[BitwiseFool]

This is a terrific, albeit deep dive into the topic. https://www.lynalden.com/fraying-petrodollar-system/

Broadly speaking, the US has to run trade deficits in order for the rest of the world to have the dollars they must use to buy oil. This severely handicaps our ability to manufacture and produce things domestically. During the past century the US Government took on lots of debt with the understanding that our economy would naturally grow to cover the obligations. But given this international monetary system, I struggle to see how the US can manage to grow it's way out of all the debt we've made for ourselves. I would like to go on, but Lyn is a far better writer than I.

[wbsss4412]

Alden’s analysis is certainly thought provoking, but it doesn’t made broad statements about the impact on US global power, which is the topic at hand here.

[BitwiseFool]

Gotcha. The article itself doesn't go into the global power aspect, but I was looking at it through the lens of implications. Mainly, how the trade deficit has made us particularly vulnerable to supply chain disruptions and how the domestic knowledge to produce certain vital things (like chip manufacturing) has been gutted. Confidence in the US and it's ability to deliver on it's obligations also diminishes as the debt grows and the growth of our economy stalls. I just don't see how we can grow our way out of debt after reading just how badly the deck is stacked against non-tech and non-intellectual sectors of the economy.

[wbsss4412]

The implication of the article, though, is that eventually the regime will end, and the structural factors that force the US in trade deficits will end. This will allow the dollar to finally be devalued, and the value of exports to rise, resetting the ability for the US to build its industrial base.

Also, the notion that domestic knowledge on how to build things like chips has been gutted is just flat out false. Intel is still close to the cutting edge in chip fabrication, they just aren’t #1 anymore.

[zozbot234]

This "buy oil" stuff is a non-sequitur from an economic POV. A current-account deficit is the flip-side of a capital-account surplus, i.e. of money flowing into the U.S. as investment, from whatever source. Far from handicapping "ability to produce and manufacture things domestically", a persistent trade deficit may thus be a reflection of that very ability.