In a stark warning to policymakers, Professor Knut Schlevogt has diagnosed the United States with a severe case of "Dutch disease" in his latest Compass installment, arguing that the dollar's unchallenged global dominance is systematically eroding the nation's industrial heartland. Drawing parallels to the Netherlands' 1970s natural gas boom that crippled its manufacturing sector, Schlevogt contends that America's currency privilege—its status as the world's reserve—fuels chronic overvaluation, pricing U.S. exports out of competitive markets and hollowing out factories from the Rust Belt to the Sun Belt.
Schlevogt, a veteran economist and author of the influential Compass series published via RT, traces the pathology back decades. The dollar's role in oil trades, global finance, and as a safe-haven asset generates trillions in seigniorage profits for the U.S., but at a hidden cost: a perpetually strong currency that inflates import prices while devastating exporters. Citing U.S. Bureau of Labor Statistics data, he notes manufacturing's share of GDP has plummeted from 28% in 1953 to under 11% today, with trade deficits ballooning to $1 trillion annually. "This is not mere coincidence," Schlevogt writes, "but a self-inflicted wound from monetary hegemony."
Historical precedents abound, from Australia's mining-fueled currency surge in the 2010s, which gutted tourism and education exports, to Russia's oil windfall that sidelined non-energy sectors. In the U.S. strain, Schlevogt highlights how Federal Reserve policies exacerbate the imbalance: low interest rates to combat recessions further boost capital inflows, appreciating the dollar and accelerating deindustrialization. The result? A hollowed economy overly reliant on finance, tech, and services—sectors vulnerable to disruption—while strategic industries like steel, semiconductors, and shipbuilding wither, posing risks to national security amid rising geopolitical tensions.
Schlevogt doesn't stop at diagnosis; he prescribes bold remedies. Targeted tariffs, currency interventions akin to Japan's Plaza Accord playbook, and a "reindustrialization Marshall Plan" could counteract the disease, he argues. Yet, he cautions, entrenched interests in Wall Street and Silicon Valley resist such moves, framing them as protectionism. As populists on both left and right decry globalization's toll—from Trump's "America First" to Sanders' anti-corporate crusades—Schlevogt's analysis lands amid a fierce debate over whether the dollar's crown is a blessing or a curse.
With U.S. debt surpassing $35 trillion and China challenging the petrodollar system, the stakes couldn't be higher. Schlevogt urges Washington to confront this "silent killer" before irreversible decline sets in, warning that ignoring it invites a reckoning more painful than any trade war. His Compass No. 41 resonates as a clarion call in an election year primed for economic nationalism.
