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End Of Empire - The 'De-Dollarization' Chart That China And Russia Are Banking On

Tyler Durden's picture




 

History did not end with the Cold War and, as Mark Twain put it, whilst history doesn’t repeat it often rhymes. As Alexander, Rome and Britain fell from their positions of absolute global dominance, so too has the US begun to slip. America’s global economic dominance has been declining since 1998, well before the Global Financial Crisis. A large part of this decline has actually had little to do with the actions of the US but rather with the unraveling of a century’s long economic anomaly. China has begun to return to the position in the global economy it occupied for millenia before the industrial revolution. Just as the dollar emerged to global reserve currency status as its economic might grew, so the chart below suggests the increasing push for de-dollarization across the 'rest of the isolated world' may be a smart bet...

 

 

As Deutsche Bank's Jim Reid explains,

In 1950 China’s share of the world’s population was 29%, its share of world economic output (on a PPP basis) was about 5% (Figure 98). By contrast the US was almost the reverse, with 8% of the world’s population the US commanded 28% of its economic output.

 

By 2008, China’s huge, centuries-long economic underperformance was well down the path of being overcome (Figure 97).

 

Based on current trends China’s economy will overtake America’s in purchasing power terms within the next few years. The US is now no longer the world’s sole economic superpower and indeed its share of world output (on a PPP basis) has slipped below the 20% level which we have seen was a useful sign historically of a single dominant economic superpower. In economic terms we already live in a bipolar world. Between them the US and China today control over a third of world output (on a PPP basis).

However as we have already highlighted, the relative size of a nation’s economy is not the only determinant of superpower status. There is a “geopolitical” multiplier that must be accounted for which can allow nations to outperform or underperform their economic power on the global geopolitical stage. We have discussed already how first the unwillingness of the US to engage with the rest of the world before WWII meant that on the world stage the US was not a superpower inspite of its huge economic advantage, and second how the ability and willingness of the USSR to sacrifice other goals in an effort to secure its superpower status allowed it to compete with the US for geopolitical power despite its much smaller economy. Looking at the world today it could be argued that the US continues to enjoy an outsized influence compared to the relative size of its economy, whilst geopolitically China underperforms its economy. To use the term we have developed through this piece, the US has a geopolitical multiplier greater then 1, whilst China’s is less than 1. Why?

On the US side, almost a century of economic dominance and half a century of superpower status has left its impression on the world. Power leaves a legacy. First the USA’s “soft power” remains largely unrivalled - US culture is ubiquitous (think McDonald’s, Hollywood and Ivy League universities), the biggest US businesses are global giants and America’s list of allies is unparalleled. Second the US President continues to carry the title of “leader of the free world” and America has remained committed to defending this world. Although more recently questions have begun to be asked (more later), the US has remained the only nation willing to lead intervention in an effort to support this “free world” order and its levels of military spending continues to dwarf that of the rest of the world. US military spending accounts for over 35% of the world total and her Allies make up another 25%.

In terms of Chinese geopolitical underperformance there are a number of plausible reasons why China continues to underperform its economy on the global stage. First and foremost is its list of priorities. China remains committed to domestic growth above all other concerns as, despite its recent progress, millions of China’s citizens continue to live in poverty. Thus so far it has been unwilling to sacrifice economic growth on the altar of global power. This is probably best reflected in the relative size of its military budget which in dollar terms is less than a third the size of Americas. Second China has not got the same level of soft power that the US wields. Chinese-style communism has not had the seductive draw that Soviet communism had and to date the rise of China has generally scared its neighbors rather then made allies of them. These factors probably help explain why in a geopolitical sense the US has by and large appeared to remain the world’s sole superpower and so, using the model of superpower dominance we have discussed, helps explain why global geopolitical tensions had remained relatively low, at least before the global financial crisis.

However there is a case to be made that this situation has changed in the past five or so years. Not only has China’s economy continued to grow far faster than America’s, perhaps more importantly it can be argued that the USA’s geopolitical multiplier has begun to fall, reducing the dominance of the US on the world stage and moving the world towards the type of balanced division of geopolitical power it has not seen since the end of the Cold War. If this is the case then it could be that the world is in the midst of a structural, not temporary, increase in geopolitical tensions.

Why do we suggest that the USA’s geopolitical multiplier, its ability to turn relative economic strength into geopolitical power, might be falling? Whilst there are many reasons why this might be the case, three stand out. First, since the GFC the US (and the West in general) has lost confidence. The apparent failure of laissez faire economics that the GFC represented combined with the USA’s weak economic recovery has left America less sure then it has been in at least a generation of its free market, democratic national model. As this uncertainty has grown, so America’s willingness to argue that the rest of the world should follow America’s model has waned. Second the Afghanistan and in particular the Iraq War have left the US far less willing to intervene across the world. One of the major lessons that the US seems to have taken away from the Iraq war is that it cannot solve all of the world’s problems and in fact will often make them worse. Third, the rise of intractable partisan politics in the US has left the American people with ever less faith in their government.

The net result of these changes in sentiment of the US people and its government has been the diminishment of its global geopolitical dominance. The events of the past 5+ years have underlined this. Looking at the four major geopolitical issues of this period we raised earlier – the outcome of the Arab Spring (most notably in Syria), the rise of the Islamic State, Russia’s actions in Ukraine and China’s regional maritime muscle flexing – the US has to a large extent been shown to be ineffective. President Obama walked away from his “red line” over the Syrian government’s use of chemical weapons. The US has ruled out significant intervention in Northern Iraq against the Islamic State.

America has been unable to restrain Pro-Russian action in Ukraine and took a long time (and the impetus of a tragic civilian airplane disaster) to persuade her allies to bring in what would generally be considered a “first response” to such a situation - economic sanctions. And so far the US has had no strategic response to China’s actions in the East and South China seas. Importantly these policy choices don’t necessarily just reflect the choice of the current Administration but rather they reflect the mood of the US people. In Pew’s 2013 poll on America’s Place in the World, a majority (52%) agreed that “the US should mind its own business internationally and let other countries get along the best they can on their own”. This percentage compares to a read of 20% in 1964, 41% in 1995 and 30% in 2002.

The geopolitical consequences of the diminishment of US global dominance

Each of these events has shown America’s unwillingness to take strong foreign policy action and certainly underlined its unwillingness to use force. America’s allies and enemies have looked on and taken note. America’s geopolitical multiplier has declined even as its relative economic strength has waned and the US has slipped backwards towards the rest of the pack of major world powers in terms of relative geopolitical power.

Throughout this piece we have looked to see what we can learn from history in trying to understand changes in the level of structural geopolitical tension in the world. We have in general argued that the broad sweep of world history suggests that the major driver of significant structural change in global levels of geopolitical tension has been the relative rise and fall of the world’s leading power. We have also suggested a number of important caveats to this view – chiefly that a dominant superpower only provides for structurally lower geopolitical tensions when it is itself internally stable. We have also sought to distinguish between a nation being an “economic” superpower (which we can broadly measure directly) and being a genuine “geopolitical” superpower (which we can’t). On this subject we have hypothesised that the level of a nations geopolitical power can roughly be estimated multiplying its relative economic power by a “geopolitical multiplier” which reflects that nations ability to amass and project force, its willingness to intervene in the affairs of the world and the extent of its “soft power”.

Given this analysis it strikes us that today we are in the midst of an extremely rare historical event – the relative decline of a world superpower. US global geopolitical dominance is on the wane – driven on the one hand by the historic rise of China from its disproportionate lows and on the other to a host of internal US issues, from a crisis of American confidence in the core of the US economic model to general war weariness. This is not to say that America’s position in the global system is on the brink of collapse. Far from it. The US will remain the greater of just two great powers for the foreseeable future as its “geopolitical multiplier”, boosted by its deeply embedded soft power and continuing commitment to the “free world” order, allows it to outperform its relative economic power. As America’s current Defence Secretary, Chuck Hagel, said earlier this year, “We (the USA) do not engage in the world because we are a great nation. Rather, we are a great nation because we engage in the world.” Nevertheless the US is losing its place as the sole dominant geopolitical superpower and history suggests that during such shifts geopolitical tensions structurally increase. If this analysis is correct then the rise in the past five years, and most notably in the past year, of global geopolitical tensions may well prove not temporary but structural to the current world system and the world may continue to experience more frequent, longer lasting and more far reaching geopolitical stresses than it has in at least two decades. If this is indeed the case then markets might have to price in a higher degree of geopolitical risk in the years ahead.

 

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Fri, 09/12/2014 - 21:19 | 5212953 freak of nature
freak of nature's picture

War is coming

Fri, 09/12/2014 - 21:23 | 5212963 Escrava Isaura
Escrava Isaura's picture

To where?

 

Fri, 09/12/2014 - 21:25 | 5212969 freak of nature
freak of nature's picture

Take a globe, spin, then throw dart. Question is, what is good for?

Fri, 09/12/2014 - 21:31 | 5212989 Xibalba
Xibalba's picture

USA manufactures financial derivatives and weapons of war.  China makes everything else. 

Fri, 09/12/2014 - 21:46 | 5213024 InjectTheVenom
InjectTheVenom's picture

You didn't de-dollarize that !

Fri, 09/12/2014 - 22:00 | 5213054 X.inf.capt
X.inf.capt's picture

OMG!

they're probably going to pull it off

knocking out the USD as a reserve currecy...

i guess its time to go long on can goods and.....{gremlins}

Fri, 09/12/2014 - 22:17 | 5213093 Harlequin001
Harlequin001's picture

Well I got as far as this...

'Second the US President continues to carry the title of “leader of the free world” and America has remained committed to defending this world. Although more recently questions have begun to be asked (more later), the US has remained the only nation willing to lead intervention in an effort to support this “free world” order...

What total, complete and utter fucking drivel...

Fri, 09/12/2014 - 22:48 | 5213178 p00k1e
p00k1e's picture

"gremlins"

 

DUENDE REAL! en Santa fe-Argentina 2014 http://www.youtube.com/watch?feature=player_embedded&v=rrnU0-Gsczs
Fri, 09/12/2014 - 21:46 | 5213027 AL_SWEARENGEN
AL_SWEARENGEN's picture

Some cocksuckerz can't go near a cliff without jumping off.

Fri, 09/12/2014 - 21:47 | 5213028 SafelyGraze
SafelyGraze's picture

looks promising for yuan

for ruble, not so much

 

Fri, 09/12/2014 - 22:32 | 5213137 hobopants
hobopants's picture

I wonder what these charts will look like after their economy takes a dump? Population is a liability these days not an asset (just look at the US) there was a reason (besides british opium) that China fell from their top dog status after the industrial rev. Machines replaced people, and machines will continue to do so into the future. As far as their miraculous growth goes it was all malinvestment and we all know what Mises has to say about that.

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

Almost a cliche at this point but still very true, the whole worlds in a toliet and that very much includes China as much as it does the US and Europe.

Sat, 09/13/2014 - 00:03 | 5213330 Mr.Sono
Mr.Sono's picture

It's not there century. One day it will, once the drunk generation will pass

Fri, 09/12/2014 - 21:51 | 5213033 MalteseFalcon
MalteseFalcon's picture

Don't bother with the dart.  It's the whole globe.

Fri, 09/12/2014 - 22:25 | 5213119 disabledvet
disabledvet's picture

And Mars too.

"This is America. We think big." This world ain't big enough for another...so we take an entire Planet too just to prove our point.

Plus the Moon "for shits and giggles."

Sat, 09/13/2014 - 00:09 | 5213344 Malachi Constant
Malachi Constant's picture

To the planet.

Fri, 09/12/2014 - 21:55 | 5213047 DOGGONE
DOGGONE's picture

IF you are concerned about (more) war breaking out, you should
inform people that they have their heads up their asses,
"The Public Be Suckered"
http://patrick.net/forum/?p=1223928
and that their judgement may well be faulty.

Fri, 09/12/2014 - 21:58 | 5213051 DOGGONE
DOGGONE's picture

IF you are concerned about (more) war breaking out, you should ...
... inform people that they have their heads up their asses,
"The Public Be Suckered"
http://patrick.net/forum/?p=1223928
and that their judgement may well be faulty.

Fri, 09/12/2014 - 23:10 | 5213238 lester1
lester1's picture

Notice how China's big rise started when Reagan took office? Do you think that might have something to do with Reagan's de-industrialization of the USA?

Thats why I really hate Ronald Reagan!

Fri, 09/12/2014 - 21:26 | 5212972 messymerry
messymerry's picture

**** OFF TOPIC ****

I know this is off topic, but I felt you all need to be aware of this:

The CBC is warning Canadians about a U.S. program where America law enforcement officers — from federal agents to state troopers right down to sheriffs in one-street backwaters — are operating a vast, co-ordinated scheme to grab as much of the public's cash as they can through seizure laws.

http://beta.slashdot.org/story/207105

Protect yourselves and respond accordingly...

Fri, 09/12/2014 - 21:30 | 5212984 NoDebt
NoDebt's picture

They work for the government (on various levels).  Governments at all levels are out of money.  They will take yours, if given the slightest chance.

Fri, 09/12/2014 - 22:52 | 5213188 Kirk2NCC1701
Kirk2NCC1701's picture

Saw the same thing on the CBC site.

It's not your parents' America any more.  Turning into a Banana Republic Par Excellence.  Sorry to say.

http://www.cbc.ca/news/world/american-shakedown-police-won-t-charge-you-...

Sat, 09/13/2014 - 00:00 | 5213324 401K of Dooom
401K of Dooom's picture

Oh ha ha ha ha ha ha ha ha ha ha ha ha, is this the same CBC that cheers on the Liberal party of Canada?  I used to watch CBC and couldn't believe how the Canucks were brainwashed!  When the 1989 free trade agreement was signed, CBC proclaimed that America would take away all of Canada's jobs!  I saw and heard the whole thing on the show "Midday".  Yep the same show with Valerie Pringle, Brent Bambury and Ralph Ben Merguie.  At least canada knows how to create interesting names and put them on T.V.

Sat, 09/13/2014 - 17:25 | 5214508 messymerry
messymerry's picture

I'm not endorsing CBC here. I'm merely pointing out that our highway patrolmen have morphed into highwaymen. Nothing more.

I'm sick of the justice department getting a pass.

Sat, 09/13/2014 - 11:09 | 5213871 matrix2012
matrix2012's picture

American shakedown: Police won't charge you, but they'll grab your money - World - CBC News

http://www.cbc.ca/news/world/american-shakedown-police-won-t-charge-you-...

 

edit: oops sorry, Kirk posted it already ;)

Fri, 09/12/2014 - 21:37 | 5213002 BaghdadBob
BaghdadBob's picture

In terms of gold ownership/procurement (if legends of it's understated collection/holdings are true) then China already is (Technically) the world's largest economy. On that scale alone, I would suggest that the US is far from second place. It would be well down the list...

Fri, 09/12/2014 - 21:48 | 5213031 Ghostdog
Ghostdog's picture

I just dont see China as a sustainable domestic economy until 2025+ and that is if EVERYTHING goes perfect. A meltdown here (which is assured at some point) will inflict much more pain on them and when you have a trillion of unhappy people... I think they can easily fall back to their tribal roots and implode and then see the bloodshed. Time will tell

Fri, 09/12/2014 - 22:07 | 5213072 BaghdadBob
BaghdadBob's picture

Right.

Fri, 09/12/2014 - 22:05 | 5213034 himaroid
himaroid's picture

The dollar will swoop up much faster than china did on that chart. This is the internet age. Liftoff about now.

 

P.S. Don't be angry. Precious will be cheaper. 

Fri, 09/12/2014 - 22:09 | 5213075 BaghdadBob
BaghdadBob's picture

Meth, Heroin or LSD?

Fri, 09/12/2014 - 22:10 | 5213077 himaroid
himaroid's picture

Deflation first. THEN hyper inflation.

Coke.

Sat, 09/13/2014 - 00:40 | 5213398 MKD
MKD's picture

If coke and hookers stay the same price then bring on hyperinflation

Fri, 09/12/2014 - 21:51 | 5213035 ekm1
ekm1's picture

Last sentence of the article:

"If this is indeed the case then markets might have to price in a higher degree of geopolitical risk in the years ahead."

 

Now, a question to the writer:

In what currency are the markets going to be priced at as unit of account if USD is no longer world currency?

Fri, 09/12/2014 - 22:00 | 5213055 philipat
philipat's picture

Gold....In other words, according to JPM, real money.

Fri, 09/12/2014 - 22:01 | 5213059 ekm1
ekm1's picture

So, you are saying that in case of trade imbalance China will ship gold to ...let's say.........Ethiopia to setlle?

Fri, 09/12/2014 - 22:05 | 5213069 sleigher
sleigher's picture

Would they have to ship physical gold?  What about this gold exchange?  Will countries like Ethopia that already look to China for increased trade and growth not be willing to use an exchange like that to settle trade deficits?  Maybe I don't know what I am talking about.  I am just asking.  Global trade is not something I know much about.

Fri, 09/12/2014 - 22:16 | 5213091 ekm1
ekm1's picture

everybody will pull a Nixon. Nobody wil ship gold

Fri, 09/12/2014 - 22:29 | 5213132 sleigher
sleigher's picture

I kinda meant if they deposit some there already and they can use it between them to settle things.  But yeah, Nixon, people don't like to spend money when they have it.  Only when they don't...

Fri, 09/12/2014 - 23:06 | 5213222 Kirk2NCC1701
Kirk2NCC1701's picture

Don't be obtuse.  Gold is what is and will be used to index a country's currency to their gold supply or supply of Precious Assets (Carbon Fuels).  They will settle in paper money (IOUs) or in Precious Assets or other Assets.

Sat, 09/13/2014 - 00:04 | 5213338 orez65
orez65's picture

Nations exchange goods and services. Trade deficits are settled in gold. In a real world.

Fri, 09/12/2014 - 22:16 | 5213086 Harbanger
Harbanger's picture

I think the oligarchs will be replacing the dollar with SDRs. Or Gold backed Yuan or both.

Fri, 09/12/2014 - 22:17 | 5213092 ekm1
ekm1's picture

That assumes a world government.

 

That is absolutely ultra impossible. Humans do not get along that well to create a world government

Not gonna happen

Fri, 09/12/2014 - 22:23 | 5213107 Harbanger
Harbanger's picture

Yeah but the global banking cabal gets along just fine.  I think Markets and trade will force countries to go along with the plan, IMHO.

Fri, 09/12/2014 - 22:24 | 5213112 ekm1
ekm1's picture

No they don't get along at all

Putin killed or threated to death or expropriated all russian oligarchs. Now he owns all of them.

 

It is unusual that humans get along for long time, particularly ultra elite

Fri, 09/12/2014 - 22:28 | 5213127 disabledvet
disabledvet's picture

I'm assuming "inter planetary government" actually.

Fri, 09/12/2014 - 22:41 | 5213165 Anusocracy
Anusocracy's picture

There isn't a suitable outgroup threat that will cause the majority of the world's population to coalesce into one ingroup.

Now that Anthropogenic Global Warming has run out steam.

I have thought a lot about this subject. There is a practical way of forming a World Government in a fairly short period of time.

Sat, 09/13/2014 - 05:52 | 5213606 edotabin
edotabin's picture

Alien invasion?

Sat, 09/13/2014 - 06:57 | 5213628 froze25
froze25's picture

That's pRobably what it would take. 

Sat, 09/13/2014 - 15:47 | 5214313 Anusocracy
Anusocracy's picture

Not likely.

My thinking involves earthbound activities only and doesn't include war.

Sat, 09/13/2014 - 13:48 | 5214147 Totentänzerlied
Totentänzerlied's picture

"That assumes a world government."

No it doesn't, unless by world government you mean IMF+BIS+World Bank, which already exist, and of which Russia and China are enthusiastic members who have both expressed approval of the SDR system*.

*Because it is the best currently possible way of replacing the dollar as WRC.

Also, adoption of the SDR system does not mean all trade will immediately start to be settled in SDR units, or even priced in SDR units.

Fri, 09/12/2014 - 22:17 | 5213096 bonin006
bonin006's picture

Why not? Iran, and Turkey (at least) were already doing it to bypass USSA sanctions on Iran.

Fri, 09/12/2014 - 22:18 | 5213097 ekm1
ekm1's picture

That is barter. Energy for finished goods

Fri, 09/12/2014 - 23:01 | 5213201 Kirk2NCC1701
Kirk2NCC1701's picture

ekm1, do you pay attention to your own text?  You asked in what currency it was going to be priced, not settled. 

The answer for 'pricing' was and always should be Gold.  Settling is a completely different matter and different debate.

Sat, 09/13/2014 - 11:01 | 5213866 ekm1
ekm1's picture

Yes as far as 'priced'. How about 'settled''?

Sat, 09/13/2014 - 17:30 | 5214522 messymerry
messymerry's picture

No, they will send gold backed yuan. A lot better than hot air backed dollars...

Fri, 09/12/2014 - 22:21 | 5213106 ekm1
ekm1's picture

My point is that a financial system is not possible if there is no world currency, which was the case in 1930s

 

Then gold becomes de facto world reserve.

Issue is that gold is hoarded too much and not much is available to be passed around as reserve.

 

It is basically world chaos. Local trade. Death of globalization. Barter

Fri, 09/12/2014 - 22:30 | 5213134 J Pancreas
J Pancreas's picture

Cant remember which book but that was one of the four possible outcomes Jim Rickards wrote about happening (chaos) with the currency wars turning hot. Thats my vote as well assuming regional reserve currencies do not pass muster.

Sat, 09/13/2014 - 09:19 | 5213724 AGoldhamster
AGoldhamster's picture

I can't await that to happen. Many jobs would come back to the West from the East. And some of those mega parasites would be thrown under the bus.

Aside of the fact, that there will always be ways to trade. Gold, diamonds, oil, Pounds, Euros, Rubbles, Yuan, Francs, ... whatever suits best the individual case.

Or did mother earth stop turning around the sun in 1930?

 

I think 90% of these discussions here are just for "entertainment" - to fill time and space. Why not.

Sat, 09/13/2014 - 11:01 | 5213863 ekm1
ekm1's picture

You and I do not make decisions affecting world affairs.

Hence everything is entertainment

Sat, 09/13/2014 - 13:25 | 5214116 shitco.in
shitco.in's picture

Denominated in Bitcoin.  Overstock is already starting to explore trading their shares on counterparty: http://www.wired.com/2014/07/overstock-and-cryptocurrency/

Fri, 09/12/2014 - 22:01 | 5213061 falconflight
falconflight's picture

I don't know if the decline of the US is temporary or not, despite its failure to abide by certain economic principals.  If the US substanitively fails, most of the developed nations are going down as well.  Those nations whom can muster the will to project power beyond their borders are likely the ones whose population are used to sacrifice if not degradation.  

Fri, 09/12/2014 - 22:18 | 5213088 7againstThebes
7againstThebes's picture

Yes,  the power of the USA in the world is diminished.  But the reason is not because the goverment in Washington failed to respond to "challanges" in places like Syria.

    The reason is because it did respond, and gin up senseless, hideously expensive wars.  

Stupidity -- or is it treason [think: Israel] --- does have its costs.

Fri, 09/12/2014 - 23:43 | 5213300 TheReplacement
TheReplacement's picture

Let us be clear and take responsibility.  Israel did not do anything here.  Americans did this to America.  They are traitors.  "We the people" gave them the power and approval.  The fault lies at home.

Sat, 09/13/2014 - 11:33 | 5213912 matrix2012
matrix2012's picture

"Let us be clear and take responsibility.  Israel did not do anything here.  Americans did this to America.  They are traitors.  "We the people" gave them the power and approval.  The fault lies at home."

 

How about those DUAL-CITIZENSHIP holders in various govt posts at decision maker levels?

Some people may be simply telling us that it's a pure coincidence that most of the 2nd citizenship go to a particular Tribe,,,

it sounds the odds of life is perplexing...

Sat, 09/13/2014 - 09:26 | 5213737 ndree
ndree's picture

"Challenges" it created ITSELF, without thorough forethought of consequences and ramifications, just like in Ukraine. Then when shxt hits the fan, they stand afar and pontificate, play the innocent and indignant, all the while pulling the strings behind the scenes.

Fri, 09/12/2014 - 22:18 | 5213095 Ginsengbull
Ginsengbull's picture

America's decline coincides with the civil rights movement.

Fri, 09/12/2014 - 22:20 | 5213100 Tom Green Swedish
Tom Green Swedish's picture

You are saying a fixed communist economy is going to get ahead of a capitalist one.  Strange, but in the past communist models have failed.  Just look to the Soviet Union.  China is to far gone in the game to change and is headed for a major disaster. Russia and China the perfect union. 

Fri, 09/12/2014 - 22:24 | 5213115 p00k1e
p00k1e's picture

Hey there...  Recall Bush taking the U.S. off the free maket system.  Did that mean anything? 

Fri, 09/12/2014 - 22:58 | 5213192 Tom Green Swedish
Tom Green Swedish's picture

No, but Texas is currently getting dumped on for all their fuck ups and will get more dumped on later. They operate like they are not a part of the United States and I can smell the stench from their little oil fields from here. Obama still has 2 years in office.  It is now time for that crybaby faggot Boehner to start cooperating after he is done getting rammed in the ass by Phil I created the banking disaster down syndrome Graham.

Fri, 09/12/2014 - 23:44 | 5213304 TheReplacement
TheReplacement's picture

What capitalist economy?  I don't see any.

Sat, 09/13/2014 - 09:22 | 5213732 ndree
ndree's picture

The one that eats, kills and jails its young ones.

Fri, 09/12/2014 - 22:26 | 5213123 reader2010
reader2010's picture

If that's the case,  it makes the American Empire the most short-lived one in the course of human history. 

Fri, 09/12/2014 - 22:30 | 5213135 disabledvet
disabledvet's picture

"The first empire that never was one to begin with."

Talk about aiming low. Still...denial ain't just a river. Maybe we can just pretend...

Fri, 09/12/2014 - 22:36 | 5213154 p00k1e
p00k1e's picture

Russia's got this.  Russia will dunk their people into the Ural Mountains.

China has replacement cities setup and clearly hope to survive by shear numbers on the surface.

Europe is a toothless Liger.  

Frankly, the U.S. has become a rouge hybrid of some sort with a diluted, impoverished citizenry.  You, me and the others will taste the Nuclear Gat.   

The Everly Brothers "Bye Bye Love"

http://www.youtube.com/watch?v=nmjPAb-v4Nw

Fri, 09/12/2014 - 22:51 | 5213181 Harbanger
Harbanger's picture

Rouge hybrid in the House!, said Barry. Boy we've come a long way down since the Everly Brothers.  The left won a cultural revolution in one generation, you have to give them credit for that.

Sat, 09/13/2014 - 03:21 | 5213544 conscious being
conscious being's picture

It wasn't "the Left". Search for Laurel Canyon. Everbody went to high school together just across the Patomac from DC. Steven Stills and Mama Cass for example. Like Hollywood, the music industry is a psy op.

Fri, 09/12/2014 - 22:46 | 5213176 KingdomKum
KingdomKum's picture

we few,  we happy few,  we band of silver holders  .  .  .

Fri, 09/12/2014 - 22:51 | 5213186 IndianaJohn
IndianaJohn's picture

This article is so vaguely equivocal. I'm going to put a $200 bankroll on my wife, for her annual shopping trip to Walmart. I trust that she will return with a detailed report on Chinese "soft power"

Fri, 09/12/2014 - 22:59 | 5213197 monad
monad's picture

First you have to believe that the 2% of every country on every continent haven't banded together. THEN you can believe this proposition is remotely meaningful.

The merchantilists ARE the corporations. The MNCs eclipsed ALL NATIONS by the year 2000. Your internet? Hahahaha the corporations own the nests that are the internests. They are fascist in structure: their instructions to your bought & threatened pussy politicians are fascist.

NWO = Global East India Company

FOREVER

Turn On = WAKE UP!

Tune In to whats steering your major life choices

Drop Out of being the chump.

 

Fri, 09/12/2014 - 23:17 | 5213249 p00k1e
p00k1e's picture

What’s the choice, yo?  Maybe swipe a ride on the EBT?

"MY EBT" by @MREBT

http://www.youtube.com/watch?v=-IGfe2tAUbM

Fri, 09/12/2014 - 23:02 | 5213212 lester1
lester1's picture

Reaganomics/consumerism is what wrecked the USA. You cant have all these unfair free trade deals where other countries have the advantage. It all started under that jerk Reagan!

Fri, 09/12/2014 - 23:48 | 5213310 TheReplacement
TheReplacement's picture

There is no harm in consumerism as long as it isn't fueled by credit/debt.  If you have to pay for the things you buy you will only buy the things you can afford.  Naturally you will choose more wisely the things you need over the things you merely want.  In the end you will get what you earn and not more. 

Mix in credit and the whole paradigm blows up.

Sat, 09/13/2014 - 12:19 | 5214003 Atticus Finch
Atticus Finch's picture

First of all most countries around the world have been screwed by US Trade Agreements. See John Perkins and Michael Hudson.

The trade agreement with China was that the US would be a consumer products dumping ground in exchange for China buying unlimited US treasury debt. That's it.

Trade Agreements, many conducted in secret have nothing to do with other countries, but with giving up national sovereignity to the control of international banks and corporations.

You are right though, the end began with Reagan.

Fri, 09/12/2014 - 23:27 | 5213268 Leraconteur
Leraconteur's picture

If there is one thing to remove from everyone's mind it is this errant concept:

Chinese-style communism has not had the seductive draw that Soviet communism had and to date

 

There is no Chinese-style communism. The nation is a combination of state owned and or directed dirigisme enterprises like Britain pre-Thatcher, or France, with a huge capitalist sector that is nearly unregulated, with the tiniest bit of Socialism. It is a looting operation for the top .1%. They earn all the money and make all the RRE and CRE deals.

The USA is far more socialist than China. The USA has mandatory, national, secure retirement for all. China does not. 

What no one wants is the Chinese model, rooted in a few thousand years of blind obedience to authority. This is a culture with no Englightenment or Liberal Tradition.

Sat, 09/13/2014 - 00:49 | 5213394 Kirk2NCC1701
Kirk2NCC1701's picture

LOL.  Yup, China has the kind of Feudal Capitalism that the US has not had before or seen before.

What we have these days in USSA is Futile Capitalism, as I like to call it... 'lovingly'.

Sat, 09/13/2014 - 04:55 | 5213584 Lea
Lea's picture

Leraconteur,

The author is talking about the lack of seductiveness of the PAST Maoism as compared to the PAST Marxism-Leninism of the ex-USSR. Of course nowadays, there is no Maoist Communism in China anymore.

Sat, 09/13/2014 - 21:23 | 5215125 Leraconteur
Leraconteur's picture

No, the language is clear. He is referring to the Chicom in the present vs FSU in the past.

Chinese-style communism **has** not had the seductive draw that Soviet communism had and **to date** the rise of China has generally scared its neighbors rather then made allies of them. 

Sat, 09/13/2014 - 06:01 | 5213611 edotabin
edotabin's picture

What was the "draw" of Soviet communism anyway?

It sucked eggs.

Sat, 09/13/2014 - 00:55 | 5213419 limacon
limacon's picture

"Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity."

Yeats

Sat, 09/13/2014 - 12:07 | 5213985 Atticus Finch
Atticus Finch's picture

I had no idea that Yeats was there during the World Trade Center controlled demolitions on 911.

Sat, 09/13/2014 - 07:56 | 5213668 InvalidID
InvalidID's picture

Why are we running the same charts and stories? BTW, I don't see what Russia has to bank on... China however...

Sat, 09/13/2014 - 09:44 | 5213759 Manipuflation
Manipuflation's picture

Well, I had just best say it now.  Russia went full retard.  I know that so many here are just in love with the place because the Russian have no time for that idiot that runs this shit show.  But hey, I have some pissed Russian women.  I was like, "What the fuck did I do?"  I did nothing in particular but now I am the asshole.

I had to peel this information of the Russian wife that I have around here.  It is shit that I have not seen reported anywhere.  So here it what it is.  Alright, if my Russian wife wants to go home to visit her mother that is not a problem until she tries to leave.  Now there is some new law over there she would have to pay to leave her own country and fill out a shitpile of paperwork.  I was like "The what the fuck is going on?"  So I got to hear that.  I am your typical male but I notice when the women get angry even if they are Russian.  It does not matter, they are women and women are the same the world over so you know when something is going on.

I had to ask about the crabbiness and why I was geting the cold shoulder.  Well, it turns out it was Putin doing his Oligarch shit.  Listen folks, all I have been doing is working my ass off seven days a week.  f there is way to beat these douchebags I would think I would try to outwork them.  I do not give a shit if I didn't have a day off since June.  It does not matter to me.  That is when the conversation turned that they may detain my children if they go Russia.  Really?  They fuck they will!  I am not intimidated.  It's all the same shit.  Stupid shit.  You are not detaining my wife and U.S. citizen children.  I do not give a fuck if you wrestle bears Mr. Putin.  If you can't beat up the Duffer-in-Chief then you can suck sow tit.

It gets even worse.  My mother-in-law whom I happen to actually like not has to fill out paperwork and I not talking about fifteen or twenty pages.  It is a god damned ream of paperwork to declare any financial holdings she has in U.S. based bank accounts.  Fuck sakes, there are NO capital holdings in U.S. accounts.  We are not that fucking stupid!  Jesus H. Christ on a popsicle stick.  And now I am the asshole for this.  That is what you get for working your ass off I guess.  I had nothing to do with anything regarding this who has the biggest balls bullshit.

This shit has to stop and I don't know what to do.  What the fuck?  I have never hurt anyone but these people seem to be begging for it.  You do not fuck with someone's family for politcal bullshit.  Creating a new cold war is fucking retarded.  Hey Russia, Get rid of central bank and then maybe we can talk.  

What pisses me off is that somehow it is my fault when it really is not.  I did not do anything to precipitate the whole thing.  I fought the assholes whrough the Ron Paul campaigns.  I didn't do anything to anyone and no I am the asshole.  What can you do?  You can't win with these fuckers.  They will always start some shit, drag your ass into their bullshit scenario and make it your fault.  It is really unbelievable.

I do not know what the muslim deal is all about other than to try to prove that we are assholes.  These fucking idiots keep stirring that shit up.  We should have never been over there in the first place.  What the fuck good did we do there?  Jack shit and no they want our blood.  I can see why they are pissed off at us.  "Hey it's a wedding so let's kill everyone there."  What the fuck?  Am I missing something?

 

Yes, I have a shitload of guns and a shitload of ammo for them but that is not the answer here.  Life is to short anyway.  Sorry for the rant but I had to let it out.  It really is pretty much what we talk about all of the time.  In chatting with William Banzai 7 last night the concept of honor came up.  We have honor at ZH.  We will not deviate from the truth and we will always ask questions while being reasonable.  It has been said that it is unwise to piss off patient men.  I agree. 

Sat, 09/13/2014 - 10:14 | 5213788 sam site
sam site's picture

You state, " China remains committed to domestic growth.  That's only because they have 4 times our population thanks to that 33rd degree Freemason Jesuit coadjuter Mao Zedong who encouraged overpopulation that now handicaps economic development. 

China tried following America's model and now they have vast college educated "ant tribes" with few employment prospects.  They also have a 15T increase in debt since 2007 to 25T from building all the empty malls and apt buildings to try to employ this disastrous overpopulation. 

The American model they didn't follow is the poisoning and handicapping of their population with vaccines, GMOs, fluoride and pesticides among others that kept their workforce healthy and low cost. 

That's their best and most competitive advantage.  America is an extinct, poisoned, controlled and captured nation by our hidden Jesuit rulers through their Zionist agents.  Our health and ability to globally compete has been compromised by this Jesuit organized crime cabal.

 

Sat, 09/13/2014 - 11:07 | 5213868 rejected
rejected's picture

I'm so sick of reading/hearing how China is the rising empire. Did the stooges do this on their own?     No.    The only thing they did/do is offer their pathetic citizens as slaves to the western corporate plantation owners. That's it. American corporations deserted us like sh!t in the wind. Reduced a skilled thriving u.s economy to the mostly non skilled retail queens for their now foreign products. Robbed us of our legitimate right to support our families and abandoned the country and people that gave them their initial start.

The Chinese allow the complete corporate abuse of their citizens, their nation and the environment while poaching western production and the jobs that go with it. Soooo pleeaasse, don't tell me how the Chinese worked hard to build their economy to compete with ours. There was no competition,,, They did it the old fashioned way,,, they stole ours with the help of the rogue u.s government along with a pathetically apathetic and lazy clueless citizenry.

Now that we created this monster someone in our government is gonna want the blood of your families to wage a future war with them. This is what they were created for. This is how the oligarch banksters have always worked. Already the u.s is 'pivoting' it's military to the east, while prodding the Russians knowing (hoping) the Chinese also jump in.

It's the same old, same old. It's now getting so bad in the u.s that friendly countries like Canada are warning their citizens about traveling here. See other posts in this Article about our armed badged thugs shaking down travellers. It's downright embarrassing yet amerikans ignore it all. And I'll wager most incumbants get re-elected this election cycle by these same slugs. 

It's just one stupid thing after another.

Sat, 09/13/2014 - 11:48 | 5213940 Atticus Finch
Atticus Finch's picture

I couldn't have said is better, except for one the thing."It's just one stupid thing after another."

It's not stupid by any means, but planned and implemented brilliantly. It would only be stupid if it was done cluelessly by a Constitutional Republic, which we all know by now is certainly not the case.

Sat, 09/13/2014 - 13:31 | 5214075 FredFlintstone
FredFlintstone's picture

Chinese are dickless cunts.

90% of African women can kick 90% of Asian man's ass any day, anytime.

Sat, 09/13/2014 - 11:42 | 5213929 Atticus Finch
Atticus Finch's picture

"One of the major lessons that the US seems to have taken away from the Iraq war is that it cannot solve all of the world’s problems and in fact will often make them worse".

This is a hysterical line. There was never an intention to solve the world's prblems in Iraq or in any other engagement for the last 60 years.

I think it's time the author reread, Rebuilding America's Defenses, by the Project for the New American Centrury, written by Dick Cheney, and the rest of the Bush criminals.

Solve the world's problems? ROTFLOL.

It creates nearly all the world's problems and has since the end of World War II.

 

Sat, 09/13/2014 - 13:20 | 5214110 frankinpetca
frankinpetca's picture

Agreed, that people who crave money and power will have a distinct advantage over the "live and let live" variety. Their emulators, who seek the same rewards also contribute to the downfall, that accompanies total selfishness and egoism. The Yeats selection above demonstrates that the world goes on with these cycles of enlightenment and aquisition, continually, as time goes on. Oscillation is and will occur as a natural aspect of things and people. A system, without correction control, in it's effort to be stable or have chosen output, usually the most acceptable by the most who are interested, tries to self correct but most often overshoots in the opposite direction (mode) and then ......(fill in the blank).

Studying control systems theory will help one realize their are many things that can be done to inhibit over-correction, and return to system stability, but a previously unknown outside force will cause a corrected system to become unstable anew, until a new pole and zero are added to allow for the new or unaccounted for pertibation. Sorry, to make things seem so scientific, but the long term economic instability problems seem to be like physical systems that are studied by most engineers. Financial engineering doesn't count. Poles and zero are like government controls or government compliances to the systems internal actions and response activities.

Thanks for reading and comments, that will improve my thinking and abilities to effectively communicate!!!

Sat, 09/13/2014 - 13:13 | 5214096 Quaderratic Probing
Quaderratic Probing's picture

China trade economy is based on filling Americas Mao Mart. They cant develop their own local population economy without first increasing pay at home.....  that cancels the only advantagd they have.

Sat, 09/13/2014 - 13:46 | 5214145 gallaghd5099
gallaghd5099's picture

People the country that is the world's currency MUST be a net importer. You can not be an export nation and be the world's currency. Think about it. It's impossible! How can the woworld grow without new money?

Sat, 09/13/2014 - 17:41 | 5214540 sethstorm
sethstorm's picture

The only places China seems to be interested in are Third World hellholes.

 

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