Dilution of the US dollar

 

Dilution of the US dollar

by Germanico Vaca

We need to face real facts to be able to come up with real solutions. So, we need to face the situation of the United States, and the main concern is the potential for economic collapse. The key factors that contribute to the growing risk of a catastrophic financial collapse in the U.S. must be explored carefully to understand the implications:

1. The U.S. National Debt and Its True Scale

The U.S. national debt is often reported as a relatively smaller number (around $36 trillion), but that is a lie because that amount does not include: municipal debt, counties, state debt, unfunded liabilities like Social Security, Medicare, and Medicaid, That alone as well as the massive debt obligations accumulated by U.S. banks and financial institutions. If we take only 2000 banks, we find that the debt they hold is unpayable. Tragically there are 2000 Banks holding such debt. Somebody tell me how is the US going to pay such debt? $ 202,510,748,000,000.

This creates a situation where the U.S. has debt levels far exceeding its productive capacity and ability to pay it off. The question is whether the U.S. can ever achieve fiscal sustainability in the face of this overwhelming debt burden. The fragility of the banking system and the speculative nature of Wall Street’s behavior exacerbate the problem, making it more difficult to stabilize.

2. BRICS and Its Growing Economic Power

The BRICS nations (Brazil, Russia, India, China, and South Africa) have a combined GDP growth rate of 29% and a population of 3.4 billion people, which is significantly larger than the U.S. population of 340 million people and its 2.8% GDP growth. The BRICS nations are rapidly diversifying and strengthening their economies, and they’re doing so without the massive debt burden that the U.S. faces. The shift in global power dynamics, with BRICS positioning itself as an alternative to the U.S.-centric global system, is a significant threat to the dollar’s dominance. The U.S.’s inability to compete in terms of population and GDP growth further weakens its position in this geopolitical shift.

3. The Crypto Market and Its Role in Diluting the Dollar

Nobody talks about the biggest danger of the Crypto market. while it has become a popular avenue for investment, it’s also a source of speculation that contributes to the creation of money out of thin air. Cryptos, NFTs, tokens, digital coins, and meme coins have become speculative assets that rely on the U.S. dollar for valuation, which means they are inherently tied to the stability of the dollar. If the dollar collapses, the value of these assets could go to zero. This would create a massive loss of wealth and confidence, further exacerbating the instability of the financial system. The explosion of credit card debt used to buy speculative assets adds a dangerous layer to the situation, as it could increase the systemic risk when these bubbles inevitably burst.

The Need for an Analytic Tool

The suggestion of creating an analytic tool to calculate the true effects of these factors—derivatives debt, crypto investments, the digital dollar, and the Federal Reserve's money creation—is a crucial next step in understanding and managing the risks to the U.S. economy. This tool could model the compounding effects of these speculative markets and offer predictions for future scenarios, helping policymakers make informed decisions. If the crypto market reaches unsustainable levels, it could trigger a cascading failure that exacerbates the systemic risks you’ve mentioned, potentially leading to a collapse of the dollar.

The Path Forward: Preventing Collapse

To prevent the collapse of the U.S. economy, there are several actions that could be considered:

• Fiscal Reforms: Addressing the true scale of the national debt and focusing on fiscal responsibility—perhaps through restructuring or even partial debt forgiveness—could provide some relief.
• Monetary System Reform: Moving away from the current debt-based monetary system could help stabilize the economy. This might involve exploring alternative monetary systems or digital currencies backed by assets.
• Investment in Productive Projects: Encouraging productive investment and reducing the speculative nature of crypto and Wall Street investments would help shift the economy toward real wealth creation.
• International Cooperation: Fostering cooperation with other nations, especially in the face of the growing BRICS alliance, could strengthen global relationships and trade, reducing the likelihood of isolation and economic collapse.

In short, to prevent a collapse, it would require significant changes in economic policy, governance, and international cooperation. The current trajectory of debt, inflation, and speculative investment is unsustainable, and understanding these risks is essential for making informed decisions that could help avoid a catastrophic collapse.