As election season approaches, a pressing question lingers in my mind: "Is America no longer sustainable?" It's not the first time this nation has faced periods of deep transformation and uncertainty — think of the Great Depression, the 2008 mortgage-backed assets bubble, or the COVID-19 crisis. These turbulent times have always been followed by painful recovery, but it seems we are on the verge of yet another financial disaster, fueled by historic-high national debt, deficits, and inflation.
At the core of these challenges lies a defective economic policy, and the roots can be traced back to a pivotal moment in 1971. Most people are tired of hearing the story, but it remains vital to understanding where we are today: the decision to abandon the gold standard.
In a gold-backed economy, monetary supply grows at a fixed and controlled rate—about 2% annually—keeping inflation in check. Keynesian economists argue this is a straitjacket for economic growth, but what we replaced it with might have been even worse. Without the gold standard to anchor the dollar, the entire economic system is now based on faith in a currency that has no intrinsic value. Essentially, we're relying on a massive "trust me, bro" from the government and the Federal Reserve.
With the dollar now free-floating, it has become a bad currency for citizens to hold—constantly devalued by inflation, compounded by rising living costs, and manipulated through economic policies that serve the interests of the elite, not the everyday American. This shift forced America into full-on corporatism to preserve wealth, a system designed to protect profits rather than foster real, sustainable growth.
But the true breaking point comes from outsourcing—the industrial base of this country now relies on cheap labor abroad to sustain its profitability. The U.S. dollar itself no longer produces value on its own. Instead, it is tied to external factors: foreign labor markets, global supply chains, and the perpetuation of economic policies that favor financialization over tangible production.
A History of Short-Term Gains, Long-Term Pain
Let's break down how this happened and why we're heading toward an even more dangerous future.
1. The Debt-Fueled Economy
America's national debt is at its highest point in history, and it shows no signs of slowing. For decades, the government has outspent its revenues, borrowing trillions of dollars to fund everything from military ventures to social programs. The days of balancing the budget are long gone, and the only way the system continues to operate is through more borrowing. This reliance on debt means that economic policy is no longer about investing in long-term prosperity, but rather about making sure the interest payments remain manageable. It's a vicious cycle that perpetuates itself—more debt leads to more inflation, which leads to more debt, and so on.
2. Inflation and Asset Bubbles
The Federal Reserve's unchecked power to expand the money supply without the constraints of a gold standard has led to persistent inflation, with the purchasing power of the dollar eroding year after year. To offset inflation, the Fed often resorts to low-interest-rate policies, which have an unfortunate side effect: they inflate asset bubbles. Whether it's the housing market, the stock market, or corporate debt, these bubbles inevitably burst, as we saw in 2008, and when they do, it's not the wealthy who bear the brunt of the fallout. It's the average American whose 401(k) plummets, whose house forecloses, and whose wages stagnate while the cost of living skyrockets.
3. Global Dependency
The U.S. dollar's status as the world's reserve currency has given America an advantage that no other nation enjoys—it can export its inflation and debt by making other countries hold and trade in dollars. But this advantage is fragile. As global dynamics shift, with rising powers like China and the growing interest in alternative currencies like cryptocurrencies, the foundation of the dollar's dominance is beginning to crack. If the world moves away from the dollar, America's ability to borrow endlessly and sustain its current lifestyle will collapse.
4. Corporatism at the Expense of the People
What we're seeing is the culmination of corporatism, where the American economy has been re-engineered not to serve its citizens, but to protect and grow corporate profits. Outsourcing became a hallmark of this system. By moving production overseas, corporations could slash labor costs, increase margins, and drive up stock prices. But while multinationals thrived, America's industrial heartland hollowed out. Factories closed, jobs were shipped away, and communities that once thrived on manufacturing were left to wither.
This shift created a fundamental mismatch: corporations are doing great, but America isn't. The stock market might be booming, but real wages have stagnated for decades. Corporate executives might be raking in record bonuses, but the average worker is struggling to afford basic necessities like housing, healthcare, and education.
The Road Ahead: Unsustainable Without Change
The U.S. economy, as it currently stands, is unsustainable without constant intervention. This isn't just about cyclical recessions or a "bad year" in the markets. The problem is structural. America has allowed its real economy—the production of goods and services—to be replaced by financial instruments and leveraged debt. It has placed its future in the hands of corporations that are more loyal to shareholders than to the country itself.
Is America still sustainable in the long run? Not if it continues down this path.
The system can limp along as long as the dollar remains the world's reserve currency and global markets continue to rely on U.S. financial instruments. But those pillars are fragile, and the moment one of them falls, the entire edifice comes down with it. Whether it's geopolitical shifts, a loss of confidence in the U.S. dollar, or a new economic competitor emerging, the cracks in the system are only getting wider.
A Path Forward
To become sustainable again, America must return to producing real value. That means reinvesting in infrastructure, education, and technology. It means encouraging innovation and entrepreneurship at home rather than relying on cheap labor abroad. It means transitioning away from a system built on debt and financialization, and toward one built on real, tangible economic output.
The clock is ticking. If America doesn't act soon, the consequences will be dire—not just for the U.S., but for the global economy as well.