I think Vembu’s diagnosis is spot on !
IMHO, It’s basically 4 major structural weaknesses that got built by the USA into the post-war Bretton Woods global monetary architecture whose pillars were :
(a) the Petro-dollar arrangements and (b) the SWIFT payment system for all trade transactions and capital flows (3) the abandonment of Gold as primary reserve standard and (4) the tax-deductibility of loan-servicing obligations by business enterprises everywhere in the world .
It is the above 4 factors that in 50 years, as Vembu says, that have now caused monetary unsustainability for the US .
Trump has recognised that America (as Vembu indicates) now finds itself suffering from acute Dollar Constipation being made worse, year after year, by chronic Trade Deficit indigestion.
Trump now sees no other way to cure America’s problem other than to give his country a massive economic enema …. And he’s using Tariffs as the deadly surgical strike to carry out that rather indelicate operation.
The problem however is that , to put it crudely, the laxative for America also results unfortunately in uncontainable dysentery for the rest of the world that has (as Vembu says) fed itself to obesity for 50 long years on America’s insatiable, profligate “imports gluttony” .
Enemas can be very traumatic . They can gut many small-to-medium sized economies indeed. But those countries that are not massively overweighed by holding/ clinging on to US currency reserves in the billions might perhaps just be able to weather the alimentary storm of America simply by adjusting their monetary diet in the short-term : increasing their gold reserves and paring down dollar holdings .
In the long term , however, the rest of the world perhaps can do nothing more than simply pray and hope that the gut health of America is restored ASAP to avert a Great Depression — economic multi-organ failure.
Sudarshan Madabushi