“You’ll own nothing and you’ll be happy.” The infamous, now deleted, Predictions 2030 video of the World Economic Forum is often pointed to as the slip of the tongue that gave away the global capitalist agenda. Unfortunately this is not true. The agenda was “given away” many times before, but we just chose to ignore it. Sir James Goldsmith warned the west against GATT- the precursor to the WTO, claiming that it would gut the production base of all Western countries and lead to massive social unrest. The warning was issued in an interview with Charlie Rose in 1994. Not only did we ignore it, but we also allowed China to join the WTO in 2001.
“Capital goes where it is welcome and stays where it is well treated.” is a quote often attributed to British capitalist, and Citibank CEO, Walter Wriston. By this rationale you can imagine that capital would much rather move East, where it can employ several people for the same cost of a single employee in the West. This meant that manufacturing moved away from the West, and as a result the Western economies shifted from real economies, that is to say manufacturing, to service based economies, that is to say financial services and knowledge based work.
The durability of this new system was predicated on the continued dominance of the United States of America as the global hegemon, whereby The U.S. would provide global naval security for goods manufactured in Asia and destined for consumption in Europe, North America, and other high GDP markets. In return Europe and the rest of the world would invest the dollars they earned from their goods manufacturing in American treasury bonds, or on the U.S. stock exchange- thus fuelling their financialized economy. This arrangement worked very well until the Global Financial Crisis of 2008.
If GATT and China joining the WTO were the firsts step down the primrose path that led to the predicament the West faces today, then the adoption of Modern Monetary Theory as a response to the 2008 GFO was the point when they started running. MMT is he idea by which the U.S. and E.U. can create credit (print money) in order to pay for the ever-growing deficits caused by the boom-bust cycles of their financialized economies. Basically the West propped up its financial sector by diluting the wage earners. Thus the purchasing power of wage earners plummeted, while asset prices went to new highs. But don’t worry, it gets worse.
As you can imagine, when the West froze the Russian overseas assets- mainly European, British and U.S. government bonds, it wasn’t without consequences for its financial services based economy. And while the argument can be made that it did not accelerate the de-dollarisation that was already under way, it did accelerate the search for alternatives to government bonds. This may also be the reason why gold has been on a tear in the last few years going from just under 1900 USD per troy ounce in February 2022 to almost 3000 USD per troy ounce in February 2025, as central banks around the world are hedging against further instability.
This last aspect is of an extra-special note as traders are trying to cash in their their paper gold at the London Bullion Market Association in order to sell it at a premium on the Shanghai Gold Exchange. This arbitrage opportunity has led to 4-8 weeks delivery delays as the Bank of England ran out of gold. In other words the Bank of England has defaulted on its gold conversion promise. This little publicised event has had a fundamental impact on England’s rampant implication in the war in Ukraine.
Since the E.U. the U.S. and the U.K. have highly financialized economies, they run a high risk of defaulting if and when they make contact with alternative markets and/or competitive real economies such as China and Russia. The U.S. was first to move as it realised that the cost of being the world hegemon was higher than the benefits it returned. Unfortunately for the E.U. this means that its economies will have to be marked to market, which would throw the entire continent into a debt default crisis. Why? Because of the reasons listed earlier. No cheap Russian energy means an uncompetitive manufacturing sector. No real economy means that the cost of borrowing goes through the roof. No money means no investments. No investments means economic stagnation. Economic stagnation with high debt means money printing. Welcome to Weimar E.U.
This is the reason Donald Trump dropped the E.U. like a hot potato. This may also be the very reason why England and the E.U. cannot end the war in Ukraine. When the war started it was only about Russian security guarantees. Unfortunately the West saw this as an opportunity to weaken and ultimately break up and plunder Russia. Instead it shot itself in the foot by cutting itself off from the rest of the world through sanctions on Russia that ended up hurting the E.U. and the U.S instead. The new U.S. administration realised this and decided to cut its losses. And while America can survive such a loss, the E.U. cannot. So now we find ourselves in a scenario where the conflict has become existential even for the E.U. at a time when American and European interests are starting to diverge. As one Chinese diplomat put it “The U.S. will get the minerals, Russia will get the land, and Ukraine will get the glory.” No mention of what Europe will get.