltsin) amid a huge collapse of standards of living, even as it destroys its scientific and academic communities.

The road back will be a hard one and the suffering in between will be massive. And all this assumes that the political problems in America don’t boil over into civil or serious foreign wars.

Americans aren’t going to take a one-third reduction in their standard of living well, especially when so many of them are just a few hundred dollars a month away from homelessness.

Welcome to the end of the American century.

You get what you pay for. This blog is free to read, but not to produce. If you enjoy the content, donate or subscribe.

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