When I first heard Steve Bannon was fired from the Trump administration I could not believe my ears. Politically speaking it made no sense. It handed a great victory to the Democrats and their allies in the media, which only further emboldens them, and plants a wedge in between the new economic populists in the GOP and its traditional conservative base. There does not seem to be any benefit to the decision. The story currently being given where Bannon is leaving the administration to fight its enemies at the head of Breitbart does not sound logical either. There is nothing Bannon could have done outside the administration that he could not have done inside it. I sincerely doubt he gave up all ties to Breitbart when he left just as I doubt Podesta or other political operators still have ties to the Washington Post and other organizations they used to have leadership roles in.

If you have been reading my articles it should be no secret that my views closely align with Bannon and I am deeply disappointed by his termination. I will pause now to cue the autistic screeching about racism from any liberal readers I may have. Over and above politics Bannon leaving the White House should be of concern to everyone. Out of every major political figure in America today Bannon is the only one who grasps the true state of the country and its vulnerabilities. It may offend some of my readers but I include President Trump in this statement. Trump understands that things are bad but in my opinion he does not fully understand how bad things are and how close to the brink we are.

I encourage everyone to read Steve Bannon’s latest interview if you have not already. In it he speaks of an all out economic war with China and about the United States being in a unique inflection point in history. He says that we are currently fighting a war to see if the hegemony of the United States will continue on to the next half of this century. He mentions that the next five years is critical as if we don’t act now we will have passed the point of no return and Chinese victory will have been assured. This is not alarmism. History is full of these inflection points. Some of them violent such as in the case of Islam and Persia or Rome and Greece. Some of them non-violent as in the case of the transition from the hegemony of the British Empire to the American one. Historically speaking America has not even been in charge for that long. Rome had a thousand years, Britain had a few centuries, America is barely completing its first.

Economic Advantage

This is the heart of the issue and one that needs to be understood the most. If you ask people, even nobel-prize winning economists, where the economic advantage of America lies you would get many different answers. Most will say something along the line of technology. Silicon Valley and the various other places computers and the programs that go along with it are developed. Others will say in the military hardware. After all more than half of America’s exports have to do with the military industrial complex which provides jobs for hundreds of thousands of Americans. Still others will say in the service sector or management. They are all wrong.

The primary advantage America has over its competitors is consumer spending. If America and China were to stop trading tomorrow America would still be able to find cheap goods. It is no secret that Vietnam, Malaysia, and other south east Asian countries already have the capability to produce goods at much lower prices than China. Companies are just kept in China because the Chinese government makes access to its market contingent on providing employment for its people. The US seems to have the opposite policy. On the other hand the Chinese would not be able to find a market that could purchase their goods at the price the US can. They have already expanded into the EU and other places that could have done it.

The reasoning behind this is simple. Americans are paid more than their counterparts and on top of this there is a well-developed financial system where almost everyone has access to a credit card. This allows people to have more purchasing power than their wage level would suggest. This may surprise some people but in less developed economies like China, India, the Philippines, and other places like that less than half the populace has access to a credit card. This means that they can only spend what their wages and savings will allow which is not a great amount to begin with. Couple this with the fact that there is social security and other forms of assistance that is lacking in other countries and Americans have more money to spend than anyone else.

This allows America to impose trade rules that are supposed to work to its advantage as a condition for access to its markets. Similar to what I described with China in the previous paragraphs. Unfortunately this is not the case as everything we have done in the economic sphere leads to the erosion of this advantage.

There may be some readers who have realized this already but wonder what this has to do with the inflection point I discussed earlier. What far fewer people realize is the system is collapsing. Consumer debt is rising at unprecedented levels. Last I checked the level of consumer debt is already past the entire GDP of China. Banks have announced record numbers of charged off accounts and have projected increasing numbers of charged off accounts for 2017. A charged off account is in essence an account that can no longer afford to pay and is sold to a collections agency. Consequently this has also tightened the eagerness of banks to increase existing credit limits or lines of credit or approve new ones. Banks will never provide data for this but I encourage you to ask people around you when the last time their bank increased their credit or approved a new card. Not to mention lowered interest rates. In the quest of our politicians to provide the cheapest goods possible for the people they have allowed the outsourcing of jobs at record pace and the replacement of onshore jobs with illegals and H1-B visa holders. Ensuring that the people who have access to these cheap goods can no longer afford them.

Military

At this point you may be thinking well what about the military? Surely American hegemony would still continue even when the Chinese beat the US in the economic field. You would be wrong. A huge military is nothing without a strong economy to back it up. Carriers need to be maintained, new technology developed, and most importantly troops need to be paid. Russia or North Korea is a great case study on what happens when there is an expensive military to sustain without an economy to support it. This is also the reason why I supported an alliance with Russia as a means to contain China. Similar to how China was used in the past to contain Russia. At its current state Russia will never be in a position to threaten American hegemony but China will.

Historically speaking Rome did not last a thousand years because it had an outstanding military. In fact in most of its battles with Persia it ended up on the losing side. Rome lasted because they had an economy that could lose a fully equipped army of 50000 men one day and turn out another fully equipped 50000 men the next. This may offend some people but it also needs to be said that America did not win World War 2 through superior generalship. It won because it massively outproduced its opponents. Japan produced a total of 2 new carriers for the entire duration of World War 2. I will leave it to the reader to find out how many America produced.

The next level of analysis is even more disturbing. What happens when a nation finds it can no longer afford its military? Does it disband it? Or does it use that military to seize resources from other nations to keep its system going?

Racism

It always comes down to this. I have already provided you with data as to why I believe the choice is binary. We either proceed with the agenda of economic nationalism with Trump and Bannon at the helm paving the way for a new century of American hegemony or we end up living under Chinese hegemony instead.

If you believe America is a racist country and Bannon is a white supremacist then you do. Nothing I say will change that. The only thing I will say in defense of America is I have not seen any other countries with active jurisprudence effectively saying that it is acceptable to discriminate against asians and whites in favor of blacks and latinos in some matters.

If you believe America is racist then you are in for a shock once China becomes the dominant power. I have seen beloved children cast out of the family for the sole reason that the person they chose to love was not ethnically Chinese. I have seen hard and talented workers denied promotions because people who were not Chinese could not rise above a certain level in some companies. This does not stop there. Criminal Justice, economic opportunities, bullying in school, and others. I will repeat people who believe America is racist have no idea what the next superpower is capable of.

I will continue trying to fight the good fight but with Bannon’s ouster I have lost any hope that America will continue its hegemony into the later half of this century. After all it is very hard to solve a problem if you fire the only person who actually knows what it is. My only consolation is that millennials who have screeched so hard about racism will live long enough to experience a world dominated by China.