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Is the Empire over-extended?

By       Message Jean-Luc Basle       (Page 1 of 1 pages)     Permalink    (# of views)   3 comments

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View Ratings | Rate It Headlined to H3 6/5/17

Author 75077
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Donald Trump is a loose cannon whose place in the White House is questionable. This being said, the Electoral College voted him President of the United States. So, why is there such a campaign of slander and accusations against him without precedent in American history? Because he is challenging the United States' hegemonic policy. He believes that far from reinforcing the country, it is weakening it.

In 1980, Robert Gilpin, a Princeton University professor, explained in a book that an empire expands as long as the benefits it draws from it exceed the costs. Although it is impossible to conduct a cost-benefit analysis, in the case of the United States, the result is unambiguous: the United States is over-extended. The costs largely exceed the benefits, as demonstrated by the budget deficits, trade deficits, public indebtedness, etc.

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If we focus on the budget deficit, we see that it is essentially due to the defense budget. Officially, it amounts to $615 billion for fiscal 2017/18. Unofficially, it totals $1,100 billion, if the cost of the secret service and veterans are included, i.e. about a quarter of total outlays. Using the official number as a yardstick, one has to total up the defense budget of seven nations to reach the American figure (China, Russia, Saudi Arabia, France, Britain, India and Germany).

Recurrent budget deficits increase the public debt, potentially threatening the dollar. The American currency is a pillar of the United States' might. Its value must be maintained at all costs. New York City has been the world's financial center since 1945. Two thirds of international reserves are held in dollars deposited at the Federal Reserve. Trade transactions and international borrowings are denominated in dollars. This gives the United States an enormous power on the world scene which the government uses if necessary, as it did in 1981 when it froze $100 billion of Iranian assets in retribution for the hostage crisis.

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This power rests on trust -- the trust the world places in the dollar. Its value is based on the health of the American economy. Trump believes the public debt threatens the American economy. To prop it up, he wants to renegotiate past international agreements, viewed as disadvantageous to the United States. He is acting like a CEO analyzing his financial statements.

In so doing, he is running counter to the neoconservatives' credo which postulates that the United States is destined to lead, i.e. dominate the world. Therefore, the issue is not to know who Michael Flynn or Jared Kushner talked to, but what will the foreign policy of the United States be. The stakes are huge. Should the conflict result in a deadlock, the consequence could be a constitutional crisis, or even possibly a revolution.

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Former Vice President Citigroup New York (retired) Columbia University -- Business School Princeton University -- Woodrow Wilson School

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