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?