The Presidential Election ended smoothly
It was commonly predicted that November 5, the day of the U.S. presidential election, would be the eve of mayhem. In reality, however, former President Trump won smoothly and any serious trouble occurred.
In “America Moving from Divide to Civil War,” which was released on October 30, I wrote:
If Mr. Trump wins, a right-wing mayhem will be avoided for the time being, but there will undoubtedly be a left-wing mayhem. On the other hand, if Harris wins by abusing blatant election fraud, it will be beyond the limits of the militias’ patience.
In any case, the divisions in American society are about to reach a boiling point, and no matter which side wins, mayhem is inevitable, and it is likely to escalate into a shooting match in the worst-case scenario.
Furthermore, if the number of votes is narrow, it is fully expected that the loser will make a fuss that there was election fraud. It is a hypothesis that the 2020 presidential election was rigged by a large-scale election fraud abusing mail-in ballots by the Democratic camp. To those who think it’s stupid, it sounds like a conspiracy theory. However, if there are voices accusing the election result of “election fraud” this time, it may indicate that the allegations of “election fraud in 2020” have been suppressed without clarification.
However, Mr. Trump won a landslide victory in the presidential election on November 5, and there was not mayhem. It is missing the point if we evaluate it a blessing in disguise. There are three reasons. First, the international community is in turmoil, second, the battle between Mr. Trump and Deep State (DS) is not over, and third, the problem of internal divisions has been left unresolved.
By the way, why was the prediction wrong? This is because the three conditions were met at the same time. First, Mr. Trump won a landslide, second, Harris readily conceded defeat. And third, unlike the 2020 presidential election, there was no illegal use of force to prevent Mr. Trump’s victory.
Of these, the mystery is hidden behind the third. There are three conceivable possibilities.
First is that there was no way to overturn Mr. Trump’s landslide victory. If it should be overturn forcibly, the reaction of the right would be too great, such as militias taking up guns nationwide and standing up. Therefore, it could not be moved into action.
Second, the procedure for dragging President Biden down in the middle of the campaign and replacing him with Vice President Harris was quite rough in the first place. President Biden’s indulgence was unbearable to listen to, and Harris was so unfit as a candidate that if she had followed the due procedure, she would never have been selected as a candidate. Therefore, it is highly likely that the Democratic camp predicted in early stage that “we could not win this time.”
Third, under the Biden administration, it has become clear that chaos and confusion have increased in both international and domestic situations, and that the hegemonic system of the United States has begun to waver. Contrary to our perception, DS might have evaluated saying as, “Well, Mr. Biden, you did a great job. Now Mr. Trump, it is your turn to do a good job.”
As will be discussed later, the most likely is the third reason.
Significant Retrogression in the last four years (International Affairs)
Let’s take a bird’s-eye view of the international affairs that has deteriorated during the Biden administration. President Biden was inaugurated in January 2021. Six major incidents that occurred since then are picked up in chronological order.
The first is the total withdrawal of U.S. troops from Afghanistan. On August 31, 2021, the last U.S. military aircraft stationed in Afghanistan took off. The U.S. sent troops to Afghanistan in 2001 to remove the Taliban forces, ending a 20-year military campaign and surrendering Afghanistan to the Taliban.
The second is Russia’s military invasion of Ukraine on February 24, 2022.
The third is the military terrorism against Israel by Hamas on October 7, 2023.
Both wars have been prolonged and escalated, with considerable casualties on both sides, but there is no end in sight to date.
The fourth is the weaponization of SWIFT. The first case was in 2012, when the EU suspended SWIFT services to 25 Iranian banks, including the central bank, in accordance with a UN Security Council sanctions resolution over Iran’s nuclear program. Subsequently, as part of sanctions against Russia, which started the war in Ukraine, the EU and the United States took measures to expel major Russian banks from SWIFT. Incidentally, SWIFT is a payment network system for international financial transactions provided by this organization.
The fifth is expansion of BRICS. Russia has teamed up with China to create a trade settlement system for crude oil and other products that does not depend on the dollar as a countermeasure to Western sanctions. Now they are scrambling to call on the BRICS countries to create a “BRICS currency”. In addition to the original five, the United Arab Emirates, Iran, Ethiopia, and Egypt have joined the BRICS as a mechanism to counter the Western countries and the G7, bringing the total number of countries to nine, and Saudi Arabia is considering to join.
The sixth is the revocation of PDS. The United States unilaterally suspended the convertibility of dollars and gold during the Nixon shock in 1972. At the same time, in 1974, in order to maintain the dollar hegemony, the United States signed the “Washington-Riyadh Secret Pact” with Saudi Arabia, and in exchange for the United States providing security, it established a system in which all crude oil transactions were conducted in dollars. Thus, the dollar hegemony was re-established. This is called PDS (Petro Dollar System).
Fifty years have passed and Saudi Arabia decided to cease this secret agreement in July, 2024. In this way, the PDS, which had been the cornerstone of dollar hegemony for half a century, disappeared.
The key question here is whether these six incidents occurred independently of each other or there is a common scenario in the background?
Significant Retrogression in the last four years (Domestic Situation)
There are a number of examples of the domestic situation that has deteriorated during the Biden administration. If I list them as I can think of, the surge in illegal immigration, the surge in fentanyl addiction, increase in violent crime and deterioration of security in major cities, the deepening of divisions between the left and the right, and so on.
As I have already written in “America Moving from Divide to Civil War,” a total of 7.3 million illegal immigrants entered the United States in 2021-24 under the Biden administration. Texas, which borders Mexico, has enacted its own state law and embarked on arrest and deportation, declaring, “This is an invasion and the federal government is abdicating its constitutional duty to defend the state.”
Thus, it is obvious that “the Biden administration has promoted the influx of illegal immigrants as a policy.”
Where is the cause of the division in the first place? It is clear that the root is the left’s excessive political correctness (PC) activities and excessive demands on the rights of LGBT and other minorities. Mr. Trump has already vowed to issue an executive order expelling all transgender service members from the U.S. military.
While many Americans have endured to avoid being targeted by insidious PC/LGBT attacks, it is quite natural that Mr. Trump, who has been the only one to repel the attack majestically, has received overwhelming support. Mr. Trump will launch a series of policies not to permit the PC/LGBT attacks without a doubt, therefore it is predicted that the left, which has lost the timing of the rally in the presidential election, will react to those policies and cause an uproar.
Who is to blame for the deepening of the division? It is very interesting to see an episode told by former Prime Minister Shinzo Abe in January 2021, when President Biden was inaugurated, in the Sankei Newspaper on November 30.
It is not Mr. Trump who created division, but the division of American society gave birth to President Trump.
It was liberals who created that division, and it occurred during eight years of the Obama administration, under which liberals have excessively brandished their PC as if they were righteous.
The question is, why did the Biden administration pursue such policies above mentioned?
What did the Biden Administration promote?
Having the bird’s-eye view, the Biden administration raises the suspicion that what it has been promoting so far. Judging by the results, it promoted the collapse of the dollar hegemony, undermined the United States, destabilized the domestic and international order, and pushed to transform the world from unipolar to multipolar system.
With regard to the war in Ukraine, it did not only deter the military invasion to Ukraine by Russia, but also provided weapons to Ukraine to enforce a proxy war with Russia, prolonged the war and made it a war of attrition.
At any time and in any war, there are groups that provide war funds and weapons in addition to two parties of the war. History proves that while the countries involved are exhausted by the war, they have made a lot of money from the war.
The sanctions of expulsion of Russia from SWIFT have prompted Russia to create an alternative to SWIFT as a means for international transactions. In the meantime, PDS ceased to exist and the “de-dollarization” has progressed. This series of events is a sign of the collapse of the dollar hegemony.
So why did President Biden push for it? This suspicion can be explained by interpreting the presence of DS behind the Biden administration. At the same time, it explains why Biden was elected president in the 2020 presidential election by massive election fraud abusing mail-in voting, and why they did not resort to use the same approach this time.
NBC News and other media reported on November 30 that President-elect Trump wrote the following comment on his “Truth Social platform”.
“Trump on the weekend warned the so-called BRICS countries he would require a commitment that they wouldn’t create a new currency as an alternative to using the greenback. Otherwise, it will impose a 100% tariff and say goodbye to its wonderful business with the American market.”
This shows that Mr. Trump recognizes that the collapse of the dollar hegemony has been promoted under the Biden administration, and at the same time, he issued a strong warning that such a situation will never be tolerated. Regardless of the pros and cons of the means, this is a process of deal that Mr. Trump has taken, and BRICS members will be forced to choose between the United States and Russia. Originally, BRICS stands for Brazil, Russia, India, China, and South Africa, but recently the S means Saudi Arabia. Mr. Trump’s threat is a check on Saudi Arabia as it dissolved the PDS and run for BRICS membership.
What is the Mr. Trump vs. DS Battle?
First of all, I would like to point out that when looking at the international situation, it is wise not to lightly label it as a conspiracy theory and stop thinking. It must be closer to the truth to think that most incidents occurring in the world are not accidental, but that there are forces that set them up, forces that wrote the scenario, and forces that make money from them. This was the case even in the Pacific War, as I wrote in “Bringing an end to the 80 Years of Cessation of Thinking, Part 3,” which was released on June 9.
The existence of DS has become widely recognized since Mr. Trump stated in public. Conceptually, it is understood here as a group of senior bureaucrats who do not always obey the president’s instructions but to pursuit their advantage or ideology, as well as international financial capitalists, the military-industrial complex, and the globalists.
Looking back at the modern history of the United States, it was the Democratic Party in general that started the war, and the Republican Party played the role of restoring to its normal state. It looks like it will be the same this time. This is because the war in Ukraine and the Israeli-Palestinian war occurred during the Biden administration, and President-elect Trump will end it.
In the modern history of the world, when a war broke out, there were financial capitalists who supply money to both parties at high interest rates. In the Russo-Japanese War in 1904-05, most of the war costs were raised in London and New York through investment banks in the United Kingdom and the United States, which operated globally. There have been groups earning a lot of money from war, now and then.
Moreover, there are groups in the world who prefer chaos to order, prefer instability to stability. To cite recent examples, when the Lehman shock, the coronavirus pandemic, resource inflation, or large-scale disasters occurred, governments around the world responded by making huge supplementary budgets. It is a fact that the more unstable the world becomes, the more money circulates, and the more actively the groups flock to the money.
When the coronavirus pandemic hit the world, it was mainly American companies that provided vaccines worldwide and made huge profits. It is also true that most governments bought up vaccines for their populations at the asking price.
In the wake of the two world wars, the hegemony of the world shifted from the British Empire to the United States, and after the war, the United States reigned as the hegemon. In particular, during the Cold War between the United States and the Soviet Union, Republican President Reagan launched an arms race against the Soviet Union, causing the Soviet Union to collapse and disintegrate. Since then, the era of unipolar America has arrived.
The unipolar America era was a period of stability, and wars between countries diminished except terrorism and guerrilla warfare. If the U.S. unipolar system should be shaken and move toward multipolarity, the world would become unstable and regional conflicts would occur more likely. For those who want to profit from war, it is desirable for the United States to be weakened. In addition, for globalists such as the M7 (Magnificent Seven), the state is no longer an entity that imposes various constraints.
As already written, the collapse of the dollar hegemony and the movement to strengthen BRICS unity, would act to destabilize the world. The Biden administration has tried to promote destabilization, and President-elect Trump has declared that he will not allow it.
Mr. Trump’s goal is to make America great again (MAGA), and he will maintain the dollar hegemony and will not allow any country to challenge it. Focusing on this composition, it is obvious that Mr. Trump is nothing but an enemy to DS.
American Hegemony is approaching its limit
Next year, 2025, will be 80 years since the end of World War II. It will be 53 years since the Nixon shock that stopped the convertibility of dollars and gold. It will be 50 years since the establishment of the PDS which determined the maintenance of the dollar hegemony system. Furthermore, it will be 34 years since the collapse of the Soviet Union, by which the unipolar system of the United States originated.
During this period, the decline of U.S. power has gradually become a reality, and under the Biden administration, in particular, the world has moved in the direction of multipolarity. At this timing, the Trump administration will be inaugurated in January 2025. The battle for maintaining dollar supremacy will intensify.
By the way, how much money is overflowing in the world. Let’s see the data.
– Global debt: $377 trillion ($80 trillion in 2010)
– U.S. budget deficit: $1.83 trillion (FY2024), 8.1% bigger than FY2023, the third largest, after the $3.13 trillion in FY2020 and $2.77 trillion in FY2021
– U.S. budget deficit/GDP ratio: 6.4% (FY2024), worse from 6.2% (FY2023)
– The value of the dollar against gold: the market price is 1 ounce = $2000, depreciating to 1/57 in the 80 years since the Bretton Woods Conference (1944)
– Total amount of dollars in circulation: 5~6 trillion dollars in the U.S., $50~100 trillion estimated worldwide
Here, the following three points are particularly noteworthy.
– Global debt has increased 4.5 times in the 15 years since 2010
– The U.S. budget deficit has increased year by year and reached to $1.83 trillion, and has also increased as a percentage of GDP.
– The total amount of dollars in circulation around the world is estimated to be more than 10 times that of the United States
What does it mean that the United States is the hegemon of the dollar in the first place? The dollar is used as a settlement currency not only in energy but also in global trade, and the world needs dollars to conduct trade. In other words, as long as the worldwide demand for dollars exists, the U.S. has the privilege of printing any amount of U.S. Treasuries and dollar bills.
According to a Bloomberg article on December 3, the Bank for International Settlements (BIS) conducted a three-year survey in 2022. It found that foreign exchange market transactions were worth $7.5 trillion a day, and about 88 percent of which were made in dollars.
In exchange for the privileges of the hegemon, the United States has the world’s largest and most powerful military force, and while it maintains a presence with U.S. military bases around the world, it also has the world’s largest budget deficit. Despite running an annual budget deficit of $1.83 trillion, some countries continue to buy huge amounts of U.S. Treasuries every year, which has maintained U.S. dollar hegemony.
However, this privilege does not last forever. This is because the amount of redemption of government bonds issued in the past is increasing year by year, and the amount of newly issued government bonds is also increasing due to the increase in the fiscal deficit. It is possible to maintain the hegemony of the dollar as long as buyers exist. But if the shortage of buyers should become a reality. the United States would not be able to make a budget, and the hegemony of the dollar would end.
As for the holders of U.S. Treasuries, roughly speaking, 40% are in China, 30% in Japan, 15% in Saudi Arabia, 5% in the United Kingdom, and the remaining 10% in others. The total amount of U.S. Treasuries issued is guessed to be $16 trillion. These figures are only estimates.
Three possible risks to the survival of this regime exist, two of which are external factors and one is internal factor. The first risk is that the United States considers China to be the world’s greatest enemy, and it is well known that Mr. Trump is trying to wage a tariff war.
The second risk is that Saudi Arabia has not only decided not to renew the PDS which has been maintained 50 years, but has also acted to join the BRICS.
Both China and Saudi Arabia have a card to play with the U.S. of selling U.S. Treasuries, and if they should actually sell in large quantities, the U.S. dollar hegemony would collapse at that point.
The third risk is regarding the possibility that the U.S. could not redeem its national bonds. If it should happen, confidence for the dollar must disappear instantly, and the dollar would crash.
When we think about it this way, we can see that the realization of MAGA, which is advocated by the new President Trump, is premised on maintaining the dollar hegemony, and that it will be inevitable to steer a very difficult course.
Modern capitalism is also approaching its limits
In “The Bubble Economy and Capitalism approaching the Limit(3),” which was released on January 31, I discussed what a bubble is in the first place, then discussed the bubble of financial capitalism that is currently underway, the U.S. bond bubble, and the Chinese real estate bubble. Here are some key points:
The government’s increase in the budget deficit has been the biggest cause of the bubble economy. And the enormous amount of money supplied to the financial markets wielded enormous power in politics, economy and war, which has been the cause of the increasing distortion of capitalism.
In this process, the cycle of bubble expansion and collapse was repeated, and the size of bubble expanded each time the cycle was repeated. And now, the bubble is about to burst in the United States and China in tandem, and after the bubble bursting in the housing and real estate markets, the next bubble is about to burst in the bond market. In terms of the scale of the bubble, we are now on the eve of the final and largest bubble burst.
There is a transaction called “yen carry trade”. It is a speculative business that skillfully exploits the exchange rate between the yen and the dollar and the interest rate difference between Japan and the United States.
In particular, in recent years, when the real estate bubble burst and the economic slowdown became obvious to everyone in China, money was withdrawn all at once and flew to the United States. Because high interest rates are maintained, and bubbles have been inflated in the stock, securities. While the world is suffering from sluggish growth, only the United States is trying to continue growing.
It is told that what is necessary for the expansion of a bubble is the inflow of money and the existence of the market. Today, the bubble has grown in such a way that Japan, with its ultra-low interest rates, provides funds and the United States, with its high interest rates, provides the market. It is worth noting that both the Japanese and U.S. governments are involved in the formation of the bubble.
In this respect, there is a crucial difference between bubble bursts already occurred and to be occurred in the future.
First of all, the position of the government is different. In the past, the role of governments and central banks was to take measures to limit the damage caused by bubble bursts. However, in the near future, the government and central banks are not in a position to limit the damage and cannot take remedial measures because they are tied to the bubble parties as money suppliers.
What is predicted to happen next is the burst of M7 bubble and Bond bubble. In particular, a situation in which the state is unable to issue and redeem new government bonds is nothing less than a “national default” and the country will be forced to repudiate its debts.
It is told that about 70 countries around the world, led by Argentina, are likely to be unable to repay loans from the IMF, the World Bank, or other countries. The bankruptcy of the state can be seen as a stalemate of modern capitalism, which has been implemented in the bubble economy.
President-elect Trump has warned the BRICS that he will not allow an alternative to the dollar to emerge, and he has made it clear that maintaining dollar hegemony is a vital requirement for the incoming administration. At the same time, it is proof that the hegemonic system of the United States, which has been established in the bubble economy, is approaching its limit.
If the bond bubble should burst in the United States, it would be devastating to the world’s financial markets, and modern capitalism, which has been premised on a bubble economy, would collapse. Thus, it must be borne in mind that Trump’s second administration will emerge in a critical period in the history of capitalism, when money has become too inflated.
Is Mr. Trump a Don Quixote today?
Finally, I would like to conclude by expressing my opinion on who or what Mr. Trump is fighting against.
The first is the battle against the Democratic Party, the left, and the DS group on the domestic battlefield of the United States to “correct the excessive ideology and restore the original America.” Under the Democratic Party administrations since President Obama, an excessive and radical ideology of “PC, LGBT, and demand for diversity” was prevalent in the country. Obviously, Mr. Trump has been fighting to restore the original America for the working class, the middle class, and the immigrants who became American citizens through the proper procedures.
The second is the battle in the international community. Mr. Trump tried to restore American nationalism and national interests against globalism, despotism represented by Russia, China, and Iran, propaganda about global warming, and various UN agencies that had become a place for minorities to loudly demand their rights.
And the third is a battle to demand that NATO and allies including Japan, to bear their fair share of the burden and play a role if they pursue peace, security, and prosperity. If they should not accept, the United States would leave NATO and reduce U.S. military base around the world.
Looking at the situation through this observation, we can see the reality that the United States, which has been in charge of the hegemonic system for 80 years since the end of World War II, might be standing on the brink of even budgeting with a huge deficit. Indeed, it seems that “Mr. Trump is trying to play a Don Quixote today.”
Japan has enjoyed economic prosperity by being subordinate to the United States after WWII, but with the inauguration of the second Trump administration, I dear say that such a naïve perception will not be able to survive the turbulent era when “one wrong step could lead to another war.”
It will soon be 80 years since the end of WWII, and U.S. unipolar system has been obviously cracked. We must seriously face the proposition of what kind of international society to create, how to rebuild the system for maintaining order, peace and prosperity, and what role Japan will play in achieving this. We must prepare for an answer to this proposition.
The era of using the U.S.-imposed Constitution as an excuse to escape its original role will undoubtedly come to an end with the inauguration of Trump’s second administration.
Finally, I would like to mention this. There is a woman named Susan Wiles (b. 1957) who is to become the chief of staff in Trump’s second administration. She is highly regarded as a famous staff member who brought a landslide victory over Trump in the presidential election.
As I have mentioned, we have to admit that the international and domestic situations that await Mr. Trump are all in turmoil, and in such a difficult situation, Mrs. Wiles will take the helm of the White House. The appearance of Mrs. Wiles, as well as Mr. Trump who try to confront challenges with courage and try to bear the burden of the times, gives us a glimpse of the greatness and soundness of the United States.
Eiichi (Ike) Kiuchi, OSI Analyst
