The share of the Chinese yuan in global trade reached a new record in July 2024. Moreover, the yuan’s popularity increased by 13% in just one month. The transition to trading in national currencies is accelerating, although it has not yet led to the collapse of the U.S. dollar’s position. In 2023, the yuan’s share of Swift transactions grew by 33%. The growth this year promises to be even more significant. In November 2023, the yuan overtook the yen and is now closely trailing the British pound. Not to mention that transactions bypassing the Swift system are not included in the analyses. Within Swift, the yuan’s share approaches 5%, but when all external transactions are considered, it is much higher.
Japan and the United Kingdom have rapidly lost ground amid the systemic crisis. The Japanese model of “zombie capitalism” is collapsing. The British economy is also not in better shape. The share of the euro is also significantly declining, which is being encouraged by both the Americans and the Chinese. At the same time, the growing popularity of gold over the dollar and U.S. Treasury securities could pose a threat to the United States. As a result, managing the rapidly increasing U.S. national debt will become increasingly difficult. The problems are further exacerbated by the instability generated by the presidential election campaign and the prospect of a significant devaluation of the dollar in 2025.
Meanwhile, the American and European military-industrial complexes are generating astonishing profits. The largest military companies expect to increase their cash flow by 40% to $50 billion by 2026. The military-industrial complex is receiving a record number of orders to replenish the arsenals depleted during the war in Ukraine. However, due to logistical problems and rising inflation, many orders are no longer particularly profitable for the military companies. And they are in no hurry to fulfill them. For example, Lockheed Martin and Raytheon-RTX spent $19 billion in 2023 on buying back their own shares. This task, much like paying dividends, is a priority for them. It is easier to pump money into a financial bubble than to try to increase weapons production.
The Pentagon is already in a state of hysteria because it lacks the capacity to fight all the wars. Only 300-500 Patriot missiles are produced annually, and production expansion is not expected until 2027. The production of 155 mm shells in the U.S. has reached a monthly ceiling of 28,000 and cannot be increased. It was promised that the production of Javelins would be doubled from 2,000 to 4,000 per year by 2024. This has never happened. There is an acute shortage of engineers, experienced workers, and raw materials. Therefore, in pursuit of even higher record profits, they have begun acquiring smaller competitors. Many speculate that military spending will sharply decline in the next cycle. As a result, they are trying to spend more money on the markets rather than invest in production that may not pay off later.
Translated and edited by Evan Right
