Ian Welsh

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

Eyes On The Big Picture: Dollar Decline & The Great Forgetting

Amid all the bad news, all the thrashing of a dying Empire, I re-iterate that while one needs to maneuver through this period deftly, the big picture remains unchanged.

There was a slow decline from 2014 to 2022, which could have just been part of normal perambulations. But from 2022 to 2025 the US dollar has dropped from 50% of reserves to 40%. That’s FAST. Right now there is no alternative reserve currency, everyone’s piling into gold. However trade is increasingly being done in local currencies.

This is exactly as predicted. It will continue to accelerate. Venezuela is in part an attempt to shore up the US dollar. It might make a slight bump, but it’s irrelevant to the trend or larger picture.

There’s a comment from Some Guy I want to highlight in whole:

The Interstate Bridge crosses the Columbia River, connecting Oregon and Washington State. It has a moderate length, about 1km, and was built first in 1917 and then twinned in 1958.

There has been talk of replacing it for decades, but it was reported today that the estimated cost has risen to a range of $14bn – $18bn (USD), with the new estimate so high that is simply may not be feasible to replace the bridge. Part of the eye-watering price tag is the expected timeline for construction, with the replacement taking 20 years and finishing in 2045.

By way of comparison, and barely scratching the surface, China completed the Huajiang Canyon Bridge a few months ago. The bridge is not particularly long by Chinese standards, 2.8km, but is noteworthy for being the highest bridge in the world. It was constructed in under 4 years, for a cost of roughly $300mn USD.

Nothing more really needs to be said, in my opinion.

The US is done. Done. Done. It will, as I keep saying, die ugly. But it is a walking corpse. This is really basic stuff. China can build infrastructure for less than 5% of the cost of America, and in less than a quarter the time. (Often 10% of the time.) This is a general Western problem, by the way, all of us are expensive and slow. Until we fix this very basic issue, nothing else matters. In fixing something this basic we will have to fix almost everything else.

It’s not just that China is ahead in tech, it’s that we are no longer even able to do things we could do twenty, forty or in many cases a hundred year ago in any reasonable time frame at any reasonable cost. This is, in Jane Jacobs’ term, a “Dark Age”, a forgetting. Dark Ages are when you lose the ability to do what you used to be able to do. That’s us. It goes far beyond building: we had defeated multiple infectious diseases like Mumps and Measles, for example, which are coming back. We literally can’t make products we used to make 30 years ago, because we sent all that industry to China and we DO NOT have the know-how any more. That know how is embodied in people and those people are dead or sixty or seventy or eighty years old.

Modern generative “AI” slop cannot actually learn. It is a copying mechanism. We do not have the people it can copy from. It cannot solve this problem for us, whatever the insane boosters say, and we have just laid our entire bankroll on the table in one huge bet, which we will probably lose and which even if we win will still not solve our fundamental problems.

If there was ANY sign of reversal, that’d be great, but there isn’t. In fact we are doubling down: we are deskilling even faster than we were before and giving up on research. We aren’t re-shoring industry, we’re still losing it.

Venezuela sucks. Gaza sucks. Greenland will suck. None of it matters to the big picture. State power since the Industrial Revolution is a function of industrial power and technological level as limited by resources and population. Population and resources are limiters, they are not useful by themselves except in rare cases that are weakening over time. (aka. mass infantry for horrific attrition warfare.)

If you’re in the West, prepare for the continued decline. If you’re elsewhere, know the the days of suffering at America’s hands are now running down. If you live another twenty years you WILL see the end of most of this nonsense. Trump has announced he wants to increase the military budget by 50%, but it doesn’t really matter, because money cannot buy what the US needs unless it fixes its real problems, which defense spending done the way Trump or Democrats will do it will not.

Empires die ugly. But this Empire IS dying and it is accelerating towards its end.

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Understanding America’s Plan and Venezuela’s Possible Submission

So, some stuff has begun to come out though so far it’s all from the US and I haven’t seen Venezuelan confirmation. First, Trump:

Second, the oil blockade per Hegseth (Secretary of War):

And third, Miller:

Meanwhile a Russian flagged oil tanker was seized. I’m not sure that it’s legitimately Russian flagged, there’s some indication they may have changed the flag in the last two weeks, but if it was, the Russians now have a quandry. The only real response is something symmetrical: seize a US bound freighter, like Iran has. We’ll see if Putin has the guts. He’s overlooked too many red lines in the past for me to be confident in his response.

Anyway, the play is obvious: no oil gets in and out of Venezuela without going thru the US first. The current government may or may not be allowed to stay in charge, we’ll see, but the Venezuelan economy can’t survive without oil exports so the US expects submission.

If neither Russia nor China are willing to intervene and Venezuela isn’t willing to take horrific losses (they’d probably win, but they’d get hurt doing so), then this is what will happen. If I were China I’d probably just end all military and dual use exports including all rare earths while there’s any blockade. What America is doing is clearly piracy. US law does not determine whether other countries can trade with each other—not de jure, anyway.

If there’s to be any remaining shred of freedom of trade it’s going to have to be enforced.

The next question is Greenland. If the US seizes that, then NATO is finished. Anyone MAGA friendly in Europe will be annihilated. Everyone will fall into China’s grasp, there’s no other alternative and there will be a mad scramble of nuclear proliferation. (Should have happened long ago, but people didn’t want to admit the US was an evil overlord.)

Trump may be able to coerce Venezuela (though China could stop him, it seems unlikeley they will) but he is accelerating the collapse of the American Empire something fierce. Again, the US is auto-catabolic in economic terms, and this is just the mad thrashing of a dying Empire, dramatic as it is.

Venezuelan crude is heavy oil. It will be of little value to the US economy, China can replace it without much difficulty and Russia doesn’t need it. This is seizing a wasting asset, acting like it’s 1935 or 1970 and oil is the most important strategic resource. It isn’t. It isn’t even close any more, as long as you have enough. China is aggressively moving away from dependence on oil, in particular, and China is who matters.

Trump’s just an aggressive moron. None of this will stop or even slow US decline where it matters. Instead it will speed it up, and in the longer term, the US will not keep control of Venezuela either.

No one’s talking about Trump being a pedophile right now, however, so I guess it’s “Mission Successful.”

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How To Defeat The US Militarily As A Weaker Power

Willingness to fight and to absorb damage is the most important thing. The Yemenis lost leaders, civilians and port facilities. They just kept going until the US withdrew. Everyone except the Chinese walks careful around the US because they know it can do a lot of damage to them: more than they can do to it.

But as the Vietnamese, Taliban, and Ansar Allah proved, if you’re willing to accept lopsided exchange numbers you can win just by being a lot tougher than Americans are. They’ll eventually give up and go away.

This was, by the way, Bin Laden’s explicit policy. He wrote as much. Get the Americans to invade Afghanistan and do to them what the Afghans did to Russia. It didn’t work that great (slow bleed, since they didn’t have Superpower support like they did against Russia) but then Bush decided to attack Iraq and whether you consider the occupation a win or a loss, it was a clusterfuck.

Venezuela is trying to avoid armed conflict, in part, I suspect, because they aren’t a unified society. That means the cost for the US is almost zero.

Hezbollah had the same problem with Israel and the US and it cost them a great deal. It may cost them everything. Their problem is and was exacerbated by the sectarian nature of Lebanon. If they had gone all out against the Israelis they could have inflicted massive damage, but Israeli retaliation might well have led to a civil war as other factions blamed them. Additionally, much of the issue, as with Iran, appears to have simply been a constitutionally extremely cautious leadership. (Khameini’s refusal to get nuclear weapons, in particular, is political malpractice of the highest order.)

America can absolutely be beaten. In fact, the US war record since WWII is abysmal. Great at winning battles, but if the opponent is willing to take the hits, the US cannot stay the course.

There are damn good reasons for trying to placate the US. The amount of damage they can do is insane.

But Trump is, even more than any other American President of my lifetime, a classic bully. If you back down to him, he takes that as a sign of weakness and that he can get more. He will keep pushing and taking till he has everything, or until you fight back and hurt him, even if it’s only just a little.

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Keep Your Eyes On The Long Game of Imperial Collapse

The kidnapping of Maduro is fascinating and it’s interesting to speculate whether it was inside job. Some sources have claimed it, we’ll know by the actions the new leadership takes. If they let the oil majors and American “advisors” in, then the allegations are probably true. Other sources are saying that Acting President Delcy and the new leadership are actually more dedicated Chavistas than Maduro was. Until we see what the Venezuelan government we don’t know which storyline is true.

There’s also talk of taking Greenland and perhaps even Canada or Mexico.

This is all standard late Imperial collapse messiness.

But nothing has changed in the fundamentals. The US is in auto-catabolic collapse and so far there is no sign of the oligarchy losing control, which is the pre-condition for any attempts to change the trajectory. I’ve now seen data indicating China is leading in 89% of key tech fields, up from 80% a couple years ago. US industry is still collapsing. Research funding has been slashed. Final bastions like chips, AI, civil aviation and biotech/pharma are all under assault and will fall like dominoes over the next five to ten years. The US has no ship building capacity to speak of, is behind on drones and missiles (the key weapon systems of modern war) and can’t even make key components in its military chain without Chinese help. Dollar hegemony is no more than five years out from being lost.

None of the trends have changed, and there is zero sign that they will change. Actions against Venezuela will speed up the purchases of Russian and Chinese AA, missiles and drones by other countries to avoid this situation, and while China’s reluctant to send “advisors”, Russia is much less so and once the Ukraine war is over (this year or next) it’ll be happy to do so, with combat proven troops and tech. This is going to make South America more resistant to America and more determined to diversify away, not less.

As I have repeatedly said “Empires die bloody.” The US is no exception. But it is dying and NOTHING has changed which effects that. Imperial power in the modern world is entirely a product of industrial capacity and technological supremacy, with resources and population placing upper limits on what industry can accomplish.

The US is done, this is just the thrashing about of a dying giant. A lot of people will die or be hurt in the process, but, again, nothing of significance has changed.

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Week-end Wrap – Political Economy – January 04, 2026

by Tony Wikrent

Trump DHS Post Calling for ‘100 Million Deportations’ Suggests Intent to Kick Out Nonwhite Citizens

Stephen Prager, January 02, 2026 [CommonDreams]

The Trump administration provoked horror this week with the suggestion that the United States could be turned into a paradise if over a quarter of the people in the country were deported.

On Wednesday, the official social media account for the Department of Homeland Security posted a piece of artwork depicting a pink late-1960s Cadillac Eldorado parked on a bright, idyllic beach. Over the clear blue sky are the words “America after 100 million deportations.”

Happy Race War! (Or anything but the Epstein Files) — The U.S. regime’s vision for 2026 is to deport almost a third of its own population.

Jim Stewartson, January 01, 2026 [MindWar]

To put this number in perspective:

  • The total number of undocumented immigrants in America is about 14 million.
  • The total number of foreign-born people in America—including naturalized citizens—is about 53 million.
  • The total number of Black and Hispanic people in America is about 110 million.
  • 100 million is almost a third of the total U.S. population.
  • Millions would necessarily die in any such process.
  • The economy would collapse.

The “third world” framing in the post makes the intention explicit. It’s not about crime or even immigrants; it’s about race. The only conclusion you can reach is that DHS’s goal is to forcibly transform America into a whites-only ethnostate like apartheid South Africa—by deporting every Black and brown person… somewhere….

DHS Says REAL ID, Which DHS Certifies, Is Too Unreliable To Confirm U.S. Citizenship 

[Reason, via Naked Capitalism 01-03-2025]

Trump’s Immigration Nightmare: It Is Happening Here

Radley Balko, December 24, 2025 [The New Republic]

With astonishing speed, the administration has toppled the most cherished pillars of a free society. And the experts agree: It’s all going to get much, much worse….

…Over the last year, I’ve spoken to and met with immigration attorneys and advocates all over the country. Many who openly spoke with me prior to the 2024 election are no longer willing to be quoted, fearing retaliation against their organizations or their funders, or even against them personally.

In more recent months, I’ve also interviewed former ICE and Customs and Border Protection officials, and former Immigration Court judges who served across multiple administrations of both parties. Career legal and law enforcement officials tend to be circumspect in their critiques of fellow law enforcement officers. They tend to avoid casual references to police states, or comparing U.S. police agencies to those in authoritarian countries. That’s no longer the case. These career police executives and prosecutors now use language I’ve rarely heard from current or former government officials in my career….

Maduro Kidnapped

Didn’t expect this. Guess enough of the military wasn’t loyal or competent. Won’t work out well for the US in the longer run, but here we go again. Hell of a precedent to set. If I were Mexico’s President I’d be very worried. Hope she can trust enough of her military.

A lot will depend on if a new leader not approved by the US steps up, ideally a military man. Don’t know enough about Venezuela to have an opinion on this. Decapitation strikes don’t work on real movements (see Ansar-Allah.)

However, more likely a “unity government” will be announced, the US oil majors will be let back in and so on. It’ll be interesting to see if an insurgency springs up or not. If I were China (I’m not, and they tend to be more passive than I think is wise) I’d happily supply any insurgency that does happen.

Anyway, discuss here.

Update: US President #DonaldTrump said in a press conference that the US is going to “run #Venezuela.” Trump added that the #US will run the country until it decides a “safe, proper, and judicious” transition is in place. He said that the US does not want to be involved with “having somebody else get in and we have the same situation that we had for the last long period of years.”

Update 2: Could be that the kidnapping did nothing but replace Maduro with someone more competent. Alternatively Delcy, whom the US has acknowledged as head of state, lead the negotiations to sell out Maduro. We’ll see.

 

Open Thread

Use to discuss topics unrelated to recent posts.

The Accelerating Nature Of Financialization Collapse

There’s a lot of confusion about the end of the American empire, and the fall of neoliberalism. Many people think the US will just be in “second place” and it’ll be OK.

No.

The problem is the nature of America’s decline. Since 1980 the US economy has been progressively financialized. Profits are all that matters, not what is done to make profits. In properly functioning markets the idea is that products fill a need, on net improve human welfare and lead to more growth of real products.

If a company doesn’t make a profit, that means it isn’t growing the real economy with products which are a net positive. In such a case it goes out of business.

This is approximately how the Chinese economy works. It’s how the US economy worked for much of its history. It’s how the British economy worked up till about 1890 or so.

It’s not how the US economy works.

You could say that the US economy is currently auto-catabolic. The more money that is made, the more the real economy is damaged. You see this most purely in Private Equity. They buy up companies, loot the company, load it up with the debt (including all the debt used to buy the company), then the company goes out of business. This is what happened ToysRUs, it is also, contrary to the current storyline, what happened to Blockbuster. The company was trying to pivot to online, but all profits were drained out by PE owners.

This happened to, literally, tens of of thousands of companies.

The sort of monopoly roll-ups which Matt Stoller so ably covers increase prices without increasing product quality. Health care price increases provide no utility (you can get a CT or MRI scan in China for under $100.) All of this damages the economy. Headline GDP goes up, but the actual strength of the economy decreases. I would estimate that fully half of US GDP is essentially “fake”, driven entirely by increased prices and fake profits. The US economy has been smaller than China’s, in real (not PPP adjusted, but “how much do we produce”) terms for at least ten years.

This process continues till there is no muscle left to consume.

The only possibility of the US avoiding the UK’s fate, despite being a continental power, is for the oligarchs to lose power and for there to be a huge compression of asset and service prices. This process will be extremely painful and is currently politically impossible, due to the control of the duopoly. Both parties are owned by oligarchs, the tech bros are rising and none of them have the least interest in creating a good economy when it’s so much more profitable to loot America.

Real innovation is moving to China and will increasingly do so. They are at least equal in pharma and will soon be ahead in biotech. Their markets prioritize increased production (which westerners complain about as “over-capacity.”) The Chinese government does not want high GDP numbers or high profits, they want increased human welfare and a more powerful state and country. So their markets are organized, well, as actually competitive markets, the most “free” in any major economy.

So Americans who are patting themselves on the back, figuring “well, how bad can it get? We’ll still be number 2” are underestimating how bad the economy is going to get. India is effectively a continental power too, and it punches way below its geographical weight.

This isn’t to say there is no hope for the US, but decline has a long way to go yet because reversing it requires the most powerful people in society to give up massive profits, and many of them, in the process, would lose their fortunes. Meanwhile many ordinary Americans are still doing “OK” if not great, and they don’t want radical (change from the roots) change either.

All of this is not a worse case scenario either, it’s the default—maybe even slightly optimistic. The worst case scenario involves some form of civil war, not like the War between the States, but low grade shit wafare that slowly drives a country into the dirt.

The bottom is not yet close.

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