Economics and Empires 6 [i]
Downfall
Introduction
Dear readers,
We have arrived at the final part of the “Economics and Empires” series.
After centuries of world hegemony by Western powers and their oligarchs, the end of this era is now in sight. And it is approaching far more quickly than anyone, including me, could have imagined. The hegemony of the Western oligarchs is built on several pillars that ensure and preserve their power. During the first five Economics and Empires articles, we described these pillars step-by-step. With this article we are going to combine the concepts and analyze the most likely scenario(s) for the Empire’s final destiny. And with it, the destiny of Western Hegemony. Finally, I’ll try to give you an outlook of how things in the West could, in a likely scenario, evolve if no dramatic changes happen in the meanwhile.
Since this is the biggest topic of all, I will be able to touch on some things only superficially. But I will present sufficient information to be able to connect the dots. The economics topics in this article require far more explanation in depth. So, in the (near) future, I will delve more deeply into those topics upon which I touch in this article. Moreover, I want to highlight that I won’t discuss the role of interest rates here, since I think that that wouldn’t contribute to the topic and would overcomplicate the discussion.
Let’s start.
Background
As always, I want to recommend that you read or re-read the titles of the Economics and Empires Series that have set the foundation for this conclusion:
Economics and Empires 3: National interests, religions and the media
Economics and Empires 4: Strategic Considerations about Developments in Asia
Economics and Empires 5: Who Is in Charge of the United States?
Rules of Western-Based Economics
Basics
I’d like to start with a few basics, that should be very well known to readers of past Economics and Empires articles. Power or hegemony is attained through control of markets and resources. These two aspects are everything that is important in the global game of power. Nothing else. Again:
Markets
Resources
Period.
The United States of America has been chosen as the host for the Western Oligarchy to enforce its policies from a militarily unreachable place. Obviously, that has succeeded very well. The Western Oligarchy consists of Oligarchs, mainly from the Western states. Not only from the United States, but from other Western countries as well. Hence, their intention to make these states prosper at the expense of the rest of the world. That has unarguably succeeded.
How does that work? Mainly through the now dead Western-led globalization.
If we imagine the entire market of the world as a cake, one could argue that until 2014 this cake had been shared between Western-owned or Western-controlled companies. Let’s dig a little deeper.
If one wants to produce commodities with the lowest possible cost, then it is essential to leverage the concept of “Economies of Scale” to the highest possible degree. I usually avoid using such concepts in my articles, to not lose people without experience in economics. However, this one is important, so I’m going to explain it in a little more detail.
Let’s say that you are starting a business to produce automobiles. I think we all can agree that a business of this sort will be very expensive at the start, since massive investments need to be made for the factory and machinery that will be used to assemble the cars. You also need to invest in people to handle purchasing, accounting, employee relations, etc. Let’s assume that you spend $50 million for all of these fixed costs, and you spend $200,000 for the parts and direct labor to make the first “batch” of cars (variable costs). Your first batch of cars amounts to only ten cars because you only received orders for that many. For these ten cars the following calculations show the cost per car:
Variable costs: $200,000 / 10 cars = $20,000/car
Fixed costs: $50,000,000 / 10 cars = $5,000,000/car
Total cost for one car based on a 10-car batch = $5,000,000 + $20,000 = $5,020,000
Yes, approximately 5 million dollars per car if you produce just ten cars in total, as in our example.
[Editor’s note: if you think that these numbers are exaggerated, please see this real-world example.]
If you now decide to produce 5 million cars, the game changes. Let’s re-calculate.
For the sake of demonstration, we can assume that the “per car” (variable) costs and the fixed costs remain the same. The result is:
Fixed costs per car based on a batch of 5 million cars = $50,000,000 total fixed costs / 5,000,000 cars = $10 fixed cost / car.
What is the total cost of a single car?
Total cost per car based on a batch size of 5 million = $10 fixed costs/car + $20,000 variable costs/car = $20,010 overall cost/ car.
This is called fixed cost degression.
There is more to the concept of Economies of Scale. If you produce only ten cars, it is very unlikely that you will have great ideas to increase the output of your cars or lower the prices of production by continuous improvement. It is to be assumed that there will be no or very little improvements in the manufacturing during a ten-piece batch. Now let’s consider the production of 5 million cars over the course of three years at maximum production (24/7/365).
It is not only likely; it is a certainty that during this time the people on the ground will have a plethora of improvement ideas to lower costs and to increase the output at the same cost.
Taking this into consideration, we can now make a new cost calculation.
During these three years of manufacturing the initial variable costs will sink from $20,000/car to $14,000/car in a three-year average. Hence, in total we have now $14,010/car as total costs per car.
Thus, Economies of Scale can include the fixed cost degression as well as the “learning curve” that evolves from operation of the facility.
Admittedly, I have simplified things here. Fixed costs are of course not the same with every batch size, since you need to build new factories and machine tools, etc. with bigger batch sizes. But you get the point.
Markets
What does Economies of Scale have to do with Western hegemony? Everything.
Remember, one of the two main pillars of the struggle for power and hegemony is the markets. And the West struggled for centuries to conquer as many markets as possible, throughout the world. In the early years this was done mainly through military power and subjugation. A market is, of course, a country. The market consists of all the people of a country together. A market that demands goods.
In the early years, before industrialization, the Economies of Scale was not so important for expansion. People did things the old-fashioned way and simply conquered other countries to win them as a market for their own goods. And as a source for cheap labor and other resources. Later, during industrialization up until today, the Economies of Scale was a very useful and powerful tool of capitalism. Having free markets and later free trade zones only the economies and industrial nations with the biggest available markets (or state subsidies) managed to generate the biggest Economies of Scale effects and outprice the global competitors.
In other words, if few nations control the production for the whole world the following applies:
Through the ability to supply the whole world, production numbers are extremely high. Mass production can be applied, which leads to Economies of Scale effects. Competitors without scale have difficulty competing on a global scale. It still happens, for example through disruptive technologies. But usually, Western countries or Western Investment Management companies are quick to take control over new (disruptive) competitors.
It doesn’t matter where the actual production takes place. The revenue, cash, and taxes flow back into the Western countries anyway.
Usually, most countries become economically dependent on Western manufacturers. The domestic national industry either goes bankrupt through a lack of competitiveness on a global scale, or gets taken over by Western companies or Investment Management corporations.
If the market of a target nation becomes fully dependent on Western goods, the dependent country is only able to pay for imports via Western currencies and via Western payment/transaction systems.
This is the stage where the target nation also becomes politically dependent. If it doesn’t obey orders then all kinds of imports, on which this nation now is dependent, become sanctioned.
Which leads us to our next topic. The Dollar.
Dollar
The value of a currency is based on trust. Trust that one will be able to purchase commodities of the same value in the future. Fluctuations in the value, like inflation and deflation, are usually caused by micro- and macroeconomic circumstances of a given country.
To some degree, this applies for the Dollar as well. But only to some degree. The main factor that maintains the value of the Dollar is fear. Fear that if you dare to abandon the Dollar system or to doubt its value you get “democratically overvoted” by the US Army or the mechanisms of the international jurisdiction of the US Federal Reserve System (in other words, sanctions).
Nevertheless, the purchasing power of the US Dollar is still maintained. What does that mean? You still can buy commodities for a decent price with your Dollars. Let’s take this further. If we assume that the most and cheapest resources are provided by Russia and the cheapest manufacturing is provided by China (Economies of Scale) what does that tell us? It tells us the following:
China is still willing to accept Dollars for its products and commodities.
Most commodities are produced or provided by China.
Through this acceptance of the Dollar as payment for global commodities, China to some degree assigns purchasing power to the Dollar.
For the time being…
If China would stop accepting the Dollar tomorrow and would require payment in BRICS currencies, the Dollar would lose most of its value in international, non-western trade.
At the same time, China would largely suffer due to the drop in exports to the West. Hence, this is not possible.
Since the United States outsourced a huge part of its former gigantic industry to China, it became dependent on this principle of Dollar-denominated trade. The BRICS states are working on a new financial system, which I will discuss later. The goal of this new system is to gradually transition away from the Dollar to a new “neutral” system. This process has started already, and when it gains momentum, the Dollar will lose value, if the US hasn’t reindustrialized before then. In the future, only countries with their own (strong) industrial base will be able to prosper. I have explained, in numerous articles, how the US is making great efforts to entirely cannibalize its allies. To attract their industries to the United States, to take over their world markets, and to transform them from producing and exporting nations into importing and consuming (dependent) nations. As far as I can judge, this transition is in full swing and might work well for the US. On the contrary it is a disaster for its allies.
If the United States manages to re-gain a large industrial base that produces most items that it needs on its own, and to become an exporter, then the Dollar will be backed again by commodities and by the immense gold reserves that the US has. This should result in a stable macroeconomy. The big question is, will the United States be able to achieve this goal in time? I will discuss that later.
For the time being, the Dollar is the heroin of the world. Everyone who uses it will be instantly dependent on it and on the jurisdiction of the FED. You don’t want to obey? No heroin! Die!
We can count the Euro into this scheme as well. The Euro is part of the Dollar system. The share of the usage of the Dollar and the Euro combined has been essentially constant since 2000. The Dollar share constantly decreases and the Euro share constantly increases. That the Euro is subjugated to the FED is evident by the American intervention in European politics and SWIFT in 2022 after several Russian banks had been excluded from (European!) SWIFT.
Credit Points
Let’s play a game 😊
I have struggled often in the past with the question of American debt creation and debt creation in all countries in general. Is it good? Is it bad? What is the right path for a country?
I’m going to discuss that question later in more detail. For now, I will use debt for the game.
Let’s assume for a minute that the Western plan in Ukraine would have succeeded and that Russia would have been defeated. The West would have gained access to Russia’s resources by partitioning it into many smaller pieces; the so-called balkanization of Russia. Now let’s assume that consequently China would have instantly folded and subjugated itself to the Western system. At this point we would have a global unified system controlled by the West. This would include the economic and financial systems as well. Everything would be in the West’s hands. Wouldn’t that goal be worth taking on an infinite amount of debt?
The graph shows the US federal debt to the US GDP ratio. It is around 120%. I’d argue it is not catastrophic for Western standards. It is still sustainable, but it is very far from being good. More about that later, in the debt section.
The point is this: If you would know or anticipate that your plan would succeed to strategically defeat your enemies and that you would afterwards control the world economics and finance system of all countries worldwide then it would make absolutely no difference how much debt you have. You could go “all-in” to make this strategic defeat of your enemy happen. Even burn all bridges behind you, etc. As you know, winner takes all…
How does the game work? I call it “Credit Points” game. You have a game master who makes the rules. He can even change or adjust the rules during the game. The game master is also part of the game. He participates as a player. First, he distributes “credit points” to all players who wish to participate. You can think of the points as some kind of currency. The goal of the players is to build up a prosperous economy and international trade, using these credit points.
If one of the players become too strong or too independent, the game master stands up from his chair, walks over to this player and, since the game master is a bully and has the power to change rules during the game, he simply bludgeons the other player until he submits. Another option is to simply take away the other player’s credit points or lock them up in a safe so that it is impossible for the player to use these credit points, even though he might be sitting right next to the safe.
Unfortunately for the game master, there were two (big) other players who were also strong. Not as strong as the game master but since they knew that they might be able to withstand the bullying of the game master if they work together, they had some success. Nevertheless, at a certain point of time one of these two strong players fell, because of a trick by the game master. The other one saw that he had no chance to withstand on his own, so he subjugated himself to the game master.
Domination
Well, after a certain time the game master (and bully) achieved total victory. Through game manipulations and bludgeoning people, he subjugated all players of the game to his will. After all, it was his game and his rules. Nevertheless, since he was forced to create extensive credit points so that he could overthrow the other two strong players, he now sits on a mountain of debt in credit points.
Once he ruled over all the other players, he performed a simple trick. He simply reset the credit points to zero. After having created new credit points, he distributed them to all players again and started a new game with total domination.
I think this should explain to everyone, even those who know nothing about economics, what is going on. A huge investment by the West was made to overthrow Russia and China. If these two players had fallen, the West would control the whole world and could simply reset the financial and economic system on their terms and impose their rules on everyone (“International Rules-Based Order”). From my point of view, that was most likely the plan.
Realization
The West went all-in (sacrifice of its allies/limbs etc.) to defeat Russia and China strategically. To be able to have absolute dominance and rule over the planet afterwards. With Russia’s successful SMO (Military, Geopolitical, and Economic Operation against the West), Russia ruined the plan. Russia not only did not disintegrate and fold. Russia is currently in the process of defeating the united West. Not single handedly, but through immense covert and overt assistance by the rest of the non-subjugated world.
The West made all these investments to defeat Russia. They shipped numerous weapon systems and ammunition to the West. They implemented multiple sanction packages, which only destroyed their own credibility, and strengthened Russia.
Everything backfired badly.
And now we come to the first main problem. One of many, of course. The main problem is debt. Debt would not be a problem at all if the West had won. It would simply make a cut, as has happened several times during the history of humankind, that is, redefine the economic and financial system for the subjugated world and start again from a far better position. This is NOT going to happen now, and huge debts must be repaid.
Debt
Consider the following situation:
A guy buys a big villa with a huge pool. He doesn't really “buy” it; he takes a mortgage so he can take possession of the house. He knows well that he has no money to pay for that mortgage. Under normal circumstances he would lose this Vila very quickly. But he knows that he will go to the casino, and he knows that he will win. He will be able to pay off the mortgage completely with the winnings! So, the guy goes to the casino, full of confidence, and starts to gamble. He KNOWS that he will win. Well… reality is not so merciful to him. Not only does he not win; he loses everything that he has. Now the casino AND the bank demand money from him.
That’s where we are with the West. Investments have been made; huge debts have been taken. The West KNEW it would defeat Russia. Only… it didn’t. Too bad.
And here comes the biggest problem. Since the world is currently economically decoupling, or let’s say diversifying, from the West, the West can no longer change or alter the rules whenever it wants. This would only accelerate the decoupling and increase the loss of power. What does that mean? It means that the West is now (already happening) forced to start to play by the rules without changing them as it wants. It has debt and it will have to pay for that debt. We will discuss that in more detail.
We know that all countries of the West are currently struggling economically. Russia did not collapse, and the West did not get access to cheap resources (Russia) and manufacturing (China). To the contrary, everything became more expensive since the West made Russia, China, and the rest of the world its enemy. Western products have become less competitive on world markets. More and more subsidies need to be paid by federal budgets of the countries of the West to their citizens and industry to keep them alive. The market would have finished them off already, but the West accumulated (in centuries of exploiting the rest of the world) a significant wealth which keeps these countries afloat for the time being.
America being an exception here. I have explained this many times. America keeps building itself up by cannibalizing and eviscerating its allies.
Now I need to kill a holy cow… But I guess that’s okay for this final part of Economics and Empires. The question which so many well-known and highly capable economists are struggling to answer. There are those who are pro and those who are contra. What? Making debt … Do? Don’t? Good? Bad? Evil?
I will try to answer that from my point of view without claiming to possess the ultimate truth here. But before I do that, I want to highlight something which is by far more important than the question of whether debt is good or not. The question is whether debt is sustainable or not. 😊
When you buy a home and take out a mortgage, you are paying back an annuity. This consists of repayment and interest payments. The bigger the mortgage, the more you need to repay periodically. Now think about your federal budget. It needs to take care of all federal spending, social expenditures, pensions, military, etc.
I will (again) give a simplified example. For the sake of calculation, we can assume the following numbers:
Total government budget: $1,000
Government spending: $800
Debt service: $300.
Which means that there is not enough money in the budget for government spending and debt service. Now the government can do two things (extremely simplified).
Cut down government spending to match the number.
Increase debt.
If you cut down government spending, you cause a plethora of problems. Protest potential in the population and, due to a lack of investments, no economic growth or even an economic contraction. Tax increases are one of the tools to increase revenues, but they also choke the economy.
Increasing debt is a downward spiral. With every year of increasing debt, the next federal budget faces even harder challenges with the need to allocate more money for debt service.
This is sustainable to a certain degree, especially if you have a huge GDP. The 120% debt/GDP ratio of the United States is far from being catastrophic. Even though it is not good/healthy, it is still somewhat sustainable in the current state of world economies. The problem is that it results in a downward spiral, as the graph above shows. It could very well reach a point where debt service and an increase in military spending will make it very hard to fund the rest of the federal obligations. In Europe things look different. As they are still developing, I won’t delve too deeply into them here, but a real crisis is very possible in Europe.
I’d like to present, for the sake of comparison, the debt/GDP rate of several other countries:
Russia
Germany
China
How to interpret these graphs? This question is directly connected to the question of whether debt is good or not. Straightforwardly… It depends. 😊 No worries, I won’t leave you hanging.
I’m a supporter of the “Golden Rule of Public Finance”. But what does it say? Roughly, we can distinguish between the following two types of target expenditures for which states are taking on debt:
Investment expenditures
These are expenditures which you make with the goal of getting a return on your investment. Hence, you should clearly explain on what you want to spend the borrowed money and how you think this investment will generate a return. A return which comes at a reasonable time compared to the nature (operational or strategic) of your investment.
Here are a few examples: Infrastructure, education, R&D, and all kinds of incentives for investors to improve the business environment, such as lowering taxes. (Note: These are my interpretations, and you might classify things differently).
Consumptive expenditures
These are the “DON’Ts”. These are ongoing costs for running a government, such as salaries for public servants or general administrative costs.
Why do I say “DON’Ts”? The people who perform these functions need to be paid (of course). What I want to say is: You need to keep control over your government spending so that you DON’T have to take on debt to pay your public servants.
From my point of view, debt should be assumed only for Investment expenditures. Then it is legitimate, since it should ultimately generate a return which will not only repay the debt position but also generate a surplus. To avoid corruption to a certain degree, and to avoid a classification of everything as an “investment” the process should be evaluated carefully by an independent body.
So, is the solution in this case to take on unlimited debt to solve all strategic problems with real and genuine investments? No. A state needs to define a maximum bearable debt level. This debt level should be derived from the percentage of the resulting overall debt service compared to the entire government budget. The burden of debt service must never reach too high of a portion of the overall budget. This allows the government to stay flexible and capable of acting in cases of necessity.
I won’t suggest any numbers here because this is different for each country. Nevertheless, I think any debt/GDP ratio higher than 40% is unhealthy. Especially if you are forced to play by the rules and if you are not the game master who can change rules as he wants.
What kind of expenditures are the financial support for Ukraine by the Western countries? Are they investment expenditures or consumptive expenditures? It depends. 😊
Initially, for the West, they were investment expenditures. Including the sanctions which were initially directed against Russia. As I explained above, the West took all these debts and self-hits with the goal to quickly (shock and awe) defeat and dismantle Russia. Then the investment would have paid off. The whole world would belong to the West, and they could cut their debts as they please or reset the system. As we all know, things turned out differently. All the expenditures to support Ukraine and to sanction Russia were in vain; worse, all the sanctions backfired! Hence, they translated into consumptive expenditures with no real value or return. They translated into a burden. And the worst fact of all: the Western countries will need to deal with this newly created debt. Since they didn’t achieve conquest of the world, they will for the first time in history be forced to abide by international rules without a game master who can distort reality. This leads to a real crisis.
The West will need to abide by the international rules, or the rest of the world will lose trust and faith in Western states; which translates into an even quicker downward spiral.
To bring this section to a close, I want to talk about China. We saw in the graph above that China’s debt/GDP ratio is rising steadily and quickly. In a very short period, China reached a level which I usually consider as bad (~80%). Is this a problem? Well, China’s whole economic model is built on investment. China is spending billions or even trillions over trillions in investments worldwide. Especially into infrastructure, developing potential trading partners, and the removal of trade barriers. But also, into developing some of its still very poor domestic regions. China still has a lot to develop (and hence, strengthen) in its own domestic market. These are real and sustainable investments which should generate, within a reasonable time (strategic, hence decades), a healthy return that exceeds the amount of the initial loan and interest payments.
Bottom line: China is taking on the right debt for investment to grow and develop itself and its partners. Of course, not every single investment that China is making with debt is useful or good, but the overall trajectory is excellent.
Economic Systems
Basics
Now I’d like to delve into the two main economic systems and make an interesting observation. I would like to present another perspective to you about Socialism and Capitalism. I’m not a supporter of one vs. the other. I’m a supporter of using the right method in the right situation. You can’t do that if you are indoctrinated for decades by ideology instead of rational thinking. Keep in mind, I’m going to mention several advantages and disadvantages of each system in the following sections. Since international economics is neither black nor white, my point of view is that you can’t solve problems with black and white. You can solve it with shades of grey which are unique for each country worldwide.
Socialism and Communism
Many people in the West see communism and/or socialism as an enemy. How could they not after decades of indoctrination and ideological education?
Socialism is not, in theory, a bad system. Unfortunately, it has been extensively abused in the past by leaders who twisted its purpose and used it as a tool of oppression against their people. In theory, Socialism could provide a peaceful and decent life for the people in that society ... in a perfect world. Unfortunately, this is not a perfect world, and socialism doesn’t work in the real world.
What do I mean by that? Well, the idea is that individuals work for the common good of all people of a country. The generated wealth is distributed to all people. Of course, you have the people in higher positions, some of whom steal a share of this money, but that is human nature, and you have that to the same degree in other systems as well. Humans are human ... period.
The problem occurs if you need to protect yourself against neighbors who want to conquer you or parts of your territory. With a (theoretically) normal, decent, and peaceful socialistic system you can’t compete with countries that use capitalism and the market economy. Capitalism is far more efficient in this case.
You may try to run a planned economy on steroids to keep up with your competitors to be able to protect yourself. This can only fail. Socialism should distribute wealth through work. It is not in its nature to expand or to assimilate others. (Yes, I know … many have done this). Nevertheless, under the threat of war or occupation the problems start. Paranoia and pushing the planned economy to levels that are difficult to control by a planning committee. This might change in several decades if AI systems are able to optimize an entire economy. But for the time being, the planned economy is not as effective as the market economy.
This leads to further problems. The people of socialist countries (Yugoslavia was one) are guaranteed a decent life. Whereas the people in market economies get the chance to pursue wealth. And some achieve it. This leads to jealousy in the socialist countries, and to internal problems. Many leaders have taken harsh measures to suppress such feelings. People in socialist countries can be easily bought off by foreign services and other interest groups. Which leads to further repressions and problems.
This is the main problem. If Socialism is forced to compete with external powers that use a market economy, socialism loses over the long run. If we would only want to live a normal life, free of luxury and where all (most 😊) people work to ensure that the family has what it needs, Socialism is not a bad thing. However, these circumstances do not exist in the real world.
Market Economy and Capitalism
Which leads us directly to Capitalism and the Market Economy. These systems are highly effective and efficient. They are efficient because they eat up their competitors that are weaker. Some kind of Darwinism. And this motivates the people and organizations to strive for the best possible performance to survive.
Problems arise here because, as I explained, a capitalist entity needs to eat. If it doesn’t eat, it dies. Just like a human or animal. It needs to eat other companies to expand and grow. And if it doesn’t grow, another entity will eat it.
What is the problem here? First, it doesn’t stop at state borders. It wants to conquer ever more and more markets; incl markets of countries that don’t open their markets. Hence, the mechanisms of capitalism, as we learned – highly effective – work on its host, the government, to provide access to closed markets. By any means. Yes, conquering through wars and sanctions as well. Make no mistake, Capitalism is not an economic system. It is a symbiosis between the state and the private economy to form a living organism that wants to expand steadily. Without respecting any state borders.
And here is where the problems for Socialism begin. Socialism can’t compete with Capitalism because it has not been designed to fight others but solely to distribute wealth generated by the workers equally to the members of society. All kind of crazy behavior often follows in such socialist countries which are under external threat. Behavior which has nothing to do with the initial socialist thoughts of Marx and company. And then socialism eventually fails.
I don’t consider either system appropriate. At least in their pure form. I think the advantages of both systems need to be combined into a new system. This is not rocket science, and it can be done.
Long Tail Evolution
But before we reach any conclusion, I want to explain another aspect of capitalism.
Since its main behavior is eating, especially competitors and their markets, free market economies tend to concentrate. Hence, considering a timeline over the last one or two hundred years, we can assume the following:
First there were many small companies in competition throughout the country. But early on, the competition was local or regional. Why? Because the logistics and communication systems were rudimentary, and products and information took days or even weeks to travel between towns or states.
With the development of communication technology and national and international infrastructure and logistics, people could compare products and prices and they could choose where to buy based on personal preferences. Consider the concept of Homo Economicus. Competition starts to heat up. The market economy is starting to accelerate. We are coming into the 20th century.
Through Economies of Scale, concentration takes place. Bigger enterprises outperform smaller competitors due to price advantages. It is very difficult for small competitors to enter the market. A Department of Antitrust needs to be set up to save/regulate the market economy. The big companies would grow so fast and deny others access to the market through outpricing and power.
Hence, a market economy doesn’t work without (some) state intervention. If there was no state intervention, it would evolve quickly into something that resembles socialism.
In the first stage, big companies would evolve. In this system, for every kind of product (or several products) one company would prevail in the capitalistic struggle (carnage) and become a monopoly. Which, in theory, through capital and power could deny other competitors the ability to grow into something that could become dangerous to their own position.
Now, we would have several big companies, each a monopolist for a given portfolio of products. The next phase of course is the struggle amongst these big companies/corporations. Again, one would prevail and "consume” the others. And here we would be in a position, like in socialism, where all enterprises have one and the same owner. With one difference. In Socialism it would be the state/people. In capitalism, a private owner/oligarch.
And that’s why the market economy works only with state intervention.
Unfortunately, as I said, capitalism is the symbiosis between the state and the market. But one symbiont is usually dominant. It is to be assumed that the state has been dominant for centuries (after Adam Smith etc.) and gradually, as described in Economics and Empires 5, private owners took advantage and began to dominate. And this is the reason why, in the West, we can observe ever more concentration where concentration should not be allowed. If we want lasting competition, large enterprises that control whole sectors must not exist. At least not in private hands.
Conclusion
I tried to explain some of the advantages and disadvantages of Capitalism and Socialism. I don’t prefer either of these systems. In fact, I think they should be combined and be used together, in parallel, to achieve maximum benefit.
I will explain this later in more detail, but I can imagine having the administration, development, and maintenance of the country’s infrastructure, education, health system, food (only partially), arms industry, and security (Police and Army) under government control. There is a combination of both market and planned economy which I would apply (I intend to write a book about this system). However, the reason for this is to maintain the security and wellbeing of the citizens under all circumstances. Especially in case of sudden exogenous shocks. That’s the reason a government should be there. For nothing more and nothing less. No more intervention beyond these reasons. No self-licking ice-cream. The government should serve the people and not vice versa.
Private consumption should be managed by market economy (capitalism), with one restriction: I would strongly regulate the marketing function. People should not be animated to buy goods which they don’t need. The only reason I say this is to avoid wasting precious resources. Sustainability. The mass production of senseless products, where half of it is never sold and wasted immediately, is the pillaging of the planet. If people need goods they should have them under the full force of the market economy, but there should be no incentives for goods that people demand frivolously.
BRICS
Basics
We talked a lot about the advantages and disadvantages of the Dollar and the Western economic system. The question is, what is the alternative? And for the time being there is no real international alternative. There are countries that are trading outside of the Western system. For example, by the good old goods-for-goods (barter) system. Or by using domestic currencies for trade. Barter works, no questions about that. Using domestic currencies could be difficult for smaller countries. The question is whether the actual currencies are in demand on the global markets. What benefit would small country A and small country B have in mutual trade with their domestic currencies, if they can’t use these foreign “reserves” in the world market?
It comes down to the need for these small countries to buy Dollars or Euros or Rubles or Yuan or Pounds or whatever for international trade. Which is a problem for their own sovereignty. As soon as you use one of the big currencies you are instantly in the scope and jurisdiction of the host nations of those currencies. I make no distinction here between American, EU, Russian, or Chinese currencies. It is NOT good if any nation has power over the trade of another.
These problems have been recognized by the BRICS states (by Russia and China in the early 2000s). Which led to the creation of this organization. And the goal of BRICS is to make international trade free of influence of single powerful countries. To allow prosperity and wealth for every nation worldwide to provide equal opportunities. Which, of course, means the leveling out of wealth. If some countries have accumulated most of the wealth of the world for centuries, they might be forced to cede access to markets and resources equally to all competitors in the markets. Interventions by the jurisdiction of their own national banks or by bombing competitors into dust won’t be allowed by the other BRICS members in the future.
BRICS countries have nothing in common
I read a lot of Western economic journals and magazines. And I listen to their podcasts. In fact, all Western economic problems are minor, and the economic problems of the rest of the world are far bigger. That’s a summary of what I read. And problems, which are predictable, are only acknowledged when they materialize and are glaringly obvious. At that point, you can read about it in the magazines. Hence, acknowledging problems only when there is no way to deny them.
This is nothing new; we know that. What is especially interesting is the reporting about BRICS. The basic reporting about it says consistently that these countries have nothing in common. BRICS is not to be taken seriously because they might fall apart at any second because they have nothing in common other than their aversion to the West.
BRICS countries have something in common
Maybe. Maybe BRICS countries have the common goal to end Western hegemony and domination over economic and financial systems. Maybe they have in common that they are striving to establish a world order where every country, no matter the size or wealth, has the same opportunity to participate and trade in the global markets. Or… to NOT trade in the global markets. This, of course, would be one of the biggest achievements of humankind (apart from scientific discoveries) in centuries.
Independence and Liberty
A country’s government should first and foremost be there to serve its people and not the other way around. Again, no self-licking ice cream.
And that means that it should provide its people with all basic needs as much as it can from domestic resources and from a domestic strategic industry. The domestic market should be priority number one; to reach true sovereignty, independence, and liberty. Yet, you can only sustain a domestic industry which can provide these things if you protect your domestic markets. Some call that protectionism. I call that sovereignty. The approach needs to be analyzed in detail for each country. Some can afford to apply that approach, others can’t. It depends on your available resources and access to global logistics (oceans).
Today the word protectionism is bad. It is bad because it would deny access to Western goods to every market worldwide. It would outprice domestic industries due to lack of Economies of Scale in small countries. And in consequence, it would destroy small countries’ industries, or simply devour them (acquisition) and put them under Western control. If you don’t open your markets and if you use the word “protectionism” (there is a reason why the word “protect” is part of “protectionism”) you know already what follows à Bombing, color revolution, or sanctions.
Every nation should have the opportunity to become independent and sovereign. And to decide independently with whom it wants to trade, what it wants to trade, and to what degree it wants to provide access to its markets.
That is sovereignty. Which is currently only seen in a few countries worldwide.
I know that many small countries can’t be sovereign at all because they can’t provide everything their population needs without the help of other countries. This especially applies to small landlocked countries.
And every country that limits access to its markets needs to know the consequences for global trade, and that country needs to take this into account in its macroeconomic calculations.
The BRICS economic system
Initially, when I planned the Economics and Empires series at the beginning of 2023, I thought we would, by now, have some clarity about the upcoming BRICS financial and trade system. I was hoping to extract some information from the conclusions of the BRICS summit in South Africa. It turned out that the available information only allows me to make assumptions. Using currently available information, I will make assumptions about how the BRICS economic system might look. And I will do that superficially. As soon as there is clarity, I will update you in a separate post.
At a G8 meeting in 2009, then Russian President Dimitry Medvedev announced what is to come: A digital world currency. Back then there was still a chance that it could become a worldwide currency, including Western countries. Had they not been pursuing the destruction and dismemberment of Russia, and trying to protect the dominance of the US-Dollar, they could have jumped on that train. We all know that they didn’t.
The idea is that you have an independent currency, controlled by an independent international organization, for world trade. It was hinted that the name of this virtual currency might have been “Brick” (plural “Bricks”).
The value of the Brick would be pegged to gold. And the value of each national currency would be established by the exchange rate to gold in the marketplace. The exchange rate between a fiat currency and the Brick is established by the value of gold. This is the reason why most countries of the Global South are acquiring significant gold reserves. Some doing so in secret (e.g., China). That makes sense, to position yourself in the future markets without letting competitors estimating your future purchasing power. International trade now can be executed by conversions between the “gold-source currency-brick-target currency-gold” value chain.
In practice, this might become a highly sophisticated algorithm, which can be only handled by extensive computing power and a digital currency. (Yes, the Brick will most likely be a digital AND virtual currency).
Making the Brick independent of any single national entity, overseen by an international organization, ensures the political independence of this currency. The most important part is that the participating states have little in common. They simply want to have fair and independent international trade; nothing more. This ensures that no concentration of parties might occur, which might be an influence on the currency. Like the West concentrating its influence to control the UN. It is better to have an international organization run by entities that are heterogenous. This is my answer to the economists that I have read who are laughing that the BRICS countries have nothing in common.
Risks
I have described the struggle of large parts of the world for sovereignty and economic- and trade independence. And I also described a possible scenario of how the BRICS system could work to ensure this independence.
There are not only opportunities, but threats as well, because of the existence of a currency that is already dominant. Historically, the only alternative to national currencies was gold. And to be honest, I’m not convinced that there won’t be attempts by certain superpowers in BRICS to establish their own currency as the new Dollar. How? By proposing their currency as an “interim solution” as the Dollar falls, and until the new system is fully established. I learned in business that nothing is more permanent than the "interim solution”.
To be clear about this; I don’t support any new dominant currency that would simply replace the Dollar, not the Ruble nor the Yuan nor any other. This must end!
I believe that there is an 80% chance that my hopes will come true. Let’s pray that the 20% chance does not materialize. A free market and a real market economy requires a free and independent currency, which the world currently doesn’t have. International trade should be free of “rules” of single powerful nations. Currency must not be an influence in trade.
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The Five Pillars of Western Power
The Financial and Economic System
We learned of the problems that occur from a Dollar-dominated world trade system in the present article and in Economics and Empires 5. But I will summarize things again. Today the Dollar is required as a transaction currency in international trade, and the US has control over transactions made in Dollars. The US also has the ability to block certain countries from trade in Dollars. By coercing the Saudis and other OPEC countries to trade oil in Dollars, the US ensures that oil importing countries must buy their energy with Dollars. And oil is, and will be, the dominant source of energy for a long time.
Most countries capitulate to the US, and this includes their acceptance of the “rules based international order” imposed by the US. Remember the game master I mentioned above?
How will that system end?
It will end when viable alternatives appear. Through the SMO and the consequent Western “sanctions from hell”, Russia made itself entirely independent from the West. And Russia survived the onslaught of everything the West threw at it. Moreover, Russia showed the world that it has the military edge against NATO (more about that later). Eventually, Russia provided the world with a new international payment system which allows trade in domestic currencies. And that trade doesn’t use network servers of Western banks. These transactions are not sanctionable. The world appreciates that. Ever more such systems are appearing. In China, India, and other countries. It ensures that nations can trade bilaterally (directly), without interference.
Hence, the dominance of the Dollar will diminish as more favorable alternatives develop. Trade in domestic currencies can occur over systems and servers that are not targets of sanctions. I want to add here that these alternatives are not perfect. The risk exists that a sponsor of a new transaction system could impose restrictions on an unfavored country. However, the countries that can initiate a trade system would probably not do that, because it is in their interest to support commerce using their system. But still, the possibility is there. This is not the target financial system which should be entirely independent (such as the Brick).
Now, why are not all the countries rushing to the new system and abandoning the Dollar en masse? Mainly because of the four other pillars. We will go through them one by one.
The International Organizations
Unfortunately, as we know from the Economics and Empires articles (especially part 5), most international organizations have fallen under Western control, or dominance. They have become politicized and biased, and therefore can’t do their job properly any longer. At least not internationally. I’m talking about organizations like the UN and its bodies. But sports organizations have become politicized as well.
As it looks to me, we will see during the coming years the emergence of many new (partly) international organizations. And we will have to redefine the word “international” going forward. If the world splits into two separate geopolitical systems, i.e., the West and the Rest, the term “international” will perhaps be more aligned with one or the other system. I will give my opinion about that later.
Nevertheless, the topic of this section is Western power through international organizations. And this will diminish over time; it has started to fade already within the BRICS community. After the Second World War with its millions of dead, the world became somewhat consolidated. It was possible to establish true international organizations. This consolidation is long gone, with the first nail-in-the-coffin being the cold war, which split the world into two factions. The even bigger nail, at least for the post WW2 international architecture, has arrived in the form of the BRICS multipolarity. There is no consolidated world community any longer. As we learned before, BRICS is not a homogenous entity. Not like the G7, where the American President gives orders and all other participants’ roles are simply to answer, “Sir, yes sir!”
Multipolarity will bring new kinds of international organizations which will be more decentralized, and thereby more independent than before. And less influenceable.
The Media, Information, and Culture
Influenceable… This leads us to the next pillar.
Media, Information, and Culture. As we learned in Economics and Empires 3, these spheres of most people’s everyday lives are under the tight grip of the West. To be more precise, of Western services. We learned that, if Russia and China had fallen, the West would have controlled the whole world. And this would have been the moment in which the Western leaders and Oligarchs would start to abolish borders and national states. In preparation for that they had already begun to cancel the culture of each national state in their sphere of influence. And to exchange the national culture, history, and tradition with one homogenous woke “utopia”; the end of family. The end of culture and of spiritual values.
This is being done by the control of information and entertainment that is being shown to people on every possible channel of influence. And as soon as an independent medium grows big enough to be dangerous to the official narrative, it either gets bought off or isolated by mass hysteria in the controlled media.
The entertainment industry serves as a big leverage to influence people. Especially the youth. If you are a celebrity, and you don’t follow the official narrative, you don’t get new engagements. There are numerous examples.
Information is a big element. Through the dominance of the big tech companies, the West has full access to most people’s data everywhere, in real time. Not through back doors, but with the key to the front door. Possession of this information brings leverage over people. Especially over people in power. People who make decisions.
How might this pillar end? That is difficult to say. The system was established decades ago, during the Cold War. And recent improvements in digital technology have allowed it to spread far more quickly than in the past decades. I am not going to give my opinion on how this will end. I think it won’t be necessary, and I will explain that later.
Religion
Religion has been the main point of influence over people for many centuries. Even though the influence of the Church is decreasing in favor of Secularism/Wokeism, the Church still has a lot of influence, especially the main Western church. Unfortunately, it has fallen to the West’s political influence. And it has transformed into something that does not comport with the teachings of the apostles and prophets. In fact, just the opposite. I’m not talking about local churches, but the leadership at the top.
It has fallen so deeply into the Western cultural grip that I’m afraid that the Western churches won’t recover from this at the leadership level. I know very well that the base is not happy about this since I know several Western priests. I am religious, and I am a member of the Serbian Orthodox Church. And even our Church is under heavy attack, especially in the EU. Perhaps I will write a separate article one day about this issue.
Nevertheless, I believe that there is no way back for the Western churches. I’m not saying that they will disappear. But they will be transformed into something that the apostles and even Jesus himself would have referred to as the “other side”. Thank God that in other parts of the world people are still allowed to learn from their priests about traditional family values as initially described and preached by all the apostles and prophets of every religion.
Hence, for this pillar in the West I see no light; only Darkness. No salvation.
That’s a disaster for ordinary families.
The Military
As we learned extensively in Economics and Empires 4, the military played a crucial role in maintaining the West’s and the Dollar’s grip over the world. Don’t want to use the Dollar for trading? We re-democratize you with “democratization” bombs and missiles very quickly. Don’t want to comply with the “Rules Based International Order” (Translation: Western Dictated Rules)? You can count the aircraft carriers appearing at your shores to remind you to be a good freedom loving democrat and comply.
This pillar will fall on the day Ukraine signs an unconditional surrender. And that day is not far away. At least on the time scale where we measure the rise and fall of empires. When Ukraine falls then it will be evident to the whole world that the West is no longer able to dictate international policy by force. And it will also be clear that countries that are willing to participate in the new multipolar and independent system no longer need to be afraid of being “democratically” bombed into submission. The West’s ability to scare nations into their own economic sphere by military force will be gone. It is a question of months to maybe several years. Not a very long time considering the scope and scale of this process.
The Western powers are struggling economically, as they have lost access to cheap resources. And they will be forced to massively invest in their military. Both in the USA and Europe. Which will lead to a massive outflow of wealth from the West. This has a direct impact on the people living in Western countries. To be more precise, it has a negative impact.
Russia and China will be the dominant military powers on the planet. Navies are outdated. At least on open waters far away from their own shores. That’s why Russia is producing small ships which can patrol the coastlines or protect some merchant routes. Through new missile technology they can deliver a lot of unstoppable damage. But at the same time, all ships are now vulnerable to missiles and naval drones. Ships can no longer be viewed as tools of global domination. Unfortunately for the West, which has placed almost all of their trump cards on their Navy… too bad. (I exclude submarines from this equation).
The End
Disclaimer: We don’t wish anything bad for Ukraine. These are analyses based on the facts on the ground which, unfortunately for the Ukrainians, will most likely happen. And it will happen because the West used Ukraine and its people as a tool to destroy Russia.
The conflict in Ukraine will, judging by all indications and facts on the ground, end with an unconditional surrender of Ukraine. And, consequently, with its end as a nation state. In fact, we might see Ukraine’s division into several parts which will be absorbed by its neighbors.
This is a poison pill for the West. I have been writing about this outcome for more than a year, and nothing has changed. Russia will make sure that three EU states will get the opportunity to annex some of their former regions back into their territories. I don’t know whether Poland and Romania will dare to do that, but Hungary likely will reabsorb Transcarpathia to protect its people there. And this is something that is unacceptable for central European powers. They don’t want changes of the territorial and political landscapes within the European Union. Especially since there are European Nations, such as Germany, that ceded a lot of territory to its Eastern and Western Neighbors. If Poland expands, this will be a major red flag for Germany.
As soon as Russia has direct access to Hungary — and Russia will make sure that it will have direct access to Hungary after the defeat of Ukraine — the house of cards in the West will start to fall. The countries that have direct land access to Russia, and to its new system and Far East logistics, will have an alternative to the crumbling West. And guess who they will choose. This will be the beginning of the end.
Note: The End means The End for the “Western Geopolitical system of Imperialism”. Not The End of single national states. BMA does not wish harm to any nation. We wish independence, sovereignty, and prosperity to every country worldwide. And I’m European myself. So, I hope that we Europeans will not suffer much until things get better again. And things will get better, eventually.
The Fate of America
Basics
In a previous article we described the Pillars that are propping Western power up for the time being. I also described how some of these pillars are already crumbling.
Will that be enough to bring down the imperial behavior of the Western oligarchs? Will it be enough to bring peace, prosperity, independence, and freedom to the nations of the world? Maybe...
However, the end of Western hegemony and empire is, in all probability, almost certain. Why? There is another very important factor that is working against the West. And this factor is the West itself. I have written about this in one of my previous articles; The biggest enemy of the West is the West itself.
The Chinese Prediction
I could go through tens of reasons why this is so. But I will focus here on a few important reasons.
One of the most important reasons is a certain Chinese calculation. The Chinese have a very capable and big intelligence service. One that is very well staffed with the brightest Chinese heads and has almost unlimited resources.
Moreover, it is working in almost total silence and secrecy. Have you ever heard anything about the work of the Chinese intelligence service? That’s how it should work.
The Chinese are planning to reunify with Taiwan by 2030. I outlined all of this in Economics and Empires 4, but I’m going to recap it here as an introduction into the “internal” US factors.
According to my information, the plan of the Chinese Communist Party, built upon the forecast of the Chinese secret service, that the USA is going to end as a geopolitical competitor by 2030 due to internal “problems”. Hence, the Chinese strategy regarding Taiwan is to simply wait and try to avoid being provoked into responding to dumb adventures by the West. Sit back, drink a lot of tea and do not under any circumstances hinder the enemy taking itself apart internally. Things should solve themselves by 2030. And at this point (or earlier), there won’t be any Americans in the Asia-Pacific region around. The Taiwanese politicians will simply hand over the keys to the Chinese peacefully.
Well, this may or may not happen, but I consider the intellectual capability of the Chinese intelligence machine to predict such an outcome as far better than any individual capability. And by analyzing the implications in detail, I tend to agree with the Chinese scenario. Which doesn’t mean that it will happen, but the probability is extremely high.
Elections
The Presidency of the United States of America was one of the most powerful public institutions in the world. It was, for a period of time, THE most powerful public institution (this ignores unofficial higher echelons of power).
I won’t discuss whether President Trump has been a good President or not. But with his presidency, the American oligarchy decided to destroy the institution of the American President. It was severely damaged by constant attacks on the President, and by pivoting of power away from the President to the more-controllable Congress.
The institution has been damaged both in power and reputation. And that was just the beginning. After President Trump, we got President (???) Biden. A guy who is almost completely senile. He can’t manage his basic personal needs, let alone manage one of the three most powerful countries in the world. People who believe that he is running the institution of the Presidency should think twice. Or watch a lot of video evidence proving the opposite.
However, if he isn’t managing more than his pajamas, who is running the country? Well, I won’t discuss that topic here. It is a huge topic on its own. The point is that the institution, its processes and rules must be changed so that “other” people can run the office instead of him. Most likely, Jake Sullivan plays a role in that. But to be able to issue orders that other American institutions will follow, a lot of procedures in the White House had to be changed. In other words, power has even further moved away from the Presidency towards adjacent institutions. The newest development is that the Congress wants to (has already?) deny the President the power to withdraw from NATO. In preparation for a possible second Trump term.
This is dangerous. We are talking about a very powerful nation which is armed to the teeth with conventional and nuclear weapons. And power is pivoting away from elected officials and institutions towards all kinds of permanent “career” players in Washington. Many people worldwide are laughing about the Americans having a senile President. I’m worried about that.
Based on the Chinese prediction that America will have bogged itself down in internal problems by 2030, I assume the following two crucial factors.
The coming two elections (2024 and 2028)
Illegal immigration
The situation is as follows: I have never seen such events in a Western country, but in the USA the establishment is trying to interfere in the election of a person by all kinds of methods that are used in… “banana republics”. Imprisoning someone just to avoid his election. Wow! If the majority of the people want to elect him, and the establishment manages to prevent his presidency, this would be without a doubt the first nail in the coffin of the institution of the Presidency. But even if a plurality wants him elected (<50%), I still think that there would be major ramificaitons.
Nevertheless, the political system in the USA is still “stable enough” to not crumble under this first nail. The next Presidential election (2028) might look different, but it is too early to predict.
The bottom line is that I consider the upcoming two elections as events that might severely damage the institution of the Presidency of the United States. Which is NOT good. I don’t like to see such a powerful country not in the control of “The People” through their elected officials.
Let’s try another metaphor: There is a high-speed train racing toward a bridge that has failed. Some passengers, who don’t have the sense of responsibility that the crew has, decide that they know better how to run the train. It should run full speed ahead because that has always worked in the past. And it should under no circumstances, even if the crew or the other passengers demand, change course or put on the brakes. To prevent anybody from slowing the train down, the mutineers permanently disable the brakes. And the fallen bridge is coming ever closer. Sound like the USA?
Immigration
First, (legal) immigration is good. If you are an American, I guess there is no way you can be against immigration. After all, there is a very high probability that you yourself immigrated or that your family immigrated one or more generations ago to America. Ellis Island has the records showing that, I guess.
The problem is illegal immigration.
Legal immigration is good. But why?
It brings different cultures together.
It contributes to understanding other cultures and people.
It can be a source of skilled or highly specialized labor or knowledge.
It can help even out demands of the labor market.
It lowers the fear of the unknown.
To have successful legal immigration, there needs to be an excellent demand and integration process in place. It needs to be determined how much immigration is currently needed, and for what purposes or skills. And people willing to immigrate should be able to apply for that. After their application has been accepted and approved, there needs to be a well-organized integration process. Which makes sure that the accepted immigrants go through all the language training, constitutional education etc. to be able to learn and work in the applicable job market. Eventually, this person, including his family, will be able to work in the target country and contribute to its prosperity.
Illegal Immigration
Illegal Immigration is a major problem, in any country. It is bad for the following reasons:
You do not know who has come to your country.
In the case of crimes, it is far more difficult to investigate.
Illegal work goes up. Which causes problems for the economy and for the illegal workers as well in case of sickness or injuries.
Usually, you have concentrations of illegal immigrants from the same origin. They build a separate society/subculture. Sometimes these subcultures do not align with the constitution of the host nation.
Immigrants tend to be people of military age. Which can become problematic if not employed and integrated properly. Especially if the concentration led to bigger clusters.
If there are, compared to the overall population, a relatively large number of illegal immigrants in the host nation, this can lead to further problems. For example, if they are not integrated, it can lead to conflicts with the local population because of different values.
Ultimately, illegal immigrants can also be used for political reasons. If there is a considerable percentage of illegal immigrants in your country and you are a political party that supports illegal immigration, you can use them as leverage. As leverage in elections, if you can arrange for them to vote.
Ultimately, you lose control as a country if you allow the creation of a parallel society/community. A community which can be leveraged by interest groups against the normal state of affairs.
Just to be clear here. I have visited the US several times. And I met a lot of illegal immigrants there. There are so many fantastic people there. And in most cases, it is not their fault. I do not want to insult these decent people here. As I introduced initially, there needs to be a system in place that supports and processes LEGAL immigration and helps these people to integrate themselves into the society/country. The USA once was a great role model for legal immigration for the whole world!
Conflict
Well, it appears that a combination of outrage during the next two elections and the accumulation of illegal immigration across the USA could form an explosive mixture by the end of the present decade. A mixture that anyone will be able to ignite with the tools of information and influence available nowadays. Both within the USA and outside. Remember all the color revolution mechanisms that the West itself invented? To be honest, it would go too far here to suggest which players could drive such a scenario. If we are talking about events which MIGHT happen in the future, it is not appropriate to talk about details.
In the event that a group would ignite a conflict after 2028, there is more than enough reason to believe, that the USA would NOT be able to maintain its worldwide military presence during and after such events. This includes the situation in Taiwan as well.
I want to make it very clear here: BMA does not wish for any kind of internal or external conflicts, especially not in the USA. As already mentioned, it would be a disaster for the whole world if there was a civil conflict within the USA. There are far too many weapons, both conventional and nuclear. A conflict there could and most likely WOULD spiral out of control, and that would be a disaster for the whole world. We wish for a peaceful transition of the USA as a normal great power that takes care of its people and provides prosperity to them while trading peacefully under international norms and laws with all other countries worldwide.
We wish for peace and prosperity!
Suggestions
Why I’m referring so much on the USA in this and in the previous instalment? Because the USA is the host of the currently dominant empire of the world. Politics and events within the USA are crucial for war and peace in the world.
From my point of view the American people would be far better off by concentrating on issues within their own country. To make it an industrial powerhouse and prosperous again, for most of its people.
Currently, the American government is spending officially some $800bn/year to maintain a military designed to keep all its colonies under control. A Navy-centric military that has the ability, with its aircraft carriers, to threaten most other nations. Has it still the ability? With the tremendous speed of proliferation of rocket and missile technology, this has changed. Rocket and missile technologies have been developed which are very easily replicated in most countries, even in improvised workshops and with low costs. These rockets and missiles can be produced cheaply in very large numbers by most nations.
And the most important point in missile warfare is the question of numbers. If an entity can fire more missiles against a US Navy ship or carrier strike group than this formation has anti-missile weapons, then the formation will take losses, or even defeat.
The world is evolving into a multipolar free world. And all nations should help build that. It would be very favorable for the USA to participate as well. It has major human capacities and resources. It could become, again, a major player along with others.
For this, it would be crucial for the US government to re-take control of the MIC. Reduce the military budget to a level that matches the level of threat. The USA needs only to defend its borders. There is no other threat to the USA. And border defense can be solved with a far smaller budget. Especially if the USA gets control over the MIC. The current prices of the products of the MIC are not prices for the products. As we learned before, hundreds of thousands of people “collect” their share from every piece of equipment sold. The bonuses on top of the prices are astonishing. If it comes down to national security, such situations should not be allowed. The price should be slightly higher than the manufacturing and R&D costs.
And this is the next problem.
The design of US military equipment of the previous thirty years is insufficient to meet the requirements of a conflict with serious military competitors. The designs are made to create beautiful pitch-decks or presentations for elected officials. The designs are oversophisticated and therefore require mind-boggling budgets with no connection to reality. Nevertheless, these designs need to be manufactured. And this is where the problems begin. To safely manufacture an oversophisticated product to a quality that matches the rough conditions of a warzone is almost impossible. Either you will have a lot of breakdowns, or you will have to pay horrendous amounts of money to somehow “make it work”.
The result is that you try to shoot down missiles worth a few thousand dollars (for example, Houthis in Yemen) with interceptors that cost several million dollars.
So, millions of Americans are homeless while less-than-capable military equipment is built just to fill pockets of the corpocracy and oligarchy. Not a very good situation.
What to do?
You can’t turn around a big ship like the United States within days. But if the politicians would decide tomorrow (which they won’t) to change course, it would take a transition time of approximately 5-8 years to restructure the political, industrial, and trade approach toward a system that benefits the prosperity of the American people and ensures national security at the same time.
A country is like an industrial factory.
In a factory, you need to make products of sufficient quality at the right time in the right quantities, and ship them to your customers. Of course, you can throw a bunch of people in the factory, hand them a rulebook and an order book, and tell them to start working. You might be lucky and you have only highly motivated experts there and something tangible will come out. But it is very likely that you will fail to produce anything. There are a lot of things which one would need to do to make that a success. For instance, training. But I’d like to focus on the Industrial Engineering department here.
These guys make sure that the people on the shop floor have everything they need to produce a given product. They need the tools, machines, instructions, information, QA, CNC-Programs, materials, logistics, training, maintenance and so on. With these resources, the people on the shop floor can focus on their job to make parts of the right quality and quantity as the customer orders. In the best case they only set up the machines, feed them with material, and adjust parameters if quality is at risk. The rest is managed with processes.
The same goes for countries as well. My suggestion for the prosperity of the people of the United States is the following:
Bring the MIC back under state control and start a program to design and produce robust weapons for an affordable price.
Bring the troops back home and refocus the military on defending the US borders.
I’m sure that through the procurement of good military equipment under state control and giving up having the world as a colony which needs to be occupied through boots on the ground, the US budget would save at least $500bn dollars. And combat efficiency could perhaps even be increased this way.
Re-invest these freed $500bn dollars into developing the United States of America. How?
Make education free, as in many successful countries. Of course, elite colleges can still be paid. Educating huge parts of your population (equality is very important here) is an investment that will bring you innovation, market advantages, and employment within a generation's time. I know… A generation is too long of a time in the West. Western decision makers want to have their money NOW.
Rebuild the US infrastructure. From road and rail to communication and infrastructure of cities, towns, and villages. You can only have a proper domestic economy and industry if the physical connection between airports, harbors, towns/cities/villages, production sites, resources processing sites (oil/gas/metals etc.) are working without interruptions in the fastest possible time. It is the basis for a strong domestic (and not China-based) industry.
Enter the BRICS economic and trade system. You don’t need to enter BRICS formally but I’m sure everyone will be able to use the independent financial and trade infrastructure which is being created. And position yourself there within the boundaries of the rules of economics and trade to get the best possible trade position and markets in the future economics order of the world. The alternative is to be cut off from most global markets within the next ten years.
Provide free healthcare to the whole population. People who are sick and only think of how they can survive can’t be productive workers or innovative thinkers. People also need to be “maintained” to always produce the best results. The increase in productivity and innovation would be higher than the costs of healthcare. This of course means you would need to also bring the pricing policy of the pharma companies under control otherwise the costs for healthcare would dominate the budget and fail in its purpose. Here we have a situation similar to the MIC.
Yes, they need to earn a profit to be motivated to find new medicines. And they need money to invest in R&D. Also true, but above that, they still earn too many billions which should be invested in the people instead of a few managers that are spending it on… Champagne (to be polite here).
Full support for families. People mustn’t calculate whether they can afford children or not. Or how many children. A family where the woman stays at home to take care of children should get a compensation. A compensation that would even out the loss of income of the woman. Which should include monthly payments and all kinds of other incentives, such as lower taxes for the working man, free parking, free kindergartens etc. Families should not even think one second about whether they can afford children or not. It should be “cost neutral” with these payments and all the other incentives.
A strong micro- and macroeconomy as well as society can only work with a strong youth-concentrated demography. (Which is why we Europeans are completely screwed strategically). A huge domestic market (PEOPLE!) is also a guarantee for sovereignty and independence from foreign influence or leverage.
This would revitalize the American economy strategically. Hence, it would become strong in a strategic sense. If we start now with these policies, the demography would become strong within maybe 20-30 years. And 20-30 years is a period of time which needs to be taken as a basis for planning if you want to have a sustainable society and economy.
Short term planning is only “fighting fires” in an overall downwards spiral.
Having enough youth coming after us, we don’t need to think about missing work, labor, pensions or other social benefits which would be carried by a broad base.
Implementing such policies would mean a short- and/or middle term problem because woman would be missing in the labor market. But that is an investment that needs to be taken because otherwise the problems will only grow bigger. You only need to look at Europe to see the problems.
Lift up people from poverty. This should be a one-time investment to invest in all the poor quarters of big cities to get people back into society. Especially as many homeless people as possible. It is a one-time investment, because after the proposed reforms, it will be far more difficult for people to fall into poverty and homelessness than before. Don’t get me wrong… it is and will always be possible, but one can improve conditions.
Okay, I hope I didn’t lose the enemies of Socialism here. Why? It all sounds like a socialistic (communistic?) paradise. That is the classic teaching. Yes. But it is entirely NOT! And I’m going to explain why.
What I just presented is capitalism in a strategic sense. The capitalist wants to achieve the highest possible earnings. Today’s capitalism is a short-term or operational capitalism which only achieves the highest earnings viewed on a scale of maybe 3-5 years.
What I am proposing is to create conditions to apply strategic capitalism. If we, just like an industrial engineering department, provide people everything they need to be educated, mobile, healthy and happy (family), then they are going to create a far higher “return” than the “fire fighting” short-term capitalism. It would generate far higher earnings for everyone, and it would also generate far more wealthy and rich people in relative terms to the population size.
In other words, enabling the American dream for far more Americans than the very few today. Wealth and prosperity within the boundaries of a free market economy.
See? No socialism or communism here. In socialism or communism equality and wealth distribution are goals, not creating wealthy or even rich people or business owners.
I think this economic system is the future. If we don’t destroy ourselves before that… 😊
The Fate of Europe
Relations between European nations
The European countries are currently bound together through two layers of hegemony.
First, Germany was allowed during the last twenty years to become a kind of a hegemon of the EU. From which Germany benefited tremendously in terms of trade (I don’t want to value other factors here). Germany gained access to all the markets of the EU without tariffs. Therefore, many industries in poorer EU countries vanished or were bought off and German goods became dominant in many European countries. Especially Eastern European countries. Yes, Germany pays the most into the EU, but through this trade access (Remember the Economies of Scale?) Germany earned far more money than it paid into the EU. That’s why Germany is an export nation and has (had?) such a big trade surplus. The situation is now changing rapidly and what I just described could be very well and quickly rolled back. This is a topic for another day. Hence, Germany is(was!) the first layer of Hegemony of the EU.
The second layer comes from the EU institution in Brussels, which is nothing more than the attempt by the Western Oligarchs to create a single point of influence above the entirety of Europe. You don’t need to convince, control, threaten etc. every single European state if you have a superstructure above it that has jurisdiction over all member countries. Having unelected leaders within this superstructure makes it very comfortable to control all European countries against their people’s will. Since the United States is the current host of the Western oligarchy and empire, the US leaders are controlling this superstructure.
If we study history, we see that Europe was in a constant status of war since… forever. The boundaries changed constantly, and empires rose and fell in Europe. (Or found a new host). The current period of peace within Europe is only possible because it is currently under the… How to explain this? “protection” of the United States.
If the United States decided to withdraw from Europe, then we would quickly have all kinds of conflicts across Europe. The EU would collapse, because it is only there to serve American (Western Oligarch) geopolitical interests. Without American media and cultural control, the EU would vanish overnight. Problems occurred with the conclusion of WW2, and forced upon European countries by the victors would reoccur, and there would be war.
And all of this without Russia, China, or any other outside actor doing anything. They would sit at the sidelines and bang their heads against the walls.
The Americans have been only able to stay in Europe because it was an economical investment and the “return” paid off their military deployment in Europe. With the current European economic downfall, this is changing. The Americans are interested in trade with Asia and other global South powers instead of with Europe. And paying for the US troops? Europe won’t be able to pay energy let alone the deployment of the American military.
What to do? I will explain a little more, before I come to conclusions.
Hungary and Serbia
Because of the tragedy that is developing in Ukraine, we have a few new geopolitical realities.
Unfortunately, the West made Ukraine into a geopolitical chessboard. And if it had only been a game, it wouldn’t be that bad. But currently hundreds of thousands of people are dying because of the actions of the West, which is a catastrophe! Unfortunately, because the West wants to dismember Russia to get free access to its ,it made Ukraine a battering ram against Russia. Which left three scenarios for its status:
Neutrality (Stalemate in chess terms):
This was the status up until 2014. When the West decided to start the occupation and assimilation of Ukraine into NATO, with the goal of destabilizing and then dismembering Russia within a few years.
Neutrality is now dead and gone and can never come back. Even if the West or Ukraine would seek peace on terms that the rest of Ukraine remains under Western control this would never be accepted by Russia after everything that happened.
This is not my wish, but only an analysis based on all the facts and information available to me. As I said from the beginning of the BMA blog: there are only two possible outcomes. Either a total Russian victory and the fall of Ukraine within its current borders up to Poland, or nuclear war which would destroy us all.
Yes, I’m sure Russia won’t incorporate the entirety of Ukraine. Some Western parts will be given back to their former owners like Poland, Hungary, and Romania. And a land bridge to Hungary will be ensured. Either within incorporated territory or through any new state succeeding the Ukrainian state West of Kiev.
Western Victory:
As already described, this was the goal of the West. To destabilize Russia on all its borders and to cause protests and eventually the dismembering of Russia either through a direct civil war or through a Yeltsin-like coup leader that would make that happen without or even with civil war.
The reality is, if such an outcome would have been in sight, Russia would, according to its doctrine, end the world overnight. And President Putin said that bluntly in an interview.
This outcome is, at least for now, off the table.
Russian Victory:
As described above, Ukraine, from a Russian point of view, mustn’t be ever again used by the West. Neither as a staging area for NATO, nor politically to indoctrinate the fraternal people against Russia. And West Ukraine mustn’t exist as a non-NATO state. A Ukraine which is de jure not NATO but de facto it is NATO, is too dangerous to abide. A Western Ukraine which is not in NATO always can attack Russian soil or conduct terror attacks within Russia without triggering an all-out war with Russia. A NATO West Ukraine would need to comply with geopolitical rules to avoid World War 3.
My prediction (and NOT wish) is that soon there won’t be a Ukraine anymore. It will be entirely gone, and its territory shared between Russia, Romania, and Hungary with a guaranteed Russian access to Hungary.
Through having a land bridge to East European states such as Hungary and others as well, Russia will be able to win these countries over economically. If we are talking about free market economy, then the only viable way forward for these countries is to start cooperating unilaterally with Russia and other Eurasian countries in economic terms.
I’m talking about resources and energy. But I’m also talking about direct access to markets in Asia which they would never have under the EU/West umbrella.
The EU and the US are keeping their “members” under control with the threat of sanctions. The fantastic geopolitical unanimous votes resembling good old election results from Saddam Hussein and other such “free democracies” … 😊 You know what you need to vote for, “or else”.
If these countries get a land bridge to Eurasia things will change. They could trade over land by road and rail without the difficulties of seaborne trade. Financial sanctions wouldn’t hurt that much because they could simply connect to the “other” financial system which is not sanctionable.
A land bridge to Russia would be the way to freedom, independence, and economic prosperity for all the connected European countries. I predict that every country that connects to an already freed country would be a multiplicator for the next bordering country. Look at the countries that are bordering Hungary and you will understand. These are also the mechanisms of a free market economy. You chose the best available offering.
One of the countries bordering Hungary is Serbia. Serbia is still nominally independent. But since it became landlocked and surrounded by NATO it needs to abide to certain degrees to the West. Otherwise, the country can be cut off from the rest of the world, without war, within days or weeks. And that would be a disaster.
Having access to a free Hungary, Serbia would be free again and could again start to make its own decisions. No, not for war with Kosovo. I personally think that the Americans will withdraw from Kosovo (Serbia) as soon as things become unsustainable for them in Europe and then this artificial nonsense will end.
NATO
With all the NATO countries falling and changing step by step into the free world order, the NATO issue will solve itself. And this all will be triggered by the fall and surrender of Ukraine. In fact, countries worldwide, and Europe in particular, are quietly waiting for this to happen. There are more than enough leaks, where hardcore West/NATO people are complaining that many European nations and politicians are waiting for this to end. And it will end.
War
Unfortunately, and I absolutely do not wish for ANY war, as soon as the EU and NATO fall, the Europeans will most likely settle the power structure between themselves… not peacefully. As has happened for millennia. No other outcome is to be expected. Even though I think “it” would be concentrated in the countries of central Europe, and maybe some around it. I do not expect that in East Europe, except for Poland.
Poland and Germany have a lot of open issues to settle which are only suppressed by the higher common goal of serving the Western geopolitical interests. As soon as this ends… Well…
There is a reason why Russia is happy to “gift” Galicia to Poland.
I’m sure, that Russia won’t be a party to a European war. The Europeans, especially these around Germany, will do that without foreign interference. And I consider that a disaster, and I hope it will not happen.
Alternatives
And this leads me to the alternative. The alternative is prosperity through economy. Each country that gets connected to Eurasia through a land bridge can choose to participate in the new free economic and financial system. By doing this, many economic problems can be solved except one. Demography is the pillar of a civilization and Europe sacrificed its demography to short term economic considerations; All women and soon even children need to work to be able to provide growth and to pay social benefits to the ever-growing senior population. Soon you will be evil if you decide to have children instead of working 24/7.
Without solving this problem (America is in a far better position here), there is not much hope for long-term economic prosperity in Europe. Most economists would argue differently by only taking the next 1-4 years into consideration. But this period also looks bleak. Looking at 30 years, things become disastrous.
Connecting to the free economic and financial system could solve many problems but not all. And it could help appease Europeans.
Still, connecting membership or participation in free frameworks with the need to stay peaceful is also the wrong way. It would open the door to new sanctions and in the long term to the return of the sanction(intimidation)-based world order of today.
My hopes are limited here —unfortunately! I wish for the opposite situation.
The New World
Implementation of the free world order could be finished by 2032, maybe.
But will it be a paradise? I’m sure that a period of prosperity will follow for most of the people of the world. And there will be losers as well.
But will the freedom and independence of most nations be long lasting? I hope so, but by studying the rise and fall of empires we all know the following: The next empire is right around the corner. And it won’t be Russia in this case.
We should all stay vigilant and try to do everything to avoid any empire being established. People should be free. Nations should be free.
But our nature seeks to dominate over others. And this is why our history is full of violence. There is little hope to change this as long as humans are ruling over us.
What does that mean?
Merry Christmas and a Happy New Year to everyone!
[i] Edited by Piquet (EditPiquet@gmail.com)
Quick note on BRICS.
Keynes, after WW2, proposed the BANCOR, which sounds a lot like the “BRIC”. The West (well mostly the US and Britain) obviously tanked the idea in favor of the USD to keep the US hold over Europe. Back then the USD was backed by gold so most didn’t mind, until 1971 when the rug was pulled out from under them. This needs to be taken into account in the new currency.
A issue they debated was the accumulation problem. Export countries would inevitably accumulate BANCORs and importing nations wouldn’t, eventually leading to gridlock. It also meant that an increase in the money supply in cases of emergencies is not possible and the only way to increase funds is through debt, putting the accumulating countries in a dominant position, which they can exploit.
The currency issues can be solved to a great extent with something like Bitcoin. However, there also needs to be universal laws that regulate the currency and any changes to it, regulate trade, and foreign investments. Here I am talking about laws that PREVENT a stronger nation from taking advantage of a smaller one and laws that kick into effect automatically with multiple input variables to bring back to a reasonable balance currency reserves to avoid gridlock.
What countries, especially small countries who are resource poor or land locked, need to accept is they will likely not be as prosperous or wealthy as larger countries and that’s ok, because they will have their independence and sovereignty, and if they have a good government, they would have enough to satisfy their basic needs. That’s just the way of the world and should be a well worth trade off (I’d say a major upgrade) from what they have now.
Your conclusions regarding my country Hungary are very interesting. I don't claim that they are against me ! :) I note that I fully support the cooperation between my country and Serbia, thanking Prime Minister Orbán, not to mention the tireless work of Foreign Minister Szijártó, for making the friendship and alliance between the two neighboring nations so close !
We hope that they can fight the current crisis with the color revolution that Soros and his accomplices are fomenting using the election as an excuse !