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The Coming Trade War and the End of the American Empire

June 20, 2018

Trump’s current policy is a well thought out plan to detach the United States from the rest of the world and bring about the end of the American Empire

Trump’s foreign policy involves withdrawing the United States and leaving East Asia to China, the Middle East to the Israelis and Saudis, and Europe to the Germans.  This will have the effect of ending the liberal internationalist world order that as existed since 1945, and reversing US foreign policy since 1918.

Trump’s policies are likely to be permanent because while they are strongly opposed by US policy elites, they are likely to prove extremely popular among ordinary Americans.  Once they come into effect there appears to be no political opposition or counter-ideology.

The notion of the United States pulling back from the world is extraordinarily unpopular in the policy centers of Washington D.C., New York City, and Silicon Valley, however, it is extremely popular among ordinary Americans.  If Trump loses in 2020, it will likely be to Democrats more aligned with Bernie Sanders than Hillary Clinton, and unless there is a massive popular movement in favor of interventionism, this is likely to be the end of American global leadership.

There will almost certainly be a trade war between the United States and China, but both sides will act to insure that this does not spill into a shooting war.

The economic policy makers in China are US-educated economists who are attempting to avoid the mistakes that the United States made in the 1990’s.  In the 1990’s, American jobs moved offshore to East Asia, which killed working class communities in the Midwest.  China is currently facing a similar economic transition as low-skill jobs are moving to Southeast Asia and ultimately Africa.  However, Chinese economic policy is extremely interventionist, and so China’s policies are to first *encourage* the movement of low-skill jobs to One Belt/One Road nations, while at the same time actively using state efforts to create new high technology jobs in industries such as solar, blockchain, and robotics.

The “Made in China” policy is simply non-negotiable as it is intended to prevent the hollowing out of Chinese industries that the United States faced in the 1990’s.

The trade war will have extreme impact on financial services and will cause financial services to move away from New York and San Franscisco to Asian centers like Hong Kong and Singapore.  Bitcoin is likely to replace the US dollar as the medium of exchange for trade.

The trade war will end the flow of US dollars to China, and without US dollars, there will be no “recycling” of funds into New York and San Franscisco.  This means that trade flows will stop between US and China, and be replaced with trade flows between China, Russia, India, and Africa.  Because of the lack of US dollars, some form of cryptocurrency will be the new settlement mechanism.  Bitcoin is likely to become the main settlement mechanisms.  As Hong Kong and Singapore become the new financial centers, it is likely that currency mechanisms based on the cryptocurrency based on the Hong Kong dollar and Singapore dollar will become important trading mechanisms.

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