In a previous article I took it as a given that the global economy will collapse at some point in the future. I didn’t expand on this, it’s just one of those assumptions I’ve always held to be true and never really thought about. Well, I’ve been thinking about it a lot lately. And now that I think of it just now, we have all the pieces already to understand why.
Remember: Markets Are Rational and Efficient
Markets are efficient. To reiterate from the linked article: they are efficient in that whatever someone desires can and will be satisfied by the market. That is to say: Markets exist to satisfy the “public like”–things society enjoys and approves of, whether or not it is good for them. People make rational economic decisions–economists like to refer to homo economicus as the modern rational economic decision making man. This is true on larger scales as well. Corporations will make rational economic decisions–look at tax havens for proof of that. There was a lot of bluster over Trump’s bankruptcy’s when all he was doing was making rational economic decisions to support his business. Was it good and moral? Maybe not. Was it legal? Yes. Was it profitable? Definitely. Countries behave this way too. Some countries structure their tax laws for the express purpose of attracting foreign corporations. Countries structure their foreign policy to protect their economic interests. Countries make rational economic decisions: not necessarily good and moral decisions, but rational decisions given the economic landscape.
Remember: Money is a Resource
Money is a resource used to conduct exchanges in the name of the sovereign to supply oneself with ones needs. The denomination of currency tells you who the sovereign is. Who receives the money tells you who is subject to the sovereign. What they use it for tells you what they need the most. NATO is a recent example I’ve discussed: We pay for their military defense, so in a certain sense America is their sovereign. This works the same way for the EU: If they operate in Euro denominated currency, they are transacting in the name of the sovereign, which is not their own. Once people decide what kind of currency they are going to use to make exchanges, they make rational economic decisions to maximize their stockpiles of currency–or property received through exchanging that currency.
Remember: The Combination of Scarcity and Demand is What Makes Currency Worth Something
There must be a limited supply of a thing for it to function as currency, and people must want that thing for it to function as currency. When there is a lot of currency around, people don’t really want it so the value of it goes down–which makes things cost more. When there is no currency around, people really want it and so the value goes up, which makes things cost less. If you are a jerk, no one will want currency issued by you. If you are not a jerk, people will be interested in currency issued by you.
And So:
America is suffering from currency inflation right now due to COVID. That means that it has a lot of currency out there, issued in the name of the sovereign, so it is not very valuable and prices are up. There are a lot of subjects to the American sovereign as well, in the form of foreign nationals who receive our currency and use it to provide necessities for themselves, namely defense and foreign aid.
The Global Order and the Global Economy will end when A) No one believes the US will protect it’s economic subjects; B) When the US Dollar is no longer valuable as a means of exchange and/or is not able to provide for defense anymore; and/or C) When some alternative to US Hegemony becomes more profitable and rational economic behavior pivots away from the US.
That’s the thesis: The Global Economic Order isn’t really the Global Economic Order–it is America’s Economic Order. And America’s economic order is not designed intentionally, so it is fragile. It is being sustained by the citizens of America, and being exported around the world. It will inevitably collapse because there is a maximum limit that the American population can support. When we reach that, only those who are disconnected from the American Economic Order will be unaffected.
Think about who is on that list.
AMDG