Regarding the US dollar and the US global ruling system: People often discuss the hegemony of the US dollar. This actually reflects the public's desire to simplify the issue of the US dollar into a phrase - the anchor of the US dollar. You can fill in anything here, such as military strength, technological strength, control of oil, gold reserves, Wall Street capital, etc.
However, the real scenario is that it is a complex and organic system.
Dollar Tide and Remaining Control over Colonies
If we look at the history further back, there was the Southeast Asian financial crisis; the current Vietnamese property market is falling, the Vietnamese dong is depreciating, and the situation is quite bleak. Many people attribute these phenomena to the harvest of the US dollar tide.
But if we look at it from the framework of the “colonial system,” we won’t see it that way: the dollar tide is the result, not the cause.
From the perspective of control, the metropolitan power always remains vigilant about the colonial surplus and takes various measures to control it.
As shown in the figure above, there are roughly two means of control. One is the surplus handover, including regular and non-recurring repatriation of multinational corporations; the other is the consumption of surplus, that is, for the surplus they cannot withdraw, they will find ways to let local residents consume it.
Among them, creating a false prosperity is a common tactic, using hot money to raise the price of risky assets, stimulating local residents' consumption, and making the economy flourish. Later, when the surplus is exhausted, the risky assets in the area collapse, and the colony is in a mess.
At the same time, we will also see operations such as "Federal Reserve interest rate hikes" and mistakenly believe that all this is caused by the "dollar tide".
In fact, the real reason is that the surplus of each colony has accumulated to a certain threshold, and the colonial power is systematically suppressing the surplus of each colony.
One means is to increase repatriation, which will inevitably lead to rising stocks and soaring prices in the mother country. The Federal Reserve will have to raise interest rates.
Another means is to stimulate colonial consumption, these are two simultaneous processes.
These two processes will eventually converge at one point: one, the Federal Reserve raises interest rates and the dollar appreciates; two, the colonies are in chaos.
Surplus Flows, Class Conflicts, and Asset Prices
Similar to the ancient Roman Empire, this system will have two types of contradictions. One type of contradiction is the internal contradiction within the metropolitan state, between the welfare class and the marginal class. Although the ancient Roman Empire expanded rapidly, the influx of massive surplus made the conflict between the nobles and the common people more acute. This contradiction is concentrated in the price level. The other type of contradiction is the contradiction between the metropolitan state and the colonies, which will be fed back into the exchange rate. The colonial currency will continue to depreciate because the surplus is constantly being withdrawn.
As shown in the above figure, prices and exchange rates reflect the internal conflicts of the mother country and the colonies respectively.
There are two classes in the colonies, one is the welfare class and the other is the marginal class. The large amount of taxation imposed by the colonial power has led to a general increase in prices in the colonies. The welfare class has a welfare shield, but the marginal class is almost naked.
Therefore, the tax collection by the colonial powers led to the marginalized classes in the colonies living a miserable life, enduring high prices but insufficient welfare. The higher the prices, the more the marginalized classes were exploited.
Interestingly, the situation of the mother country and the colonies is the same. Both the mother country and the colonies have a certain degree of inflation. In fact, this is easy to understand. The root cause is that the mother country wants to withdraw the surplus, and the surplus will be enriched from the bottom up.
In the process of the remaining repatriation, we will find that the stocks of the mother country continue to rise.
In fact, the political attributes of U.S. stocks are far greater than their economic attributes. So much surplus must have a place to go. What else can we do besides this?
Therefore, the U.S. stock market has a powerful function, which is to serve as a global reservoir, especially a reservoir of surplus value.
Going further, we can derive a simple and crude conclusion: US stocks are the US dollar, and the US dollar is US stocks.
On the Colonial System and Its Maintenance
Many people have a very naive attempt: they hope to discuss economics without discussing politics. In fact, this is simply impossible.
Therefore, to discuss the dollar system, we must first ask questions in the direction of decreasing political power:
1. Do the actual borders of the United States encompass the entire globe?
2. Is this a colonial system?
3. Is the world fair to the extent that people choose the US dollar voluntarily?
In fact, the colonial system is a more reasonable starting point for analysis, which includes both coercive and voluntary elements.
In the past 200 years, another important example is the British Empire, which was once a hegemon and was known as the "Empire on which the Sun Never Sets". Later, with the independence of its colonies, the international status of the pound gradually declined.
Therefore, the most important foundation of a currency is its governing system. Once the governing system changes, the role of the currency will also change.
In other words, the deepest essence of international currency is a control relationship. The wider the scope controlled by the sovereign country, the more solid the international status of the currency.
In the modern financial system, this control relationship can be very hidden:
1. The colonies "rule" themselves and have independent finances and currencies;
2. Multinational corporations control key areas and reap huge profits;
3. Multinational corporations continue to transfer profits from colonies to the mother country;
As a result, we will see an extremely strange phenomenon: the currency of this country is constantly depreciating, sometimes fast, sometimes slow.
In this situation, the colonies would bear a heavier burden, having to maintain the operation of their own public systems and pay taxes to the mother country.
Although paying taxes to the colonial power is a huge expense, the taxation methods of the modern colonial system are too covert, so this contradiction often manifests itself as an internal contradiction in the colony.
As a result, we see an even more bizarre phenomenon: some countries have been changing governments, but social contradictions have always been acute. The root cause is that if they do not get rid of this "control relationship", any change will only be a change of name.
Imagine from a game theory perspective, if a government has large overseas colonies, how will it rule?
1. It requires a team of agents;
2. The main function of this agent team is to collect taxes;
3. It does not allow the agent team to control too much surplus;
Therefore, it will collect taxes to such an extent that the surplus is just enough to maintain a local government. If it cannot collect the surplus, it will be consumed in the form of war or economic crisis.
In politics, maintaining the power system is the top priority. What is important is not how much surplus is extracted, but maintaining the relative power comparison between the mother country and the colonies and maintaining the established power structure.
With such a reference benchmark, our analysis will not be far from the truth. As long as the mother country can maintain a huge influence on the colonies, the entire system will be stable and the mother country's monetary status will be secure.
Let me first state the conclusion:
We have a general idea of how the US dollar system works. It is not simply based on some mysterious "little formula". It is an extremely large system. At the core is its power system.
1. Complete control system;
2. Complete cultural system;
3. Complete surplus value circulation system;
After sorting out the above, we can understand why they keep selling American democracy. What they are really worried about is the emergence of an overly powerful political entity within the country. However, nourishing a political entity requires surplus. Therefore, the basic routine to suppress local forces is:
1. Extracting the colonial surplus through multinational corporations;
2. Suppressing the accumulation of local surplus through consumerism;
3. Sell them a more fuel-intensive "infrastructure" through American-style democracy;
Although the US ruling system has various problems, there is no political force rising within the system that could endanger it, so it is too early to talk about the dollar hegemony.
Finally, thanks to: Tugouge for providing a series of literature ideas
