Chinese leader Xi Jinping knows something Barack Obama doesn’t: America is finished. The U.S. economy is an ocean liner holed below the waterline. In the stateroom, the band plays on – but, on the bridge, the outcome is clear.
With the arguable exception of the late-era Soviet Union, America is sinking faster than any Great Power in history.
As a proportion of national output, America’s foreign debts are already larger than those of any Great Power since the egregiously corrupt Ottoman Empire a century ago. For those who need reminding, the Ottoman Empire, which had flourished for more than six centuries, was then within a decade of final collapse.
Because every dollar of current-account deficit (the current account is the largest and most meaningful measure of trade) represents an extra dollar that has to be funded from abroad, America’s foreign indebtedness is now accumulating at a rate of more than $1 billion a day.
There is no way America can export itself back to national solvency – U.S. industry has just become too hollowed out. Even apparently solid U.S. manufacturers like BoeingBA +0.41%, CaterpillarCAT +0.45%, and Corning Glass have long since sourced many of their most advanced components and materials from Japan, Korea, Germany, and other manufacturing-focused nations. (For a closer look at Boeing, click here and here. Much of Boeing’s most valuable technology has long since been transferred to East Asia, not least its avionics and its incomparable wing technology.)
In proceeding full steam ahead towards national bankruptcy, the United States is world history’s ultimate example of the triumph of ideology over commonsense. Beginning in the Eisenhower era, succeeding Washington administrations have bet the farm on ever-freer trade. Supposedly this would strengthen American economic leadership. To say the least, the powers that be in Tokyo, Seoul, and Taipei, as well as in Bonn, Frankfurt, and West Berlin, discreetly laughed at such epochal naïveté. …
It’s ludicrous to think the US “leadership” didn’t see this coming. They banked on it. They marketed it to the gullible public as an ideology but any economist worth his salt knows money flows aren’t dictated by ideology. The banksters in charge of washington took advantage of the trust engendered by decades of prosperity, while they moved their investments offshore. And their treason will pay off handsomely.