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Will vast global debt lead to war? Time will tell!
Now, as the global reserve currency, the Dollar and associated agencies are in a win – win. The USA offers it currency to the world and in return, the world pays the costs of the Dollar, not the USA. The USA produces the Dollar and the rest of the world consumes the Dollar or better said trade their scarce resources for that Dollar. In possessing the world reserve currency, the USA has the advantage over countries that rely on the Dollar for trade and industry.
When the Virgin Islands borrows cash from a US bank, whether the borrower is government, business, or an individual borrower, that loan is in Dollars. The costs of the transaction, in addition to interest rates, is borne by the Virgin Islands. The USA is able to transfer the costs and liabilities down the pyramid. The relationship between the Federal Reserve that produces the Dollar and the rest of the world is a relationship based on power.
All transactions big and small within the borders of the Virgin Islands, and all trade between the Virgin Islands and foreign countries is in Dollars. Essentially this makes the Virgin Islands a Dollar vassal. In reality, apart from administrative and geographic differences, the Dollar makes the United States Virgin Islands and the British Virgin Islands one economic jurisdiction with the USA mainland the senior economic partner.
The Virgin Islands is not alone in this: all countries that adopt the Dollar, or whose currencies peg to the value of the Dollar are essentially vassals of the USA. This is hegemonic power. That power is increasing.
US super corporations are the largest businesses on earth with stock market values surpassing the GDP of most countries. The top 10 businesses on earth in terms of market value are US corporations. Apple for example is valued at $4 000 Billion equal to the GDP of the UK. The Dollar hegemony, trust and confidence of investors, technology, and the institutional power of Federal agencies has driven this US hegemony.
The USA as the producer of the Dollar ensures a foreign country uses the Dollar according to its own purposes. This is a huge privilege. It will ensure the US strategic interest is supreme in the use of its currency. The USA holds all the cards. That is why the USA can use the Dollar as a weapon. Countries that refuse to act according to the dictates of the USA can find themselves penalized and sanctioned and the privileges of the Dollar withdrawn.
In some instances, the USA seizes the Dollar and related instruments of countries. That fear of the power of the Dollar is a reason BRICS nations are searching for an alternative currency infrastructure.
The world is a US bazaar. Traders in that market pay a levy of some type to the USA for trading in that bazaar. The USA owns the infrastructure and payments system.
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