America is broke and depends on borrowing from foreigners. What happens if they cut up the credit card? We may be about to find out.
America is broke and depends on borrowing from foreigners. What happens if they cut up the credit card? We may be about to find out.
The dollar is America's greatest strength, but also its Achilles heel. Its status as the world's reserve currency allows the US to borrow vast sums from the rest of the world at ultra-cheap rates. No other currency has this privilege. But there is another type of price to be paid. Access to such easy money means America is vastly in debt. The annual interest payments alone are close to a trillion dollars. Many wonder if the capital, about $38 trillion, can ever be repaid.
The US's ability to be a superpower and fund its military depends on this cheap borrowing. What happens if the whole system suddenly implodes? The idea used to be thought of as fanciful, but is now being taken more seriously. The US's threat to invade European territory and annex Canada has made some in those places wonder if they should use their biggest weapon - cutting off the US's credit card. The blowback would be huge for them too, but as former allies inch closer to war, such things become more likely.
If this happened, would this lead to a rapid reorganisation of the world order? Who would emerge strong or weaker from the wreckage? What would it mean for science, tech, and AI development?