The hour of maximum danger for U.S. democracy

The hour of maximum danger for U.S. democracy, or what will be left of it, will be when other nations rebel against the power of the U.S. dollar.   That will be when the United States is most in danger of a would-be Hitler or Mussolini.

The power of the U.S. dollar is what gives Washington the means to be a great economic power despite huge trade deficits and a hollowing out of American manufacturing.  It provides the means to maintain the world’s most expensive military.

It gives Washington the means to wage economic warfare against nations such as Iran, Venezuela and Russia, and to force poor nations to sacrifice the well-being of their people to foreign creditors.

But the power of the U.S. dollar is a legacy of a past when the U.S. was the world’s leading industrial nation, leading creditor nation and leading exporting nation.   Now the dominance of the dollar rests on the fact no nation’s leaders are both brave enough, and lead a nation that is strong enough, to defy the dollar system.

Benjamin Carter Hett wrote in The Death of Democracy that many European nations turned to fascist and right-wing dictatorships as a result of military defeat, which discredited the established governments, and strong Communist and revolutionary movements, which caused the middle classes to look for protectors.

German democracy survived for a time, but was pushed over the brink by onset of the Great Depression, which the established government was unable to cope with.

The conditions will exist in the United States following the crash of the U.S. dollar.  The U.S. government will no longer be able to raise money by borrowing in foreign markets.  Lack of borrowing power will mean it no longer will be able to pay for a world-wide network of military bases.

At the same time, the military will have to pay more for imported electronics components, imported oil and other supplies, including uniforms.  The fall in value of the U.S. dollar will make U.S. manufacturing costs cheaper in relation other currencies, but it won’t be able to fix the lack of manufacturing capacity.  And it will make investment in new manufacturing capacity more expensive.

The sudden collapse of U.S. military power without a military defeat would open the way to a “stab in the back” myth, comparable to the one about Germany’s defeat in World War One.

The buying power of U.S. workers will fall and the prices of merchandise, so much of which is directly or indirectly dependent on foreign supply chains, will fall.  There will be a crash in the U.S. financial markets and real estate markets.  Many workers will strike.  Many citizens will turn to the streets in protest—probably very few that are explicitly Communist, but who knows?

This didn’t have to be.  The Swiss franc is a hard currency, even though the Swiss are not a global power.  The British pound sterling was a rival for the U.S. dollar long after the collapse of British global power  The United States could have maintained the supremacy of the dollar simply by being a responsible manager of the world’s most important currency.

Instead Washington uses its position to promote its own purposes.  The Trump administration abrogated the Obama administration’s agreement with Iran to left economic sanctions in return for Iran agreeing to limitations on development of nuclear power.

This was an international agreement that the other partners – Britain, France, Germany, Russia and China – saw no reason to break.  But the U.S. government is using its dollar power to force the European partners to boycott Iranian oil and gas and instead import more expensive U.S. oil and gas.  This is contrary to the best interests of the European partners.  They submit out of fear, but maybe not indefinitely.

Shortly after the Castro revolution in Cuba, the U.S. government instituted an economic boycott of the island nation.  But the boycott only affected U.S. companies.  Canadians, Europeans and others were free to trade with Cuba.  Nowadays sanctions are aimed not only against target nations such as Iran, Venezuela and North Korea, but against any foreign company or individual that dares to violate U.S. rules.

Then there is the use of U.S. dollar power to impose U.S. economic policies in foreign nations.  An example was Argentina.  The government of Argentina had borrowed more than it could afford to pay back, so it reached an agreement with majority creditors to settle the debt by making a partial payment.  A few speculators objected, and a U.S. judge ruled the agreement invalid.  The judge had jurisdiction because the payment was in dollars and went through a U.S. bank.

I think it is only a matter of time before the world revolts against this.  President Trump has accelerated the process by going out of his way to use American power in abusive ways and without giving foreign governments any way to save face.

All the nations the United States has targeted as enemies are joining together, and looking for alternatives to the dollar.  It is only a matter of time before neutrals and U.S. allies join them.

I think the dollar will decline slowly and then crash suddenly, like Soviet power in eastern Europe.  Once banks and governments lose confidence in the dollar, they will race to get rid of their dollar holdings.  None will want to be the last to be stuck with investments tied to a depreciated currency.

We Americans will face an economic crisis without sympathy or help from other countries.  That will be the hour of maximum danger for American democracy.  Hardly anybody will understand the reasons because the national newspapers and broadcasters will not have reported the background.  It will seem like the catastrophe happened for no reason.

That will be the hour of maximum opportunity for a would-be Mussolini or Hitler.

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Then again, the United States does not need a crisis to cease being a democracy.  American freedom and democracy have been eroded little by little for a long time.  The science-fiction writer Charles Stross wrote some years back that what’s going on in the UK and the US is like a pre-emptive counter-revolution.  Maybe it is.  Maybe this is the deep state’s plan to deal with the coming economic collapse and catastrophic climate change.

LINKS

Punishing the World With Sanctions by Philip Giraldi for the Strategic Culture Foundation.

U.S. Economic Warfare and Likely Foreign Defenses by Michael Hudson on his web log.

If You Provoke the Entire World, Something May Happen by Andre Vitchek for The Unz Review.

De-Dollarizing the American Financial Empire, an interview of Michael Hudson for Guns and Butter.

The Unipolar Moment Is Over by Pepe Escobar for Consortium News.

How the U.S. has made a weapon of the dollar by Satyajit Das for the Times of India.

 

Tags: American Democracy, dictatorship, Fascism, U.S. dollar