Regular readers know that I am a "deflationist", i.e. I believe that the current Great Recession is already characterized by asset and credit deflation, which will likely deepen and widen further before the global economy rebounds.
Needless to say, this view is not shared by several academic analysts and gold-standard theorists - and most definitely not by commodity speculators who, however, are mostly talking their "book". Some even mention the possibility of hyper-inflation, a la Weimar Republic.
For everyone's consideration, then, here is another piece of the puzzle: foreign/international holders now own $3.5 trillion of Treasury debt or 50% of the total, up sharply from $1.06 trillion and 30% in 1999 (see chart below, click to enlarge).
Needless to say, this view is not shared by several academic analysts and gold-standard theorists - and most definitely not by commodity speculators who, however, are mostly talking their "book". Some even mention the possibility of hyper-inflation, a la Weimar Republic.
For everyone's consideration, then, here is another piece of the puzzle: foreign/international holders now own $3.5 trillion of Treasury debt or 50% of the total, up sharply from $1.06 trillion and 30% in 1999 (see chart below, click to enlarge).
You Wanna Do What To My Money?
The simple point is that powerful foreign creditors, e.g. China and the oil Arabs, now stand to lose a serious - record breaking serious - amount of money, should the US go down the inflation route to rid itself of onerous debt. It follows that they will not sit idly by, looking at their savings turn into so much dust in the wind (do I hear "oil embargo"?).
Judging from the increasing noise emanating from places like Beijing and the Gulf about dumping the dollar as the major global reserve currency, the Obama administration is clearly being sent overt warning messages. Happy hour at the bailout saloon should come to an end, they seem to be saying. Stop serving out the monetary booze and concentrate instead on bringing back a semblance of normalcy in interest and FX rates.
The simple point is that powerful foreign creditors, e.g. China and the oil Arabs, now stand to lose a serious - record breaking serious - amount of money, should the US go down the inflation route to rid itself of onerous debt. It follows that they will not sit idly by, looking at their savings turn into so much dust in the wind (do I hear "oil embargo"?).
Judging from the increasing noise emanating from places like Beijing and the Gulf about dumping the dollar as the major global reserve currency, the Obama administration is clearly being sent overt warning messages. Happy hour at the bailout saloon should come to an end, they seem to be saying. Stop serving out the monetary booze and concentrate instead on bringing back a semblance of normalcy in interest and FX rates.
I can appreciate the deflationist view. Mish, Steve Keen, and Hellasious.........you all make very convincing arguments.
ReplyDeleteAnd, I would agree if our world weren't governed 100% by politics.
Look at Obama's domestic agenda. It has absolutely nothing to do with rescuing the economy. This stock market rally is based on the Fed and Treasury.
I believe the Obama administration, and I would believe the same about a GOP administration; the Fed and Treasury are hostage of politics.
Obama's first major slight was the Olympics. Quickly his ego was stroked by Nobel.
He truly believes he will be able to placate the Arabs and Chinese with words. Regardless of if he can or can't...............all those dollars are slowly waking up and plotting their way home.
The last currency crisis was ~ 38 years ago. And it didn't even take the U.S. that long after Bretten Woods to piss away all the gold earned from WW1 & 2. So, in that regard, we are doing a little better. But the result is still the same, it just took a little longer.
What is normal anymore? Making stuff and selling them at a reasonable price for a modest profit used to be normal. As was steadily but realistically increasing wages of workers so that they could afford these products and services. It used to be normal to avoid debt and bankruptcy was viewed as a moral failure. People proudly burned mortgages that were paid in full.
ReplyDeleteThen normal became finding workers in this country who would make these things for less money. This led to selling stuff for less money but also a larger profit. Lost wages were supplemented with "buy outs", pensions and government supplements of various kinds.
Then normal became finding workers in other countries like Mexico who would make stuff for even less money, sending prices moderately lower but profits much higher. More wage paying jobs were lost and this was to be mitigated by convincing people to retrain themselves for jobs that required more education and certification (terms that became synonymous).
Then normal became starting companies which did not make anything of value or generate income and convincing people that these entities were indeed great investments. P/E ratios transcended rational (er, I mean traditional) opinion. Investment was juiced by speculation of pending doom (aka Y2K). Employment increased as the newly "educated"
Started working for and even starting these profitless companies themselves. Entrepreneurial rebels they were, rules were for fools as they ballyhooed the new economy from ivory tower to ivory tower. Debt was viewed as a tool to generate wealth.
Then normal became all about leverage and real estate. Debt at all levels was embraced. The refugees of the profitless companies became handymen and women. Self proclaimed experts on plumbing, electricity and carpentry. Granite counter-tops were coveted like a loving cup. Even people of modest means decided they had to have vacation homes. Realtor's became a standard profession on par with doctor or lawyer. All the while less and less stuff was being made and more and more debt was being accumulated.
So what is normal?
Another great post as always
ReplyDeleteInteresting comment re: oil embargo and default.
Yet another reason to go green I guess? It would let us default on the Middle East?
... Indeed, do you know what the US ROI for green energy would actually work out to if we included the potential gain of default to foreign creditors?
Anyway, what does history show re: investors who loan for the short term?
Having a pretty good idea of the kinds of relationships that tend to get shredded in difficult times, I suspect short term investors are the most likely to get slaughtered.
I know people tend to not go out on a limb for weak relationships.
But I don't really know if this is true, do you?
... Indeed, your post also makes me wonder if there is any difference in the length of maturity of US foreign debt based on national origin of said funds?
I don't like to seem as I am in the inflationist camp. I just discuss this issue because I think it is very important (as in: hyperinflation is the harbinger of war).
ReplyDeleteA few things that I am not convinced you weighted in properly:
1. That our western politicians/elites are good enough to understand the system. It is not clear to me that they understand things. It is not clear that they have the correct narrative in ther heads. Think about all those that think that this is just a liquidity problem... That debt is a not a problem... You put too much faith in the political establishment.
2. In times of crisis, economics is squashed by politics. Think debt jubilee, free money (bailouts and money to avoid foreclosures), ...
3. While foreign creditors are a pressure point, so are angry mobs of people living below a bridge with only food stamps and charity help to go by.
I know this is peanuts (especially compared to bankster bailout), but it ilustrates my point.
Once upon a time, I asked fellow deflationist Mish what is the difference between hyperinflation and a pure fiat currency returning to its intrinsic value of zero. His answer, "time". Time is now up.
ReplyDeleteJoe M.
Once upon a time, I asked fellow deflationist Mish what is the difference between hyperinflation and a pure fiat currency returning to its intrinsic value of zero. His answer, "time". Time is now up.
ReplyDelete+1.
In terms of handling their own savings, gold nuts have won the case. This has a meaning.
Mish, and other vocal deflationist, have only part of the explanation to the current situation. Monetary aggregates are going a recessionary path for sure.
Deflation, well, I can not feel it here. This word is used and abused, time and again.
Ready to eat my hat if the equity drops markedly within a couple of a months.
imagine...something big, fundamental...slowly it rises in the early morning mist...i see only a vague blob...iterating the world game rules from the hopelessly archaic and resource inefficient geopolitical to the hyper-efficient nano-technology-based domainpolitical. the successes of google/amazon/ebay prototypes demand more iterations, eventually evolving whole new new product line families...everything--raw material extraction, fuel, industrial, food, etc--produced on-demand, locally--an amazon of life products all produced locally...we pay domain taxes and through some maze of administration databases comes back local domain-neutral public administrations...the devil is in the details...
ReplyDeleteSo foreigners own 50% of Treasuries. (Actually, it's probably a bit more, because of indirect holdings.) That means that Americans own getting on to 50%. That in turn means if the US Government starts to go the inflation route, it's going to have a major political problem. Not to say the problem can't be solved. (A gratuitous TIPS adjustment for Americans but not foreigners?) But rapid inflation is not going to be as cost-free to American politicians as some people assume. So I am inclined to agree that deflation is the more serious risk.
ReplyDeleteI believe an oil embargo would be interpreted as an act of war - no?
ReplyDeleteHell, one other thought as I really am trying to work through this to get to your point of view
ReplyDeleteExcept for the fact that foreigners have loaned us more in debt today than they did in 2001- but again we know that the very fact they lent us all this credit has made the much larger amount of today's loans worth far less than the same amount of money would have represented in 2001- why would creating negative real interest rates from QE today be viewed by foreign creditors as different than creating negative real interest rates in 2001 when the Fed dropped rates low for several years?
Further if we defaulted on some of our debt today (as opposed to inflating it away), the fewer dollars our creditors are left with would probably be worth the same as the larger (but less valuable) dollars our creditors would hold in an inflationary approach to this mess.
Tweedledum vs. Tweedledee
It seems to me that from any kind of absolute perspective, it would be the same to our creditors.
... Though I understand that from certain points of view this can seem like the glass is either 1/2 empty or 1/2 full.
I certainly don't see the absolute case for war that you make
Tiago, To your points:
ReplyDelete1. Politicians are not elites. People that have huge holdings of government debt are elites and their will be done.
2.Bailouts (elite bailouts), compared to money for foreclosure avoidance? What is that ratio, 1,000/1?
3. People living under a bridge do not have the organizational skills to form mobs. Fox news and the teabaggers are the ones with these skill-sets, which camp (elite status quo v average Joe) do you think they are in?
Yes, that is peanuts and it contradicts your point--the people holding the debt will make policy at the expense of the productive workers.
marcus,
ReplyDeleteDon't underestimate the power of a bunch of mothers seeing their kids starving.
I know there are few examples in American history, but I can think of a few examples in Europe where chaos followed (sometimes with good consequences, sometimes with terrible).
Anyway, we will see as history unfolds.
Interesting times, indeed.
"People living under a bridge..." = productive workers????
ReplyDeleteIt is quite an interesting neighborhood you must live in.
I work every day with the people living under the bridges in my neighborhood. Indeed I am on quite a friendly basis with many of them.
I am not quite so sure I would equate these two statements (again in my neighborhood), but we obviously see different versions of the world so I can't comment on the version you see.
See here is the interesting tidbit... it will be deflationary as long as foreigners are not pissed.
ReplyDeleteThink of a simplistic example of diversification (i will use gold, just for simplicity).
Let say i have 10oz gld and 10000$ in ty's, so my assets are combined 20000$.
I produce something which will give me profit of 1000$, but this time I buy another 1oz gld. I do this thing over
and over...
My gld/whatever is now enough to offset my loses in my $ holding even if they go down 50% in value.
Why would i not care that much if the dollar go down, cause once I buy the gld I can just spend those last 10 000$ to buy one more time 10oz gold
and force the price of gold skyrocket.
(Ooo I forgot my name is China ;)).
My point is that there is a point in time when the foreigners will be ready to send back big portion of $ they hold, cause they will be diversified enough.
The more $ there is floating the more eager they will be to do that.
Which is inflation.
Even if derivative 1Q monster collapse everything will go bankrupt and after quick deflation we will have worldwide inflation.
The only way we may have long deflation is if the gov/fed can manage slow deflating of 1Q-monster and printing simultaneously to not allow all-out default.
But this can't go long cause the longer you do it the weaker the currency becomes. Especially if there is no increased production to displace it.
Where do you see the equal sign between my two paragraphs Thai? Two different sets of people, the second set being vastly larger.
ReplyDeleteSo the oil sheijks will get pissed? Don't think so, they are completely dependent on the USA for their security and the US are firmly established in Iraq with massive bases. They will do as they are told.
ReplyDeleteConcerning the infla/defla debate. Chris Martenson gave a perfect explanation a couple of days ago.
One could come up with some really grim scenarios when looking at China's inability to produce all the food it needs, India's inability to produce all the food it needs, and America's inability to produce all the food it needs without petroleum. And before anyone mentions rude military intervention, consider how much petroleum such an operation would take.
ReplyDeleteEven if China/India/Middle East excluded us, would they have sufficient arable land to support themselves? Time to break out the old Risk board....
Bingo to the person that wrote about offsetting one's losses by acquiring gold coins in increments. The only difference in that illustration from what is occurring in the real world is that China, for example, is not acquiring gold, mining interests, and various and sundry resource outfits in increments. They are doing so in large chunks, and it's not all about shoring up their vast resource
ReplyDeleteneeds as a nation, but clearly to protect their dollar denominated assets which are, as we know, enormous.
Imagine how much they and others will offset their losses when prospectively gold is selling for 10k an ounce and silver for 800 dollars an ounce etc. etc. And it will be even sweeter a setup as they are using their U.S. bond holdings as collateral for all their resource investments. Someone else is going to be the U.S. bond bag holder. The Chinese may have bought all that debt, but it is being pledged to others for items that will hold their value in a U.S. dollar debt debacle.
Everyone involved is playing for time, but the writing is on the wall and at some point the seemingly gradual evolution of this process may become a lot less gradual. With that in mind I would like to offer that journalist Robert Fisk's recent assertion ( in his otherwise illuminating article) that the dollar's demise would be managed over eight years or so is, to put it politely, wishful thinking. Think two or three.
"the second set being vastly larger."
ReplyDeleteAmen to that, which is what makes this growing debt burden such a fascinating mystery.
If Hell is to be believed we have been at it since at least 1984.
Someone/some group of people in the morass of productive workers is not as productive as they would like to think are or we would not be borrowing for them, would we?
And as it is quite simple to figure out those who are on net putting more in than those who are on net taking out, I only hope the collective is not too wicked towards these people when the musical chairs stops.
... I strongly suspect these people know who they are.
One can at least hope we will do the right thing.
We live in interesting times.
And Dink, great tragedy of the commons angle ;-)
Maybe those "unproductive" people that you're looking at NOW, Thai look a lot like... what those unproductive people ALREADY looked like under... Louis XIV. It took a few years for that to play out in the French Revolution though.
ReplyDeleteBut... just WHAT is "productive" , that's my leitmotif.
That collective decision is ALSO subject to fads, and whims.
But sometimes I wonder if we are not caught up in a form of apocalypytic thinking which changes, like a cameleon, from one age to another.
Every age has its own form of apocalyptic thinking.
Is the dollar demise... OURS ?
Most mainstream politicians, 'economists' and other 'experts' may indeed have no idea what's going on or at least miss the big picture. However, it seems more and more likely that there are some 'illuminated ones' who know perfectly well what's going on as they are setting up a crushing disaster and probably WW3, if USA makes real moves against Iran, not just the usual warmongers lies.
ReplyDeleteI really hope you Americans can avoid going down the Hitlers path and stop Barry the Puppet.
Hmmm...
ReplyDeleteAfter the.. HAPPY HOUR the...
HANGOVER ?
Hell
ReplyDeleteThey aren't going to embargo us, we just aren't going to have the money to buy the oil.
Which makes the oil go down in price to where we can afford to buy it, but not in such large quantities.
Debra
Food comes from natural gas more than diesel and gasoline. We import nitrogen fertilisers from Saudi Arabia, Russia, and Trinidad.
Ah, the problem lebensraum, as it were, or eating room, or some such. One answer to that, that everyone has left out of the discussion is AFRICA.
ReplyDeleteChina has bought up to the equivalent of one our medium sized states worth of land on The Dark Continent since 2006. I suspect they have in mind using that land for a variety of purposes, one of which will be to off load millions of their own population. The demographics of Sub Saharan Africa may look very different in a generation.
Go west young Mao, go west!
the problem of lebensraum...
ReplyDeleteNext in The China Tale comes the chapter where 1.2 billion increasingly affluent people start getting used to eating... meat! And that's when all hell breaks loose, doesn't it?
ReplyDeleteThai- "Someone/some group of people in the morass of productive workers is not as productive as they would like to think are or we would not be borrowing for them, would we?"
ReplyDeleteAs usual we lived in shades of grey, but let me go from my view of dark to light:
You have the first class (and by far the largest) of bailout recipients designing and selling toxic "instruments" around the world. By far the darkest of the group, because this knew real estate prices would not increase ad infinitum.
At the lower end you have the home owner (real estate investor) that bought homes thinking the value would increase every year, and bought into an already juiced up market (thanks to Allen Greenspan), and assumed they would have a job to keep up the loan payments.
So in "Bizzaro World" we have the darkest class of culprits being bailed out by the remaining productive workers and the latter class living under a bridge or sliding there.
And Debra, Productive definition: Let's agree that the people that make your food and ship your food to you are in the productive class, and the people that created and dispensed toxic assets are in the destructive class. Make sense?
Apologies for the lack of editing (this is especially for you Debra)
ReplyDeleteI must have missed something...
ReplyDeleteWhat did I say that led someone to the comment about food and natural gas ?
Is it a joke, that humorless little me didn't get, maybe ?
On the off chance that the comment was serious, I would like to remind US that we don't need them nitrogen fertilizers if we just managed to treat our own... by products of all sorts (FREE FREE FREE, no Montsanto ogre to make you pay...) without sticking a lot of bought in store products on our land.
And Thai, you KNOW how I love to be the devil's advocate : if John Q Farmer is bringing your food to you while loading up the soil with toxic assets then... is he PRODUCTIVE or DESTRUCTIVE ???
Really, I'm disappointed in you for not seeing this incredibly ZERO SUM ISSUE.
Hellasious,
ReplyDeleteI have to disagree here with you.
The US seems to go forward monetizing its mortgage debt. Just hinted they will go on with MBS purchases.
Now if the Chinese would say no mas - what can they do? Buying up assets ? African land, gold, oil in Nigeria. Look, they are already doing it.
A deflationary outcome would be preferable to the world, I just do not think it will happen with politics in the US being what it is (plutocracy).
They will trash the dollars until too many panic and flee the Dollar.
Oh Deb, I see it, trust me I see it.
ReplyDeleteI am just having a little fun. ;-)
I tend to get a chuckle from that uniquely American way of thinking: namely all the other cars on the road are causing global warming.
... I'll just keep plugging for cooperation and I guess in the mean time head back to work. ;-)
Be well
My apologies, Thai, I was a careless reader.
ReplyDeleteThe zero sum issue is for YOU, Marcus.
And Thai, one mirror leads back to another...
ReplyDeletea uniquely AMERICAN way of seeing things ???
Personally I think we cooperate pretty well on this blog.
Your Nodame.
(Hint, hint, y'all, when you wake up from your hangover, take a peek at the Japanese series "Nodame Cantabile" download.
The Japanese are SO MUCH BETTER at TV than we are...)
Thai, Seems you like to talk "cooperation" when it comes to paying our way out of this mess but personal responsibility when talk about people's health and health care.
ReplyDeleteNo commiserate blame and responsible payback for the people and institutions that mired us into this mess? Sounds to me like socialize the losses privatize the profits, not cooperation.
Debra, "if John Q Farmer is bringing your food to you while loading up the soil with toxic assets then... is he PRODUCTIVE or DESTRUCTIVE ???"
ReplyDeleteName a farmer that is doing this. What toxic assets are you talking about?
What is going on with our financial institutions is analogous to bandits coming to your house and stealing your food, rather than being apart of the network that is supplying your food. But you're OK with this, we're all in the same boat, right? Bandits have to make a profit too right?
How's it working in Darfour? They all in the same boat, or are some dying while others profiting?
Marcus, you read what you want to read and nothing more. To this outsider, you are clearly trapped in a Moral matrix and don't even recognize its existence.
ReplyDeleteHere is an early Christmas present from me to you.
Regards
I agree with Marcus.
ReplyDeleteWhat we had is a clear case of theft and robbery. A select group of banksters paid politicians to create laws that only enrich them at the expense of productive members of the society.
Anybody who does not see this by now needs to gets his eyes (and head) checked.
Touche Greenie and fair enough-agreed.
ReplyDeleteThanks for the "gift" Thai. You amuse me, you know like a clown.
ReplyDeleteDebra, you wanna help me out here, I'm having a hard time ciphering Thai's erudition. He criticizes my point, Greenie agrees with my point, Thai agrees with Greenie, so Thai agrees with me? Help me with this complex logic Debra.
Marcus, don't look to me for help.
ReplyDeleteI'm out in Nodame Cantabile land and I don't have time to split hairs the way you would like.
And I HATE the blame game.
It consumes valuable ENERGY that could be put to use elsewhere.
Quite some time ago, Cottonbloggin put up a link to a ten page article about JUST HOW AGRI BIG BUSINESS IS DESTROYING OUR SOIL, and our future capacity to feed ourselves in OUR desire to turn a buck. And has been doing this for quite some time, moreover.
If you're a good boy, maybe Thai will stick in a link to it so you can BE INFORMED.
Back to Nodame Cantabile.
Sometimes it's too cynical and depressing here...
Come on Marcus don't get your panties in a twist. It is not that hard to decipher Thai's erudition. You should thank clowns like us. We ARE productive members of society. Clowns don't subscribe to the selfish meme permeating our society. We just want to amuse people and lighten their psychic load in these increasingly difficult times. So what if I USED to live under a bridge, I'm no troll. In fact, cooperation is one of the cardinal ethical principles of clownhood. I even pulled that knife out of your back. So sit back, enjoy life more, have a few laughs.
ReplyDeleteBozo
YES YES YES (from Ulysses, James Joyce, last chapter, Marcus...) Bozo.
ReplyDeleteWELCOME TO THIS BLOG.
I was starting to feel a little lonely...
All money pumps are primed and ready to go. Fannie/Freddy/FHA account for 80% of the current mortgage market. 3.5% down with the $8K (soon $15K) tax credit? No problemo! We're basically back to zero down loans. Stock market is in bubble mode, oil up, gold up...sorry, I just don't see deflation. China inceased their money supply by 28% on an annual basis. Chinese banks lend to anybody 'cos the Chinese government wants them too. Anywhere you look more money is injected into the economy, not just the US.
ReplyDeleteWe don't need hyper inflation to control our debt. A 10% per year inflation rate will do just fine.
Nobody is interested in a strong currency, not the US, not China, not Japan and not Europe. The holders of cash will learn a hard lesson. That includes the oil countries, China and Japan. They will threaten, bitch and moan but ultimately there's little they can do. Oil embargo? That will hurt them just as much as US. China is in a pickle as well. Where are they going to sell all their junk too? Their domestic market is not strong enough. They have to sell their stuff to somebody.
@Dink:
ReplyDeleteYou forgot Pakistan, Pakistan cannot feed itself, it is on eternal IMF support, the population is growing at 5% p/a and the natives are getting really pissed off that They never see any of that IMF money but plenty of NATO / US driveby shootings.
NATO is just one serious riot in Peshawar away from having to shoot their way out of Northern Afghanistan and then they must lick Medejevs boots for safe passage through the Russian -stan sattelite nations.
Soo many moving parts ...
Maybe I'm just a generalizer, but it seems to me that...
ReplyDeleteWhen you're the Emperor, you get to say WHAT is money, HOW MUCH it's worth, and what can be bought and sold with it. Everybody will politely agree BECAUSE... you're the emperor.
And when the Emperor has no clothes, people will continue pretending that the emperor is STILL the emperor, as long as nobody strong enough has yet come around to challenge that position, and to say that... the Emperor has no clothes.
But... the day that somebody big enough and strong enough comes around to challenge the Emperor's position, well then... the whole thing collapses, right ?
Personally, I am definitely attached to the democratic way of life (not currently visible in U.S. politics, by the way...), but I am not convinced that as a species we can pull it off, with our constant hankering for authority, ideals and people (when it is not gods...) to worship.
Debra:
ReplyDelete"And I HATE the blame game.
It consumes valuable ENERGY that could be put to use elsewhere."
This country flubbed the "blame game" when it attacked Iraq instead of focusing on the people that attacked us.
We don't "blame" and rectify the institutions and people that caused the financial fiasco, so it is happening again.
Not very ENERGY efficient eh Debra?
Enjoy your fantasy land tour with the insane clown posse, but I'd rather not repeat stupid (energy wasteful) behavior.
Enjoy your ea with Bozo
"One answer to that, that everyone has left out of the discussion is AFRICA"
ReplyDeleteand
"You forgot Pakistan, Pakistan cannot feed itself, it is on eternal IMF support"
Well, my best defense is a quote from The Big Lebowski:
"This is a very complicated case, Maude. You know, a lotta ins, lotta outs, lotta what-have-yous. And, uh, lotta strands to keep in my head, man. Lotta strands in old Duder's head. Luckily I'm adhering to a pretty strict, uh, drug regimen to keep my mind limber."
Limberly,
Dink
Thanks for reminding me/us, Dink, about the perils of Pakistan.
ReplyDeleteI raised the subject of the dark continent simply for the purpose of illustrating one substantial and significant coping mechanism that China has manufactured for itself. Pakistan, on the other hand, seems in no position to produce much of anything useful for itself, and given its particular volatile makeup that, dudester, is worrying indeed.
Just a note about Pakistan:
ReplyDeletePakistan has about 50m workers and its chief exports are rice and textiles. Its main trading partner is the US. In theory it can feed itself; same with India and China. The problem really is the disparity between rich and poor, in all three countries.
All three countries also have a potentially good working relationship with the US. The question is how to keep it on the good side. As someone rightly pointed out, China and India have been making investments in Africa, providing aid and technology and services.
From about 500 (earliest records) to 1800, this region from North Africa to Japan accounted for the majority of the world's capital, trade, resources, etc. The balance only shifted during the Hobsbawm's 'long 19th century', and it started shifting to the US after 1914 (although only a minority of the world's people noticed).
If the US collapses, the center of the world, after much strife and bloodshed, will shift back to the Indian Ocean and Eurasia.
You know, if we imported all the human shit in the world and all the manure in the world, and spread it on US farmland, we still wouldn't be getting enough nitrogen for our crops without artificial fertilisers.
ReplyDeleteIt's one of those reality things.