Us economic decline and global instability Part 3: Money printing, debt and increasing international isolation

by Phillyguy for The Saker Blog October 31, 2022

Summary

The international news cycle has been dominated by the war in Ukraine, mounting tensions in the Taiwan strait and Middle East, rising inflation and high cost of energy and severe economic problems confronting the EU. Much less attention has been focused on what are the primary forces driving all of this? I believe this is a direct consequence of the accelerating economic and social decline of the American empire and its attempts to counteract this decline with austerity at home and an increasingly bellicose, reckless and astronomically expensive foreign policy. These policies have not only undermined US national security, they represent an existential threat to the US economy and viability of western capitalism. This essay examines how the role of the dollar, money printing, debt and an increasingly reckless and chaotic foreign policy play in this process.

Introduction

This is a continuation of my previous articles, linking US economic decline and global instability. Part 1 examined the implementation of neoliberal economic policies which began during Ronald Regan's Presidency (1981-1989) and have been continued by subsequent administrations  1. Part 2 examined the attainment of economic and military parity by the Russia-China-Iran axis and rise of BRICS nations  2. Part 3 examines the use of monetary instruments, primarily money printing to sustain financial markets and the Pentagon, with the side effects of a rapid increase in debt, inflation and an increasingly chaotic foreign policy.

The US emerged from WWII as the world's leading power. Since that time, US global supremacy has rested on unrivaled military and economic power, control of world's energy reserves (primarily in the Middle East), and maintaining the dollar as the world's reserve currency. This relationship began to transform in the mid-1970s, as US corporate profits began to stagnate/decline, the proximate cause being the 1973-1975 recession  3, a consequence of increased competition from rebuilt economies in Europe- primarily Germany (Marshall Plan) [ 4], Japan/South Korea (Korean war) and more recently China. The US ruling elite responded to this economic challenge by pursing neoliberal economic policies (reviewed in  1). This included: 1) multiple tax cuts for the wealthy, 2) financial deregulation- repeal of Glass-Steagall legislation (1933 Banking Act) by the Gramm-Leach-Bliley Act (GLBA) in 1999 and Commodity Futures Modernization Act (CFMA) of 2000, that exempted over-the-counter derivatives trades between financial firms from regulation. It should be noted that both of these bills were passed during the waning years of the Clinton Administration and may have been a quid pro quo to spare President Clinton an impeachment conviction over his affair with White House intern Monica Lewinsky [ 5]. 3) attacks on labor and the poor and job outsourcing to Mexico, China and other low-wage platforms, facilitated by passage of North American Free Trade Agreement (NAFTA) in 1994 [ 6]. The effect of these policies is vividly observed in the manufacturing sector. In 1960 the US produced 50% of global manufacturing output, accounting for 25% of GDP. Today, the US produces circa 17% of global manufacturing output, accounting for 11% of GDP [ 7]. 4) Spending vast amounts of taxpayer money (> $20 trillion) on post-911 militarization.

The neoliberal economic policies outlined above precipitated the Global Financial Crisis 2007-2008 (GFC), the largest financial crash since the Great Depression [ 8] [ 9] [ 10]. None of the structural economic problems giving rise to the GFC (listed above) have been resolved; instead, the FED has used the US Treasury as a taxpayer-funded 'piggy bank' (the FED cannot print money) to pump over $40 trillion (this figure may be as high as $50 trillion) to support insolvent banks, inflate bond and equity markets and over-priced real estate, creating the 'everything bubble' [ 11].

Thus, since 2009, the US 'economy' has been sustained by continuous money printing to prop up financial markets and the Pentagon. Not surprisingly, this has been accompanied by an explosion of debt and rising inflation, further exacerbated by the Covid-19 pandemic, war in Ukraine and sanctions on Russian energy, which has led to demands for even more money to support financial markets and the Pentagon. To provide some perspective, from 2020- Q2 2022, US government debt increased over $7 trillion [ 12].

US Debt Levels

Below, I provide a brief overview of the trade [im] balance as well as current government, corporate and consumer debt levels in the US (summarized in Table 1). For an overview, see [ 13]. The US trade balance- the difference between US exports and imports for 2021 was the highest ever -$1.09 trillion [ 14]. US government debt currently stands at $30.5 trillion [ 12] [ 15] with interest on this debt amounting to $400 billion (~ $3,055/household) annually [ 16]; interest costs are projected to exceed $1 trillion a decade from now [ 16]. Municipal (state, cities and towns) debt is currently $4 trillion [ 17] and thus, combined government and municipal debt exceeds $34 trillion. Debt for nonfinancial corporations is $12.6 trillion [ 18] while debt for financial firms is $16.4 trillion [ 19]; total corporate debt is $29 trillion, close to government debt. I have broken consumer debt into 4 categories- Mortgage Debt- currently $5 trillion [ 20], Credit Card debt, the highest ever recorded- $930 billion [ 21] [ 22], with an average interest on this debt currently running at 22% [ 23]. Auto loan debt is currently $1.5 trillion [ 24], while student loan debt comes in at $1.75 trillion [ 25], with the average student carrying a balance of $37,667 at an average interest rate of 5.8% [ 26].

The rapid growth of debt, especially since 2019, when the Covid-19 pandemic began, begs an obvious question- how has the US been able to amass such high debt levels and how much longer can this continue? This is primarily due to the dollars status as world reserve currency and the immense size and power of the US economy, giving it the ability to exert a dominant effect on international financial institutions and engage in economic warfare, such as imposing economic sanctions and physically seizing the assets of countries that are viewed as hostile to American hegemony and want to chart an independent path.

1. Reserve Currency As pointed out in Part 1 of this series [ 1], the US dollar continues to be the world reserve currency and is still the primary reserve currency held by foreign banks [ 27] [ 28] [ 29]. In addition, the dollar (aka 'petrodollar') is the dominant currency used for international energy sales [ 30].

2. FED The US Federal Reserve System (FED) is the leading international financial institution, directing monetary policy through open market operations, emergency lending facilities, quantitative easing, and foreign exchange transactions. FED policies, such as setting interest rates and money supply are closely followed by the European Central Bank (ECB), Bank of England, Bank of Japan (BOJ) and other central banks [ 31] [ 32].

3. International Financial Institutions As the dominant global economic system, the US wields considerable influence over international financial institutions, including: i) Society for Worldwide Interbank Financial Telecommunications (SWIFT) system [ 33], which facilitates financial transactions and payments between 11,000 member institutions; SWIFT processed 42 million financial transactions in 2021 [ 34], ii) the Bank for International Settlements (BIS), whose purported 'mission' is to 'support central banks' pursuit of monetary and financial stability through international cooperation, and function as a bank for central banks [ 35], and iii) World Bank and International Monetary Fund (IMF) which ostensibly share the common goal of 'raising living standards' and 'economic prosperity' in member countries. [ 36] [ 37]. Loans from the world bank are in dollars, forcing recipient countries to maintain dollar reserves to pay off this debt, as described in 'Confessions of an Economic Hit Man' By John Perkins [ 38].

4. Gold Price. The largest global markets for gold are the Comex precious metal exchange in NYC  cmegroup.com and the London Bullion Market Association (LBMA)  lbma.org.uk). These bullion banks work in concert, setting the Gold price by buying and selling of gold futures contracts at the COMEX and eCBOT exchanges in the US and the London Gold market [ 39] [ 40]. The FED also stores gold on behalf of the US and foreign governments, central banks, and international organizations [ 41].

While there has been a gradual erosion of American global power since the mid 1970's, this decline has accelerated since 2020. The Covid-19 pandemic precipitated a global economic slowdown that severely impacted the US and EU. Unemployment rose, tax receipts fell and US federal debt grew circa $7 trillion (30% increase) in 3 years [ 12] [ 42]. The Pentagon deployed thousands of US troops to Afghanistan for 2 decades at a cost to US taxpayers of $2.3 trillion [ 43]. In Aug, 2021, President Biden removed all remaining US forces from Afghanistan in Aug, 2021, eliciting howls of protest from some members of Congress and corporate media, while vividly demonstrating that spending huge amounts of public money on military campaigns does not ensure 'victory' and also highlighting the limits to US military power. Despite these setbacks, the ruling elite has responded by instructing their functionaries in Government and Pentagon to engage in an even more chaotic, reckless and bellicose foreign policy, currently focused on four theaters- Eastern Europe/Ukraine, Middle East/Iran, East Asia/Taiwan Strait and Horn of Africa/Arabian Peninsula.

Ukraine- For good overview, see [ 44 ]; Figure 1. In 2014, the democratically elected President Viktor Yanukovich was ousted in a US-sponsored coup and replaced by a Russia-phobic government heavily influenced by far-right, Neo-Nazi forces. Since that time, American taxpayers have spent at least $60 brillion supporting Ukraine [ 45]; the Biden administration is requesting an addition $50 brillion in 'aid' to Ukraine, which he hopes will be approved by Congress prior to the November midterm elections [ 46]. Immediately following the Russian invasion of Ukraine in Feb, the US/EU imposed sanctions on Russian energy imports [ 47] [ 48]. At the time, the Biden Administration believed these sanctions would cause severe economic problems in Russia and a decline in support for Russian President Putin. Instead, these sanctions completely backfired, as Russia redirected energy exports previously going to the EU, to China and India. Energy costs have skyrocketed across the EU and UK, while the Russian ruble has strengthened to historic highs, and President Putin enjoys strong support from the Russian public [ 49]. On September 26, pressure drops were noted in the Nord Stream 1 and 2 pipelines transporting Russian natural gas to Germany [ 50]. Later, it was revealed that these pipelines were subjected to sabotage- it has been speculated that 500 kg (1100 pounds) of TNT was used at 4 separate sites to insure destruction of the pipelines [ 51] [ 52] [ 53 ]. Video from a Norwegian submersible drone showed at least 50 m (164 ft) of NS1 was destroyed [ 54]. While no one has taken responsibility for the attack on NS 1 & 2, it was obviously carried out by someone with access to highly skilled forces, capable of placing large amounts of explosives in close proximity to these pipelines, at a depth of 80 m (260 ft). Less than a week following destruction of the pipelines, US Sec of State Antony Blinken stated that the 'Nord Stream explosions are a 'tremendous opportunity', which accomplished the Biden administration goal of shutting down the Nord Stream pipelines and will enable Washington to increase LNG exports to the EU [ 55]. It appears the Pentagon may be getting ready to insert troops from the US Army's 101st Airborne Division, currently involved in war games in Romania, close to the Ukrainian border and town of Odesa [ 56 ] [ 57]. Russia has speculated that Ukraine is preparing to use a "dirty bomb" on its own territory, which was dismissed by Western and Ukrainian officials. Obviously, placing US troops in the Ukrainian war theater in such an overt manner, sets up a direct confrontation between the US and Russia. The EU continues to serve as a junior partner to the Pentagon. EU Commission President Ursula von der Leyen has announced plans to physically seize Russian assets [ 58].

Regarding a direct conflict between the US/NATO and Russia in Ukraine, military analyst Andrei Martyanov has pointed out- 'no US service, including USAF ever fought anything like this in the life of several generations of American servicemen...nobody in NATO (primarily US) armed forces has any concept of seeing their homeland devastated and losing their loved ones to attacks, famine, cold, illnesses and other things which real war brings on a massive scale. The US NEVER in its history, including in WW II, fought the enemy which could easily strike at strategic and operational depths with ease, and can deny NATO most of its ISR (Intelligence, surveillance and reconnaissance) assets.... Ukraine and VSU demonstrated perfectly a real worth (very low) of the NATO "standard", with NATO excelling only in PR and shelling civilians' [ 59].

China- The Biden Administration has continued Obama's 'Asia Pivot' and Trump's tariffs on Chinese exports, while instituting more hostile policies towards China. These include frequent military provocations- 'freedom of navigation' exercises through the Taiwan Strait by the US Navy, provokingly sending House Speaker Nancy Pelosi to Taiwan in August, suggesting the US is abandoning the 'One China policy', which has guided US-Sino relations for 5 decades, negotiating new arms deals with Taipei and imposing a ban on the export of any materials or equipment used in semiconductor manufacturing. No doubt, the State Dept is putting immense pressure on Japan, South Korea and Taiwan and EU to follow the US lead in this effort. As stated by the paper of record (NYT) the US is 'trying to establish a stranglehold on advanced computing and semiconductor technology that is essential to China's military and economic ambitions.' [ 60] [ 61].

Not only are Biden's policies reckless and potentially dangerous, they will likely fail. China is the largest importer of semiconductor chips in the world [ 62]. Limiting China's ability to import these chips is going to reduce the profits of chip manufactures in Taiwan, Japan, South Korea, US and other countries. China has invested large amounts of money developing its own chip manufacturing capability; China's share of the global market continues to grow and has overtaken Taiwan [ 63]. China educates 15x the number of STEM (science, technology, engineering and math) graduates than the US and thus will have the intellectual power and capability to develop indigenous state-of-the-art semiconductor fabrication. Further, as economic historian Michael Hudson has pointed out, the financial system in the US has evolved into a 'neo-rentier' economy, where 'wealth' is generated by extraction of economic rent via the finance, insurance, and real estate (FIRE) sectors without producing real value. At the same time, Labor is increasingly exploited by high levels of student and credit card debt, inflated costs of housing, education, medical care, transportation and food. The high cost of living in the US has made labor more expensive and consequently American manufacturing is not competitive with China. For an excellent discussion, see [ 64].

Middle East/Iran- As pointed out above, an important pillar of post-1945 US global power has been to control the world's energy reserves, primarily in the Middle East (circa 70% of global energy reserves). Indeed, the relationship between the Kingdom of Saudi Arabia (KSA), which has the second largest energy reserves in the world after Venezuela, and the US have remained relatively unchanged since the meeting between FDR and Saudi King Abdulaziz ibn Abdul Rahman Al Saud aboard the USS Quincy in the Great Bitter Lake, Suez Canal on Feb. 14, 1945 [ 65]. The importance of this relationship can be inferred from the fact that it has endured for 75 years, through Democratic and Republican administrations.

The UK, via the Anglo-Iranian Oil Company controlled Iran's oil industry from 1913, until the Islamic revolution, 1979. The US/UK have still not recovered from this event. Iran has two things they covet: 1) the world's fourth largest oil reserves and largest natural gas reserves, 2) geo-strategic position in the Middle East-between Afghanistan, Pakistan, the Indian subcontinent and Central Asia and abuts the Strait of Hormuz, a strategic "choke point" through which circa 25% of the world's energy transits. In a prescient piece published several years ago, Dan Glazebrook pointed out- "The reason for this obsession with destroying Iran - shared by all factions of the Western ruling class, despite their differences over means - is obvious: Iran's very existence as an independent state threatens imperial control of the region - which in turns underpins both US military power and the global role of the dollar." [ 66].

In 2015, the Obama Administration negotiated the Joint Comprehensive Plan of Action (JCPOA; aka 'Iran nuclear deal'); in exchange for $ billions of sanctions relief, Iran agreed to dismantle much of its nuclear program and open its facilities to intrusive inspections by the International Atomic Energy Agency (IAEA) [ 67]. Indeed, the IAEA described Iranian inspections as the 'toughest and most technologically advanced inspections' put in place to prevent a country from developing an atomic bomb [ 68]. It should be noted that the JCPOA was unanimously adopted by the UN Security Council (resolution 2231) and Iran is signatory to the nuclear nonproliferation treaty (NPT).

In May, 2018, President Donald Trump announced the US was [unilaterally] withdrawing from the Iran nuclear deal, claiming 'This was a horrible one-sided deal that should have never, ever been made....It didn't bring calm, it didn't bring peace, and it never will' [ 69]. During the 2020 Presidential campaign, then candidate Joe Biden said he would return to the deal. Not only has Biden not rejoined the deal, but US policies towards Iran have remained bellicose and threatening [ 70] [ 71].

The problem for the US is that despite facing continuous military threats and economic sanctions from the US, UK and other western Imperialist powers, Iran has developed a formidable defensive military capability which has no doubt deterred direct military attacks from the US/Israel and positioned Iran as a major power broker in the region. The Center for Strategic and International Studies (CSIS) has concluded- 'Iran possesses the largest and most diverse missile arsenal in the Middle East, with thousands of ballistic and cruise missiles, some capable of striking as far as Israel and southeast Europe.' [ 72].

Financial deregulation has promoted the creation of circa $600 trillion of highly-leveraged derivatives; the energy derivative market is valued at $12.4 trillion [ 73]. Any actions which cause rapid fluctuations in energy prices, such as military threats against the Islamic Republic of Iran, imposition of sanctions on Russian Energy and US threats against the Kingdom of Saudi Arabia (KSA), the largest producer of energy in the world potentially puts holders of these leveraged contracts at risk of default, as recently pointed out by the IMF [ 74]. Obviously, a massive default in these commodity markets will have catastrophic effects for Western economies and will reverberate across the World. As Pepe Escobar has pointed out- 'never underestimate a wounded and decaying Empire collapsing in real time [ 75].

In 2019, drones allegedly fired from Yemen inflicted major damage at two Saudi Aramco oil processing facilities, located in Abqaiq and Khurais, temporarily disrupting international energy markets [ 76] [ 77]. Imagine the damage to energy infrastructure in the Persian Gulf, should a major war between the US and Iran take place. Despite these dangers, the Biden Administration is committed to regime change in Iran [ 78 ].

Horn of Africa/Arabian Peninsula- As they say in real estate, it's about 'location, location, location'. While largely under the radar, the Horn of Africa and Arabian Peninsula are of significant geostrategic importance [ 79]. The Red Sea maritime corridor, consisting of the Gulf of Aden, the Bab-el-Mandeb strait, Red Sea, Suez Canal and the Mediterranean is the shortest shipping route between Asia, Europe and US East Coast. Not surprisingly, the Bab-el-Mandeb strait has been described as the 'bottleneck' of the Red Sea and a 'confrontation arena' between global superpowers. The southern coastline of the strait is bordered by Djibouti, Eritrea and Somalia on the Horn of Africa, which sit directly across from Yemen, which borders the northern coastline. The relative importance of this region can be seen from the miliary assets allocated by the US and China. The US Naval base at Camp Lemonnier, located in Djibouti city is home to the Combined Joint Task Force - Horn of Africa (CJTF-HOA Africom) [ 80] and is the only permanent U.S. military base in Africa. In addition, the US is in negotiations with UEA/KSA towards establishing a US military base on Socotra Island, technically an archipelago of Yemen, located 380 km south of Yemen in the Indian Ocean. China's only overseas military base- the People's Liberation Army Support Base in Djibouti opened in 2017.

In 2015, the Houthi Ansarullah movement overthrew the Yemeni government, led by Abdrabbuh Mansur Hadi, forcing him to flee to neighboring KSA. In response, Mohammed bin Salman (aka MBS), Crown Prince of Saudi Arabia, has unleashed a savage war against Yemen [ 81], that has been actively supported with intelligence, logistical and material support from the US, UK and other imperialist countries [ 79]. Similar to the situation in Ukraine, KSA has served as a proxy force for the Pentagon. Despite spending $ billions attacking Yemen, KSA has been unable to prevail in this conflict. Yemen has likely been receiving military support from Iran and other countries. Bottom line- despite spending $ trillions of taxpayer money, the Pentagon has been unable to prevail in conflicts in Ukraine, Middle East, East Asia or the Horn of Africa, indicative of declining US military power.

Economic Sanctions and Asset seizure

The US and EU have resorted to economic sanctions and physically seizing assets of countries deemed hostile to their imperialist ambitions [ 82]. Over the last several decades, the US, along with support from their 'allies' primarily the UK, has used its economic power to impose economic sanctions on North Korea (DPRK), Cuba, Iran, Syria, Venezuela, China and Russia [ 83] and exclude Cuba, Venezuela, Myanmar, North Korea, Iran and most recently, several Russian Banks from the SWIFT system [ 34] [ 84], to impose the US-driven 'rules based order' [ 85] [ 86]. In addition, the US, UK and EU have been aggressively confiscating assets of other countries. This includes- $1 billion of Venezuelan gold held by UK, $330 billion of Russian assets 'frozen' by US/EU, $1.75 billion Iranian assets, still held by Citibank (NY) and $7 billion of Afghanistan Government funds, held by Federal Reserve Bank in New York (NYFED).*

(*A $3.5 billion 'Afghan Fund' has been set up, run by the Bank for International Settlements (BIS) based in Basel, Switzerland. The US claims this fund will be used to 'reduce suffering and improve economic stability for the people of Afghanistan', while the Taliban in Afghanistan described the transfer as an "illegal venture". In effect, the US is seizing Afghan assets.) [ 87]

Blowback from an Increasingly Assertive Global South

College students taking introductory Physics learn Isaac Newton's three basic laws of classical mechanics, which describe the relationship between an object in motion and forces acting upon it. Newton's Third Law of Motion states 'for every action, there is an equal and opposite reaction' [ 88]. The same is true for international relations.

After seeing the US/NATO attack country after country, steal their resources, impose economic sanctions and freeze or seize financial assets, and destroy infrastructure supplying energy to an 'ally'- blowing up the Nord Stream pipelines, has made many countries in the Global South ask a fundamental question- 'are we next'? No doubt, this is one of the reasons Saudi Arabia, and other Gulf countries are reexamining their relationship with the West and exploring closer relations with China and Russia. We are seeing the rapid expansion of BRICS and Shanghai Cooperation Organization (SCO)- Saudi Arabia is considering joining the SCO [ 89]. Both organizations are closely integrated with China's Belt and Road Initiative [ 2] [ 90] [ 91]. Russia has developed the Mir payment system to directly compete with Master Card and Visa. The US response has been rapid and predictable [ 92]- threatening to impose economic sanctions and expulsion from SWIFT- against any foreign financial institution using the Mir system, which has, at least temporarily, forced banks in Armenia, Kazakhstan, Tajikistan, Turkey, Uzbekistan and Vietnam to suspend use of the Mir system [ 93]. Russia is developing a bullion exchange, the Moscow World Standard, to end gold price manipulation by the LBMA and Comex bullion exchanges [ 40] and reveal the metal's true market value [ 94] [ 95] [ 96]. To avoid using the petrodollar, China has set up an energy trading platform- Shanghai International Energy Exchange [ 97] to advance China's goal of increasing the use of yuan for energy transactions. This platform is now being used to complete transactions for energy imports from Russia and Iran and in the future, with KSA and other Gulf countries, reducing China's reliance on the petrodollar.

Russia [is not] Isolated. Referendums held between Sept. 23-27 showed that residents of the Donetsk and Luhansk People's Republics, Zaporizhzhia and Kherson regions of Ukraine voted overwhelmingly to become part of the Russian Federation. Russia formally agreed to admission of these territories on Oct 5, 2022 [ 98] [ 99]. On Oct 12, the UN General Assembly voted on a resolution calling on countries to 'not recognize' the four regions of Ukraine which Russia has claimed, following the September referendums and 'demanding' that Moscow reverse course on its "attempted illegal annexation" [ 100]. While 143 Member States supported the resolution, following 'heavy lobbying' by the US and UK [ 101], as the saying goes- 'the devil is in the details'. Closer analysis of the vote shows there were 35 abstentions, including many African nations, China and India, while 5 countries voted against the resolution- Belarus, Democratic People's Republic of Korea (DPRK), Nicaragua, Russia and Syria. While this vote was touted by the US State Department as a 'rebuke' of Russia, those countries voting to either abstain or against the resolution constitute circa 80% of the global population- 6 billion people [ 102].

Concluding Remarks

We are seeing the accelerating decline of late-stage American capitalism, a hang-over from the 2007-2008 GFC and a direct result of over 4 decades of neo-liberal economic policies, including uncontrolled money printing by the Treasury/FED, which has been used to prop up Wall St and support the Pentagon's military campaigns, but has increased inflation and debt. As Michael Hudson has pointed out, the American economy has been transformed into post-industrial finance capitalism that seeks wealth primarily through the extraction of economic rent, not industrial capital formation. Favorable tax policies to the FIRE sector, increasing monopolization of infrastructure- IT, communications, health care, housing, education, transportation, etc. has increased the cost of living for working people and increased operating costs for business enterprises [ 103]. Changes in the tax structure- tax cuts for the wealthy, effectively transferring a higher tax burden onto working people; cash strapped states and municipalities have responded by increasing regressive excise taxes- sin taxes on tobacco, alcohol, increased costs for building permits, occupational licenses, public transportation and an explosion of state lotteries, which has further eroded the purchasing power of working people. Not surprisingly, this has been accompanied by increased credit card debt [ 21], as working people increasingly rely on debt to maintain their standard of living.

At the same time, the ruling elite have promoted wars in Afghanistan, Iraq, Libya, Syria, Yemen and Ukraine. Despite spending astronomical amounts of human and financial capital on these conflicts (> $21 trillion since 2000), the empire has been unable to extract significant economic rent or obtain any tangible victories. The US now confronts an increasingly assertive Russia-China-Iran axis, that has attained military and economic parity with the west, and also unifying the Global South via BRICS and SCO [ 104] [ 105] which threatens the dollars status as reserve currency and American global power.

How times have changed! In Oct, 2000, Iraqi leader Saddam Hussein began pricing oil in euros rather than dollars [ 106], while in North Africa, Libyan leader Muammar el-Qaddafi increased Libya's gold and silver reserves, which were intended to back a pan-African currency based on the Libyan golden Dinar [ 107]. Both of these actions threatened the primacy of the dollar as the world reserve currency and the sole currency used for commercial energy transactions, and not surprisingly, ignited the rath of the US/UK. In Mar, 2003, the Pentagon responded with 'Operation Iraqi Freedom' which destroyed Iraq [ 108] [ 109]. It should be noted that the US war on Iraq is still ongoing. On Mar 19, 2011, a US/NATO-led 'coalition' began military interventions in Libya resulting in the overthrow and assassination of Muammar Qadhafi and effectively destroying the country [ 110]. Obama would later describe the war on Libya as the 'worst mistake' of his presidency [ 111]. To the consternation of the ruling elite, the American empire cannot treat the Russia-China-Iran alliance, which is now aggressively challenging the primacy of the dollar, in the same way they treated Iraq and Libya, as any war with Russia/China will result in the incineration of the US. Perilous times ahead.

Notes

1. US economic decline and global instability. The Saker Jan 19, 2021;  thesaker.is

2. US economic decline and global instability Part 2: Rise of BRICS. The Saker Sept 1, 2022;  thesaker.is

3. Today's global economy is eerily similar to the 1970s, but governments can still escape a stagflation episode. By Jongrim Ha, M. Ayhan Kose, and Franziska Ohnsorge Brookings Fri, July 1, 2022;  brookings.edu

4. Marshall Plan. History.Com Dec 16, 2009;  history.com

5. The Impeachment of President William Clinton: A Chronology;  famous-trials.com

6. Clinton signs NAFTA into law. By Andrew Glass Politico Dec 8, 2018;  politico.com

7. What Happened to the U.S. Manufacturing Industry?  60dayusa.com

8. The Global Financial Crisis. Reserve Bank of Australia;  rba.gov.au

9. The "Next" Financial Crisis and Public Banking as the Response By Michael Hudson The Hudson Report Wed, Aug 1, 2018;  michael-hudson.com

10. Economist Michael Hudson on debt relief, inflation, Ukraine disaster capitalism, petrodollar crisis By Ben Norton Sept 8, 2022;  multipolarista.com

11. Central Bankers Have Forgotten Econ 101 By Richard Farr Barrons Feb. 8, 2022;  barrons.com

12. Federal Debt: Total Public Debt;  fred.stlouisfed.org

13. Overview, see- Debt of Nonfinancial Sectors, 1952 - 2022;  federalreserve.gov

14. U.S. trade deficits hit record highs in 2021- More effective trade, industrial, and currency policies are needed to create more domestic manufacturing jobs. By Robert E. Scott Economic Policy Institute Feb 15, 2022;  epi.org

15. What is the national debt?;  fiscaldata.treasury.gov

16. Interest on Fed Debt Committee for a Responsible Federal Budget;  crfb.org

Note: interest costs exceed expenditures on other programs

17. US Municipal Bonds Statistics;  sifma.org

18. Nonfinancial Corporate Business; Debt Securities and Loans; Liability, Level $12.6 Trillion;  fred.stlouisfed.org

19. Domestic Financial Sectors; Debt Securities; Liability, Level $16.4 Trillion

 fred.stlouisfed.org

20. Mortgage Debt Outstanding by Type of Holder and Property: Federal and Related Agencies: Federal Agricultural Mortgage Corporation for Farm Properties (DISCONTINUED) (MDOTHFRAFAMCTPFP) $5 trillion;  fred.stlouisfed.org

21. Credit card debt in the U.S. hits all-time high of $930 billion-here's how to tackle yours with a balance transfer. By Alexandria White CNBC Oct 11, 2022;  cnbc.com

22. Inflation-slammed Americans are piling on credit card debt. By Megan Cerullo Moneywatch Oct 18, 2022;  cbsnews.com

23. Average Credit Card Interest Rate in America Today By Matt Schulz Oct 13, 2022;

 lendingtree.com

24. US Auto Loan Debt;  ycharts.com

25. A Look at the Shocking Student Loan Debt Statistics for 2022 student-loan-debt-statistics. July 29, 2022;  studentloanhero.com

26. Student Loan Debt Statistics. By Melanie Hanson Education Data.org, July 29, 2022;  educationdata.org

27. The Dollar: The World's Currency- The dollar's role as the primary reserve currency for the global economy allows the United States to borrow money more easily and impose painful financial sanctions. But some experts say the costs to areas such as the Rust Belt are too high to bear. By Anshu Siripurapu CFR Sept 29, 2020;  cfr.org

28. Will the U.S. Dollar Lose Its Reserve Status? Kathy Jones Charles Schwab

Mar 18, 2021;  schwab.com

29. US dollar still dominates international funding markets BIS Press release June 18, 2020;  bis.org

30. What Is the Petrodollar? By Kimberly Amadeo The Balance June 4, 2022;  thebalancemoney.com).

31. Federal Reserve History;  federalreserve.gov

32. What Is the U.S. Federal Reserve? Over the past decade, the Fed has deployed trillions of dollars in stimulus while expanding its regulatory oversight. The central bank is back on the front lines to fight the COVID-19 crisis. By James McBride and Anshu Siripurapu Council on Foreign Relations Jan 27, 2022;  cfr.org

33. Society for Worldwide Interbank Financial Telecommunications (SWIFT)  swift.com

34. A SWIFT explanation by Carlos Santamaria GZERO Feb 25, 2022;  gzeromedia.com

35. Bank of International Settlements;  bis.org

36. World Bank;  worldbank.org

37. International Monetary Fund (IMF) and World Bank;  imf.org

38. Confessions of an Economic Hit Man By John Perkins (Book) 2005;  amazon.com

39. London or New York: Where Does the Gold Price Come From? Brian Lucey, Charles Larkin and Fergal O'Connor;  lbma.org.uk

40. Rigged Gold Price Distorts Perception of Economic Reality By Paul Craig Roberts and Dave Kranzler Sept 22, 2014;  paulcraigroberts.org

41. Does the Federal Reserve own or hold gold?;  federalreserve.gov

42. Chart Book: Tracking the Post-Great Recession Economy May 27, 2022;

 cbpp.org

43. US Costs to date for war in Afghanistan. Watson Institute for International and Public Affairs;  watson.brown.edu

44. Historical Context for Conflicts in Ukraine Ray McGovern (Video) Jul 10, 2022;  youtube.com

45. The Ukraine War in data: $60 billion in US aid - while a top Republican warns of no 'blank check'- Week 33: The midterm election results may slow what has been an historic flow on U.S. assistance. By Alex Leeds Matthews, Matt Stiles, Tom Nagorski, Justin Rood and Mariana Labbate Grid Oct 20, 2022;  grid.news

46. US Congress looks to approve $50 billion in Ukraine aid, NBC reports Oct 20, 2022;  yahoo.com

47. US Government Imposes Sanctions Prohibiting Importation of Russian Energy Products and New Investments in the Russian Energy Sector By Paul Amberg, Meghan Hamilton and Caroline Howard Mar 14, 2022;  sanctionsnews.bakermckenzie.com

48. EU sanctions against Russia explained- The EU has imposed a series of new sanctions against Russia in response to the military aggression against Ukraine. Find out what this means in practice;  consilium.europa.eu

49. How trade sanctions on Russia backfired in Europe- Numbers Don't Lie

By Andrew J. Masigan Aug 14, 2022;  bworldonline.com

50. Three Inquiries, but No Answers to Who Blew Holes in Nord Stream Pipelines- Denmark, Germany and Sweden are all investigating the ruptured pipeline sites, but they remain tight-lipped over who might have caused the damage and why. By Melissa Eddy NYT Oct. 25, 2022;  nytimes.com

51. Hundreds of pounds of TNT were used to damage the Nord Stream pipelines, Sweden and Denmark tell the UN by Ryan Hogg Oct 1, 2022;  businessinsider.com

52. Denmark says 'powerful explosions' caused the Nord Stream pipeline leaks.

By Jasmina Nielsen and Melissa Eddy Oct. 18, 2022;

 nytimes.com

53. Jeffrey Sachs says US 'PROBABLY' Behind Nord Stream Pipeline Attacks, Bloomberg Host SHORT-CIRCUITS Oct 4, 2022;  youtube.com

54. Nord Stream blast 'blew away 50 metres of pipe'- At least 50 metres (164ft) of an underwater pipeline bringing Russian gas to Germany is thought to have been destroyed by a blast last month. By Merlyn Thomas BBC News Oct 18, 2022;  bbc.com

55. Nord Stream explosions are a 'tremendous opportunity' - US. Washington can now step in as Europe's top supplier of LNG, the Biden administration explained RT Oct 1, 2022;  rt.com

56. Ukrainian Power Outages, the US 101st Airborne, and Russia's Next Big Move Oct 23, 2022;  youtube.com

57. NATO Is Cocking Its Fist. By Gonzalo Lira (Video) Oct 24, 2022;  theduran.com

58. EU Ursula, seize not freeze. Boris: Cultural Learnings of America. 30 DEMS retract peace letter. by Alex Christoforou The Duran Oct 26, 2022;  theduran.com

59. And They Huff, And They Puff By Andrei Martyanov Oct 22, 2022;  smoothiex12.blogspot.com

60. Biden Administration Clamps Down on China's Access to Chip Technology- The White House issued sweeping restrictions on selling semiconductors and chip-making equipment to China, an attempt to curb the country's access to critical technologies. By Ana Swanson NYT Oct. 7, 2022;  nytimes.com

61. US waging 'unilateral' economic and tech war to halt China's rise, DC insiders say openly- The Biden administration's aggressive sanctions aim to "kneecap" China's tech sector. A former Pentagon official acknowledged it is a "disproportionate" and "unilateral" attack, a "form of economic containment." By Ben Norton

Oct 24, 2022;  multipolarista.com

62. China to import $300 billion of chips for third straight year: industry group

By Reuters Staff Aug 26, 2020;  reuters.com

63. China's Share of Global Chip Sales Now Surpasses Taiwan's, Closing in on Europe's and Japan's by Semiconductor Industry Association Monday, Jan 10, 2022;  semiconductors.org

64. Economist Michael Hudson on debt relief, inflation, Ukraine disaster capitalism, petrodollar crisis- Economist Michael Hudson discusses partial student debt relief in the US, inflation and the Fed, disaster capitalism in Ukraine, and China's challenge to the petrodollar. By Ben Norton Multipolarista Sept 8, 2022;

 Economist Michael Hudson on debt relief, inflation, Ukraine disaster capitalism, petrodollar crisis

65. This Day in Politics- FDR meets with Saudi king, By Andrew Glass Politico Feb 14, 2019;  politico.com

66. Trump's delusional Iran oil gambit is decades too late by Dan Glazebrook RT July 9, 2018; Link:  rt.com

67. The Joint Comprehensive Plan of Action (JCPOA) at a Glance Arms Control Association March 2022;  armscontrol.org

68. World's most robust' nuclear inspection program under fire as Trump tries to rewrite the Iran deal By Shashank Bengali LA Times Oct 4, 2017;

 latimes.com

69. Trump Abandons Iran Nuclear Deal He Long Scorned By Mark Landler NYT May 8, 2018;  nytimes.com

70. What Is the Iran Nuclear Deal? Diplomacy to revive this arms control agreement has faced multiple stumbling blocks, including Iran's nuclear advances and geopolitics related to the war in Ukraine. By Kali Robinson CFR July 20, 2022;  cfr.org

71. Stuck on a hostile path? US policy towards Iran since the revolution by Louise Fawcett & Andrew Payne Contemporary Politics Feb 2, 2022;  tandfonline.com

72. Missile Defense Project, "Missiles of Iran," Missile Threat, Center for Strategic and International Studies July 16, 2020; Link:  missilethreat.csis.org

73. OTC derivatives statistics at end-December 2021;  bis.org

74. IMF points to growing dangers in key area of financial system Nick Beams WSWS Oct 10, 2022;  wsws.org

75. The 'War of Terror' may be about to hit Europe by Pepe Escobar The Saker Oct 24, 2022;  thesaker.is

76. Two Major Saudi Oil Installations Hit by Drone Strike, and U.S. Blames Iran By Ben Hubbard, Palko Karasz and Stanley Reed NYT Sept. 14, 2019;  nytimes.com

77. Yemen's Houthi rebels claim a 'large-scale' drone attack on Saudi oil facilities By Nada Altaher, Jennifer Hauser and Ivana Kottasová, CNN Sept 14, 2019;  cnn.com

78. US Recruits Elon Musk's SpaceX for Iran Regime Change Op by Brian Berletic (Video) Oct 25, 2022;  youtube.com

79. Strategic Importance of the Indian Ocean, Yemen and Bab-el-Mandeb Strait Saker Aug 5, 2020;  thesaker.is

80. Combined Joint Task Force - Horn of Africa;  africom.mil

81. Yemen's Tragedy: War, Stalemate, and Suffering- Yemen's internal divisions and a Saudi-led military intervention have spawned an intractable political, military, and humanitarian crisis. By Kali Robinson CFR Backgrounder Oct 21, 2022;  cfr.org

82. How U.S. & Allies Increasingly Rely Upon Theft to Conquer the Rest of the World by Eric Zuesse The Duran Oct 26, 2022;  theduran.com

83. United States sanctions; en.wikipedia.org

84. SWIFT Sanction on Russia: How It Works and Likely Impacts. By Alessandro Rebucci Johns Hopkins Carey Business School Mar 4, 2022;  econofact.org

85. China Wants a 'Rules-Based International Order,' Too- The question is who gets to write the codes- and whether the United States will live up to its own. By Stephen M. Walt Foreign Policy Mar 31, 2021;  foreignpolicy.com

86. 'My Order, My Rules': China and the American Rules-Based Order in Historical Perspective William M. Zolinger Fujii Dec 28, 2021;  e-ir.info

87. U.S. Establishes Trust With $3.5 Billion in Frozen Afghan Central Bank Funds- The Afghan Fund, which will be based in Switzerland, is meant to help stabilize Afghanistan's economy and pay for imports like electricity - without benefiting the Taliban. By Charlie Savage NYT Sept. 14, 2022;  nytimes.com

88. Newton's Third Law of Motion;  physicsclassroom.com

89. Saudi Arabia's accession to SCO: An opening to the future. By Islam Farag United World Sept 26, 2022;  uwidata.com

90. China's Massive Belt and Road Initiative- China's colossal infrastructure investments may usher in a new era of trade and growth for economies in Asia and beyond. But skeptics worry that China is laying a debt trap for borrowing governments. By Andrew Chatzky and James McBride Jan 28, 2020;  cfr.org

91. The Belt and Road Initiative;  silk-road.com

92. Treasury-Commerce-State Alert: Impact of Sanctions and Export Controls on Russia's Military-Industrial Complex; home.treasury.gov

93. Banks from six countries suspend Russia's MIR cards amid US pressure and Ukrainian hacker attacks By East-West Digital News Sept 27, 2022;

 Banks from six countries suspend Russia's MIR cards amid US pressure and Ukrainian hacker attacks

94. Where is the Russian Federation's Gold Stored? By Ronan Manly Apr 21, 2022; Link:  bullionstar.com

95. Eurasian alliance plans a Moscow World Standard (Moscow gold standard) to destroy LBMA's monopoly in precious metals pricing By Ronan Manly Aug 31, 2022;  bullionstar.com

96. Russia's new gold exchange could challenge LBMA and reveal gold's 'fair' price- Matthew Piepenburg by Cornelius Christian Sept 20, 2022;  kitco.com

97. Shanghai International Energy Exchange;  ze.com

98. Federation Council approves ratification of accords on accepting new entities into Russia Tass Oct 4, 2022;  tass.com

99. Russian Federation Council Approves Annexation of Ukrainian Territories. By Thomas Falk European Views Oct 5, 2022;  european-views.com

100. Ukraine: UN General Assembly demands Russia reverse course on 'attempted illegal annexation' Oct 12, 2022;  news.un.org

101. Strong majority of countries rebukes Russia at UN- 143 countries backed a resolution slamming Russia's claim of annexation, a larger-than-expected result. By Nahal Toosi and Ryan Heath Politico Oct 12, 2022;

 politico.com

102. A New U.N. Vote Shows Russia Isn't as Isolated as the West May Like to Think. By Yasmeen Serhan Oct 13, 2022;  time.com

103. The rentier resurgence and takeover: Finance Capitalism vs. Industrial Capitalism

By Michael Hudson Wed, Jan 27, 2021;  michael-hudson.com

104. Geopolitical Shift. Cross Talk with Peter Lavelle RT Oct 24, 2022;  rt.com

105. Everybody wants to hop on the BRICS Express By Pepe Escobar Oct 28, 2022;  thesaker.is

106. Iraq nets handsome profit by dumping dollar for euro By Faisal Islam The Guardian Sat 15 Feb 2003;  theguardian.com

107. Why Qaddafi had to go: African gold, oil and the challenge to monetary imperialism By Ellen Brown The Ecologist Mar 14, 2016;  theecologist.org

108. Operation Iraqi Freedom;  history.navy.mil

109. The US war against Iraq: the historical issues By Nick Beams Mar 24 2003;  wsws.org

110.The war in Libya and the new scramble for Africa By Chris Marsden Mar 29, 2011;  wsws.org

111. The Legacy of Obama's 'Worst Mistake'- There's a problem with the American way of war. By Dominic Tierney The Atlantic Apr 15, 2016;  theatlantic.com

Figure 1. Map of Ukraine

(source: US Dept of Defense)

 thesaker.is