The U.S. model – financialization, rentier oligarchy, and the imposition of dollar hegemony – is hitting its limits.
Juan Laborda is Professor at the Department of Organization Engineering, Business Administration and Statistics, Universidad Politécnica de Madrid
This article appeared originally in Spanish at Salto Diario
Donald Trump embodies the terminal decline of Western democracies, but his rise is merely the logical corollary of a systemic dynamic that, although some of us anticipated, proved impossible to halt due to the personal and collective inability to counteract its mechanisms. His figure represents the culmination of a deregulated and arrogant liberalism, whose historical manifestations—from colonialism to savage capitalism—have always left behind a legacy of polarization and civilizational crises. Theoretical warnings, from Sheldon Wolin’s “Inverted Totalitarianism” to classical analyses of fascism, now seem like self-fulfilling prophecies.
The implosion of the Soviet bloc in 1989 marked a turning point: neoliberalism, previously contained by the Cold War, shed all ambiguity. Under this new order, social demands and democratic principles were subordinated to an unquestionable dogma: the infallibility of the market. This paradigm was no accident but a project orchestrated with the active complicity of major Western political forces—liberals, conservatives, Christian democrats, and even social democrats—who abdicated their redistributive role. Academia, for its part, legitimized this shift through elegantly mathematized economic models disconnected from material reality, transformed into a priesthood serving capital.
The result was a structural mutation: economists became oracles of the markets, while a legion of policy experts reduced politics to a manual of technocratic “best practices.” Traditional left-wing movements, especially social democracy, paid the highest price: their metamorphosis into managers of the status quo emptied them of ideological content, fracturing their ties with unions, impoverished middle classes, and vulnerable sectors. This representation vacuum fueled the breeding ground for the far right, in general, and Trumpism, in particular.
In the United States, the hegemonic parties—Democrat and Republican—are equally complicit. Their collusion with corporate elites and lobbying groups turned the state into an instrument serving private interests. Trump is not an anomaly but the crystallization of this perverse pact between money and politics. The same happened across the Atlantic: in Europe, the progressive erosion of social democracy and institutional right-wing parties has opened the floodgates to ultranationalist projects that, under the rhetoric of sovereignty, replicate the same script: dismantling institutions, demonizing the “other,” and normalizing authoritarianism.
Trump, the Braggart, Forgets Certain Things
Donald Trump’s protectionist strategy, under the slogan “America First,” prioritizes tariffs and trade sanctions to impose U.S. economic supremacy. His approach, initially focused on renegotiating agreements like the North American Free Trade Agreement (NAFTA) with Mexico and Canada, threatens to destabilize global trade by ignoring economic interdependence. For example, his 25% tariffs on Mexico aim to force political concessions but could trigger a crisis similar to 1982: reduced Mexican exports to the U.S. would depress the peso, spike inflation, and complicate dollar-denominated debt payments, replicating a regional collapse.
Trump’s policies strain the balance of payments in economies dependent on the U.S., particularly in the Global South. A strong dollar, resulting from the initial reaction to tariff policies, makes imports and external debt more expensive for these nations. Countries face a perverse dilemma: accept U.S. terms (with currency depreciation and falling living standards) or resist through debt suspensions and import substitution. If I were them, I’d choose the latter—let them deal with it. If we’re playing, let’s all play. Perhaps the braggart Trump will encounter something unexpected: the collapse of the current monetary order and the end of dollar hegemony.
Keynes Was Right: The Fallacy of David Ricardo’s Theory of International Trade
David Ricardo’s theory of international trade, based on comparative advantage, argues that countries will always find a way to balance their international payments by adjusting wages and prices to make their exports more competitive. This logic underpins the IMF’s austerity model, which imposes severe budget cuts on debtor countries in the hope of reducing their trade deficit.
However, as John Maynard Keynes explained in the economic debates of the 1920s and 1930s, this theory is deeply flawed. During the interwar period, the U.S. demanded that its European allies repay massive war debts, which they passed on to Germany, while simultaneously imposing tariffs that prevented these countries from generating income through exports to the U.S. The result was a spiral of financial crisis and the rise of authoritarian regimes that led to World War II.
Keynes argued that a functional international financial system must allow debtor countries to generate income by exporting to creditor nations. Otherwise, the system collapses under debt pressure. Keynes’ proposal at Bretton Woods for an adjustment mechanism based on the “bancor” aimed precisely to prevent the polarization of the world into creditor and debtor nations. They didn’t listen, and now, with Trump, it’s double trouble. If Trump’s threats materialize, the U.S. will violate this fundamental principle by blocking other countries’ access to international trade, making their debts unpayable. I repeat: dollar-denominated debts will not be paid!
Trump’s arrogance assumes that affected economies will not respond. However, history shows that options like suspending debt payments (Mexico, 1982), reorienting trade toward China, or fostering regional alliances (BRICS, digital yuan) are viable. These measures would not only weaken the dollar as a global currency but also accelerate the fragmentation of the financial system. Trump’s policies, far from consolidating U.S. power, could catalyze its decline as the global economic hegemon.
But There’s More: The United States Is Humanity’s Greatest Bubble
There’s something no one talks about. The United States is, in fact, the greatest bubble in human history. Everything it produces—especially technology, goods, and services—is deeply overvalued. One example is its military and space programs. It spends far more on weapons than its main competitors, but its performance on the battlefield leaves much to be desired—witness what’s happening in Ukraine. It lacks hypersonic missiles like Russia’s or sixth-generation fighter jets like China’s. As mathematician Nassim Taleb says, there’s a clear overpayment—typical of public-private agreements. The same applies to electric cars, aerospace programs, the pharmaceutical industry, and its university education system. The latest example is artificial intelligence. In this field, a group of privileged, autocratic brats in Silicon Valley endlessly extract rents from their ivory towers. But when push comes to shove, the Chinese release DeepSeek, which is cheaper and more efficient because, in the end, engineering works.
Since the late 20th century, the U.S. economy has mutated into a finance-dominated, deeply extractive model, turning even basic universal rights—housing, education, and healthcare—into speculative assets. Moreover, it is profoundly predatory, accelerating the climate crisis and the extraction of minerals and raw materials. We are heading toward *Thanatia*—that’s what the bravado about Greenland is about. Investment funds and banks have artificially inflated housing prices, transforming them into profit instruments rather than a right. Education, burdened by abusive student debt, and healthcare, controlled by insurers and pharmaceutical companies imposing monopolistic prices, reflect how financialization prioritizes profit over access. The culmination of these dynamics is the increased market power of certain firms, which has led to a rise in extractive capital (pure profits) at the expense of labor and productive capital. This process has diverted capital from productive investment to speculative bubbles, exacerbating inequalities and generating cyclical crises.
In this context, what role does Trump’s tariff policy play? Let’s revisit Robert Triffin’s Paradox. The dollar’s hegemony as a global currency forces the U.S. to maintain chronic deficits to supply the world with liquidity, but these same deficits undermine confidence in its value. Trump exacerbates this paradox: his protectionism limits the dollar’s international circulation, while financialization demands its issuance. The overvaluation of U.S. assets (from stocks to educational services) is possible because the rest of the world accepts the dollar as a guarantee, but a crisis in dollar-denominated debts will accelerate the shift toward alternative currencies (yuan) and alliances like BRICS. Trump’s policies, by obstructing global trade, will hasten the flight of confidence toward other currencies.
The U.S. model—financialization, rentier oligarchy, and the imposition of dollar hegemony—is hitting its limits. Trump, by imposing tariffs and trade restrictions, is not strengthening the U.S. but accelerating the erosion of its currency and influence. The combination of unpayable debt, international retaliation (debt suspensions, yuan-based trade), and the loss of dollar credibility could trigger a systemic collapse. Far from restoring greatness, Trump’s strategy replicates the errors of the 1930s: protectionism that fuels crises, inequality that polarizes societies, and hegemonic decline. The result will not be an adjustment but an implosion. Which makes me wonder: what if Trump is actually an infiltrated agent serving another power, with a different motto: MAGA—Manufacturing America’s Gradual Annihilation?
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