America's Great Rip-Off
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America's Great Rip-Off According to the Gospel of the Drill-Baby-Drill
There is an idiom: "Be careful what you wish for." It means considering the potential negative consequences of getting what you want.
USA leadership should be mindful of this insight.
To fuel consumption and growth, the US imports all kinds of minerals, manufactured goods and highly educated people.
The US sells their manufacturing and software products to the world. Countries like Canada, China, and Mexico import those goods. However, they export more goods, measured by their monetary value, than they import from the US.
The negative balance of payment for the US has reached 36 000 000 000 000 (trillion) dollars.
The interest payment on this debt is 392 billion as of January 2025. The US balance of payments deficit in 2024 was $918.4 billion.
Therefore, debt of 918.4 billion plus 392.0 billion interest payments equals US$ 1 310.4 billion.
This amount is more than the GDP of the Netherlands and increases yearly.
Considering this ever-increasing debt, how do Americans keep their living standards much higher than the global average?
They print as many dollars as they need because the dollar is the undisputed reserve currency.
This party might end in the medium term as there are some challenges to the dollar's supremacy. Several leading players in the market, China, Russia, and Brazil, are already using their currency in some of their bilateral trade.
Controlling reserve currency provides considerable advantages for the US as they can print as many dollars as they need. Printing brings the dollar's value down.
However, this green paper pays for tangible value goods that have been dug out of the Earth, manufactured in factories with the digging country's labour, and then transported to the US at their cost.
With these countries importing less in monetary value than they export, they create a trade deficit for the US; in other words, the US owes them money for goods delivered, and the US gives them IOUs in the form of treasury bonds and other monetary instruments.
So, Trump is complaining that countries that have delivered goods to American consumers and didn't get paid for it are ripping the US off. I am sure that there are other factors in this process, but these are basics, and they point in the opposite direction of Trump's assertion that these countries rip America off.
The logic points to the view that countries that deliver tangible goods in exchange for depreciating fiat currency are being ripped off for the amount of the trading deficit.
There are opinions that the US will never be able, or intends to, repay this debt, which increases, including interest, by more than a trillion dollars annually.
The Dollar Illusion: Who Needs Who?
The US' dominant role in the global economy benefits immensely from its unique position as the world's reserve currency issuer. Contrary to Trump's claims, a deeper examination reveals that the rest of the world bears the brunt of the dollar.
Let's examine it more closely.
Trump's insistence on tariff increases opens Pandora's box of international realignment in trading relationships. There would be alarming consequences if nations subjected to US tariffs and others opposed to the dollar's supremacy shifted their trade towards one another and bypassed the USA.
Canada is already shifting their imports of liquefied gas from the US to Europe.
It seemed impossible only a few weeks ago, as people were stuck in a stale mindset of the status quo, but they are waking up to resist bullying. Considering the US population of 330 million is 5% of the global 8 billion population, what eight billion population cannot consume that 330 million Americans do?
It's just a matter of money to buy goods, and they can consume a lot more. Consumption is not an art. Often, it is just an impulse not exclusively reserved for Americans.
Exporting Dreams, Importing Wealth: America's Intellectual Colonialism
The US imports vast amounts of raw materials, manufactured goods, and especially, skilled professionals worldwide. Many countries invest decades to educate and train their best and brightest, only for the USA to scoop down like a hawk on a bird and take them to its nest.
This recruitment of the best and brightest contributes to America's economic strength, while the brain drain negatively affects ripped-off countries' economic development. This talent redistribution depletes the highly skilled workforce for the rest of the world and concentrates it in the USA.
Many of the US business leaders are foreigners.
This is the biggest rip-off of them all.
Economic Alchemy: Printing Wealth from Thin Air
Americans can "afford" this because of global reliance on the US dollar as the primary trading currency. This reliance gives the US government an extraordinary ability to print dollars at will, lowering its currency's value and paying for imported tangible goods and services using money it generates out of thin air.
For other nations, the process is a little more complicated. They must work and produce real value: minerals, electronics, machinery, and other materials and sell these energy and labour-intensive products to earn dollars.
The mechanism of reserve currency reaches many areas of human interaction. This mechanism ensures that while other nations provide valuable resources and labour, the US reaps the benefits as it largely determines the cost of goods and materials through the supply and demand mechanism.
The Confidence Game: Who Will Pay America's Debt?
The US, importing more than it exports, consumes more than it produces, which would turn most countries into a deadly inflation spiral. Many argue this is a weakness, but the reality is quite the opposite in the short term. American consumers get to consume more goods than they are due.
The goods received in exchange for US dollars are tangible and essential - energy, raw materials, consumer products. In contrast, the trade deficit is paid to suppliers by IOUs in inflated dollars, whose value depends on global confidence in the USA.
This confidence is decreasing.
President Donald Trump and his newfangled US policymakers argue that America is being "ripped off" in global trade. However, this view ignores the fundamental advantage of the dollar's reserve status that enables the US to sustain trade deficits indefinitely or until it loses the world's confidence.
The US's national debt is about 36 trillion US$. This is an amount by how much the US rips off the rest of the world to subsidise its lifestyle.
Living Large: 5% of the People, 25% of the Resources
Despite having only 5% of the world's population, the US consumes about 25% of the world's resources. The dollar's dominance enables this over-consumption. By having an unlimited capacity to issue its currency, the US ensures it can sustain a high standard of living. At the same time, the citizens of developing nations struggle to afford essential goods.
Global GDP is US$ 110 trillion, and the USA consumes 25%. Putting it in mathematical terms, we get more clarity.
USA consumption is 110 trillion divided by 4 (25%) = 27,5 trillion. If we divide 27,5 trillion with a USA population of 330 million, we get about 80,000 US$ spending per year/person.
Global consumption excluding USA: 27,5 trillion x 3 = 82,5 trillion.
Dividing 82,5 trillion by about 8 billion world population would translate into 10,000 US$ per year/ person.
A US citizen consumes 8 times more goods and services than the average consumption per person in the rest of the world.
If everyone in the world consumed as much as each American, we would need a GDP of 8 billion people x 80 000 per year, giving us US$ 640 trillion.
We would need 17 earths to satisfy it. Trouble for all of us, including Americans, is that we only have one.
Currently, the environment is degrading at an unsustainable rate by people using 1,7 times Earth's renewable resources. What would happen if we increase our consumption tenfold? We would burn out within a few years.
Currently, the USA is supposed to be this shining house on the hill where Kardashians live, a source of profound philosophies many aspire to.
So much for our wisdom!
This imbalance extends to environmental consequences as well. The production and extraction of goods that feed US demand often occur in other countries, leaving them to deal with pollution, resource depletion, and labour exploitation. At the same time, the US enjoys the finished products with minimal direct impact.
Global Debt, American Dreams and the Dollar Trap
At the moment, the environment is getting degraded at an unsustainable rate.
Humans use more renewable resources than the Earth can regenerate in a year, equivalent to 1.7 Earths. This means that humanity is in an ecological deficit and is spending the Earth's future resources. We are stealing from our children.
If we increase our consumption eight-fold, we will burn out within a few years. The USA is supposed to be this shining house on the hill. This house is where the Kardashians live and is the source of profound philosophies we aspire to.
So much for our wisdom!
Even as the US Dollar has lost 96.8% of its purchasing power since 1913, the US's ability to import more than it exports without facing any serious economic repercussions is a privilege afforded by the dollar's unique status.
Meanwhile, the actual cost is borne by the nations that provide tangible goods and services in exchange for the greenback.
This structure ensures the US remains economically dominant while other nations must continually produce and sell to sustain their economies. This is why Trump wants to put 100% tariffs on countries that want to move away from the US dollar.
He doesn't want the golden goose to get away.
BRICS are gunning for US$, and if they succeed, it will dramatically change the situation for the USA and the world. The transition is not going to be painless.
The USA will never be able to repay this debt as the deficit grows every year. The only way to repay debt would be if Americans decrease their standard of living dramatically or increase their exports by 1,5 trillion per year.
Both of these are unlikely to happen.
The Trade Chessboard Shifts: Will the US Become a Spectator?
If countries subjected to US tariffs decide to bypass trade with the US and instead trade directly with each other, the global economic landscape will undergo dramatic shifts.
The immediate and long-term effects on the US economy, standard of living, and geopolitical power would be significant.
Reduced Access to Cheap Imports - US consumers would be denied inexpensive foreign goods. If other nations prioritise trade among themselves, Americans would have to produce goods themselves, leading to inflation and reduced purchasing power. The cost of living would increase rapidly.
Declining Dollar Demand – A significant consequence would be a decline in the global demand for US dollars. As countries reduce their reliance on the dollar for trade, the currency's value would depreciate, making imports even more expensive and reducing its suitability as a reserve currency.
Supply Chain Disruptions – The US economy is deeply integrated with global supply chains. A shift from US-centric trade networks would create logistical challenges, raising costs for businesses and consumers. This shift is a one-off challenge, and countries might decide that freedom from economic terrorism and their well-being is worth the hassle.
Country by country, organising their logistic would simplify things. Once things are running, they would be free from US sanctions and other pressure instruments.
Long-Term Effects on the US.
Weakened Economic Influence – A significant shift in global trade flows could diminish US economic influence, particularly in regions traditionally relying on American markets. Countries forming alternative economic blocs would reduce their dependence on the US, weakening its impact on global events.
Even ubiquitous digital products would depend on the rest of the alienated world, as their dependence on the 330 million population would produce minuscule income. Instead of billions of users, they would have to be satisfied by millions.
This transition is not out of reach. It wouldn't be too difficult to copy or produce even better Facebook, Microsoft tools, Twitter, and other major platforms to satisfy users looking for alternatives to American corporations.
DeepSeek is a dramatic confirmation of this.
Declining Standard of Living – The US benefits from low-cost imports that enhance its standard of living. If alternative trade networks exclude the US, the cost of goods would rise, reducing consumption and economic growth.
Dollar Reserve Status in Jeopardy – The US would lose a fundamental economic advantage if global trade moves away from dollar transactions. A loss of dollar hegemony would lead to higher borrowing costs and reduced global investment in US assets.
Political and Military Implications
Reduced Political Clout – The US exerts considerable political power through economic means, including sanctions and trade restrictions. American sanctions would lose effectiveness if countries move away from dollar-based transactions.
Shifts in Military Alliances – Economic power often translates into military influence. If countries strengthen economic ties outside the US, they may seek security partnerships that counterbalance American dominance. They could also decline to supply crucial minerals for weapons and other high-tech production.
Challenges to Global Leadership – The US has maintained global leadership partly due to its economic strength. Reducing its trade significance could shift the balance of power, allowing other countries to play a more prominent role, such as the Chinese Belt & Road Initiative.
A Radical Financial Blueprint: The $45 Solution
If other countries printed money the same way the USA does, it would be inflationary, but so is the US printing of dollars. Gradually, countries could bring inflation down.
If it works for Americans, it would work for others.
Let's repeat our on a back of serviette calculations. Whoever watched Scarface will probably remember when, in the disco, Harris Yulin, a crooked cop, writes down a bribe amount on the serviette and shows it to Tony Montana, played by Al Pacino.
The global GDP is about US$ 110 trillion.
Three hundred thirty million US residents consume 80 000 US$ per person per year in US$, which adds up to a quarter of 110 trillion GDP, which amounts to 27,5 trillion.
The USA imports about US$ 3,35 trillion. So, dividing 3.35 trillion by 330 million, each American consumes just over US$ 10,000 imported products annually, about US$ 845.00 per month.
If we divide 3.35 trillion by 8 billion global population, we get 418.75 dollars per person per year; dividing it by 12 months gives us about US$ 45 per person per month.
If each country prints enough money to cover this amount and distributes it equally amongst its population, they would get enough money to purchase and consume entire USA imports and eliminate the threat of American sanctions.
Problem solved!
Unrealistic? Maybe, but so was DeepSeek.
Trump's Administration has to be careful of its rhetoric because the above scenario is viable. It would create some hassles, but with enough political will, those could be overcome.
Despite all these arguments, this development wouldn't be good for freedoms worldwide as many strongmen, without American influence, would increase their hold and clamp down on the freedom they are suppressing in their countries. Neither is the direction in which America is going under Trump would be conducive to freedom.
Fascism under Trump, everybody is talking about, would be worse for the world because America has a history of freedom and legitimacy. If that is gone, the world will be in trouble, and our freedoms will be gone.
The narrative that the US is being exploited in global trade is fundamentally flawed. In reality, the rest of the world supports American prosperity through an economic system that allows the US to consume beyond its means without suffering the same consequences as other nations would and enables it to sustain trade deficits indefinitely.
By leveraging the dollar's reserve currency status, the US has established an economic advantage that allows it to benefit disproportionately from global trade, making it the true beneficiary of the so-called "Great Rip-Off."
However, if significant trading partners shift their commerce away from the US, the long-term economic and geopolitical consequences would be severe.
Let's use common sense and find a way to fix our world peacefully because the current situation leads to big trouble.
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The previous article in the R2,0 series is: Rat Race vs Survival Instinct
