Could ant colonies and social structures give an insight into human hierarchical structures, the rise of Empires, the Queen ant, and its symbolic reserve currency status?
The Queen ant, the Superorganism, will sacrifice the ant colony to retain the throne.
So the human equivalent of Queen ant in ant colonies would-be superpowers, which represent the apex of human hierarchical structures.
“The Queen ant, the Superorganism, will sacrifice the ant colony to retain the throne”
WIN INVESTING
Reserve currency status keeps the superpower, the Queen ant, on the throne
US dollar exorbitant privilege means that the colonies, members of the worker castes, will have to labour away. The least able of the worker castes will provide commodities. Better skilled and educated worker castes will add value and provide high-value end goods and services.
So reserve currency status means that a superpower can obtain commodities, valuable goods, and services because the colonies, the rest of the world, willingly toils away exchanging natural resources, labour, ingenuity for the world’s reserve currency, USD.
The superpower, the Queen is relieved from the burden of toil provided that its minions willingly accept USD as a mode of trade and a store of value
Put another way, the exorbitant privilege of reverse currency status is that the industrial class no longer needs to manufacture, they just became glorified box shifters. So offshoring of factories to low labor cost regions was more profitable than manufacturing onshore. USD reserve currency privilege meant that the relative strength of the USD made foreign-made goods cheap. So, the buy abroad, ship it, then slap on your sticker makes profits.
“reserve currency status means that a superpower can obtain commodities, valuable goods, and services because the colonies, the rest of the world, willingly toils away exchanging natural resources, labour, ingenuity for the world’s reserve currency, USD”
WIN INVESTING
Reserve currency status also meant the world willingly stores their savings in USD, so demand for reverse currency increased with global economic growth. Moreover, because nearly all vital commodities are in USD, that also keeps demand for reserve currency buoyant. So with buoyant demand, the Federal Reserve can create USD to fund the Federal Government, the welfare state. The rise of food stamp dependency and worthless higher education courses disguised unemployment and increased the public deficit.
Financial elites on Wall Street enriched themselves by recycling the rest of the world’s savings as cheap loans, which also helped fuel a consumer boom funded by consumer borrowing.
What then followed was reserve currency privilege abuse that also led previous superpowers in history on an unsustainable trajectory
All previous empires, the Rome, Dutch, and the British ended with a loss of reverse currency due to runaway debts.
So the twin blowout US trade deficit of 2 trillion and public deficit of 30 trillion US dollars is an unsustainable model, which is already leading to negative real treasury yields.
The point where borrowing to consume foreign-made goods and services is no longer sustainable is when the supply of sovereign bonds, which then gets monetized, exceeds the demand for those sovereign bonds.
“with so much debt in the system, the Fed’s leeway to raise rates is limited due to the danger of triggering the world’s largest debt default” – Win Investing
US reserve currency status is the late-cycle where excessive money supply M2 has led to currency debasement
So when the supply of something exceeds its demand, that means the price has to rise. In other words, the price of money, the interest rate would have to rise.
But with so much debt in the system, the Fed’s leeway to raise rates is limited due to the danger of triggering the world’s largest debt default. The US public deficit is 30 trillion dollars. Moreover, the total stock of US dollar-denominated debt of non-banks outside the US is at 11.4 trillion US dollars, according to the latest BIS estimate.
If the Fed can’t raise rates to save US reserve currency status, what it can do is increase the demand for USD
This is where geopolitics comes into the equation of a reserve currency.
Make no mistake about it, the EU is a colony of the US.
The US refers to Germany as their ally, but do allies keep 21 military bases and 24,000 troops in a country and still call it an ally?
Germany, the economic engine of Europe, is the most US-occupied territory on the European continent.
Post WW11, the US military bases remained the highest in Europe.
Cold war politics, which we believe is being engineered in Europe, legitimizes NATO and that shifts the demand curve for USD.
A swift way to dent a 2 trillion USD trade deficit is to keep the military-industrial complex sales tills ringing.
“90% of the world’s 5-nanometer microchips are made in Taiwan, which makes supplies unstable due to natural disasters and geopolitics. Intel is leading the way to bring innovation and production within the US” – Win Investing
Reserve currency status is about keeping horses with blinders on the USD race track
So the US doesn’t want Germany buying energy from Nord Stream 2, a Russian to German gas pipeline because that would mean an energy deal outside the USD orbit. Forcing its occupied territories to buy energy transacting in dollars increases the demand for US dollars and keeps the dollar on the throne.
So a cold war increases demand for US dollars because it keeps the EU within the USD orbit and away from pivoting East along the silk road.
Another way of strengthening reserve currency status is by reducing the level of imports and increasing exports, which has the effect of increasing the demand for USD.
Bringing back production and innovation onshore could be a new trend
The Fabless model could be over, particularly for strategic industries.
So, for example, 90% of the world’s 5-nanometer microchips are made in Taiwan, which makes supplies unstable due to natural disasters and geopolitics. Intel is leading the way to bring innovation and production within the US.
The fabless model is over, and Intel will lead the way to bring fabs back to the US. Those who understand cold war politics USD hegemony sense what is happening. Strategic companies chip makers will lead the trend. The pharmaceutical sector is another one that will also do research development and production onshore.
So these new high-tech automated factories will improve the US trade deficit and shift the demand curve.
Reserve currency status is strengthened by increasing demand for USD by keeping EU defence and energy policy on the USD race track.
Taking production, particularly strategic industries back home reduces the trade deficit and increases the demand for USD.
