The cyclical economic mechanism has its limits
Fiat’s economic system led by the dollar was tailored to the constant growth of production and consumption, but due to the fact that resources are limited (by the whole world now). A new debt or money creation is not leading to further growth, it is leading only to the stagflation of a non-cyclical nature.
Indeed, we managed to escape another great depression in 2008. Ultra-loose monetary policy helped not to follow the 1929 deflationary crisis path. But instead, we got a tremendous rise in central banks’ balance sheets and global debt, up to unsustainable levels.
Thus instead of a deflationary depression, we are facing a much deeper inflationary one.
So with the global economic mechanism coming to stagflation, the US has fewer means and influence to sustain its superpower status and is losing its role as a global policeman. This fact has very profound implications worldwide.
Is there hope for Peace?
International law was designed in times of bipolar security architecture with its unique checks and balances. For a long time, there was a hope for a multipolar world to replace the bipolar system, but too many strategic mistakes were made by NATO / US which led to a rise of international competition to challenge its global superpower status.
So now, when the US is not able to continue being a global policeman in the world, we can see a growing temptation of other rising powers to violate established rules and regulations. It seems that no conclusions were made in the past 100 years, and the rule of force is still regarded as normal. Russia military forces’ invasion of Ukraine is for now the biggest and probably the scariest sign of this.
What will be next? Is Russia claiming the Baltic states back? Or did China start military operations in the South China Sea region? Or Iran gaining nuclear weapons? There is also uneasy peace between India / Pakistan over Kashmir; the balance in Israel/Palestine; or the many challenges in Greater China over Xinjiang, Tibet, Taiwan, Hong Kong, etc… If Russia achieves its goals in Ukraine, such behavior will be regarded as normal globally. This will be a precedent that finally heralds a totally different world. A world without the United Nations, without international law. This will be a world full of local conflicts, where big and strong countries can swallow their smaller neighbors neglecting the suffering of ordinary people.