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Economic force multipliers

by | Sep 18, 2022 | Philosophy | 3 comments

Note: the following post is an expansion of a series of lengthy comments that I made on my Telegram channel earlier today.

The Shanghai Cooperation Organisation (SCO) conference wrapped up in Samarkand, Uzbekistan (not Astana, Kazakhstan, which is what I mistakenly told people earlier – I got my conferences mixed up, because Iran, Russia, and Turkey met there a couple of months ago). The results of that conference are not fully known or understood yet, but they will be felt for decades to come. I think the mood of the SCO can be best understood by looking at just one picture:

That one image has become quite famous around the world. It shows Ergodan sitting and telling a story to Putin, Lukashenko, and what look to me like assorted Chinese dignitaries with their heads in the way of the camera. More than anything else, it shows the mood on display at the conference – one of joviality, camaraderie, and relaxation, while discussing amazingly potent business deals.

If you actually look at what happened during the SCO – do not pay attention to the idiot whorenalists of the Western (((media)))))))))))), those wormtongues lie through their fangs about what was said and done there – then you will quickly understand that the world as we know it is about to change in a very big way.

MAFFing out the SCO

To understand what is likely to happen, we first need to understand just how much power gathered in one place in Samarkand this week.

I did some MAFF last night (that’s not an acronym, it’s just me making fun of the Ebonics equivalent of “math”), which I shared with my Telegram chat members today after correcting a quite embarrassing cock-up that I made with respect to Russia’s nominal output. Here it is:

CountryPopulation (M)GDP (US$ B)GDP PPP (US$ B)% Global Pop% Global GDP% Global PPP GDP
Sri Lanka21.4184.52313.000.27%0.09%0.21%
TOTAL SCO3,590.2124,842.3450,176.71

Look closely at the proportions in the rightward columns. The members of the SCO, plus its largest observers, account for roughly 45% of the world’s population, and about 26-34% of its economic output, depending on how you measure it. It is growing rapidly into the world’s most powerful economic development and cooperation bloc.

When 30% or so of the world’s economy decides to move away from the dollar, what do you suppose will happen to the value of that currency?

The Asteroid that Killed the Dollarsaur

Consider what happened to global oil and gas prices when the Empire of Lies decided to cut themselves off unilaterally from something like 15-20% of the world’s energy resources, supplied by just one country. In one stroke, supply to their countries dropped by at least 15% – and that impact multiplied itself due to speculation in the futures markets. Look at current energy prices, and that will give you some idea of just how shocking the impact was.

Now imagine what happens when demand for the dollar drops by 30%, while the US continues to crank out supply of those same dollars.

Yep – we are looking right down the barrel of a complete and catastrophic collapse of the dollar’s value. And it will happen within the next 5 years, if not sooner.

Approximating Economic Potential

One point of interest worth noting – if you look at the ratio of each country’s share of the world’s population in that table above, relative to each country’s share of nominal GDP, you can get a very approximate measure of true economic power. The ratio gives you some indication of the productivity of a country’s population.

The Russians, for instance, make up 1.83% of the world’s population – but account for 1.85% of its economic output. This indicates a country that is generally achieving an impressive level of economic output and power.

The figure is even more stark for China – about 18% of the world’s population, accounting for about 18.5% of its total output. This, again, indicates an economy with immense productive and technical capacity, operating at a high level.

Contrast this with India, where they account for almost 18% of world population, but only 3.3% of nominal output. This indicates a country that is very poor and nowhere near its true potential.

The Debt Trap

This metric does not account for leverage, however. If you look at the US’s ratio, that is staggering – the US accounts for only about 4.15% of world population, but a stunning 24% of its total economic output (in nominal terms – in PPP terms, that proportion drops to about 16%). This seems extremely impressive, as it indicates an economy punching FAR above its weight, with a hugely productive and advanced population.

The problem with that idea is the fact that the USA is leveraged to the gills and beyond. Its true debt-to-GDP ratio exceeds 500% once you account for all of the unfunded liabilities. That money has to be paid back eventually (or defaulted upon – the more likely outcome, in America’s case). Once you strip out the impact of debt, the reality is that the American economy is greatly diminished relative to the rest of the world. (As is China’s, whose true debt-to-GDP is more like 300%.)

Once you factor in leverage, you see that the Russian economy is not 1.85% of the world’s production in nominal terms, or 3.26% of it in PPP terms – it is well north of 5%, because Russia’s debt-to-GDP ratio is a very stable and exceptionally healthy 25% or less.

That gives you some idea of the true power and strength of the Russian economy. It is NOT a gas station masquerading as a country. It is in fact a true superpower.

As I have pointed out before, Russia can pull out of the ground roughly US$28 TRILLION in known, recoverable energy reserves – that’s just ENERGY ALONE. Never mind food, lumber, military hardware, shoes, finished goods, high technology, and about a dozen other fields – the Russians can, on their own, support at least 20% of Asia’s energy needs, along with their own domestic ones, for about the next century, at minimum.

And that is before we get to the fact that the Russians are investing heavily in nuclear power and fission technology. They are heavy users of nuclear power, and are happy to help other countries build their own nuclear power plants.

In other words, the Russians build for the future. And this will act as a force multiplier, if you will, for their economic and military strength in the future.

The Infrastructure Multiplier

What about the US and much of the rest of the Empire of Lies? What can we say about those countries?

Unfortunately, the US appears to be degrading very rapidly into a shithole country. You can claim all you like that these problems are native to Blue cities and states, primarily. I would not disagree with you. But, keep in mind that the Blue states and cities are also the biggest and richest in the US. Simply by virtue of being so large and wealthy, they do attract a disproportionate amount of investment and capital.

The fact that they squander it so readily is to be expected. But there is a finite pool of such investment capital available – that’s just a fact, no matter how big it is. This means there is less investment capital available for Red states and cities, which are by definition smaller, sparsely populated, and less wealthy.

Multiplier effects are real, just not in the way that Keynesians think they are. And the fact is that in the USA, they aren’t working.

The US has some very severe structural problems that it continually fails to address. Europeans visiting the US are always shocked by the awful state of the infrastructure – they are used to big broad clean well-maintained highways and highly functional railway systems, but they come to America and find decrepit, broken, poorly maintained airports, roads, bridges, tunnels, highways, and so on.

Europeans usually fail to grasp the sheer size of the country when they argue that their own rail systems are better – rail makes very little sense as a means of rapid transport in such a gigantic place, relative to air travel. But they do have a point about how backward the US has become with respect to most of its infrastructure.

Compare the infrastructure that you find in the US with what you find across much (not all) of Asia. It is a staggering contrast. The Chinese boast constantly about how much they invest in roads and rail – you have to discount quite a lot of that, given how shoddy the quality of their work is, but the fact remains that they do have the world’s most extensive highway and high-speed rail systems.

Admittedly, in densely populated parts of the world, like southeast Asia, high-speed rail makes plenty of sense. In America, not so much. Yet the cost of shitty infrastructure is real, and serious. There IS, in fact, a real multiplier effect that comes from good roads, rail, airports, internet, and public facilities.

America has chronically underinvested in its actual infrastructure for decades – think of all of the money that was wasted on pointless Forever Wars in the Dirt World, and then think of what that money could have done to rebuild and reinvigorate the American heartlands. It’s enough to make you weep – or make your blood boil.

The West’s Devalued Asset

When you look at the USA, and to an even greater extent at most of Europe, you see a toxic combination of extreme leverage and chronic underinvestment in the things that actually matter – roads, infrastructure, education, cheap energy, and manufacturing capacity. These things all tie together. You cannot separate them out from each other.

The ONE thing that the West truly had, which made it greater than any of its peer competitors for centuries, was the rule of law. This WAS a force multiplier, make no mistake. There was once an ideal in the West that all men were equal before the law, and that laws existed to protect the weak from the strong – because the strong were themselves subjected to the law.

This was not a new idea for the West. It dated all the way back to Roman times, to the ancient days of the Roman Republic. The ideal of the Roman Law was so strong that patricians would literally die to uphold it. A Roman patrician subjected to a mortal insult by a peer would happily kill the offender – and then would go home, run a hot bath, and open up his own veins, to die with honour, because that was the penalty under Roman law.

The legendary general Cincinnatus had to be torn, weeping, from his plough, to take command of Rome’s armies in a dire emergency and take up the rank of Dictator. When the emergency was done, he promptly laid down his powers and went home to his farm, because Roman law explicitly forbade Rome to have a king.

This iron discipline and adherence to the rule of law propelled Rome to heights never seen before, and seldom since. It was that ideal of law that made its way into the West – and that, more than anything else, made the West strong and coherent.

Today, the idea of fidelity to the rule of law is laughably absurd. There is no such thing – not when you can go to jail in PommieBastardLande just for hurting someone’s feelings, not when the son of a Fake President can commit flagrant felonies repeatedly on camera and get away with it, and not when an actual President can be persecuted by his political opponents just so that he stays out of power.

Conclusion – the Quality of Quantity

Also attributed to Stalin, by the way

The future will be multipolar, whether the Empire of Lies likes it or not. Its greatest force multiplier, the dollar standard, will shatter once enough of the world stops using it. And we must never forget that these multipliers work just as readily in reverse, too.

Force multipliers amplify the effect of a positive attribute. They do exactly the same with a negative attribute. Once de-dollarisation hits in earnest, the immense oversupply of dollars will cause hyperinflation all over the dollarised world – thereby hastening its demise even further. Already we are seeing countries in Eurasia looking to alternatives that suit their own economic and political needs better. The alternatives are currencies tied to the production of real things – in Russia’s case, the ruble is backed by real, hard commodities, and in China’s, it is backed by the immense manufacturing power of the country itself.

The SCO powers have mass behind them that the Empire of Lies can no longer fight against, because it is too enfeebled from DECADES of wasted opportunities and debt-based debauchery. The time of its final collapse is coming – and it will happen suddenly, much faster than any of us can understand or anticipate.

Let us hope that the world which replaces it will be better and fairer – for it appears that the West’s one great virtue and asset, the rule of law, is about to disappear with it.

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  1. Ramkumar

    And of course since they learn from history, it will not be the Creature from Jekyll Island.

  2. Ramkumar

    “The ONE thing that the West truly had, which made it greater than any of its peer competitors for centuries, was the rule of law.”

    I will draw the following corollary, the adherence to excellence and discipline of the sciences (and engineering) was a competitive advantage but this has been abandoned for equity. It is no wonder that I haven’t interviewed a US born and raised PhD engineer in about 6 years.

  3. Feckliberals

    The failure or the right wing to crush liberalism out has caused this.


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