This article is excerpted from the author's humble book "The Century Dilemma of Global Political Economy" (tentative title), due to the lack of context, some places may not be so smooth to understand, please bear with me!
I have hardly seen any scholars analyze this root cause as the main cause of its decay. In fact, not only the United States, but also the paper money of any economy is used as the main international settlement currency and reserve currency, and continues to print money, then the economy will inevitably decline, such as the euro area, which is second only to the dollar. Therefore, in the process of the collapse of the US dollar hegemony, the settlement of sovereign currencies such as RMB, rupee and real instead of the US dollar can only be used as a transitional means to cushion the impact of the US dollar collapse.
Before elaborating on this root cause, I would like to introduce two new concepts that I have defined: monetary concentration and monetary concentration difference.
1. Currency concentration.
According to the previous analysis in this book, when new money is injected into the economy, there will be significant local monetary intensification in areas such as injection ports and flood storage tanks, so is there an ideal indicator to measure the intensity of this currency? This is where we introduce the concept of "monetary concentration". Since the currency in circulation revolves around the traded commodities, then the level of monetary intensity is actually the comparative relationship between the overall or partial monetary quantity and the commodity trading volume, and the problem now is that different commodities cannot be simply summed up, and must be summed up by a "unified standard", and when the money itself is the source of the problem, the quantity of commodities in this concept can certainly not be summed up by this problematic tool, therefore, We have to go back to the essence of the commodity, the value of the commodity, in which we argued that the commodity can actually be regarded as a collection of labor time due to the conversion between the two dimensions of scarcity and labor timeThe labor time converted by the value of each commodity is summed up, which is the standard that can most accurately reflect the essence of the commodity.
Therefore, I putMonetary concentrations are defined as follows:Within a certain range, the comparison between the amount of money in circulation and the total amount of labor time converted into the value of different commodities (i.e., the core scarcity of commodities) in the period of one currency turnover. The result of this comparison is the number of quantities of money that are matched in a transaction for a commodity produced by a single standard labor force in a unit of labor time, which I also call it"Theoretical ** level per unit of working time".The so-called theoretical ** level refers to the ** level under the condition that the currency has been diffused evenly within the area under investigation (which can be applied to the part or the whole), if it refers to the part, it is assumed that even if the local is different from the local outside, the local is also uniform. If it refers to the whole, it is assumed that the ** level in the environment of constant monetary aggregates, then the theoretical ** level is equivalent to the actual ** level, and in the environment of the growth of monetary aggregates, the actual ** level and the theoretical ** level will be different. Therefore, the concept of monetary concentration is essentially a specially defined level concept, and we mainly use it to illustrate the important phenomenon of monetary concentration difference.
Second, the difference in currency concentration
This concept is important because it is a central factor that distorts the signal, which in turn induces the misallocation of resources and sows the seeds of economic crisis.
The difference in currency concentration refers to the phenomenon that the local currency concentration is abnormally high mainly due to the two factors of new money printing and ** debt expenditure, and there is a significant difference between the currency concentration and the currency concentration in other regions.
1) New money printing is the biggest cause of significant differences in currency concentrations.
Due to the injection port effect and the reservoir effect of new money printing, the region with the earlier and more new money diffusion inflows, the currency concentration is significantly higher than that in the region where new money diffusion flows later. The "region" here mainly refers to the "industry" system of different commodity categories analyzed earlier, but sometimes it also refers to different geographical regions and national regions, especially when we analyze the United States later, we will focus on the national impact when the international settlement currency is printed, or the geographical impact of concentrating the acquired new currency in a certain region. The earlier and more new money flows in, I call it the "front end" affected by money printing, and the injection port and flood reservoir are typical of the front end, while the area that flows in the latest is called the "end" affected by money printing, the closer to the front end, the higher the concentration of money, and the closer to the end, the lower the concentration of money.
Why does the injection of new money into the economy significantly increase the concentration of local money? I believe that many readers have been able to judge according to the previous content of this book, in the content of the injection port effect and the flood storage tank effect, we have analyzed that the acquirer of incremental money will be more concentrated in chasing specific industry commodities (represented by asset commodities), creating incremental demand for such commodities out of thin air, and in the relevant areas of the injection port and the flood storage tank, the amount of money flowing in due to these incremental needs has increased significantly, but they surround and contrast the trading volume of such commodities with a much smaller increment, if converted into the amount of labor time, The increase may be smaller, but considering that labor productivity will not change much in the short term, in the narrative, I will directly talk about the volume of commodity transactions rather than the amount of converted labor hours, "the amount of money that increases greatly compared with the volume of goods that increase in small increases", then the money concentration in these local areas is naturally significantly higher than the value before the injection of money printing, but the money concentration in the commodity market, which is far away from the injection port and the reservoir, does not show this change, so the difference in the currency concentration in different regions arises. and dynamically evolve and change with the diffusion of money.
For example, in the injection port and flood storage tank, the amount of money increases by 20% in the short term, the injection of money printing and the first round of use is usually very fast, and the circulation and derivation of money will lag behind, but the output and transaction volume of the commodities they are surrounding are less likely to increase rapidly in the short term, and the small increase in the number of these commodity transactions is still due to the lag of the large increase in the amount of money, which is the "large increase in the amount of money compared with the small increase in the volume of commodity transactions" in the region The reason for the significant increase in the local monetary concentration is that the significant increase in the local monetary concentration is the core of the increase in the "scarcity of artificial intervention", and the scarcity of artificial intervention is a component of the local scarcity, so the ** of such commodities within a local range will be significant**, and in this process, the value of the commodity will basically not change because of this monetary factor.
Let's summarize the above in a simplified chainThe effect of new money printing on local currency concentration and **: under the two effects, money printing creates a phased "distorted demand" for early acquirers out of thin air - the amount of money flowing into local specific industries increases greatly - the large increase in the amount of money compared with the small increase in commodity trading volume makes the local currency concentration significantly increase - the scarcity of human intervention is significantly increased - * significant ** - signal distortion induces excessive allocation of resources.
Let's further use the above metaphor of the pigment solution to understand this concept in depth: the first drop of pigment is dropped into a glass of water, and the pigment solution is formed after dissolving and diffusing evenly, and the "first drop" of pigment is equivalent to the initial printing of money, after the initial printing of money is completely diffused, all the currency is evenly distributed around the traded commodity, if the second and third drops of pigment are dropped again in this pigment solution. This is equivalent to printing new money, so what happens when the second drop of pigment is in? Obviously, in the local area around the dropping site, the concentration of the pigment will be much higher than that of the non-dropping place, and then this "local high concentration" phenomenon will disappear with the gradual diffusion of pigment molecules, and all the pigments will eventually be evenly distributed in the whole cup of solution, and this second drop of pigment dropping will be equivalent to the injection port and flood storage tank of the new printing money.
This metaphor is mainly used to understand the high concentration of local money after the injection of new money printing and the subsequent diffusion process, but after all, it is only a metaphor, and there are two main differences between the two, the first difference is that the new money printing will continue to circulate in the diffusion to derive new money, and the pigment certainly does not have the ability to self-derive and recreate; The second difference is that the overall diffusion process of pigments is relatively regular and uniform, because the molecules are unconscious, they follow the laws of pure physical motion, while the diffusion process of new money printing is irregular and uneven, because there are subjective people who use and diffuse these money prints, and people who obtain different amounts of new money printing and different people in the morning and evening, the direction in which they spend money, that is, the diffusion path of money printing, will show irregular characteristics, especially when the new money is unevenly diffused to the area outside the reservoir. But as long as the diffusion time is long enough, no matter how irregular and uneven this intermediate process is, a certain round of money printing and the derived new currency will eventually be basically evenly distributed in the entire market, but many times it will take a long time, but the key to the problem is that once the money printing policy is adopted, then there will not be only one round of money printing, but will be under the effect of "drug addiction" round after round of money printing, in this case, the previous round of money printing has not been completely evenly diffused, and the next round of money printing diffusion will be superimposed, As a result, it is basically difficult to survive in a completely uniform state of money concentration in the entire economy, which means that under the continuous expansionary monetary policy in reality, the phenomenon of money concentration difference will exist widely and significantly in the economy.
2) High concentration of local money creates excess profits and raises total factor costs**.
The high concentration of local money after the injection of new money printing will greatly increase the scarcity of human intervention, thereby greatly increasing the excess profits of commodities, but these profits are usually not evenly distributed according to the value of commodities converted into the components of labor time, and some factors of production will be distributed more, such as land resources (natural commodities) in real estate commodities, * in the original shareholders, and some are relatively less, such as ordinary workers, That is to say, the distribution of this kind of staged excess profits is often not distributed according to the value of the factors, but is affected by various factors such as the discourse power, control, entry threshold and the near and far end of the industrial chain.
But we must be clear that in the commodity categories around the high concentration of local currency, all the elements in their entire industrial chain, regardless of the amount of distribution, their owners are basically the beneficiaries, that is, the cost of all factors will be **, for example, driven by incremental money, in addition to the original shareholders of listed companies, these big beneficiaries, ordinary employees, their salaries and benefits will also rise sharply, and these employees themselves are also labor commodities in these industries. They are a component of the high concentration of local money leading to a sharp rise in all related commodities, and labor is the cost of labor. In the United States, for example, the income level of ordinary employees of Wall Street investment banks under the big money printing is a few streets away from ordinary manufacturing employees with the same IQ but not in the injection port and flood reservoir.
Because the difference in monetary concentration makes the phenomenon of local commodity and total factor cost significant, we can call it the phenomenon of the difference in monetary concentration and cost.
After introducing these two concepts, we can analyze how the hegemony of the dollar has led to the continued decline of the United States, which will have a major impact in the following aspects:
1. The effect of the difference in the concentration of foreign currencies under the hegemony of the US dollar.
As the largest international settlement currency, the foreign currency concentration difference effect of the US dollar will lead to the continuous loss of product competitiveness, the continuous shrinkage and closure of the manufacturing industry and the hollowing out of the economy. This is the most important of the several fundamental factors, and the decay it leads to is an inevitable trend that is unlikely to be reversed until monetary hegemony disappears.
i) Differences in the concentration of foreign currencies.
As we pointed out earlier, money printing can exhibit an injection port effect and a reservoir effect, with the earlier and more new money flowing into the front-end area, the higher the concentration of money, and the lowest concentration in the terminal area where the new money flows in late. The crux of the problem is that the dollar currency used by the United States and other countries in the United States is basically at the end of the diffusion of new money printing, which is easy to understand, because the new currency of dollar printing is injected from the injection port in the United States, and it must first circulate and spread in its domestic circulation, whether it is the first sector to obtain the new currency, through the circulation and diffusion of fiscal expenditure, or by its flood storage tank system, and gradually spread to the surrounding areas are first carried out in the United States. When these new currencies eventually flow into the international settlement, it is basically the end of the diffusion of money printing. In other words, the United States in international settlementsMore of the old coins used in the past, old coins with low concentrations
What does it mean for the United States to use the dollar at the end of the diffusion of money printing in the international ** with other countries? First of all, the settlement in US dollars means that the ** system used for goods with the United States ** is the ** system of the US dollar, and it is the ** system under the US dollar money printing environment; Second, these dollars are at the end of the monetary diffusion, which means that the monetary concentration of the dollar around these imported goods is significantly lower than the average monetary concentration of domestically manufactured goods in the United States, that is,The level of domestic manufacturing per unit of labor time is significantly higher than that of imported goods, that is, the same goods produced by the same labor force and the same efficiency, the domestic manufacturing will be significantly higher than the imported, which is the biggest reason why the United States manufacturing continues to lose its competitiveness and lead to the shrinking of its manufacturing industry, and the domestic manufacturing industry that can maintain competitiveness will become less and less, they are those products with a high degree of differentiation and scarcity, such as advanced technology goods or faster innovation goods that other countries have not yet caught up, or channel monopoly goods.
2) The difference between internal and external currency concentrations.
From the foregoing, it can be seen that the concentration difference exists due to the time of diffusion of printed moneyThe difference between "morning and evening"., the difference in the concentration of money within it, which is equivalent to the difference between the concentration of some commodities that were affected in the early days of the diffusion of money printing and the ordinary commodities that will be affected in the middle of the future; The difference in the concentration of foreign currencies is equivalent to the difference between the concentration of ordinary commodities that have been affected in the medium term and imported commodities that will be affected in the later period.
As we have explained earlier, the internal effect of the difference in monetary concentration, its "industry" characteristics are more obvious, because the new money printing is the earliest and most into the injection port and the reservoir-related commodities (early), especially the asset commodities, and then gradually spread to the domestic ordinary commodities (medium-term), that is, the former is the first to precede the latter. The effect of the difference in the concentration of foreign currencies is to continue to spread from domestic ordinary commodities (medium-term) to the end of the import part (late), in the medium-term, the characteristics of the industry have been blurred, at this time the vast majority of commodities have been affected by the first, therefore, compared with imported goods, the total factor cost of these domestically made ordinary commodities is naturally higher than the same imported goods.
Due to the comparison of the first level of domestic manufacturing and imports, due to the difference between the middle and late stages of the diffusion of money printing, this difference can be understood by a metaphor, if A was born earlier than B, then no matter how much time has passed, A's age will always be greater than B's age, no matter how hard it is useless. For monetary diffusion, this means,The average monetary concentration of ordinary goods in the medium period will always be higher than that of imported goods in the late period。This is important to understand.
The larger and more frequent the scale and frequency of dollar money printing, the more obvious the effect of the difference in the concentration of foreign currenciesThe greater the impact on the manufacturing industry, the watershed of the dollar printing was the disintegration of the Bretton Woods system in 1971, since then the dollar printing has completely abandoned the first constraints, began to let go of itself, and the United States' ** situation has also deteriorated significantly after this, from the original basic surplus to a continuously expanding deficit.
In this case, when comparing the best of domestically manufactured and imported goods in the United States, the conditions set are the same labor force and the same efficiency of producing goods, but if the level of American labor is also declining, then the result will undoubtedly be worse, and it will accelerate the rate of contraction of the manufacturing industry, which is the case in the actual situation of the American labor force, which is the content of the second point below.
Second, the unearned effect under the hegemony of the US dollar.
This kind of unearned effect will not only allow the dollar interest group to obtain the labor product from the people of the world and the American people for free, but it will also make the labor level of the United States continue to deteriorate.
As manufacturing shrinks continue to evolve over decades, the U.S. has increasingly relied on dollar hegemonyPaper (printing money and borrowing money) is used to exchange goods from other countries, rather than producing goods in exchange with other countries, which eventually evolved into a "parasitic" economic model that basically depends on the status of the dollar for survival, and its ** deficit will continue to expand over a long period of time. Under this economic model, the domestic consumer service industry naturally becomes the main force of employment, and what many people don't know is that a large part of this consumer economy is based on the import of physical goods from abroad. Relying on the status of the dollar, exchanging paper with almost zero cost for the physical goods of other countries' hard work is naturally a free gain for the whole world, which includes two parts, one is the big unearned gain of the dollar interest group, which is equivalent to the unearned gain provided by the printing of money, 20% of the people get 80% of it, and the other is that the general public can also get a small proportion from this external unearned gain, which is equivalent to 80% of the people getting 20% of it, Of course, this ratio is only for the purpose of understanding and illustrating, not an accurate ratio.
From the point of view of the US dollar interest group,Their unearned gains also consist of two partsThe first part is external, mainly for the unearned gains of **deficit** countries, and the second part is internal, that is, for the unearned gains of domestic working people. From the perspective of the general American public, although they can also benefit a small amount from not working abroad, this benefit is far less than the loss of their free labor for interest groups, and the loss of labor skills degradation caused by the hollowing out of the manufacturing industry and the deformity of the employment structure.
Unlike the strong subjective motives of the dollar interest groups, the general public is forced to reluctantly become part of the overall unearned system, which is caused by the environment, and no one can avoid it, because in the context of the shrinking manufacturing industry, a large number of manufacturing jobs are lost, labor skills will be greatly degraded, and they also have to accept the welfare and relief that the United States has used to print a part of the money, and these are part of the fiscal spending supported by the printing of money, and it is also a necessary means for the ruling party to obtain votes. It's just a drop in the bucket compared to the huge gains made by interest groups. Since the general public is only a small part of the income from external non-work, and the average is very small for everyone, of course, the public cannot rely on this part of the profit to survive, and they also have to rely on the service-oriented labor provided to the interest group to obtain the diffusion of printed money, which is the above-mentioned interest group does not work for the inside. The general public has to rely on labor to survive, but this labor should be used more for the production of physical goods, and is forced to be alienated into mainly service labor, which isThis has led to the deformity of the employment structure and the degradation of labor skills
As long as the US dollar continues to maintain its hegemonic position as the main currency of international settlements, then the differential effect of US dollar money printing on foreign currency concentrations and the trend of deterioration of labor levels will not stop.
Third, the continuous decline in the savings rate will inevitably lead to the decline of the country.
Under the effect of the dollar's hegemony on foreign currency concentration differentials and the effect of unearned gains, the US savings rate will inevitably fall for a long time. In order to maintain the "prosperity" of the economy, the ruling party can only vigorously encourage consumption, and even overdraft consumption, which of course mainly uses money printing machines to support these overdraft consumption, resulting in the continuous decline of the country's overall savings rate and core investment, and forming a vicious circle of mutual promotion. As we have discussed earlier, uncontrolled consumption is a kind of stupid consumption, and society will inevitably decay, and without the continuous evolution and accumulation of the means of production, how can the economy develop and how can society progress? To give a vivid example, China's investment in the means of production in the port has made the operation of many ports intelligent, and the investment in these intelligent means of production can make the efficiency of a single labor force several times higher than that of the American port industry, because the American economy is busy eating, drinking, and consuming, rather than investing a considerable part in more efficient means of production.
A truly strong economy must be based on strong industry, agriculture and other physical commodity productionThe service industry can only be healthy if it is based on this good foundation, just as we cannot enjoy high-quality network services without cutting-edge 5G and 6G physical equipment. If there is a lack of a strong industrial base but high-quality service facilities to provide excellent services, then only the printing presses used across borders can achieve this, and the hegemony of the dollar undoubtedly meets this need.
From the perspective of the whole country (not only the ** sector), the United States is already a significant overdraft country, we can clearly see this from the difference between the output and consumption of physical goods in the United States, the official so-called savings rate data is completely implausible, and the output and consumption of the domestic service industry in the United States is that I serve you and you serve him, it has nothing to do with the accumulation of means of production, and the output value of the service industry in the United States is also seriously overestimated in GDP statistics. The debt burden is less exaggerated.
Fourth, the decay that is first slow and then accelerated.
The hegemony of the dollar itself was born on the basis of the once strong manufacturing industry in the United States, so in the early days of the strong manufacturing industry, it was fully capable of exchanging goods with other countries instead of using paper, and the motivation and pressure to print money and borrow money were not so great, with the continuous effect of the foreign currency concentration difference effect of the settlement currency, so that the average ** per unit of labor time was higher than the environment of imported goods, low-end goods that do not require high labor skills could not compete with imported goods first, However, high-tech goods still have a competitive advantage in the early middle and early stages due to their high differentiated scarcity, and this is not the advantage of a single commodity, but the advantage of having an industrial chain "system". In the middle and late stages, as the manufacturing industry continues to shrink bit by bit, the deficit will inevitably continue to expand, the pressure of printing money and borrowing will continue to increase, and the increase in printing money will inevitably expand the effect of the difference in currency concentration, so that even the advantages of high-tech commodity differentiation can not stop the disadvantage of manufacturing costs, coupled with the continuous degradation of labor skills, the high-tech industrial chain system will inevitably begin to fall apart, thereby accelerating the shrinkage of the high-tech manufacturing industry in the United States.
The more the manufacturing industry shrinks, the greater the deficit, the greater the pressure on printing money and borrowing, and the more money printed, the more obvious the difference effect of money concentration, and the more serious the decline in labor skills, which in turn leads to the faster the manufacturing industry shrinks, which is a typical vicious circle, which will eventually lead to the hollowing out of the entire national economy, especially in the last two decades, the speed of the shrinkage of the manufacturing industry in the United States is completely "visible to the naked eye", almost everyone can see it.
5. The hegemony of the US dollar gave birth to the world's largest transnational Ponzi cycle.
If a currency can only be used domestically, then the scope of influence of money printing and debt is mainly limited to the country, resulting in the misallocation of resources with too much allocation in some industries and too little allocation in others, which is also mainly an internal problem, because in any case the country still has a considerable part of the effective production capacity, which is the effective stock of wealth, and its **debt is also** an overdraft of private savings, when the Ponzi cycle finally breaks, then it is entirely possible to quickly recover through internal reorganization, Because as long as their effective production capacity and skilled labor force are there, they are not afraid of running out of firewood in the future.
The hegemony of the US dollar makes its money printing and debt cause a global disaster: the misallocation of resources it causes is not a problem of industry allocation within a country, but a mismatch between countries, that is, the United States manufacturing industry mentioned above continues to shrink, resulting in too little capacity allocation, and too much allocation of other countries, under this mismatch, the effective stock wealth of the United States will be too little, therefore, if the Ponzi cycle of debt in the United States breaks, then it is not just ** that defaults and goes bankrupt. It is the bankruptcy of the whole country, because the effective capacity of the country is too small, and the skills of the labor force are greatly degraded, so it is not able to recover through reorganization as quickly as the internal circulation of other countries, and this is the biggest difference between them.
Due to the support of the hegemony of the dollar, the military-industrial complex under the dollar interest group is very keen to wage war, if there is no money printing machine and borrowing machine under the hegemony, the United States simply does not have the financial resources to wage war so frequently, and the war is fought for money, and the money printing machine and debt borrowing machine facing the world provide this basis, but to dig the money from printing money and borrowing into their own pockets, they must need a reason, no matter what the pretext to start a war is the best reason to ask for money. But what is clear is that the military-industrial complex's unbridled demand for the hegemony of the dollar will inevitably greatly accelerate the arrival and rupture of the end of the Ponzi cycle in US debt.
After the collapse of the Ponzi cycle of US debt, it will have to actively enlist the help and investment of other countries, because without the dollar printing machine and the borrower, you will find how incompetent the extreme politicians who spend their days clamoring against the military-industrial complex and the instigation of war and the extremist politicians under their control. (ENDS).