, 23 tweets, 8 min read Read on Twitter
01. I usually avoid mainstream politics, but enjoy @ScottAdamsSays’s periscope videos. Yesterday he asked some interesting questions about socialism and capitalism and UBI, and the size of the US military.

Here’s a few things it could be useful for Scott Adams know:
02. Instead of =socialists= v =capitalists= it might be more useful to view the key
social/economic conflict being between between =producers= and =consumers=.

English-speaking nations are now the world’s biggest consumers.
03. One very striking fact is 3 nations selected as examples of Capitalism (USA) and socialism (CAN, UK) are the three nations with largest Current Account Defcits.
04. Broadly the most productive nations send the Anglo nations real stuff, and receive IOUs in return. Most of these IOUs are US dollars – because it’s the world reserve currency.

The US dollar continually declines in value.
05. That looks a pretty terrible deal. Why does the rest of the world accept it?
Because they need dollars if they want to buy oil. This is called the #petrodollar system.

06. Foreigners must accumulate US paper (USD/USTs. This allows the US to run huge deficits. And funds the giant welfare/warfare state. US govt usually spends far more than it receives (USAFactsReport2018)
07. Why did the US become a consumption-based society?

Because it had to.

Because the international role of the US dollar forces the US to consume more it produces.
08. World reserve currency status means that the US must always provide the world with enough dollars. Foreigners earn dollars by sending real goods and services to the US.
This is called Triffin’s Dilemma and shows up in the ever-growing US Trade deficit.
Now $22 trillion USD
09. The USD is overvalued. Bigly. This is called the ‘exorbitant privilege’. Barry Eichengreen explains:
“It costs only a few cents for the Bureau of Engraving and Printing to produce a $100 bill, but other countries have to pony up $100 of actual goods in order to obtain one.”
10. Having the world’s reserve currency looked like a great deal in the short term (US IOUs in return for the world’s stuff). But over the decades it destroyed the productive parts of the US economy.

As @DaveChappelle said.
"I wanna wear Nikes, I don’t want to make them."
11. In Nov. 1989 main reason for the enormous US military collapsed overnight.
But the US military kept expanding.
Again it's the #petrodollar. The US military is a key factor in supporting the US dollar overvaluation.
12. US political & military actions *encourages* foreigners to use USD.
Remember when Saddam & Muamar tried to bypass the USD in oil trading?

So what do Iran, Venezuela, Russia, the EU and China all have in common? They are trying to bypass the USD in oil trading.
13. Again – this system has not had not much to do with party politics. Its the currency. It hasn't much mattered who the US president is / what party they belonged to.
14. In the US it usually doesn't matter who the president – but ocassionally it matters. BIGLY.

Luke Gromen pointed out this sequence.
Can you guess what it might predict?

Clue – the "J' stands for "genius'.

(Sorry, can't recall who told me that joke)
15. Too much debt bankrupts a country.
Too much welfare bankrupts a country.
Too much financialization bankrupts a country.

The way out of this trap is to make America productive again.
Trump calls it MAGA.
16. It looks part of MAGA means
• bringing the military home
• bringing the jobs home

That also means bringing the dollar home, ie ditching reserve status.

Some people smarter than me have realized this also means devaluing the US dollar.
17. Only then can the US start thinking about having affordable healthcare.
18. The most productive nations (Germany/Russia/China etc.) are moving the global currency system something more balanced. This process is called #dedollarization

This process lies behind a lot of the geopolitical turmoil we see (Iran, VZ, Nord Stream 2, trade wars etc.)
19. Now it seems like everyone important (except some powerful Wa. DC interests perhaps) wants the same thing; a devalued dollar, re-balanced trade, & multi currency oil.

Few talk about this openly. Wilbur Ross kinda hinted at it at Davos last year.
20. The most likely way get there is via a huge economic crash. Probably the biggest ever. But after that I am hopeful that we enter a new era of relative peace and prosperity. What @scottadamssays calls a #goldenage.
21. Understand that the international role of the US dollar (and how it ends) and the rest of 2019 will make a lot more sense.

My thanks to Another/Foa, @FOFOA, @VictorCleaner, @mortymer, @lukegromen @ttmygh and others for putting most of this story together.

Addendum A;

the words *capitalism* and *socialism* themselves are not helping the fake debate. I prefer @PaperMoneyEcon's description of the US dollar-based system as #creditism.
B; Since 1971 the US currency has been a form of debt (aka credit) in itself. With the only limit on how many are created being foreigners’ willing to accept them in trade. Looks like that era is coming to an end.
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