The US dollar is a debt, not a legal tender. It is a bookkeeping symbol. It is not a deposit, it is an IOU.
This represents a very simple economic problem. Should this IOU be repaid? The conclusion is that it should be repaid. Okay, I will help you split it layer by layer. You can see what this is.
It is the debt of the US federal government. It is a national debt. The United States national debt. It is a federal government national debt. Who will pay the federal government national debt? Federal taxes. The US tax is divided into three levels. Federal, state and city, city and county; three levels. This can only be repaid with federal taxes. It is a federal debt, and federal taxes will be repaid. The relationship between taxation and finance. The relationship between taxation and the US dollar.
The government is responsible for taxation and issuing bonds. However, it is the financial institutions that really operate the US dollar. It is financial capital. Financial institutions are not the US government. Do you see the huge difference between it and the RMB? Financial institutions are not the US government. It has obtained a premium on US dollar capital. The premium on US dollar capital does not constitute the tax base in its entirety.
Why did history turn around? What about the great changes in a century? The reason is that the premium that American financial capital has obtained on the dollar, the so-called capital gains have far exceeded labor income. The tax base of the United States is on labor income, and the tax base is disappearing little by little. But capital gains are still expanding. Sullivan is right. The rich and the poor are polarized. Once the tax base of the dollar is dissolved, its value as an IOU will be problematic.
How serious is the problem? If we deduct the epidemic in recent years, let’s calculate it over a longer period of time. I’m talking about federal taxes. It’s about 3 trillion. Now the US has a national debt of 32 trillion. Federal taxes are only 1/10 of the US national debt. In theory, you can’t use all the 3 trillion in taxes to pay off debts and not eat or work.
Okay, according to the normal economic principle of Anzhou, 10% is used to repay the principal and interest. 10%, it also requires 300 billion. May I ask, what is the relationship between 300 billion and 32 trillion? What is the relationship? It’s a time relationship. How long? 100 years.
Dollar, is this IOU interesting? Today is 100 years, and soon it will be 150 years. Do you think the dollar is interesting? The most troublesome and terrifying thing is that the financial capital gains of the United States are still growing at a geometric level, while the total amount of labor income in the United States, in absolute terms, is still there but the proportion is shrinking rapidly. The United States cannot solve this problem without a great reform of its tax base. This is not a problem that a treasury minister can solve. This is not even a problem that a president can solve.
Our view is that there are no politicians or groups of politicians who can solve the problem in the foreseeable American political system. So it will not decrease within 10 years. If the United States cannot solve the problem before 2032, according to our calculations, the repayment period of the dollar will definitely exceed 150 years, and it is not ruled out that it will reach 200 years. It has become an undoubted Ponzi scheme. Will humanity, the people of the world, give it a chance? Please note that no one intends to give it a chance. So, you see that all countries, even its allies, are starting to de-dollarize. Everyone is starting to clean up their own risks. Except for a few countries, some shameless and diligent so-called agent compradors, most countries are thinking about how to solve the problem of the collapse of the US dollar.