Like nations rich in natural resources that fail to develop other industries, America's focus on 'manufacturing capital' has led to the decline of its real-world production capabilities, evidenced by 20 years of flat electricity generation.
Countries divesting from the dollar must first settle their dollar-denominated debts. This process requires them to sell assets to acquire dollars, creating a temporary 'dollar thirst' that increases its value before a long-term decline can take hold.
To combat rising interest rates set by the market on long-term bonds, the Treasury is increasing its issuance of short-term bills. This moves the debt under the Federal Reserve's direct influence, allowing for potential rate manipulation to manage costs.
By mandating that dollar-pegged stablecoins be backed by short-term Treasury bills, the U.S. government is creating a massive, built-in demand for its debt. This new class of buyers is insensitive to yield, seeking only dollar exposure.
The government's endgame for its massive debt is to hold interest rates below inflation. This 'negative real interest rate' means bondholders like retirees and pension funds are paid back in dollars with less purchasing power, transferring wealth to the government.
Investors feel richer as their brokerage accounts show rising dollar values. However, when assets like the S&P 500 are priced in gold, they are down significantly. This indicates currency debasement, not real value creation, is driving nominal gains.
Using the dollar for foreign policy leverage, such as sanctioning a French bank, is the primary driver causing even allies to seek alternatives. This foreign policy tool is paradoxically accelerating the de-dollarization it should be preventing.
The U.S. government has reached a critical fiscal point where its four largest mandatory expenses—Social Security, Medicare/Medicaid, veterans benefits, and debt interest—cost more than all tax revenue collected, funding everything else with new debt.
The problem in places like Appalachia wasn't the coal itself, but the local population's lack of knowledge to negotiate deals that would build domestic industry and infrastructure, allowing wealth to be extracted without any lasting local benefit.
Chasing cheaper goods through globalization provided immediate benefits and a strong 1990s economy, but it ultimately hollowed out domestic industries. This created long-term social problems like the Rust Belt and 'deaths of despair,' a poor long-term tradeoff.