Why a desperate America may soon annex its 51st state
At the center of Sovereign Man’s core ethos is the indisputable view that the United States is in decline.
I take absolutely zero pleasure in writing that statement. But it’s incredibly difficult, if not impossible, to objectively appraise the bountiful evidence at hand and not reach the same conclusion.
Consider the following:
US government finances are appallingly bad. The national debt exceeds 100% of GDP, annual deficits run into the trillions of dollars with no end in sight, and major trust funds for Social Security and Medicare will soon run out of money.
Political incompetence is mind-blowing; politicians fail to be able to even identify problems, let alone understand them, let along reach compromises to solve them.
Ditto for central bank incompetence. These people simply cannot understand how, by keeping interest rates at zero for nearly a decade and conjuring trillions of dollars out of thin air, they engineered record high inflation. And they also fail to understand how their actions to ‘fix’ inflation are causing widespread havoc in the economy and financial system.
Social divisions across the country are extreme. Censorship and cancel culture prevail, and corporations now wag their fingers at their own customers to “be better”.
The education system is in pitiful shape, with many politicians and school board officials turning classrooms into activist training camps.
The population is terribly unhealthy. Obesity and drug addiction are epidemics. Plus there’s an obvious mental health crisis that drives far too many people to commit horrific acts of violence on innocent people, including children.
National security is in decline. Military readiness is down, yet top officials seem more concerned about diversity and inclusion rather than the ability to prevail in war.
The rule of law has been perverted, including for political purposes and self-aggrandizement. We just saw another example of this yesterday.
Even the national fertility rate continues plummeting– an indication of the rising cost of living and social apathy.
The Wall Street Journal recently published a series of polls indicating that most Americans doubt their children will have a better future; pessimism is strong.
They also found that certain values which once defined American culture, including a sense of community, hard work, and civility, are no longer important to the majority of people.
This is all happening at a time when adversaries are circling. And that includes China.
Now, usually whenever I bring up China, there are always people who are quick to assert that China cannot possibly replace the US as the dominant superpower because they have just as many problems.
And it’s true that China has a ton of problems. They have their own debt issues, financial system chaos, and economic problems. They have social challenges, a major demographic crisis, and even a serious issue with childhood obesity.
But no civilization or empire throughout history has ever been problem-free.
Ancient Rome, even during its early republic days, had enormous problems. They had to deal with constant revolts, civil war, the genocidal dictatorship of Sulla, famine, war, plague, and more.
Yet there’s an enormous difference between taking on challenges while you’re on the rise… versus succumbing to them while on the way down.
Rome was able to deal with its challenges and continue its rise to become the dominant superpower. China may be able to do the same.
The US finds itself in a precarious position where they have a mountain of compounding problems… and no ability to even slow them down, let alone solve them.
I’ve written before about what I call the “Four Forces of Decline”, which I define as
1) Forces of History– the inevitable, cyclical nature in the rise and fall of Empire. No empire, no civilization in human history has ever retained the top spot forever, and most tend to experience similar challenges on the way down.
2) Forces of Society– the vicious way in which a society eats itself from within, vanquishing the ability and inclination to solve complex problems.
3) Forces of Economy– the debilitating toll that enormous debts, deficits, and currency inflation take on a nation and its people.
4) Forces of Energy– when energy is cheap and abundant, prosperity reigns. When energy is expensive, prosperity wanes. The relationship couldn’t be more clear.
Today’s podcast puts all of these together, with a particular focus on #4, Forces of Energy.
Part of being the dominant superpower in our modern world means having access to abundant energy. Yet the US government has spent the last few years trying to destroy its energy (oil and gas) industry.
They’ve been pretty successful. The President of the United States hardly misses an opportunity to bash oil companies. Politicians pass new rules and taxes to punish them. The media beats up on them. Investors have pulled funding for them.
So it shouldn’t be a surprise that US oil production, while not in terminal decline, is failing to keep up with growing demand.
Shale oil is especially problematic given that most of the highest quality “tier 1” sites have already been drilled. Many are already in decline.
This is a big deal. Shale oil is the reason why the US achieved near energy independence. With shale in decline, the US will be forced to import a LOT more energy (which, again, is critical for prosperity) from places where they have an increasingly adversarial relationship.
Russian oil is obviously off the table. So is Iranian oil. Saudi Arabia is rapidly becoming cozy with China; in fact the Saudis are now publicly considering to sell their oil in Chinese currency, the renminbi.
This is an enormous threat to the US. Saudi Arabia has been selling oil in dollars for decades; they’ve even had their currency, the riyal, pegged to the US dollar since 1986.
This concept of selling oil in US dollars is known as the petrodollar, and it’s one of the key reasons why the US dollar is the global reserve currency.
Anyone who wants to buy oil needs to own US dollars. And that pretty much includes ever country on the planet. So foreigners are forced to stockpile dollars, and by extension, US government bonds… simply because they need dollars to buy oil.
As a result the US government is able to get away with the fiscal equivalent of murder. They can run multi-trillion dollar deficits every year. They can wage expensive wars in foreign lands. They can go into debt to pay people to stay home and NOT work…
… and they’ve always had a bunch of suckers overseas– foreigners who have no choice but to buy US government bonds, simply because oil is priced in US dollars.
But what if Saudi Arabia started selling oil in renminbi?
Most likely a LOT of foreigners would dump at least some of their dollars and start holding renminbi as part of their official reserves.
America’s biggest privilege and benefit– its reserve currency– would vanish, practically overnight.
Suddenly the US government wouldn’t be able to run multi-trillion dollar deficits. It wouldn’t be able to go into debt to pay people to stay home and NOT work.
They’d have to be like almost every other country– act with some fiscal responsibility.
Think about it– if the President of Mexico shook hands with thin air, investors would be rightfully terrified and panic-sell Mexican government bonds. If South Korea ran a multi-trillion dollar deficit, its currency would probably plummet.
Back in September we saw the British pound and UK government bonds practically collapse… and the Prime Minister of one of the world’s largest democratically elected sovereign governments was forced to resign… simply because investors didn’t like her economic revival plan.
These issues are all linked. If the US continues to demonstrate incompetence and weakness… if they continue to subvert and destroy the energy industry… and if Saudi Arabia starts selling oil in renminbi…
… the consequences will be life-changing.
This is one of the biggest stories of our lives. It’s easy to miss because it’s playing out over a period of years. It gets lost in the day-to-day noise and the crisis du jour.
But rest assured this is happening in front of our very eyes; it’s a slow motion crash that’s already started.
The outcome isn’t inevitable yet. But nothing about these people’s actions demonstrate that they have the slightest clue what’s going on.
Join me in today’s podcast as we dive further into this… and I outline my “51st state” theory– a ‘solution’ that I wouldn’t be surprised to see in the near future.
Simon Black is an international investor, entrepreneur and permanent traveler. His daily letter is both educational and entertaining, and we suggest that those who want unbiased, actionable information about global opportunities sign up for Sovereign Man’s free, actionable newsletter at http://www.SovereignMan.com.
From Simon Black of SovereignMan.com
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