Part 4/15:
A pivotal part of the discussion centered around "Dutch Disease", a phenomenon where a resource discovery or currency strength hampers domestic manufacturing and export competitiveness. The US's petrodollar system—establishing a dollar-based demand for oil—created an artificial necessity for dollars globally, effectively exporting US inflation abroad while maintaining high valuations of US assets.
The US accumulated a trade and capital account surplus, enabling it to buy depreciating imports from emerging markets and offload appreciating assets—mainly stocks and land—to foreign investors. This arrangement, while beneficial for US equity valuations, undermines the competitiveness of blue-collar workers and manufacturing industries, leading to income disparity and economic imbalance.