The Great Power Shift From West To East

The Great Power Shift From West To East

My book Breaking the Code of History published in 2009, highlighted that America was the last empire in a long series comprising what I called, the Super Western Christian Empire (SWCE), dating back to the 1400s, starting with the Portuguese. Based on my Five Phases of Empire model, I determined that America was the last of the SWCE empires and that from 2001, it had entered a state of decline, the last of the five stages of an Empire. Meanwhile in the East, China is the second comer to the Super Asian Empire and had been moving up the Five Stages of Empire curve, since the Boxer Revolution in 1902. By 1996, China had entered the second stage of expansion and as American power shrunk, China moved into the vacuum at an increasing rate.

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empire curves

Twenty years later, China is now the equal of America, in all but military power. The entropy tsunami caused by the pandemic will only accelerate the relative power shift as America is diminished, in a multitude of ways through the pandemic and its failed leadership, be it Trump until December or Biden as the next president. Consequently, our global world has now split into a bifurcated world. Whilst we battle against the pandemic caused by China, President Xi is planning his military acceleration and to move up a gear in his arms race with America. Every nation on earth will have to take a side. But, because of the pandemic, only a few will side with China. Thus, the pandemic has accelerated China's challenge to American power. It has been emboldened to make its military challenge in circa 2027, when the commodity prices have rebounded with a vengeance in the final phase of the K cycle which will then act as a potential catalyst to WW3.

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commodity cycles

Lessons from the Decline of the British Empire

During the Five Phases of the British Empire, the debt ratios showed a double mountain pattern. The first was a healthy investment into the infrastructure of the Empire that ultimately gave Britain its monopoly. From this position it paid back its domestic debt. This is most analogous to China today.

From the second mountain came the need to leverage, to stay competitive and the money came from borrowings from the Empire and beyond, including Britain’s greatest competitor and cousin America. If that sounds familiar, it is because that is America today. When Britain finally lost its Empire status during the Suez Crisis, it was America that accepted the baton of leadership. As the values were so similar, Britain gave way peacefully and the world did not change. Britain was allowed to go into retirement and in decades to come restart its cycle.

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British empire

 

The Decline Of The American Empire

Breaking the Code of History was written in 2005 and published in 2009. I predicted that because America did not have a friendly cousin to pass the baton of power to with the SWCE, it would be forced to borrow to maintain its falling Empire and that it would do so until it financially imploded. Indeed, since the chart above US debt has increased by 250% before the pandemic (as shown below).

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us empire

With borrowing associated with the support package through the pandemic, coupled with a collapse in national earning, the US debt is set to increase exponentially from here until a foreign power calls time. In the case of Britain, it was America during the Suez Crisis. Today, it will inevitably be China, during this pandemic crisis, seeking to gain the upper hand as the polarisation levels rise between the two sides.

There is an additional perspective. Empires always fall from the inside, until weak enough to be attacked from the outside. America's decline started in 2001, as marked by 9/11 and the underlying collapse of the tech bubble. That was Shock One. The financial crash of 2007 to 2009 was Shock Two. The remedy for these was to increase the national borrowings to leverage diminishing annual GDP levels. This was a strategy that took us to Feb 2020 and a stock market bubble that did not reflect the real level of America's economic weakness. The pandemic is Shock Three. Systems inevitably suffer deeply on the third shock and the risk is extremely high that the financial system of America as we have known it, collapses under the stress. This includes a debt default. This is commensurate with America losing its Empire status.

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US Debt

Although the FED has learnt from 2008/2009 and intervened early with everything it has got, it will not be enough. Thus, as the stock markets fall in Phase 3 the FED will look increasingly impotent and will lose control of the situation.

 

Trump Will Not Get Re-elected

In our opinion, the Wuhan Virus has removed any chance of Trump's re-election. We have maintained that whoever wins the Democratic nomination, will be the next President of America. Using our Five Phase Life Cycle, our analysis shows in the last phase of decline, an Empire’s wealth distribution party achieves dominance. Within that framework, Trump’s election was an anomaly. It was a reaction to Obama's rapid eight-year power give-away. His promise of making America great again has not been achieved in reality, making him vulnerable. As a narcissist, his power to project his view of the world, with absolute belief, onto voters is his greatest political tool. However, reality has a strong probability of catching up and busting the delusional bubbles of Empires and their leaders. Therefore, we expect a reversal back to the Democratic Party.  Trump's popularity will decline  as time goes on. However the lack of suitability of Biden as an old man to be President in such challenging times, further demonstrates where America is on its cycle as during decline capable leadership never rises to power.

 

The Demise of the EU

The EU has sheltered under American power since WW2. Thus as America falls, so will the EU fracture from its current form, under pressure from the Virus. Italy and Spain lead the way into financial collapse. The contagion will spread to  France and then the other EU nations.Then it will be every nation for themselves. The levels of co-dependency will worsen the economic plight of each nation, as they are left to fend for themselves. Meanwhile, Britain will be viewed as a safe haven.

 

Time Frame?

I often explain that geological forces that drive plate tectonics take decades to build up, but are released in only a relatively short time. After which the landscape is changed forever. Geopolitical forces are very similar. Today the Virus has catalysed and accelerated the great power shift from West to East, so by the year end, all of the above trends will be clear to everyone.

 

 

 

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Thanks for another great blog post David. Apologies, but I cannot read the commodities chart x axis very well. It looks like the commodity spikes were coincident/slightly lagging the beginning of the wars listed i.e. the spikes were in response to the war not the other way round ? A separate question: what are the odds of Trump getting relected by banging on a populist drum that China was responsible for the virus and that he is the man to stand up to them etc etc ?