Obama won, and the American people were happy with the result of the election. Yet, their current debt level will cause them to suffer. Japan could be a key to stopping the decline of America. Photograph: Reuters/Aflo

America Will Be Overwhelmed By a Budget Deficit

Where will America be heading after its November 6th presidential election?

It was already decided. During President Obama’s first term in office, the defence budget was reduced by 1.5 trillion USD (about JPY 83 trillion) whereas 940 billion USD (JPY 75 trillion) was spent on social security in a 10-year plan. Due to President Obama’s re-election, the American defence budget could fall to the low level it was in the 1940s.

After all, a huge budget deficit will not allow for any financial freedoms. As a result, America could become an ‘ordinary country’ rather than maintain its hegemonic status in the next four years.

A Leadership Failure Similar to What the U.K. Experienced After World War II?

After the Second World War, Great Britain fell from power as a result of its budget deficit. In the late 19th century, the pound sterling was the currency used for British trade, and it dominated half of the world’s manufacturing industry. The best navy in the world protected the key currency bloc, but Britain spent 60% of its GDP (Gross Domestic Product) on two world wars. Britain also borrowed an enormous amount of money from the United States.

Thus, no money was left to operate the large naval fleet, and France, the Netherlands, and Australia bought many of the aircraft carriers, which dismantled Britain’s sizable fleet. Then, the U.S stripped the status of the currency reserve of the British pound, because the U.S. insisted on a written agreement that changed the value of the currency. The new contract guaranteed an exchange of gold to dollars instead of pounds at the time of the founding of the International Monetary Fund (IMF) in 1944.

America is now in a state quite similar to that of the UK after the Second World War in the sense that ‘its defence budget has been cut due to a huge debt which has caused the loss of trust in its key currency’.

Military Power Has in Fact Brought About the Financial Debt

Yet, there is an obvious difference. The British debt was in a foreign currency (dollars) whereas the current US government’s debt is in local currency (dollars).

Great Britain had to pay back its loan in hard-earned dollars based on a diligent work ethic. On the other hand, since US dollars have been accepted all over the world as a reserve currency, the U.S. could afford to print more money and could pay for its government’s allowances. If President Obama becomes aware of the power of the dollar, he could maintain and strengthen the U.S. military and drastically stimulate the U.S. economy.

Furthermore, if the U.S. military could maintain its No.1 position in the world, as a last and desperate measure it could occupy a rich country somewhere to make up for its deficit. Based on my observations, the indispensable structure of the current U.S. hegemony is founded upon the ‘power of the US military alliances that enable the dollar and US bonds to gain acceptance all over the world’.

If the President recognises the above, America might be able to extend the life of its rule. But as far as I can see from the results of the presidential election, it doesn’t seem as if the necessary human resources are available. I have the impression that America must wait another four years for a revival after the following presidential election.

Japan Should Buy Four Decommissioned US Aircraft Carriers

During the next four years in which America will lose its lustre, only Japan can fill the gap.

The American Heritage Foundation predicts that all of the US Navy’s aircraft carriers and submarines will not be able to operate in 2020 due to the economic situation. The think tank named Center for a New American Security (CNAS) recommends that Japan should possess multiple aircraft carriers.

With regard to the conventional types of aircraft carrier, the decommissioned Kitty Hawk, the John F. Kennedy, and the Constellation are currently being preserved with consideration for possible reoperation. In addition, the nuclear-powered Enterprise will be decommissioned in December this year. If Japan purchases these four decommissioned aircraft carriers, and acquires the operational knowledge of them with the assistance of US naval crew, who will be made redundant, then the benefit to both Japan and the US should be substantial.

Moreover, it is inevitable that the value of the dollar will fall gradually over the next several decades and the distribution of dollars, which account for approximately 60% of the world’s currency, will be reduced. In the midst of a continuing Euro crisis, the Japanese yen could possibly fill the hole. The Chinese renminbi could also be a candidate. However, China is a ‘currency manipulator’. China sells its products at ‘half price’ all over the world, and that disqualifies China’s entry. If Japan buys global products with the ‘strong yen’, and distributes the yen mainly in Asia, then the yen could be regarded as a quasi-reserve currency.

That said, military and economic cooperation between Japan and the United States could stabilise the world. This is one of the methods that might halt the decline of America for the time being.

(by Jiro Ayaori)