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The US economy is far more fragile and endangered than you might think

Posted by on July 7, 2014.

In the modern world, the new weapons of war are no longer just guns and munitions, but money and intel.

Intelligence is like any other weapon of war – if you have more and of better quality than the enemy, you will win. That requires acquiring knowledge of the enemy while preventing the enemy from acquiring knowledge of you. Today, most intelligence passes across the internet. Consequently, owning the internet provides a huge intelligence advantage over everyone else.

dollarMoney is like any other weapon of war – if you have more money than your enemy, you will win. That requires a means for obtaining more money than other countries, and a methodology for protecting that means.

If you own the world’s money supply and source of intelligence, you will dominate the world.

The Snowden files show to what extent the NSA/GCHQ alliance currently owns the internet. Since the greater part of the world’s data passes through or resides on servers within the United States, or is siphoned elsewhere by the NSA’s Five Eyes partners, international protestations will have little effect on this global reality.

This is untenable for other countries. In Europe, Merkel and Hollande are discussing a Schengen internet – a walled garden of European data and emails that will have to remain within Europe and under the protection of European data protection laws. More specifically, it will provide some protection from NSA and GCHQ access. It will help rebalance the intelligence wars.

It is not clear yet whether this is a threat or a promise. However, Merkel and Hollande will be watching Russia closely. On 4 July (oh, the irony), Russia declared its independence from the Cyber United States. It passed a law that will require all companies doing business in Russia to store users’ personal data on servers in Russia by 2016. This is a Russian Schengen internet – and how it works might well shape the evolution of Europe’s Schengen internet.

If all goes to current plans, the NSA/GCHQ surveillance machine will be cut off from all the major trading blocks of the world: China is already firewalled; Russia and Europe will follow.

US domination of the world’s money is also under threat. Sanctions levied against Russia (over the Ukrainian issue) have led Russia (the world’s sixth largest supplier of oil, and Europe’s gas supplier) to experiment with trading oil in rubles rather than dollars. A new energy agreement with China offers the elimination of reliance on western energy buyers. Russia’s natural allies in Iran and Syria could lead to a large percentage of future oil trades being conducted in rubles rather than dollars – and that will drastically reduce the Fed’s ability to just print more money whenever the economy needs it.

But it’s not just energy – it’s money itself.

BNP Paribas SA (BNP), France’s biggest bank, was slapped with a $8.97 billion fine by U.S. authorities last week for transactions carried out in dollars with countries facing American sanctions.
Post BNP, EU Wants Equivalence on Banks With U.S., Barnier Says

Neither France in particular, nor Europe in general, are happy. There is a growing determination to break the dominance of the dollar in international trade. (China seems to be embarking on a similar journey.) French finance minister Michel Sapin told Bloomberg that tomorrow’s Eurogroup meeting – a meeting of the eurozone’s finance ministers at the Justus Lipsius building in Brussels – will seek to raise the profile of the euro in international trade as a matter of ‘global balance’. Not much will happen tomorrow; but the seeds are being sown, and seeds tend to grow.

The reality is that the United States seems hell-bent on destroying itself. It lives way beyond its means. Its economy is not sufficiently supported by its natural manufacturing or trading strengths, but by the use of the dollar as the world’s trading currency. For so long as the world requires the US dollar for trade in general and oil in particular, the US can simply print more money knowing that it can be sold to foreign governments and companies.

But its foreign policy of containment (that is, maintaining the status quo by force if necessary) is failing. New alliances are being forged in the world, and allies are being estranged. The status quo cannot last for much longer.

One thought on “The US economy is far more fragile and endangered than you might think

  1. Daniel Ivan Gyenesse on said:

    Nice article!

    I should add that their national defense budget is a farce.
    It’s *several times* that of their, say, space program.
    It might also explain the complete, total and utter lack of actual healthcare for most citizens.

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