Surely the crash of the US economy has to be soon
wilsoniumite.com520 points by Wilsoniumite 4 days ago
520 points by Wilsoniumite 4 days ago
I feel like there's some credibility to 'this time it's different'
The US economy depends on the country's position of world hegemon - the US dollar is the world's main reserve currency, the US enforces international order and trade rules via its military strength, it dominates technology and culture through 'US defaultism'.
I dont think AI even factors in to this.
The US economy is priced for global reach - if it manages to lose that through a combination of credible competitors, and loss of goodwill - it's going to be in heaps of trouble.
The looming US debt is also a great question - a lot of economists have argued that since most US debt is good. It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.
Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue.
All said, I think if the US continues down the political path it currently seems to be pursuing, 'this time it's different' actually will be.
> It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.
Strangely enough, this is exactly the opposite of how it works. The dollars abroad tend to stay abroad, as either a more stable alternative to local currencies, or a reserve currency. Likewise, treasuries held abroad tend to stay there as reserves. This is how the US is able to run both a huge debt, and a huge trade deficit. If the dollars were being repatriated, the trade deficit would close, and the influx of money would cause hotter inflation. Same with treasuries, yields would spike as demand fell.
There are lots of second order effects there, good and bad, but, basically, those dollars not coming home has funded America for quite some time.
I, a foreign entity, have sold something to an american and now have 10 dollars and zero treasuries.
I purchase a treasury. I have zero product, zero dollars and one treasury.
At some point in future i have zero product, maybe 12 dollars and zero treasuries. Presumably i now either repeat the cycle or use my winnings to spend on us output.
GP’s version checks out, your assertion about dollars staying abroad doesnt track? What am i misunderstanding - How did these dollars get abroad, how did they repatriate to buy treasuries, how did a treasury become a reserve, how did the dollars still exist abroad after being exchanged for treasuries?
> Presumably i now either repeat the cycle or use my winnings to spend on us output.
What you are missing is that these dollars can be circulated indefinitely in the global economy without ever repatriating, because they are valuable and useful as actual currency. They may never come back to the US.
They also don't have to circulate - they can be used as collateral for debts.
Indeed, everyone should be familiar with the "eurodollar" system - it's critical to how the world economy works.
> I, a foreign entity, have sold something to an american and now have 10 dollars and zero treasuries.
Or you sold something to a non-American entity in a dollar-based market, eg. oil. The dollars do come from America to begin with, but once they get "out there" they work as a medium of exchange for whoever wants to use them for that purpose.
Which is why the US historically bombed any country that sold oil for other currencies, but now china is negotiating the petroyuan and it's working.
Interesting - The petroyuan was not on my radar at all.
https://ipr.blogs.ie.edu/2025/06/27/geopolitics-of-oil-how-c...: This article explores case studies such as Russia, Iran, and Venezuela, illustrating how the petroyuan has been implemented to bypass sanctions and reduce dependence on US financial systems.
It's ironic, isn't it? After going to war so many times to protect the petrodollar, the US deleted the petrodollar itself.
Because the world trades using US dollars. Country A needs to buy something from Country B. Country A needs to buy/get dollars to buy stuff from Country B. Country B will not accept anything but dollars or gold for its products because it also needs to buy other stuff like oil in dollars from other countries.
It could accept any credible currency if it was connected enough. Euros, yuan, rupees and yen aren't going anywhere for at least 20 years. Each one is a separate system and countries mostly connect to just one, which is USD, but that doesn't have to be the case forever.
India won't accept euros because it's not part of the ECB, not because it doesn't believe in their value. But India has accounts at US banks in dollars.
Banks do this, not countries. Most banks in the world have accounts at US banks to accept dollars with, they don't have accounts at eurozone banks to accept euros with, or Japanese banks to accept yen with. It doesn't matter in everyday practice because it's easy to exchange euros in eurozone banks or yen in yenzone banks with dollars in dollarzone banks. There's plenty of infrastructure for that. It matters in long–term economic trajectories because all those banks are holding US dollars and the US exports inflation to them and they're not holding euros and then ECB can't.
> Presumably i now either repeat the cycle
Most of the time this is exactly (foreign or not) institutions do.
Think about it, if the 10-dollar treasury is due and you got your money back, the US debt will go down by 10 dollars. However, in our reality, the total amount of US debt almost never goes down.
Of course some interest will be used in other ways, like spending on the US goods or staying as cash to provide liquidity. But at the end of the day, the most popular way to spend the money got from due treasuries is... to buy more treasuries.
> Strangely enough, this is exactly the opposite of how it works. The dollars abroad tend to stay abroad, as either a more stable alternative to local currencies, or a reserve currency.
I think you have it backwards. The US dollar can be handled as a more stable alternative only if it's actually stable. As soon as the US government starts to deteriorate goodwill and outright be hostile towards the world, not only does the US dolar lose its value as a stable alternative but foreign governments start to be motivated to dump their assets, which further tanks its value. In the past couple of weeks we started seeing countries outright dump their investments in US dolar to derisk their portfolio, and they did it at the tune of billions of dollars. You also started to see political pressure for foreign governments to demand their gold reserves are pulled out of the US, which means this pressure goes way beyond US dollars.
> I think you have it backwards.
I don't understand how your argument here goes against mine. If anything you're arguing that I am correct, but things are changing.
If dollars were being repatriated, but as investment into financial instruments and real estate instead of purchases of goods and services, then that would not affect the trade deficit, right?
I don't believe so. I don't think foreign equity and real estate purchases are counted in trade balance. Those assets never leave the US as exports.
> Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue.
Right now this is much more of a maybe, possibly, eventually, over a long enough time horizon.
As of the end of 2025, USD still made up 57% of foreign reserves vs 20% for the Euro and 3% for the Chinese renminbi. Nearly all commodities are still priced in USD and about 50% of trade invoicing is done in dollars, closer to 60% if you exclude the Eurozone. USD also makes up about 60% of SWIFT transactions.
So the demand is still there today and de-dollarization is not really a thing in aggregate as of January 2026, despite all of the events of the past year or so.
So if this time is different, I’m not seeing it yet.
The international "rules-based order" is a good idea when most nations play by the rules most of the time, and when the most powerful at least pretend to follow the same rules as everyone else.
A world order based on rules makes it possible to live at a much higher level of abstraction.
Abstractions like rule of law, democracy, government currencies and stock exchanges are intangible and imaginary. They're mostly just figments of collective belief. But these wispy and unreal ideas that everyone believes in make it possible for most people to live longer, healthier and less difficult lives.
The "rules-based order" was always partly mythical, but as long as everyone kept pretending, it mostly continued to function.
But when we devolve from the rules-based order to the old order of pure power and might-makes-right, kings and dictators, when there's no more collective belief that the rules apply to the rich and powerful, then the tower of abstractions collapses, and we're back to the cold, hard, brutal and difficult real world.
People will find out that life in the real world is a lot poorer and more miserable than life at the top of the tower of abstractions, even if your brokerage account appears to double.
I generally agree with your comment except the 'back to the real world' part. This is just the difference between a world with the gains that cooperation give verses a world with just the maximized minimum return that distrust leads to. A trusting world is the real world we have seen for decades. It is a real world we can choose to keep pushing for.
Who is the "we" who can choose? People training this from places like the USA and India have at least some modicum of choice. In China not so much.
Neither is 'real'. The power of might depends on belief just as much as the power of rules. You need a whole lot of compliance, even when forced by fear and terror, to just keep up a police state. The belief consists of where people think other people assign authority to, at large. But that can be just as brittle as a meme stock if the time is right.
Social reality is always constructed. No single construction is more real than any other.
A system that is closer to physical, tangible reality is more "real" than one built on many layers of concepts, beliefs and ideas.
Just as "real assets" like buildings, machinery and metals are more "real" than abstract assets.
Abstract assets like shares of a corporation, intellectual property, cash in a bank account, promises to deliver a commodity in the future, and other intangible concepts only exist because we collectively believe they exist and trust each other to follow rules.
There are real weapons and prisons at the bottom of this stack of abstractions to force people to comply, but it's mostly collective belief, trust, culture and tradition.
When we devolve from a rules-based order to might-makes-right, those layers of abstraction between us and the weapons evaporate, and ordinary people like moms and ER nurses get gunned down in broad daylight by agents of the state asserting raw power.
Abstractions like law and due process evaporate, and the "real world" underneath is nasty, brutish and short.
"rules-based order to might-makes-right"
These are the same. They are the same because someone has to enforce the rules. The reason why this entire discussion is so obtuse is because you refuse to accept this. If I was wrong and they were different, you wouldn't treat the US and others (say China) by the different moral standards. To bring this back to an individual level, this is the same as saying police don't deter crime. You wish these two concepts were different so you let your political bias blind you to reality. That doesn't effect reality though. Police do deter crime and whoever (the US) enforces the rules based order has to do so (from time to time) kinetically.
> you refuse ... you wouldn't ... you wish ... you let your political bias blind you ...
You don't know anything about me, but the strawman you're describing sounds like a real dipshit.
> Abstractions like rule of law, democracy, government currencies and stock exchanges are intangible and imaginary. They're mostly just figments of collective belief.
> But when we devolve from the rules-based order to the old order of pure power and might-makes-right, kings and dictators, when there's no more collective belief that the rules apply to the rich and powerful, then the tower of abstractions collapses, and we're back to the cold, hard, brutal and difficult real world.
Many have absorbed and believe the argument of the might-makes-right crowd that their vision is 'real' and their enemies' vision is 'imaginary'. Unless people believe in what they seek, they are lost.
There's nothing imaginary about it; that theory is paper thin and doesn't survive simple examination. Obviously, humans are social animals that live in groups, have powerful intellects, and therefore have tremendous ability to cooperate and work together toward greater good; we've done it many, many times. Freedom and democracy have appealed powerfully to people worldwide, in a tremendously wide variety of cultures. That model was created by people who had experienced WWI and WWII; they knew more of your 'reality' than probably you or I ever will, and with that knowledge and experience they created this order.
And the greater good long predates that; religions and similar ethical codes based on the greater good long predate modern democracy and the rules-based order. Rules-based orders predate it. The Gospels in the New Testament are an easy, very familiar example, from 2,000 years ago (and a significant basis of modern freedom and democracy). Similar is true for abstractions like law, government, justice, etc.
We all are biologically the same, essentially, as the best of humanity and the worst - both are in all of us. It's our choice, our moral choice, what we do. That is also a fundamental that long predates the post-war order, democracy, the Englightenment, etc. Inevitability is a cheap tactic long used by those whose ideas are undesireable and don't withstand scrutiny.
Our choice is easier than those who survived WWII, and their predecessors. Our ancestors gave us the tools, the institutions, etc. They had to build them from nothing for a skeptical world.
Religion isn’t based on “the greater good”, it’s always explicitly about the will of the god or gods involved and obeying or appeasing them.
About religion, I don't think we can say "always" or anything near to that.
I agree that religions commonly use the god/god's will as the reason, but I don't think we should take that at face value. It's the argument to trump all others - rulers often claim to be chosen by the will of the supernatural - but not the reason the rule was made, which is a product of the cultures involved.
And humans often come to the same ethical conclusions: The rules against murder and rape, the priority on justice and fairness, as examples, are universal across cultures regardless of religion (look up 'cultural univerals').
The source of truth in fascism is not popular support or inquiry, thus they always need to channel some privileged connection to reality, or claim to voice the true will of the people and authentically represents the pure will of the nation.
Its a farce, of course, but one that can sometimes muster enough support to keep the signs in the shop with just a bit of intimidation and violence to back it up.
The US has played by different rules, might makes right, in the western hemisphere for a long time.
Screwing around with Greenland shit, on the other hand, seems riskier.
In practice the US could already do whatever it wanted in Greenland/Canada etc. The options for the motivation behind the theatrics I see. 1. Instill fear in the vassals->support for militarization rises there->they become more useable as proxies against RF/China 2. Just another Trump silliness
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Buddy if you think financial crashes were bad today, you should see what happens when banking is not regulated (great depression). Or, if you think war is bad today, you should see what happens when the world becomes multipolar and countries start carving up the world for territory (WWII).
Like please, read a history book.
I'm sure I agree with you that there are many problems with this system but life without it can get so much worse. The green agenda? 4G? That's the worst thing you can imagine?
What do you propose instead? Why don't the things that you condemn in "liberal democracy" happen there?
Actually, what you're listing above is just another set of beautiful (to you) abstractions. No, "banksters" are not "100% parasitical". The percent is definitely less than 100. But, you know, as they say: the devil is in the details.
Definitely less than 100? What do you know about it? How is what they've accomplished not monstrous crime so total, and we haven't even properly named it? It's systematized, bureaucratized, anti-human. "Clown World" is the meme, but that is not sufficient.
The rules based order is mostly a fabrication of recent history. Perhaps between the fall of the Soviet Union, China becoming more open, and the general peace and prosperity it seemed like it existed.
Politics between countries has always been around interests. Countries have no interest in giving up their sovereignty. They may pretend to respect these "rules" when it suits them and then ignore them when it doesn't. Everyone is focused on how "bad" the US is but a) the US has always more or less done whatever it wants b) Russia and China (and many others) have never even pretended to play or accept these "rules".
Canada's Carney whines about "international order" when just a few years ago China simply abducted Canadians in response to the supposed "orderly" arrest of the Huawei CFO to be extradited to the US. So Canada basically abducts the CFO of a major Chinese company and China abducts Canadians in retaliation and that's a rules based order to who exactly? And we can put together an endless list of an endless number of countries. So when exactly was there ever a rules based order except as a tool for countries to bully each other and for the poorer dictator led countries to try and get a seat at the table because they can vote in the UN general assembly.
> Russia and China (and many others) have never even pretended to play or accept these "rules".
This false. They have pretended to play by the rules, and when breaking them, to at least manufacture some pretext, or to deny it was a state activity at all.
One example I can give you is that when invading Czechoslovakia in 1968, the Soviet Union convinced a few Czechoslovak politicians to write a letter inviting the forces for "brotherly help", thus manufacturing a case that it's not really an invasion. They didn't have to do it, the force differential was overwhelming, but they did it because they could point at the letter on international stage.
All this may seem a bit pointless but binding them in international structures brought interesting fruit in the wake of Helsinki conference on human rights. After that they were forced to at least somewhat follow the signed documents which lead to significantly better conditions to dissidents behind the Iron Curtain. And there are many examples like this, when pointing at international rules actually made things better. So let's not throw that away.
Russia fabricated an attack on Russia by Ukraine before invading Ukraine. So this is still occurring.
Possibly, though that was perhaps more for internal reasons, as at the time it was afaik illegal to start an attacking war per Russian law.
And you just fabricated this whole thing. By the way, if that was an attack by Ukraine on Russia, then you just accepted that Donbass is part of Russia, and has been for some time.
>> Canada's Carney whines about "international order" when just a few years ago ...
> They have pretended to play by the rules
@YZF is unwittingly agreeing with Carney. The rules-based order is partially a fiction. Relevant snips from Carney's Davos speech.
"The system's power comes not from its truth, but from everyone's willingness to perform as if it were true, and its fragility comes from the same source."
"For decades, countries like Canada prospered under what we called the rules-based international order. We joined its institutions, we praised its principles, we benefited from its predictability. And because of that, we could pursue values-based foreign policies under its protection."
"We knew the story of the international rules-based order was partially false ..."
"This fiction was useful, and American hegemony, in particular, helped provide public goods, open sea lanes, a stable financial system, collective security and support for frameworks for resolving disputes."
When the US invaded Iraq, it at least pretended it was following the rules. It appealed to the UN for approval, it justified the invasion in the name of freedom and democracy.
It was all bullshit, but at least the US sustained the myth of a system of rules and a moral order.
But the US no longer pretends. It invades Venezuela and publicly states it was all about oil.
So even the pretense is gone now, and the benefits that came from pretending are gone. That's the "rupture" Carney is talking about, that sustaining the myths is not longer useful, so it's time to stop pretending.
I'm well aware Carney also says it never really existed. So I don't think there's an "unwittingly" here. My issue with Carney is that he's whining about it.
He's the first world leader I've seen who publicly tells other leaders to stop complaining that the false thing is false, that pretending the false thing is true hurts everyone except the hegemon at the top. Taking concrete action to build a replacement system it is kinda the opposite of whining.
He is simply negotiating with the US. That's it pretty much. He's trying to get the best deal for Canada. That's always been how things work. It's just politics. There is really nothing new here other than perhaps the more aggressive and public approach of the Americans. What used to happen in closed rooms is just getting a bit more light and the current US administration thinks that it can/deserves to get a larger share of the pie.
Incorrect. The rules based order was first attempted after the first world war and then created after the second one. These are lessen that have been bought with blood. Lots of blood. Megaliters of it. The incredible stupidity of throwing that away is absolutely disgusting.
The "rules-based international order" was a fiction popularized by US policy makers who wanted to quietly substitute it for international law, so they could violate said laws, while still vaguely gesturing at moral authority.
International law was and is also a fiction. We have various conventions and agreements.
https://en.wikipedia.org/wiki/International_law
"In the 1940s through the 1970s, the dissolution of the Soviet bloc and decolonisation across the world resulted in the establishment of scores of newly independent states.[67] As these former colonies became their own states, they adopted European views of international law.[68] A flurry of institutions, ranging from the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (World Bank) to the World Health Organization furthered the development of a multilateralist approach as states chose to compromise on sovereignty to benefit from international cooperation.[69] Since the 1980s, there has been an increasing focus on the phenomenon of globalisation and on protecting human rights on the global scale, particularly when minorities or indigenous communities are involved, as concerns are raised that globalisation may be increasing inequality in the international legal system.[70]"
Laws aren't fictitious just because people/countries break them. No one writes a law thinking "that settles that, no more embezzling." Laws simply tell you how that system works: you embezzle, FBI arrests you, you get tried, etc.
Also the US always made a big deal about not joining various treaties, with their reasoning explicitly being "we actually plan to do a lot of things that would violate that treaty." In that sense, that shows the US actually had respect for those institutions.
Also, the west benefited from this arrangement. Most western countries could benefit from the rules based order, and when they needed a little pump, the US broke some rules and brought home a treat for the home team. You might argue this undermines the whole enterprise, but my counterargument is this is the longest period of relative peace and prosperity humankind has ever experienced, so although it wasn't perfect, it was a huge improvement.
Ofcourse people break laws. But they are enforceable and the authorities have absolute power to enforce them. Putin can get away doing whatever the f he wants but nobody in Canada can get away with breaking any law they want whenever they feel like it, for example. That's the difference between the very real Canadian laws over Canadians and "international law" over nobody. Now Canada can pass a law that is in line with some international agreement, but it's still the law of Canada. Other laws don't apply in Canada. Canadian laws don't apply in other countries. And that's about it. If we had world elections, world government, world police, world courts and world laws, with all countries giving up their sovereignty to those institutions then we'd have "international law". Until then we don't.