The US is currently at war with China over trade, economic policy, technology, capital and
geopolitics (Dalio, The Changing World Order, 2021, Chapter 13). While the US has no formal
treaty obligation with Taiwan and President Nixon and Secretary of State Henry Kissinger
recognized China’s claim five decades ago, President Biden repeatedly said the US would
intervene militarily to defend the island. Only a global hegemon could make such a threat.
China is destined to once again be a great dynasty, as it has been at least twenty times over the
last 22 centuries. The US was the sole global hegemon by 1945 as all the major empires of the
world were at this stage in decline, setting the stage for a century (the historical norm) of global
dominance. But within two decades, with the ascendance of FDR protégé Lyndon Johnson, a
War in Vietnam and a “Great Society” at home, the US was in decline.
In spite of the creation of OMB in 1970, the flight from the dollar that forced President Nixon to
default on gold convertibility in 1971 and the creation of the CBO in 1974 to stem the debt
crisis, starting in 1975 30 states petitioned for a federal balanced budget amendment. Since
then, US debt has grown 100-fold, current spending is twice revenue, the Federal Reserve is
financing half that deficit and the dollar has fallen 98% relative to gold. Such debt super-cycles
end in national bankruptcy-ending empire the way Hemmingway described: “slowly at first,
then all at once.”
National denial has global consequences. Britain entered into the Great War as a declining
power to thwart Germany, then a rising power. World War II was really an extension of the
Great War, when a German veteran, a lance corporal, came to power on the false narrative that
the Bolsheviks and Jews caused their loss. Britain lost the empire but remained in denial until a
speculator dethroned the pound Sterling in 1992. Similarly, the Soviet Union was in denial (as
was the US CIA) right up to the point of total collapse from within in 1989.
The US is now arguably in the position of Great Britain prior to the Great War as a military
power, but faces internal dissent that is arguably worse than that of the former Soviet Union. It
can follow the British path to weaken the rising power while restoring US hegemony, remain in
denial and continue on its current path toward civil war or revolution, or seek a softer landing
based on a restoration of US founding principles. Faced with these choices politicians generally
find war more politically palatable than the short-term pain of restructuring, even when that
results in complete destruction, asserting “nobody could have seen this coming.”