The US Economic Hegemon
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Transcript of The US Economic Hegemon
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7/27/2019 The US Economic Hegemon
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Sean Balkissoon
is on stable ground,even as we see the rise and growth of the BRICs.
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Past challengers laid to waste :
Soviet Union
Japan
European Union
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US economic hegemony consolidated by:
US Dollar Role as world reserve currency
Dominance of US Markets and Institutions in GlobalFinance
US economy role and significance in global trade
Political Stability confidence
US Energy Security supported by
Military Superiority and determination to protectits economic interests
Globalization Americanization
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Previously Britian Sterling backed by GoldStandard eventually collapsed
Post WWII US dollars, backed by gold reservewas new world reserve currency
1971 Gold backing abandoned This gave UShegemon enormous economic powers
Effectively now debt, rather than credit hadbecome the new monetary power.
60% global currency reserves is USD, Euro is25%. No alternative to US dollar for Globalcurrency on horizon, even though China haveproposed this since 2009. In uncertain times
people seek confidence in USD.
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Highly developed & sophisticated, range of
financial products & services
40% of global capitalization, presents unlimited
opportunities for investors. China is only 5%.
Markets are liquid, and liberalized allowing free
flow of mobile global wealth .
By contrast China markets underdeveloped and not
transparent less attractive to investors.
Significance of US Financial markets underscored
by the global contagion of the 2008 US Sub-Prime
financial crisis.
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US economy is the engine for global economy
- American consumerism.
US consumer economy vital to export driven
emerging economies, like China.
Low domestic demand of China - cannot
surpass central importance of US to global
economy.
The world and China needs a strong US withstrong demand.
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Political Stability & Liberty Confidence in USDemocracy (> 200yrs), and civil liberty attracts
people and wealth to US.
By contrast BRIC Communist China, the resthave either new or tenuous democracy
Rapid development poses socio-political
challenges. China has bound to undergo arevolution, it remains to be seen what shape it
will take.
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US Growth and Dominance in the world
economy has been fueled by aninsatiable appetite for energy
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US understands this better than any other nation
Threat is reliance on foreign oil
Risk factors:
Peak Oil
Political Instability Nationalization
Terrorist attacks
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US foreign policy seeks to minimize energy
security threat.
Policy deterrents Carter Doctrine et al
Military defense of economic interests
Key Gulf Allies Saudi, Kuwait
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Boost domestic oil production Gulf of Mexico
Develop Shale Oil production currently at 1 millbpd, 20% of total output.
Improve transportation energy efficiency majorconsumer of oil ~70%
Increased use of natural gas and coal as analternative to petroleum
Develop Shale Gas production
Nuclear power
Bio-Fuels Grain Ethanol and Bio-Diesel
Hydro-Electric, Wind, Solar, Geo-thermal
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US Military Superiority continue to be a stabilizing
force for world security for vulnerable resource rich
nations
Defense of US economic interests to enforce
US hegemony
Industry of war and rebuild efforts will fuel
economic activity for American corporations.
BRIC nations as a powerful economic power,
yet militarily inferior will conform to a US led
world order.
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US consumer expansion limited - market
near saturated.
Rise of large powerful middle class in BRIC -
presents a new market.
More affluent consumers demand more
consumer goods - based on American tastes
and brands.
Consumer markets in BRIC open up for
American products.
US innovation & technology protected by
adoption of intellectual property rights law
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The US is on stable ground:
The current status quo is in the best interest
of everyone.
BRICs need strong US with strong demand fortheir continued growth.
The US needs the rise of the BRICs and the
emergence of a large powerful middle class,
which will be a new market for American
consumer brands, among westernized
domestic youth.