Sunday, March 5, 2017

The US needs us more than we need her

Five years after the last world war, the US GDP as a share of the world's GDP was in excess of 60% but the USD was the anchor currency for about 20% of the countries. Today the situation is completely reversed (see right hand side of chart)

Exiting the turmoil of the World War II (left hand side of chart) the world needed America more than it needed the world. Today it is the other way round. Put it in stark simplicity, the dumb Trump should understand the impact on the US would be much bigger than its ricochet on world if America turn inwards. For a while the US might still have its overwhelming military machine but over time it would be economically unsustainable and that is not even considering how other nations will increase defense spending to fill the holes left by America.

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