THE CHANGING WORLD ORDER 67 0% 10% 20% 30% 40% 50% 60% 70% All Countries Sterling Agreement Countries Central banks begin selling their sterling reserves following the devaluation. The share of the pound collapses. Sterling Agreement countries promise to continue holding pounds, but only if 90 percent of their dollar value is guaranteed by the British government. 1968 1969 1970 1971 1972 0% 5% 10% 15% 20% 1968 1969 1970 1971 1972 AVERAGE SHARE OF POUNDS IN CENTRAL BANK RESERVES (%TOTAL) THE EUROZONE COMPARED TO THE US AND CHINA EUR USA CHN Empire Score (0 to 1)* 0.55 0.87 0.75 GDP Per Capita (2017 USD, PPP Adj) 41,504 60,236 16,411 GDP (%WLD, PPP Adj) 13% 17% 23% Population (%WLD) 4% 4% 18% Exports (%WLD) 12% 11% 15% Military Spending (%WLD) 9% 28% 19% College Grads (%WLD) 13% 20% 22% Patents (%WLD) 11% 17% 41% Nobel Prizes (%WLD) 11% 32% 2% Equity Mkt Cap (%WLD) 8% 55% 10% 28% 55% 2% 21% 62% 2% *Europe Empire Arc treats major Eurozone countries as single unit for purposes of comparison. Intl Transactions in Currency (%WLD) Official Reserves Held in Currency (%WLD) THE CHANGING WORLD ORDER 68 DEU FRA ITA ESP GRC GDP PER CAPITA (2010 USD) GDP PER CAPITA (2010 USD, INDEXED TO 2007) 00 05 10 15 20 20,000 30,000 40,000 50,000 70% 90% 110% 130% 00 05 10 15 20 69 THE CHANGING WORLD ORDER Level Relative to Own History (1 = Max) UNITED STATES: INDEX OF KEY DETERMINANTS 0 1 1700 1800 1900 2000 Major Wars Education Innovation and Technology Competitiveness Military Trade Economic Output Financial Center Reserve FX Status C H A P T E R 11 THE BIG CYCLE RISE AND DECLINE OF THE UNITED STATES AND THE DOLLAR 70 THE CHANGING WORLD ORDER US ARC 1750–PRESENT Major Wars United States United Kingdom China Level Relative to Other Empires (1 = Max) 0.0 0.2 0.4 0.6 0.8 1.0 New Order Strong Leadership Founding Fathers Internal Conflict Innovation 2nd Industrial Revolution Military Strength Global Empire & Reserve FX New Order US-led Western Bloc WWII American Revolution Cold War WWI Louisiana Purchase Gilded Age & Progressive Era 1750 1800 1850 1900 1950 2000 Mexican- American War Civil War Innovation Digital Revolution (1) (2) (3) (4) (5) Rising Inequality & High Indebtedness 80 100 90 110 1912 1915 1918 1919 1911 1914 1917 1910 1913 1916 SPOT FX RATE VS USD (INDEXED) Devaluation against the dollar during World War I GBR FRA DEU 71 THE CHANGING WORLD ORDER 0 1 1940 1960 1980 2000 2020 Level Relative to Other Empires (1 = All-Time Max) RELATIVE STANDING OF GREAT EMPIRES USA GBR CHN RUS 1945 1965 1985 2005 NUCLEAR WEAPONS STOCKPILE (# WARHEADS, LOG) USA CHN GBR IND RUS FRA 1 10 100 1,000 10,000 100,000 72 THE CHANGING WORLD ORDER 45 55 65 75 85 95 05 15 45 55 65 75 85 95 05 15 USA Long Rates USA Short Rates USA Core Inflation USA Headline Inflation 0% 4% 8% 12% 16% 20% 0% 4% 8% 12% 16% 20% 1990 2000 2010 2020 EXPORTS OF GOODS AND SERVICES MINUS IMPORTS OF GOODS AND SERVICES (REAL, USD BLN, 12MMA) USA CHN -1,200 1,200 -600 0 600 Country gets richer Country gets poorer 73 THE CHANGING WORLD ORDER 20% 60% 100% 140% 180% 1900 1920 1940 1960 1980 2000 2020 When the cycle changes New World Order When the cycle changes PRIVATE SECTOR NON-FIN DEBT (%GDP, 6MMA) 4% 9% 14% 19% 24% 29% 0% 4% 8% 12% 16% 20% 1900 1920 1940 1960 1980 2000 2020 When the cycle changes New World Order When the cycle changes USA Interest Rates USA Monetary Base (%GDP) 74 THE CHANGING WORLD ORDER USA INCOME SHARES Top 10% Bottom 90% 20% 30% 40% 50% 60% 70% 80% 1920 1970 2020 USA WEALTH SHARES Top 0.1% Bottom 90% 0% 10% 20% 30% 40% 50% 1920 1970 2020 House Democrat Senate Democrat House Republican Senate Republican IDEOLOGICAL POSITIONS OF THE MAJOR PARTIES -40% -30% -20% -10% 0% 0% 10% 20% 30% 40% 50% 60% 1900 1920 1940 1960 1980 2000 2020 More conservative Less conservative Greatest gap 75 THE CHANGING WORLD ORDER SHARE OF CONGRESSIONAL MEMBERS’ VOTES CAST ALONG PARTY LINES 1790 1830 1870 1910 1950 1990 2030 60% 70% 80% 90% 100% This chart shows the average predictiveness of a given member’s left/right ideology in determining their vote across chambers for each congressional session as measured by NOMINATE, an academic model of ideological preference. USA Unemployment Rate USA CB Balance Sheet (%GDP) UNITED STATES 00 20 40 60 80 00 20 00 20 40 60 0% 10% 20% 30% 80 00 20 0% 10% 20% 30% 40% 76 THE CHANGING WORLD ORDER 0% 10% 20% 30% 40% 50% 60% 70% EUR Unemployment Rate EUR CB Balance Sheet (%GDP) EUROPE GBR Unemployment Rate GBR CB Balance Sheet (%GDP) UNITED KINGDOM 00 20 40 60 80 00 20 0% 2% 4% 6% 8% 10% 12% 14% 00 20 40 60 80 00 20 0% 5% 10% 15% 20% 25% 00 20 40 60 80 00 20 0% 10% 20% 30% 40% 50% 00 20 40 60 80 00 20 77 THE CHANGING WORLD ORDER JPN Unemployment Rate JPN CB Balance Sheet (%GDP) JAPAN 00 20 40 60 80 00 20 0% 2% 4% 6% 8% 00 20 40 60 80 00 20 0% 40% 80% 120% POLITICAL SPECTRUM 50 YEARS AGO POLITICAL SPECTRUM 2021 12 12 Shading indicates degree of polarization. 78 THE CHANGING WORLD ORDER 0 1 1500 1600 1700 1800 1900 2000 Level Relative to Other Empires (1 = All-Time Max) RELATIVE STANDING OF GREAT EMPIRES France Germany Spain Netherlands Ottoman Empire Japan India United Kingdom China United States Major Wars Russia C H A P T E R 12 THE BIG CYCLE RISE OF CHINA AND THE RENMINBI 79 THE CHANGING WORLD ORDER Level Relative to Own History (1 = Max) CHINA: INDEX OF KEY DETERMINANTS 0 1 1800 1850 1900 1950 2000 Major Wars Education Innovation and Technology Competitiveness Military Trade Economic Output Financial Center Reserve FX Status Major Wars Rough Estimate of China’s Relative Standing vs Great Powers 0 1 600 800 1000 1200 1400 1600 1800 2000 Tang Dynasty Level Relative to Other Empires (1 = All-Time Max) Song Dynasty Yuan Dynasty Ming Dynasty Qing Dynasty RC PRC