Is America Headed for an Economic Collapse?

The people in our country are so absorbed in the plethora of problems surrounding them that they are unable to think about events taking place around them. Even those which can have huge implications on their future. The impeding collapse of the world’s sole Superpower-America.

Let’s analyze the probable American collapse by looking into its present economic conditions and its position in global politics.

Fact 1: Today it is no secret that the economic situation in America has gone from bad to worse. From having budget surpluses a little less than a decade ago US budget deficit is many times more than the size of the total Pakistani economy. Her annual trade deficit with China alone nears around $300 billion; US government is forced to print dollars to pay for increased imports and government expenses putting the very survival of the American dollar- the global reserve currency at stake, the currency which is believed to be the lifeline of the American economy.

Thanks to cheaper production costs and less regulation in the third world, in recent years a huge portion of the American industry has shifted abroad resulting in massive unemployment in the country. Furthermore, American exports are no longer able to compete with cheaper exports from other countries in the international market resulting in an increasingly declining American share in the world trade. Cheaper imports from China have wrecked havoc to the domestic industries in America. Technological innovation which spearheaded the growth of the American economy for almost a century is on the wane with America barely holding on to number two position behind Japan in the sector of R&D. It doesn’t end here; over half of science graduates studying in America are foreign students majority of whom will be heading home as soon as they complete their education meaning that in the future America will no longer be able to hold on to its position of being the world leader in science and technology.

American dollar which has now for almost seven decades held on to the status of the global reserve currency is fast losing its worth. As a reserve currency dollar attracts strong demand in the international market which artificially inflates its value because of which it does not represent the true state of the American economy. With a national debt of over $15 trillion and a $560 billion budget deficit, any other country would face currency crises however due to dollar’s special status America is able to avert such a situation for the time being.

Moreover, the artificially inflated value of the American dollar results in the depreciation of the price of the goods purchased with that currency which means Americans are able to purchase imports at a discount and other countries do not receive the right value for their exports. Due to this factor, in recent years American dollar has come under sharp criticism and there has been an increasing call for the replacement of the American dollar as a currency used for reserves and international transactions and it is doubtful whether the dollar will be able to hold on to its present status for long.

If and when this eventually happens costs of imports for America will immediately soar, unable to pay for swelling deficits by selling now-devalued treasury notes abroad Washington will finally be forced to slash its bloated budget greatly.

Soaring prices, ever-rising unemployment and a continuing decline in real wages can spark domestic unrest in America.

Fact 2:  America undoubtedly holds the mightiest military power the world has ever seen, with its budget exceeding the budget of nine other major military powers combined. Yet with increasing financial difficulties it is difficult to see for how long America will be able to hold on to its present status and for how long will the policy of borrowing to build more tanks and guns work. In short America’s current defense spending pattern is no longer sustainable.

Fact 3:  American prestige today is at an all-time low. The world is no longer accepting the idea that America knows best. The American dream which was once the envy of the world seems no longer attractive anymore. With countries like Iran, Venezuela and North Korea, with much smaller economies and populations openly challenging American might and the majority of the world population viewing her as an arrogant and imperialist power; America’s days of my way or highway approach are probably nearing their end.
Thus it is no secret that the downfall of the world’s sole superpower has begun. According to a Russian think tank, owing to its present difficulties America might not be able to survive as a single state and may break apart in future.

What we need to see is the impact downfall of America is going to have on us.  Whatever difficulties the US might be facing, it is still considered the growth engine of the world economy and its decline is going to have a global impact. Many of the large economies in the world are dependent on America for exports. 25% of Pakistan’s exports are to the USA, besides it is also a major donor and source of home remittances.

However what we must understand is that America will not go down without a struggle. Scared by a rising China it already is entering into new alliances which include India to offset the impact of her decrease in military expenditure. Anti Pakistanism in US establishment is at a high pitch due to our resistance for upholding our sovereignty. America knows where our weaknesses are and will never spare a chance to keep us weak and de-stabilized in order so that we become less of a hindrance to her designs in this region.

We need to immediately start preparing our country and our economy for any harm that a falling superpower might cause to us in desperation for America has abundantly made it clear to the world that it wants to leave a foothold in our region and sees Pakistan as an obstacle to this. In short, we need to prepare ourselves for the coming disaster.