Bye-bye, US hegemony

In the last few days there have been three articles devoted to the imminent demise of US financial hegemony -- a corollary of which will be the loss of US military hegemony.

1) An essay by Michael Hudson on "de-dollarisation,"

2) An essay by W. Joseph Stroupe on the move out of dollars and US Treasuries,

3) And an essay by Chris Hedges on how bankrupt the US imperium is.

These essays are of interest to someone like myself who for years has known that the US-dominated financial system is utterly unsustainable but yet was never able to figure out what kind of tectonic changes would have to occur for the demise of the old system and its replacement by a multi-polar system. In the past few months we've begun to receive intimations, suggestions, of what an emerging new set-up may look like. It appears that both the world's major central banks and private investors are becoming increasingly averse to both dollars and US treasuries. This means it will not be possible for the US to deficit-finance its budget. And since half the budget deficit for this year is defence-related, this suggests the US is going to have to trim its sails. Drastically.

I always enjoy everything Michael Hudson writes. If memory serves, I bought one of his two books -- "Global Fracture" -- at Mayday some years back, and this was my introduction to his historical analysis of how the US-dominated financial order came into being. In the essay listed above he examines how, inter alia, the emerging BRIC powers, are trying to diversify out of dollars -- primarily for economic reasons (no-one wants to be left holding a bag of worthless paper), but also with an eye to reducing USA's deficit-financed bellicose stance towards the rest of the world. But in order to get out of the present system, they have to devise a new one, however tentatively and uncertainly. This is what the current SCO meeting in Yekaterinburg is all about.

The second essay, by Stroupe, confines itself to discussing how Washington's policies of exploding budget deficits is undermining faith in both dollars and Treasuries, and how this will likely accelerate a trend towards a new global around based around the major emerging economies rather than the USA and UK.

And the final essay, by Chris Hedges, rewords some of Hudson's essay, and points out some of the dire domestic implications for the United States. Some of these can be questioned but will no doubt divert those who enjoy doomsday scenarios.