^[1]More than a large bit of news and handwringing is generated by the state of America today.

And why shouldn’t it be so?

The US is, to any objective person, in decline.

If you don’t think so, just consider all the areas of measure that are normally associated with decline…

Our trade deficit is horrible, our taxes horrendous, our infrastructure corroding, our education standards and performance lagging, and our ability to compete is falling.

But abroad, the Idea of America is no longer in fashion…

The world looks less and less to the US for guidance, for protection, and for an ally.

Our domestic decline seems to be mirrored by our fall in our position in much of the rest of the world…

To put that more precisely, the American Empire is in decline.

The only exception, for the moment, is the US dollar.

We have looked at the reasons why that is the case…

The facts are pretty clear…

Even in the midst of a rather broad and deep decline in American economic and cultural dominance,

The one aspect of America that is still attractive is our international trade and financial system, such as it is.

Given that the above is more or less accepted as true, what happens when no one in the world wants the dollar anymore?

Well, one of the first things to happen would be the collapse of the current financial system.

Why?

The answer is simple; because the current system is based upon the dollar.  Most of the world’s transactions take place in dollars.

But, when dollars are no longer wanted, the system will collapse.

Will another financial system be set up to replace it?

Trading Reflects Values

Perhaps; more likely there will be regional, and/or commodity based arrangements set up.

But the underlying question is what will happen to the liberal, open international trading system?

Well, it is reasonable to deduce that a financial system typically mirrors the culture and values of the nation that sets it up.

America was founded upon free market principles and  is—or used to be—an open and free democracy with strong speech and private property rights.

The international trading system that America constructed after World War II reflected those values.

But what can the world expect once the US is no longer making—and enforcing—the rules of international trading?

What will the world look like, with say, a rising China and Russia as the two dominant players upon the global stage?

A Russia and China Dominated World

There are two schools of thought on this question.

Some think that both China Russia would strive to preserve the current system as much as possible—with a few changes, of course—because it is the system that allowed them to thrive economically in the first place.

For Russia, 70 some years of communism proved to be a failure in financial and economic terms; no to mention the social and political oppression that it brought to hundreds of millions of people.

After the Soviet Union broke up, many Western firms brought investment capital and technological know-how to Russia which has allowed it to tap into its vast oil fields, bring Russia back to a wealthy and powerful nation status.

The same can be said of China, and even more so.  It is beyond doubt that China’s rise has been a direct result engagement with the West, and specifically with the US and Western Europe.  China’s wealth has grown hugely in the past two decades.

Chinese GDP has galloped at 10% or more for the past decade or even longer.  This has only come about by the US allowing China access to US markets and manufacturing joint ventures.

The thought is that in a world where either or both Russia and China are making the rules, that neither would want to change too much of the international trade system that has benefited each so much.

But of course, there is another way to look at this possible eventuality.

Many, including myself, think that the system that we know today would be swept from the world like yesterday’s news.

The reason?

Because, as I noted above, trading systems and laws tend to reflect the social and political values of those creating them.

The most forceful, enduring idea behind Russia today is the same as it always has been: authoritarian and anti-democratic.

Even though Russia emerged from communism 20 years ago, the impulses for authoritarian rule continue and are growing stronger under Putin and his oligarchs.  They have no idea, and certainly no appreciation for a free and open system for that would threaten their existence.

And again, a similar argument can be made with China.

Unlike the Russians, the Chinese have yet to abandon communism and single party rule.  And make no mistake about it; single party – that is, communist--rule is what China is all about.

The hybrid system of leveraging capitalism externally while maintaining brutal communist rule at home has been a means to an end for China.

There exists no cultural or political value in China that would compel it to want to continue the liberal, open and free international trading system that is now in place.

In both instances, in a post-America world, both Russia’s and China’s will to power, to dominate, and to subjugate tell me that any ‘new world order’ would be far less free and far less wealthy than the one we have now.

Will this come about?

Who knows?

All I know is that something will come about to replace the system based upon a dollar whose days seem terribly numbered to me.

And those are…The Gorrie Details.

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