Collapsing hegemony?

Economic chaos, war, inflation and hunger – eyes accustomed to history reading and watching movies are probably going to witness coups of the past. There is a storm brewing on the world's economic thought-shore — the days of the dollar are clearly over, and even the night of Westernisation is probably just a little longer — at least that's the feeling.

There is a joke around the world about the dollar-raj that if the United States sneezes, then the whole world must have a cold. That is, if the economy of the United States sinks, other countries will also go into the abyss. Many people say that the United States seeks relief by distributing its disease to others. Be that as it may, it is undeniable that the dollar still reigns supreme on the economic map of the world. There is a long history here. And that history informs the future.

The year is 1792. The United States adopted the dollar as the country's unit of currency. The word dollar is derived from the German word ‘thaler’. Dollars were then made of silver and gold. From 1863, when the Civil War was going on in the United States, the dollar has been the only currency in the country. It is also important to remember that most of the world was under British rule at that time. As a result, the acceptance of the dollar next to the pound was very low. But that soon began to change.

World War I started. The normal use of gold was suspended. America was in danger, because it was burdened with the debt of Europe. And Europe started the liquidation of gold. As a result, a lot of gold continued to flow out. The price went up. The situation reached such a point that America had to create an emergency currency system. However, the Federal Reserve System established in 1913 was able to successfully generate funds for foreign creditors during this period. The situation returns. The New York Stock Exchange reopens. From 1915 to 1917, a period of stability prevailed, but President Thomas Woodrow Wilson this time imposed an embargo on gold exports, affecting foreign trade. Then came the 1929 Wall Street crash.

The Great Depression led to the abandonment of gold by major monetary systems, causing widespread chaos. The Gold Reserve Act was introduced, resulting in a stagnant gold market. The significance of the dollar grew as the world faced the alarm bells of the Second World War. While Europe and Asia's economies suffered, the US economy remained stable, bolstering its political and economic importance. The Bretton Woods system was implemented, comparing all currencies to the dollar and establishing fixed exchange rates. This led to the creation of the International Monetary Fund, solidifying the reign of the dollar worldwide.

Here it is important to consider that while the USA had enough dollars, European or Asian countries did not. At the international level, it became necessary to import from the US. The American nation continued to build itself. But in 1959, another problem arose. That is, the number of dollars released into the market exceeded the gold reserves of the United States. The turmoil continued for some time. In 1971, Nixon decided that there would be no more direct conversion from dollars to gold. He said, "We must protect the position of the American dollar as a pillar of monetary stability around the world ... I am determined that the American dollar must never again be hostage in the hands of the international speculators." This event is known as 'Nixon Shock'. So, the massive amount of dollars marketed welcomed him to the throne of the world-economy. Gresham gave a famous formula that states, when bad money enters a system, good money hides. Nixon did just that.

In this way, the US had two main weapons in its hands – one, great military power and two, economic sanction. Since the end of the Cold War in 1991, the US has conducted a total of 251 military interventions. NATO was also founded by them for this reason. If you go to the NATO website, General Hastings Lionel Isme's statement is right there, the purpose of establishing NATO was to “keep the Soviet Union out, the Americans in, and the Germans down.”

But this time, neither of these two weapons were effective against Russia. Russia has a large military and is also an industrialised country. As a result, when the US made a profit from the war with Ukraine by exporting massive weapons, they did not think that the war could be so much. Russia has deployed more missiles than the US produces in a year. As a result, NATO is now under a lot of pressure. On the other hand, what has happened this time in terms of economic approval has never been seen in history. But the benefits did not come. In fact, Russia has learned from the 2008 crisis. The preparation was done well. It is not that it didn't affect it at all, but it was insignificant, the GDP decreased slightly. Now most of the world's countries (75 percent of the world's GDP) want to do business with Russia, they are not willing to go into any antagonism.

Naturally, the US economy is in dire straits. So, they are keen to regain their position by affecting the world economy again. They are trying to use the dollar empire to raise the prices of oil, gas, etc., because they are still traded in dollars. But the global economy is showing interest in returning to gold, against the dollar.

It should be remembered that if the debt burden of the United States increases, it is not difficult to repay it, because they are the ones who print the dollars. But in the case of other countries, they have to earn dollars in different ways, which is not fair. Because this is how, with increased interest rates, there comes various compromises, stories of compromises.

As a result, Brazil, Russia, India, China, and Saudi Arabia have introduced their own global currency, while around 24 countries oppose the dominance of the dollar. The yuan and Indian rupee have made significant strides in world trade agreements. Discussions about an Asian Monetary Fund as an IMF alternative have emerged. Consequently, numerous dollars held by central banks are returning to the US, losing their value. The world is striving for a multipolar system, breaking away from currency dominance and signalling the decline of US’ influence. According to an IMF report, Asia, led by China (34.9 per cent) and India (15.4 per cent), will contribute around 70 per cent to the global economy, potentially leaving the US and Europe in a precarious position.

It's amazing to think that the dollar has ruled the world for almost 75 years, and that everything will change so quickly. Lenin said, “There are decades where nothing happens; and there are weeks when decades happen”. However, it is not right to be so optimistic that the yuan or the Indian rupee will recover quickly. But as long as the emperor lives, he does not want to leave the mattress easily. America will give a resistance. It could endanger world democracy which would give rise to dictatorship. Again, the drums will sound the war. The ground of the earth will shake with the violent mixture of blood, corpses and tears. Hunger, poverty, emigration and insecurity will engulf the entire world. When the two superpowers America and Asia collide, destruction is sure to happen. There lies the apprehension and fear of common citizens. King-king war will be fought and Ulukhar's life will be lost. It is not an anxiety whether the dollar is there or not, the worry is, amidst this economic terrorism and bloodbath would there be children's laughter or evening strolls, friends' joint joy – or will home be returned!

Views expressed are personal