by Daniel Brouse
April 13, 2025
Economic Collapse Ends the Era of Mass Consumption, Capitalism, and Fossil Fuel Dependence
In 2017 and 2018, many economists warned of rising inflation and interest rates due to Donald Trump’s economic, environmental, and social policies — warnings that were largely dismissed at the time. Few believed the U.S. dollar, the linchpin of global finance, could lose its status as the world’s reserve currency. That confidence, once deeply rooted in the strength of U.S. institutions and global leadership, is now unraveling.
Trump’s Debt-Driven Economics: A Personal Philosophy Gone National
In office, Donald Trump mirrored his personal business model on a national scale: borrow excessively and sidestep repayment. Having declared bankruptcy over six times, Trump’s track record raised serious concerns about his approach to fiscal responsibility. That approach translated into:
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Massive tax cuts without corresponding spending reductions.
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Explosive deficit growth, pushing the national debt beyond the size of the U.S. economy.
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Crowding out private investment as government borrowing soared, pushing up interest rates.
The result was an era of artificially inflated growth fueled by unsustainable debt and reckless financial policies.
Weakening the Dollar: Trade Wars and Protectionist Failures
Trump’s “Make America Great Again” agenda, anchored in economic nationalism, inflicted direct damage on the U.S. dollar’s global standing. His administration’s use of tariffs, trade barriers, and unilateral withdrawal from international agreements led to:
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Erosion of trust in the U.S. as a stable trading partner.
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Increased costs for imported goods, contributing to persistent inflation.
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Undermining the predictability and liquidity of global trade, which the U.S. dollar heavily relies upon.
A reserve currency depends not only on economic strength but on political stability, institutional reliability, and global trust. Trump’s policies weakened all three pillars.
When Trade War Meets Credit War
What was once a hypothetical scenario — simultaneous trade and credit wars — has become reality in Trump’s second term.
In Trump 1.0, the groundwork was laid: shredding trade agreements, attacking global institutions, and retreating from multilateral leadership. In Trump 2.0, that playbook has scaled up into a full-blown economic experiment.
This time, the effects are no longer speculative. They are materializing in real time.
Tariffs are not just taxes on goods. They are also blows to global liquidity and trust. Countries that earn fewer dollars from exports to the U.S. have fewer dollars to invest back into U.S. Treasuries and assets. That’s how a trade war becomes a credit war.
Early Warning Signs of Systemic Breakdown
The early tremors of this dual war are already visible:
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Bond market liquidity is vanishing as fewer international buyers participate.
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Foreign demand for U.S. Treasuries is declining, despite rising yields.
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Global central banks are diversifying reserves away from the dollar.
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Gold, commodities, and non-dollar assets are surging as safe havens.
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Interest rates are climbing, not because of growth, but because of risk.
This creates a dangerous feedback loop: less trade, fewer dollars abroad, reduced Treasury demand, higher U.S. borrowing costs, and ultimately tighter credit across the economy.
Collateral Damage: The U.S. Housing Market and Mortgage-Backed Securities
Trump’s policies are also destabilizing a once-resilient cornerstone of the U.S. financial system: the mortgage-backed securities (MBS) market.
As foreign central banks accumulate fewer dollars, their purchases of U.S. MBS and Treasuries decline. This reduces liquidity and drives up borrowing costs for American households.
Simultaneously, domestic strain is rising. FHA mortgage delinquencies have reached 11%, and investors in the secondary mortgage market are offloading debt at 5–10% discounts to raise cash—signaling a broader crisis of confidence.
The Unsustainable Status Quo: Debt, Decline, and Desperation
The U.S. government’s rising debt, coupled with shrinking foreign capital inflows, will make refinancing more difficult. As a result, the U.S. may be forced to do something it hasn’t done in nearly a century: balance its budget.
That prospect threatens to upend decades of U.S. economic expansion. It could lead to:
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A collapse in the standard of living.
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Reduced life expectancy as healthcare, infrastructure, and social services are gutted.
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Exploding property taxes and insurance costs, with annual increases potentially exceeding 100% in a high-inflation environment.
With few tools left, the U.S. could resort to the nuclear option: hyperinflation. Turning trillions of dollars in debt into billions via inflation would devastate consumers, retirees, and anyone on a fixed income. It would also destroy the credibility of the dollar.
A Pyrrhic Victory? The Painful Path to Environmental Sustainability
Ironically, there may be a sliver of hope in this economic unraveling. If Trump’s economic collapse ends the era of mass consumption, over-leveraged capitalism, and fossil fuel dependence, it could reduce global emissions and slow the pace of climate change.
A forced degrowth scenario—where economic contraction leads to lower carbon output—might offer the time humanity needs to adapt, innovate, and survive. But it would come at enormous cost: to livelihoods, stability, and America’s global role.
Conclusion: Exceptionalism Undone
The U.S. dollar’s fall from dominance, combined with unprecedented political and fiscal recklessness, is dismantling the illusion of American exceptionalism. Once the anchor of global finance, the U.S. is now showing signs of becoming a net liability to the world economy.
The question is no longer whether the dollar can fall—but whether it can be saved. And if it cannot, what comes next for a nation built on the myth of infinite credit, endless growth, and unquestioned supremacy?
* WARNING * — Our updated climate model, now integrating complex social-ecological factors as part of a dynamic and non-linear system, shows that global temperatures could rise by up to 9°C within this century — far beyond previous predictions of a 4°C rise over the next thousand years. This level of warming will render much of the world uninhabitable within this century.
Climate Collapse Will Break Capitalism
The Destructive Legacy of Trump’s Climate and Economic Policies
Trumpenomics: The Decline of the US
State of the Climate Crisis 2025