The 3-Legged Stool Of American Supremacy And The Dollar Crisis
The Roman Empire ruled the world by conquering land. It came undone not by an external enemy but because it crumbled from the inside, at its core. The British Empire did not need to conquer land to rule the world. It controlled the sea with its navy and thereby controlled commerce and the world at that time. The beginning of the end of the British Empire was the innovation of aviation. Aviation made naval power less important and helped unleash America’s power.
How did America gain an empire-like hegemony in the 20th century? The answer is a 3-legged stool.
- American high moral ground originated by the constitution, progressed by American idealism and demonstrated by America’s role in WWII and the rebuilding of Europe.
- American innovation and entrepreneurial edge, demonstrated by its productive drive and a series of scientific, medical, and technological breakthroughs.
- The unique, never before in history, universal reserve currency status of the Dollar.
This third leg has been the more invisible instrument of American dominance. It did not need to control the land, nor the sea. America controlled the universal currency. Three things allowed the Dollar to become the universal currency.
- The Dollar was good as gold and was backed by gold as the ultimate currency that has never been tarnished. The gold window was closed in 1971 by Nixon.
- The great engine of American industrial and technological development became the fountain of wealth creation that backed up and gave deep support to the unique Dollar status.
- America’s role in WWII created tremendous trust in both its strength and in the benevolent ideal demonstrated by America in not reducing Europe and other parts of the world to conquered states. In essence this was a second George Washington moment in not assuming the kingship role that was available. Instead America did something smarter. It made the Dollar the King.
The machination of the dollar’s crowning is found in the Bretton Woods Agreements .
On September 20, 2007 the Dollar broke down a critical technical resistance by cutting through it’s all time low. A few days later the Canadian Dollar achieved and surpassed parity. The deterioration continues further. The third leg of the American stool is being challenged very seriously. The strength of an economy is in the soundness of its currency. The last five years have seen the first leg of the stool – the American high moral ground – being criticized and tarnished in the world. Thomas Freedman tells us that the second leg of entrepreneurial and innovative edge is also being challenged by a flattening world. Some would claim that the 3-legged American Hegemony stool is no more because of the triple deficit coupled with many trillions of Dollars in what is called by some a nuclear derivative cloud.
I propose that it is too early to conduct an American Requiem. That instead this can be a moment for America to transcend its crisis to discover and unleash the even greater potential waiting in this land. This potential is in the form of a new release of brilliance. Brilliance not aimed at preserving old hegemony but toward leading the family of nations on the path of true world and planetary citizenship.
Great nationhood in the 21st century is offering leadership of a global planet-wide nature. The task for young and bright minds of America and of China, India, Latin America, Russia, and Africa – the task and challenge for the young people of the Earth is to discover the ingredients of such global, local and personal leadership. This is bigger than climate change or any one issue and includes societal, cultural and spiritual maturation. The task is to identify, build and lead the three or seven legs of world citizenship and leadership wherein individuals, families, groups and sovereign nations can choose their destiny and thrive without bringing this planet back to some dinosaur age. Any ideas?