It started many millennia ago when humans figured out fire and stone. This enabled us to make various types of tools. Since then, human ingenuity has led us to create numerous tools and technologies. In the present day, that tendency of tinkering and innovation has helped us to create a massive corpus of knowledge, technologies and figure out their myriad applications.

Today, due to the development of technology, what was once considered myth has become our lived reality. Now, humans fly not only from one place on Earth to another, but also dream of reaching other planets. In another sphere, a whole stack of digital tools has made life easier for billions of people around the world through seamless trade and finance, and improved communication abilities over vast distances of time and space.

While the creation of these tools and technologies has accrued numerous social benefits, including unprecedented economic growth and improved global mobility, their unchecked growth and proliferation has also inflicted outsized miseries on an individual’s life and livelihoods, apart from fraying our bonds of community and society.

In the current system, apart from economic inequality that alienates one human being from another, while fostering a general feeling of distrust among members of the society, the miseries we bear in our lives also have its roots in how social media platforms operate in our lives and society today, apart from how Artificial Intelligence tools are being used to shape our lives, economic wellbeing and social interactions.

The problem, however, is not the technology itself. It is the convergence of three forces: economic and financial systems that extract value from human lives without restraint, political systems that operate without meaningful accountability, and digital technologies that amplify both at unprecedented scale. When these forces fuse, they do not merely distort markets or media; they erode democratic agency of individuals and institutions itself. Artificial intelligence enters this equation not as an isolated threat to our world and way of life, but as a multiplier of existing structural failures, affect our individual and collective wellbeing.

For most of human history, social cohesion, communication and collaboration were one of the most defining characteristics of human life and society, responsible for propelling humanity forward. Throughout history, these aspects allowed humans and society to flourish together. More importantly, this happened within the bounds and norms of what is acceptable and beneficial for individuals and society as a whole, without infringing on the rights of individuals or diluting their duties. Crucially, this was made possible due to the common and shared understanding of what we as humans are, and what entails our humanity, values, ideals and principles, along with their place in our lives and society. These aspects, when integrated together, created ample space for humans to coexist for large periods of time without conflict or chaos.

However, this paradigm has upended recently due to the convergence of a number of factors that have been left unchecked to operate in our society for too long. These are related to how global economies and finance assign value to human lives and reward human labour, apart from how social norms and relationships have evolved in the age of digital social media platforms and artificial intelligence tools.

The world today, in spite of unprecedented economic and financial growth, massive technological prowess, vast repositories of knowledge, and understanding of what is harmful or beneficial for our world, the environment, individuals, and society, has become an inhuman and inhospitable place.

Here, we have created and accepted social and economic norms and frameworks that dehumanize human labour to extract maximum value from our lives, to operate and sustain the extant perpetual profit-at-all-cost model of economic growth. On top of this, we have built digital tools that commodify human attention through social media tools that manipulate individuals at population scale. This keeps large sections of people in our society distracted from our own material and economic condition, while simultaneously keeping most of us ignorant, docile and divided enough that we do not ask any questions of the state, authority, power, or businesses, leaders and politicians.

This has rendered us incapable of organizing ourselves into a political force—local, regional, national, international, or global—that can hold power and authority accountable, or take it back to introduce much-needed checks and balance into the system to restore normalcy and agency in our own lives.

At the base of these problems are the frameworks of finance that govern our economic lives. (I have written extensively about how they operate. You can read it here). On top of these are digital tools like social media platforms, and the new disruption that is artificial intelligence tools that have effectively enslaved the minds of people by controlling and restricting the wide range of thoughts and ideas people used to be exposed to or engage with before digital social media tools took over our lives.

Although most of us are aware of the harmful effects of social media platforms today, it bears repeating how these platforms have accumulated so much hold over human psyche, our lives, and consequently, society at large. It is crucial to also look into the part played by the state (governments around the world) in enabling this situation, and not acting with alacrity when needed to protect the interests of common citizens.

What started as seemingly innocuous collection of personal data to improve these platforms has evolved into tools of mass surveillance and manipulation in the hands of vested corporate interests, pools of financial capital, and political ideologies that aims to capture power at all costs. The entrenched nature of these forces in the global economy, and their debilitating control on our lives, is visible in the maintenance and perpetuation of the current status quo, where everybody is suffering, and barely anyone is able to comprehensively articulate what is wrong, where, and how to fix it. Moreover, the power of these systems is so massive that anybody who does aim to break the shackles of these chains, does so at great personal cost to life, livelihood and dignity.

The status quo today is this: Governments are not accountable about the authority they exercise. Politicians and leaders are not answerable for the power they wield, nor are they held responsible for the miseries their decisions and policies bring. Businesses and corporations only know one thing today: to generate perpetual profit, even if it comes at the cost of a burnt out planet, a destroyed environment, and a society full of people whose prosperity, dignity and security is the most expendable thing available for a trade-off to generate a profit quarter after quarter.

To sum it all up, all the levers of change and power that were once available with the common people to affect change and keep control over their lives have been, gradually and destructively, captured by an elite group of people and institutions who game the system at every turn, while enforcing lopsided rules and norms on everybody else to keep them in a precarious situation throughout their lives.

Share

In short, the prevailing model of economic growth rewards extraction—of human labour, their attention, and their data—with little regard for long-term social cost. Once this paradigm becomes dominant, as it is today, institutions adapt to it, power and authority perpetuate it, while the people most affected by it become mute spectators whose lives and futures are hijacked to serve the narrow interests of a select group of unscrupulous elite people.

AI Takes Over

It is in this backdrop that we are seeing the world overrun by artificial intelligence tools. Like all the technologies and tools we have created or discovered so far, beginning from fire and tools made of stone, to mastering the creation of devastating explosive devices like nuclear bombs to carving beautiful sculptures of stone, the development of artificial intelligence operates on the same framework.

Artificial intelligence does not emerge in a vacuum. It enters a world already shaped by distorted incentives and captured institutions. We have already seen how algorithmic systems in the form of social media—when optimized for engagement to the point of addiction and profit at all cost—can reshape human attention and public discourse.

AI extends this logic further; from shaping what we see to shaping what decisions are made, what considerations are taken into account, what policies are recommended, and what actions are justified. In a system already unmoored from accountability, AI does not correct distortions. It scales them to population scale.

Here, technology does not create moral failure. It reveals and amplifies it. Hence, the core problem today is not artificial intelligence, or any other technology for that matter; it is the distribution of power and the incentives that govern its use. In accountable systems, technology expands human possibility. In captured systems, however, it narrows and amplifies it to serve the narrow interests of who governs their operation, under what norms.

It bears noting here that artificial intelligence is a tool with no soul, no concept of what is right or wrong, and no capability to make value judgments about what will serve the interests of individuals, humanity, or society over time. In short, it is not sentient like human beings, hence it cannot make moral judgments about right and wrong.

All that it can do that is similar to the capabilities of humans is that is can predict the most probable next word in a string of sentences based on all that it knows. That is not to say, the tool has no utility. Rather, it is a singularly momentous achievement of human ingenuity that can tremendously support human endeavours by complementing human intelligence, cognitive abilities, and decision-making frameworks.

Modern AI systems, operating through large-scale pattern recognition, optimization, and probabilistic inference, can analyse vast datasets, generate strategic scenarios, optimize logistical systems, and influence decision-making at speeds and scales impossible for human institutions alone. But they do not possess moral reasoning or lived experience, even as they shape the informational environment within which moral decisions are made.

This lends these large language models to some constraints in a world that has an infinite number of variables. Not all of these variables can be captured and fed into AI tools. But the limitation of AI is not that the world contains infinite variables and whether AI can analyse all of them. Humans also operate under these constraints. The limitation lies in alignment with human values and their considerations.

AI systems are optimized for objectives defined by those who design, deploy and use them. If those objectives are narrow, such as profit, efficiency, dominance, etc., then the AI’s outputs will reflect that narrowness. Consider what happens when such systems operate within already distorted incentive structures as we see in the world today. They do not introduce wisdom; they amplify whatever values are encoded into them.

The other prominent constraint these models work within—that distinguishes them from humans—is that they are not spontaneous or intuitive in their action or responses.

These two factors combine to create numerous other constraints for AI tools to operate in, which can be expressed in terms of a question. If AI is not sentient, spontaneous (cannot take initiative), or intuitive, how can it perform the numerous value-judgment based tasks or take decisions that require humane cognitive abilities and robust emotional intelligence? This is a matter of deeper research and not the topic of discussion for this piece.

This write up is concerned with looking into how the unfettered use of AI tools for objectives like mass surveillance, autonomous warfare, or the conduct of international relations is putting our world in jeopardy.

The recent history of how various social media platforms—operated by big tech corporations operating within the framework of generating outsized and perpetual profit-at-all-cost—summarily violated the privacy of billions of people around the world to collect their sensitive personal information, and then used that information to make their users addicted to their platforms, is no secret.

These tools, and their algorithms, touted as online spaces where a diverse range of people could converge, interact, engage, and communicate with each other to foster greater understanding of the world and each other, have instead been leveraged by governments to insidiously surveil their citizens, curb dissent and discussion, or been hijacked by politicians to openly manipulate people to achieve their own narrow goals of capturing power. If not that, then the corporations running them have themselves weaponized the platforms to hook people onto them by manipulating their human vulnerabilities, to generate ever more profit without any consideration for the social costs of such operation.

In doing so, the platforms and the governments—themselves charged with protecting the interest of the people—have formed a nexus to exploit the most vulnerable part of this equation, the common people.

The analogy to understand this paradigm better is to look at what social media platforms—themselves a poor facsimile of the wide range of our social interactions and public discourse—have actually replaced.

Even though public discourse has never been perfect, earlier it was bounded by friction. Editorial gatekeeping, institutional accountability, slower dissemination, and identifiable authorship before the proliferation of digital modes of communication ensured ideas and opinion were scrutinized thoroughly, and harmful ones were summarily rejected while those that could improve the collective well-being of humanity were discussed prominently and accepted or rejected accordingly. Digital social media platforms, however, have removed that friction, while preserving the incentives that reward manipulation. This has led to a situation where people with the most divisive and destructive ideas about humans in general and society in particular have found an audience, while their ideas get normalized and accepted.

Subscribe now

The chain this paradigm reveals is straightforward. When power is concentrated in the hands of the few and accountability is systematically weakened, decision-making narrows, and gets untethered from the fundamental objective of ensuring the well-being of all. Hence, when digital systems amplify selective information that is harmful to the lives of individuals and society overall, public deliberation deteriorates.

Consequently, when AI systems accelerate analysis and recommendation within this distorted environment, the pace of escalation outstrips the pace of reflection necessary to check the march of power. Here, instability does not emerge from AI alone. It emerges from accelerated power operating without constraint of any kind, moral or material.

Hallucinating with the Machines

This piece, however, is not about social media and their harmful effects. We have already witnessed that over the past decade and a half. This piece aims to look at how artificial intelligence can be used to make poor decisions that push our world to the brink of war and chaos. To understand how that happens, conduct the following thought experiment.

Imagine you are the leader of one of the richest, most powerful nation of this world. Now, imagine you are a xenophobic megalomaniac devoid of any sense of morals, ideals, and principles, or respect for other human beings, especially women. On top of that, there is barely any check on your power. Whatever little checks and balance exist, you have refused to respect their bounds.

Now think about all your past misdeeds, where you have abused your wealth, power, and connections, to exploit other people, especially women. Now, imagine that information becomes public knowledge.

Now, as the leader of the world’s most powerful nation—that claims to bring democracy to despotic countries around the world, while upholding the principles of democracy and the rule of law in the domestic and international arena—who won by promising to clean up corruption and work in the interest of the country’s citizens, your misdeeds are out in the open for the world to see.

Now, people on social media platforms are talking about your activities, even as you deploy the full might of your state machinery to suppress what is coming out in the public domain about your past actions. Mind you, this is the same social media platform, money power, and divisive narratives you leveraged before to capture power.

But now, people are using these digital tools to discuss your past and you need to stop them from discussing that. You need to find a distraction for the people so that they stop talking about your past. Your advisers are no good in this matter because they are obviously not as smart as you. Hence, you do the only logical thing you can think of.

You talk to the machine that can answer any questions you ask of it. You explain to the machine your position, your power, your resources, your connections, everything, and ask it to advise you. It tells you to come clean, but that is not an option for you. You are too powerful to accept a mistake.

Then, you ask the machine if creating a strong enough distraction will be sufficient to mask the stink of your past misdeeds. It is a machine, designed to confirm to its users’ inputs, whatever they may be. Hence, it affirms your suggestions.

You ask if fomenting war and destruction on another country will be sufficient distraction. The machine agrees again. You do not ask the machine whether doing so will be a violation of your own national laws or violate the sovereignty of another nation. Nor do you quiz the machine of all the possible consequences of such an action.

Then you ask the machine if killing the leaders of helpless countries—especially ones that are never going to be a match for the power and authority of your own country—on trumped up charges of dealing in drugs or in the guise of upholding international law and security related to nuclear proliferation, will turn you into a world beating hero again, and the machine agrees to that as well.

So, that’s what you order and hope that people stop talking about your sordid past. Instead, they start discussing how your heroics in the international arena have made your country great again, while improving the lot of your country’s citizens.

This tool (AI) generates scenarios showing that limited escalation has high probability of domestic distraction and low immediate military risk. It presents these projections as statistically favourable. It does not ask whether distraction, or the action needed to create it, is morally legitimate. It just optimizes and responds for the objective it has been tasked with achieving.

Mind you, the readers of this piece, the above thought experiment is a work of fiction with no basis in reality. Any similarities with any living being or incidents is merely coincidental.

An important factor to consider in this thought experiment is the trend of governments using algorithmic systems for intelligence assessment, threat modelling, and strategic forecasting. When such systems are optimized for speed, predictive confidence, and strategic advantage rather than restraint or diplomatic nuance necessary to maintain peace and harmony in the world, they can narrow the perceived range of options available to decision-makers. In moments of crisis such as we are witnessing today, accelerated recommendation loops can compress deliberation of momentous decisions itself.

A World Full of Anarchy

Now, compare this with the reality we live in today. That reality is exposed by the questions we ask of it. Here are some of them:

What are the norms and rules that we live by in the world today?

Who makes these rules?

Why do we follow them?

Who follows them?

Are they the same for everybody?

Are they fair to everybody?

What do I do if they do not seem fair to me?

What do I do if they do not seem fair to other people?

Is there an authority I can complain to?

Is there a person tasked with enforcing them?

What are the rules for them?

What if they break the rules?

Who is keeping a check on them?

What if more rules are needed?

How do we make these rules?

Does everybody agree to these rules?

Do they agree all the time?

What if somebody does not agree?

What happens if somebody with less power tries to change the rules unilaterally?

What is the process for that?

More importantly, what happens when somebody with a lot of power tries to change the rules unilaterally?

What if they try to change the rules in their own favour?

What if people with a lot of power or money choose to completely disregard the rules everybody else is supposed to follow?

Will leaders of other countries have to invade these countries to punish these rich and powerful people who are breaking the rules?

Or is it God who is supposed to come down on earth or send another prophet or messiah so that he can punish these people?

These questions go on in an endless loop. The only questions that matter are these:

What do we do now?

How?

Why?

The answer to these questions is a matter of debate, discussion and an open-minded outlook to engage with opposing views. In simple terms, that is what the institution of politics and political will is all about.

The politics of every time and the politicians who engage in this are an expression of the best and the worst of what our world has to offer at any given time. It can be as enlightening and empowering as we make it, or it can be as crass, uncouth and divisive as we accept and normalise.

The nature of our politics determines the outcomes we get. If we elevate an anarchist to the highest seats of power, the world turns into a place filled with anarchy. In that situation, no one will have the space to walk the high ground, since survival will not only depend on but be dictated, not by morally sound logic, principled stands, or ethical behaviour, but by underhand methods of operation that violate every norm and principle of living and engaging in our society.

In such a world, no action, however destructive, divisive, or debilitating to people and society, will ever be considered excessive, unjustified, or worthy of punishment. In this world, people with power and money will have no qualms about violating laws and norms; hence they will keep on doing what they please to protect their interest, even if it comes at the cost of destroying the lives of people and the fabric of our society.

What is the solution to all this?

How can such a situation be prevented from coming to pass?

What if these things are already happening?

How do we stop the world from devolving into a place run by unscrupulous people whose only aim is self-aggrandizement, and not the empowerment of the last person on earth to live a life of prosperity, dignity and security?

The answer to these questions is also politics.

But this politics has to be different. It has to be a politics that gives primacy to the needs of the greatest number of people, instead of working for the benefit a small group of elites. It has to begin with people at the center of all that is proposed, discussed, debated, and implemented.

Because here, structural capture of institutions and authority does not eliminate agency; rather it fragments it. The task, therefore, is not spontaneous uprising, but institutional reconstruction—from reforming campaign finance that funds our politics to algorithmic transparency that shapes how we interact with our physical reality, all the way to digital infrastructure that is designed with public-interest at its core, to renewed civic education that gives prominence to the well-being of the individual and society. Political will here is not an abstraction; rather it is organized pressure sustained over time to attain specific goals related to the wellbeing of people, generation after generation.

This can only happen when common people take a stand. A stand against what is acceptable and what is not. It has to be a stand against people who aim to hijack the agenda of common good for their own good. Who bend every norm and rule in the rule books to save their own skin, while pushing the world to the brink of chaos and destruction.

Moreover, necessarily, this process has to be democratic, inclusive, and engaging, so that it encompasses the widest range of voices in determining its goals, objectives and the methods through which they are achieved.

Once the widest number of people take that stand; to not be pushed around, to not become pawns in the power and money games of the rich and the powerful, to not be lulled into a false sense of complacency that other people, however well-meaning they may claim to be, have their best interest in their hearts, then these people can claim power for themselves.

With that power, a world can be created that does not violate the agency and sovereignty of any individual, nor does it violate the sanctity of nature, or our society. Where rules and norms are not designed to suppress the individual’s will to live by extracting maximum value but empowers them to achieve their greatest potential in life and contribute to our world in a holistic manner.

I wonder when that will happen!

Share

Subscribe now

Most of human history has been marked by a unique construct: money. More than what it could do, history has been defined by what it could not do, particularly due to the constraints around it.

Money (in any currency) evolved as a mechanism to store and exchange value. People priced their goods, services and labour in monetary terms to trade them in the marketplace. This activity of pricing and trading is what ascribed the value of exchange to these items.

For the longest period, this relationship between goods, services, labour, value and money existed to serve the needs of people and societies, which can be understood as their use-value (social usefulness). In recent times, however, this relationship has eroded. The value of goods, services, or labour produced by people are not grounded in reality anymore as no amount of producing and trading goods, services, or labour is sufficient for people to earn enough money to ensure a life of prosperity, dignity or security. This has rendered a life of prosperity, dignity and security out of reach for most of humanity.

That was not always the case. Thoroughout history, in certain pre-industrial societies, most common folk could rest assured that if they worked with honesty and dedication in their chosen trade, craft or vocation, they could fulfil their and their families’ needs. It did not matter whether one was a sweeper, a cobbler, a blacksmith, a farmer, a tradesman, a soldier, or a scholar; if the service you provided was deemed useful to society, you could sell it and earn something in return that would allow you to live a prosperity, security and dignity. It would not be a life of overabundance and luxury, but it would also not be a life of poverty and destitution. Most common folk were assured of this.

Moreover, it was not that wealth and wealthy people did not exist earlier. They existed as they do today, and even their wealth was concentrated at the top as it is today.

What changed between then and now to render most of human labour insufficient to ensure a life of prosperity, dignity, and security?

The answer lies in understanding how the means and methods of earning an income and generating wealth have evolved over time, and how their relationship with goods, services, and labour have changed.

The methods of earning an income and generating wealth are markedly different. Here’s how.

Income or Wealth?

Since millennia, through most of pre-industrial society, earning an income has involved engaging in a trade or craft where the producer exchanged its output with the buyer for some value that they both agreed to. Meanwhile, accumulating wealth involved aggregating the output of various craftspeople to sell them at a mark-up and pocketing the difference.

In both these setting, earlier, the marker of how goods, services or labour would be priced primarily depended on how scarcely it was available. That is not the case anymore.

Today, theoretically, nothing material is scarce in the world anymore due to the mass production of goods and services through technological means. Nearly everything of material necessity can be produced in abundance entirely without human intervention due to automation, while a huge number of service delivery can also be automated. However, institutions, from governments and businesses, to their priorities such as perpetual growth at all costs and economic hegemony over the world, dictate where capital flow, where automation happens, and who captures the gains from it. In simple words, scarcity today is no longer a function of physical limits, but of who controls access to abundance.

This manufactured scarcity is not only rendering most human labour undervalued or obsolete in most sectors of the economy, but also suppressing wages in places where they are still needed. However, the need to earn a living wage has not vanished from our lives, even as everything from food to housing to healthcare become expensive.

Another aspect of how labour is undervalued or obsolete today can be understood through the prism of global trade, finance and integrated economies. Due to the unhindered march of hegemonic globalization, workers today compete across border, and employers do not negotiate locally, even as wages get negotiated globally, instead of socially.

A worker’s wage is no longer measured against the cost of living in the geography or society they serve, but against the lowest wage someone elsewhere is willing, or forced, to accept. What matters here is not whether the work sustains a life where it is performed, but whether it can be done more cheaply somewhere else.

As a result, even as economies and labour markets have expanded drastically to encompass the whole world, and grown accordingly, worker protection in most of the world has not kept pace, rather it has weakened remarkably over time.

The problem, however, is not that human labour has become useless, rather that its value, determined in terms of wages, has become negotiable only on terms dictated elsewhere.

Which means, labour has not stopped creating value. What has collapsed is labour’s ability to negotiate its share of that value. Value is still produced on factory floors, in offices, in hospitals and homes, but the power to claim that value has moved out of the hands of those who produce it as wages have stopped keeping pace with the value the labour-force contributes in the economy.

In simple terms, the labour-force’s bargaining power—it ability to claim value, not create it—has been systematically stripped away, while keeping it bounded in a system that offers no escape or recourse to a better, more secure life.

This paradigm is effectively destroying all the incentives people have to seek gainful employment, all the while deepening a structural condition in people’s lives where they are compelled to seek out jobs that effectively undervalues their labour and contribution to economic growth, pays them accordingly, but extracts every bit of value from their labour and lives.

In contrast, in terms of accumulating wealth, the profits generated from the production and trade of goods and services are not distributed equitably among the people who produce them. Rather, the profits from these activities flow to a small group of people who own the means of production. This accumulates outsized wealth at the top of the economic order, which is starkly visible in the world today.

The problem would be contained at this stage if not for the fact how this accumulated wealth is used by the owners of capital to corner even more resources from the common pool of the world while benefiting from an economic system where the rest of the people are entangled in a precarious life revolving around barely sufficient wages, usurious debt and eventually destitution or bankruptcy.

In other words, the mechanism of generating enough income and building long-term wealth from it has not evolved to ensure that a maximum number of people can build a secure life and future. This, when the only thing they can trade—their labour—has become undervalued and underpaid.

In contrast, the frameworks of generating wealth today (read current global financial system, financial markets, etc) actively favour the accumulation of wealth at the top of the economic order in the hands of a few people, while the rest of the population suffers as the current economic system actively prices human labour out of the market in the pursuit of perpetual growth by replacing it with technology.

More importantly, in the current global financial framework, capital is enabled to exit a geography almost instantaneously without any constraint, even as labour remains geographically bound. Hence, any negotiations between owners of capital and providers of labour in exchange for wages turns asymmetrical in nature, harming the interest of workers everywhere.

Hence, these out-of-reach methods of generating income and sophisticated methods of accumulating wealth have not only concentrated outsized wealth at the top, but actively impoverished or are in the process of impoverishing large sections of people around the world. What’s more, the same forces that created the current situation are also being leveraged today to scuttle every effort at redistribution, and foil all attempts to create a fairer system that can benefit the most number of people generation after generation. Ergo, this article will only pose a few simple but vital questions related to money and its implications on society at large. The questions are:

How has the nature of money evolved? What has that done to society? What is the solution?

Let’s start with the first question.

Changing Nature of Money

Starting as stores of value, money has had a storied history. From what would be considered money to who could create it to how it would operate in society, every aspect and framework related to it has evolved drastically over time.

At the beginning, its value was pegged to the precious metals it was minted in. This created a physical limit on the value it carried. Furthermore, there was a ceiling to how much money could be created, since it was based in a finite quantity of precious metals. Today, however, it is created by government fiat, which theoretically removes any limits on its creation.

In simple words, earlier, when money was firmly grounded in previous metals, the numbers (representing money) had to obey the rules and limits of physical reality. This limited how much money could be created, who could create it, and what functions it would play in society.

In modern times, however, with the creation of money untethered from the confines of physical reality due to its fiat nature, everything from how money operates in global trade and finance to the domestic economy and people’s lives has changed, and not always for the better.

However, the story is not how money stopped being tied down to physical reality and entered into the realm of artificial reality. Rather it is the fact how our global economy has not evolved from when money was scarce because it was tied down to physical reality, to now when it has broken out of that constraint.

The gold-based currency system had constraints which the fiat and reserve currency framework was designed to overcome. But even as that framework overcame the constraints of currencies being pegged to gold, the unhindered creation of money combined with the skewed framework of income generation and wealth distribution has primarily fuelled the asset markets.

When money was scarce (mostly in pre-industrialised societies), people had to beg for it, borrow it, steal it, or earn it, to live their lives. While begging for it demeans a human, if you borrow it, you have to return it, and stealing it is criminal. So the only dignified option was to earn it.

Hence, to earn it when money was scarce, everyone in society had to participate in the upkeep, maintenance and stability of society, community and the economy, without resorting to coercion, exploitation, extraction or usury. This included participation from countries, merchants, and individuals alike to ensure the world’s common resources were not exploited to the brink of extinction. Since everything from money and labour to goods and services were scarce, it was necessary to value them appropriately to ensure these resources were used judiciously and trade happened in a fair manner. This relationship has broken down in recent times.

As money has evolved into fiat currency, institutions tasked with ensuring that the world becomes a more equitable and prosperous place with the help of money have instead helped turn money into a commodity that is made artificially scarce, and coveted not for what it can do to benefit the world and the lives of its inhabitants, but to signal a certain status and exclusion from the norms of society for a relatively small group of super rich people while avoiding doing what is good for our communities and the world. This, despite the fact that money can be created by government fiat, is not pegged to physical reality, and is no more a true measure of the value of goods, services, or labour, as it can be disproportionately created out of thin air by policymakers.

All of this is happening in an economic system that has turned more extractive than fair to the parties engaged in it who trade their labour for wages. Today, that labour is no more sufficient to ensure a life of prosperity, dignity or security, as it has to compete directly against machines to earn an income. In simple terms, what was once invaluable has turned worthless, while an artificial construct rules over human lives.

Looked on from the other end of the spectrum, the evolution of money into fiat currency has devolved the current global economic system into a race to the bottom among nations, corporations and the wealthy to see who can have the most money, which has become a measure of their status and clout. In this race, status and clout are accrued by competing with each other to have the biggest economy and GDP growth, extract the biggest bottom line quarter-after-quarter, or generate the highest valuation for their businesses.

While these competitions, or rather, priorities, may not look harmful on the surface, dig into them and you will discover that they disproportionately affect the lives of common people by diverting resources, capital, policy and political will away from ensuring the wellbeing and security of the vast majority of people and society towards perpetuating the survival of such a devastating and extractive economic and financial arrangement. These inane competitions actively focus resources towards influencing policies that favour more accumulation and preservation of wealth at the top of the economic order, as opposed to designing economic and financial systems that ensure a more equitable distribution of wealth among the general population, generation after generation.

The problem is exacerbated even more as institutions tasked with the governance and wellbeing of society and people have stepped back from protecting labour from being exploited by vested interests who treat labour and natural resources as dispensable items in the race to amass the greatest amount of wealth. Consequently, every protection that the labour-force once relied upon to ensure their survival and well-being has been hollowed out. This has removed the collective bargaining power of the labour-force, while treating them as an easily dispensable and replaceable commodity or factor of production.

Hence, the paradigm of fiat currency, which grows and maintains its hold over the economy and peoples lives through credit flows, favours asset accumulation by a small group of people over the sustainability of lives and livelihoods of the people. This has broken down the trust people have in institutions and policies to safeguard their interests.

In simple terms, the allocation choices of a small group of elite leaders, politicians, and technocrats, determines the outcomes of our global economy, in which the common people are left holding the bag of low wages, diminished social security, and heightened economic and financial uncertainty, while the elites enjoy the benefits of perpetual economic growth, corporate profits, and rapid technological innovation.

Consequently, even as the global economy has never been bigger than it is today, with the size of global GDP reaching astronomical heights, and technological innovation making monotonous and back-breaking human labour unnecessary, at no point in human history was there so much income equality, or so many peoples’ livelihoods were threatened, while people battled debilitating issues like anxiety, depression, xenophobia, diminishing trust in governments and institutions, apart from exhibiting a general lack of will to engage with their work, their neighbourhoods, community or society in any meaningful way.

This situation forces us to the question: who or what is responsible for this malaise in our society? While there are many big and small problems that have converged over time to create this situation, the underlying factor unifying all of that is how money is earned, circulated and accumulated in the economy.

From economic, financial and political structures that thrive on exploitation and extraction of every last bit of value from human labour to systematically accumulate wealth at the top of the economic order to a precarious jobs market and financial framework that sustains itself by undervaluing human labour and intelligence, while underpaying wages, to push people towards debt traps to meet even basic human needs like food, shelter, health, and education, forget leisure or other creative pursuits, the exploitative, extractive and subjugating tendencies of the current economic systems are plainly visible today.

The next natural question, then, is how to fix this problem? This is where the task gets complicated.

Fixing Money

Fixing how money works in our lives and society sounds like a simple task when you look at it from the perspective that countries can simply create it by fiat. Theoretically, this would allow countries to create as much money as needed for their developmental and economic needs. But not all the goods and services that a country needs can be paid in their own currency. For that, they need to hold something called the reserve currency, which is another category of money above fiat currency.

This means, on a theoretical level, while every country around the world has the sovereignty to create their own money, on the global level of trade and finance, that monetary sovereignty hits a brick wall made up of the US dollar, which serves as the reserve currency of the world today.

In today’s modern world of integrated economies, finance, trade, and capital flows, the US dollar, as the reserve currency of the world, provides the mechanism to price goods, services and labour globally. Consequently, this gives the US dollar—and in turn the US government and its institutions—outsized but inadvertent influence over the affairs of the world’s economy and finance.

This happens because the US dollar’s status as the reserve currency is supported by an economic system that gives supremacy to the US economy over the rest of the world. This framework creates constraints for the natural growth of other countries, while delivering massive leverage to the US government, financial institutions and businesses to spur the development and stability of the US economy at the cost of the economic and financial well-being of the rest of the world and its citizens.

In practice, the dominance of the US dollar over global trade and finance does not eliminate choice for other economies, but narrows it, especially in times of crisis. This dominance not only includes importing American capital into other countries, but also American standards of functioning and working that expect to run businesses to generate profits at all costs perpetually, while employing the cheapest labour anywhere in the world.

However, export-led economies, capital-surplus states, and countries with policy buffers experience these constraints differently from import-dependent economies and debt-burdened states. More importantly, how these external pressures are absorbed by a country is ultimately decided domestically by political elites, policy choices, and institutional priorities.

Hence, any attempt to fix how money functions in the world today, where it has become the supremely coveted entity, while human labour and intelligence are at risk of losing all value and relevance, the first problem that needs to be addressed is how the current global monetary framework, in terms of how reserve currency, fiat currency, and the financial framework of nations, integrate and work in tandem with each other to effect the life of people.

This should be done keeping in mind that people and societies do not exist to serve the interest of monetary frameworks. Rather, these frameworks are expected to serve the interest of largest number of people in society by being cognizant of the world we want to create and live in.

Along with monetary framework, it is also imperative to focus on institutional design in terms of how labour wages and capital markets interact and function with each other, apart from creating robust ownership structures of capital and resources, because the failure is not technological, nor monetary alone, but institutional, in how labour markets are designed, how ownership is structured, how risk is allocated, and how monetary and financial power is governed in the world today.

One thing to keep in mind is that these are not technical mysteries waiting to be solved, but political choices that have long been deferred by people who claim to serve the interests of society and our world.

In fixing that problem, the world needs to devise frameworks where the power to constraint the finances of the world does not rest with any one country or currency, apart from ensuring that there is no single point of failure.

Apart from that, the system should be such that one country is not coerced into subjugation by another and has ample access to alternatives to mitigate crises when needed.

Even if such a system is created on the level of countries and economies, it will be imperative to ensure that common people reap the rewards of such democratisation, and their lives are positively impacted.

To ensure that that happens, governments, governance and administrative norms; global trade, economic, and financial ties and frameworks; businesses, business priorities and operations; institutions of global cooperation and collaboration, apart from norms and regulations that govern all these things would have to recalibrate in sync with each other with the wellbeing of people, society, and our world as the core tenet.

The difficulty is not in thinking about alternatives to the current situation but confronting the reality of who benefits from the status quo, and how deeply those benefits are entrenched in the current system.

Only once we do that will it be possible to design systems that ensure our world is not buffeted by waves of economic, financial, or political turmoil due to the self-interest driven decisions of a few leaders, while people are empowered to lead a life of prosperity, dignity and security, year after year, generation after generation.

Share

The United States of America IS Exceptional. There’s no doubt about it. Regular rules of jurisprudence, adherence to international law, due process, international co-operation, or the shared well-being of our world that all the rest of the countries on our planet adhere to do not seem to apply to Exceptional America. It keeps proving this time and again.

The most recent example was when US military forces kidnapped a sovereign nation’s sitting President, Nicolas Maduro of Venezuela, and his wife Cilia Flores in a covert operation. It marked one of the most brazen violations of a nation’s sovereignty in recent times.

True to form, the President of the United States of America, Donald Trump appeared on television, not to deny the act, but to announce it in a public display of how little the United States feels constrained by the international rules-based order it has itself created over the last century, with itself at the top as the most powerful nation on Earth.

This piece is not going to get into the morality and legality of what the US did, and the implications of what that means for the rest of world. That discussion deserves its own space.

Instead, this analysis aims to ask a more pertinent and unsettling question: what allows the US to act with such impunity against any other nation on Earth, repeatedly, without consequence to itself?

There’s a simple answer to this question: American Exceptionalism. But what does that mean, exactly?

Is it capitalism? Is it crony capitalism? Is it the consumerist society? Or is it the credit-fueled capitalist and consumerist market economy that reduces human agency to just consumers and not citizens, while concentrating all of the nation’s wealth and resources in the hands of a select group of people at the top?

It is not any one of them in isolation, but something more nuanced that enables all of the above and more in terms of America’s adventurism in the international arena. Let us see how.

The Birth of Exceptional America

We know the USA is the biggest economy in the world. It is home to some of the biggest businesses of our times, and the biggest financial institutions in the world that sit right at the top of global finance. Its citizens are among the highest per capita income earners in the world, and they enjoy a material standard of life that is nearly impossible to achieve for a majority of the population and countries in the rest of our world today.

These are all overt examples of how the US is exceptional relative to the rest of the world. The real power of American Exceptionalism, however—that allows the US to lord over the rest of the world—is far more insidious, debilitating and dangerous for other countries, their economies, their finances and the global rules-based order of international cooperation and competition.

American Exceptionalism, as used here, does not refer to cultural superiority, democratic virtue, or economic ingenuity. It refers to something far more structural and basic: the United States’ unique ability to externalise the economic, financial and political costs of its economic and political actions onto the rest of the world, while internalising the benefits within its own borders.

That ability does not arise from capitalism alone, or military power alone, or consumerism alone. It arises, mainly, from the US’ singular position at the center of global finance; a position anchored by the status and role of the US dollar. That power is described as Exorbitant Privilege.

Suffering from Exorbitant Privilege

The real engine of American Exceptionalism is not visible in the fighter jets or aircraft carriers it prances around the world. Rather, it is embedded in the balance sheets, currency markets, financial institutions, and government debt of the USA and how it interacts with the rest of the world. Economists call this the US’ Exorbitant Privilege.

Described simply, all countries must earn foreign currency before they can spend it. The United States does not have to. Because the dollar is the currency everyone else needs, the US can spend first, borrow endlessly later, and settle its global obligations with debt denominated in its own currency; debt that the world is compelled to buy and hold. Here’s how that works.

Derived from the role of the US dollar as the reserve currency of the world and the position of the US government’s fiscal and monetary policies at the center of global trade and finance, along with the impact of their decisions on the economies, finances and decisions of the countries in the rest of the world, exorbitant privilege is defined as the US’ unique ability to borrow cheaply in its own currency, run persistent fiscal deficit (spend more than it earns) and current account deficits (import more than it exports), and pay for all of its imports with liabilities (debt) instead of goods.

In simple terms, the US pays the world in dollars as debt to get all the goods it needs along with all the profits generated from trading and financing in dollars that it has supplied to the world as debt.

Sounds mind-boggling, doesn’t it? Let’s take a deeper look to understand how all of this works and how it has created the unstable world we live in right now. We will start with the US dollar.

How US dollar is central to the world of global trade and finance

The world saw in the 1970s how the US cajoled the Kingdome of Saudi Arabia to price all its crude exports in USD, effectively making it the reserve currency of the world. Because oil was the world’s most indispensable traded commodity at the time, pricing it in US dollars created permanent global demand for the US currency. This was the genesis of the current paradigm.

But why do global institutions still want dollars and dollar-denominated assets?

In current times, the US dollar is the most widely used currency for international trade and finance. Sample this: according to the International Monetary Fund (IMF), the US dollar accounts for over half of all exports in global trade invoicing at 54%, even when the US isn’t a party to the trade.

Then, according to the Bank for International Settlements (BIS), the US dollar accounts for 89% of global foreign exchange transactions. This translates to almost 9 out of every 10 currency trades conducted globally.

Next, even though the US dollar’s share of global foreign exchange (FX) reserves has reduced from the peaks above 70% in earlier decades, it remains entrenched at around 56–57% of all official reserves today. This is nearly 3x larger than the second placed Euro, which is at 20%, according to the IMF.

All of this means that global trade, finance (debt and foreign investments) and crisis management (Treasury securities) are structurally dependent on access to US dollars, regardless of whether a country has any political alignment with the United States or not. That’s how the world functions today. This is why the USD is held globally by foreign governments and central banks, global financial institutions, and corporations and commodity producers.

Even as the US dollar has evolved to become the operating system through which the rest of the world trades and finances itself, there are a set of singularly US-focused domestic activities that internalise all the benefits of having the USD as the reserve currency while simultaneously externalising every cost attached to it onto the rest of the world. Let’s decode how.

Why the world needs America to run deficits

Nearly every country in the world suffers from a persistent and perennial problem: that of running a fiscal and/or current account deficit. A fiscal deficit occurs when a government spends more than it earns in a fiscal year, while a current account deficit (CAD) occurs when a country imports more goods and services than it exports.

In the case of a fiscal deficit, the government must borrow—either in local or foreign currencies—to fill the gap between expenditure and revenues. Meanwhile, when a country is running a current account deficit, it means its national savings are less than what it needs for domestic investments, in which case again it needs to borrow foreign capital.

At this point, it is critical to note that the United States does not merely tolerate large current account deficits; it is structurally required to run them under in the current arrangement.

In a dollar-dominated system, global demand for US dollars does not arise from preference or sentiment alone. It arises because global trade and finance overwhelmingly occur in US dollars, a structure that forces countries to acquire and hold dollars regardless of whether they trade directly with the United States or not.

Once this structure is in place, the demand for US dollars becomes self-reinforcing. But for the rest of the world to accumulate these net dollar balances, those dollars must first be supplied or earned.

They can only be supplied if the US sends more dollars abroad than it receives in return. In practical terms, how the US can do this is by importing (buying) more than it exports (selling), along with investing more abroad than it earns back.

Hence, a persistent US current account deficit is not a policy failure under this system; it is the mechanism through which global dollar liquidity is provided. But if more dollars start flowing towards the US, other countries can and do land in financial trouble.

Due to this dependency on the US dollar, other countries are disciplined by external balances: they must first earn the foreign currency before they can spend it. Not so for the US.

As the issuer of the world’s reserve currency, the US creates and supplies the foreign currency everyone else needs. This results in a system in which global stability depends on American imbalance, and in which the costs of that imbalance are distributed outward, while the benefits remain concentrated at the center.

But current account deficit is only one side of the coin. The other is fiscal deficit.

Where does fiscal deficit come into play

Note that there is a fundamental link between a country’s fiscal deficit and current account deficit. When a government consistently spends more than it earns (fiscal deficit), it must borrow to make up that difference. But if domestic savings are insufficient, that borrowing must inevitably come from abroad.

That extra spending by the government does not disappear; it increases overall demand in the economy. Part of that demand leaks abroad in the form of higher imports.

So, foreign capital flows in to fund government borrowing and private consumption, while goods and services flow in from abroad. The result is a current account deficit: the country buys more from the world than it sells, and pays for the difference with foreign money.

More importantly, persistent foreign borrowing weakens the currency, raises interest rates and eventually triggers capital flight or a balance-of-payments crisis. Under normal conditions, this linkage is precisely how financial markets discipline governments that overspend. For most nations, this relationship acts as a hard constraint, as markets impose discipline on the government.

The United States, however, operates outside this constraint. Because global savings flow structurally into dollar assets, its fiscal deficits are financed externally without the usual penalties. This allows the US to sustain both large fiscal and current account deficits simultaneously and indefinitely; something no other country can do without courting crisis.

This is not a temporary deviation. It has been the structural feature of the US economy for decades. Sample this: In the second quarter of 2025, the US current account deficit was $251.3 billion, or roughly 3.3% of GDP, according to official Bureau of Economic Analysis data. Over the past two decades, the US has persistently run large deficits: in the 2000s, deficits averaged around 4–6% of GDP at peak, and in 2024 the annual current-account deficit widened to over $1.1 trillion, about 3.9% of GDP, the largest in recent history. It is expected to rise even more with the government’s current spending plans and policies.

Hence, at the national level, deficits are not ideological choices; they are accounting realities not only for the US but for the rest of the world too.

Treasuries: Where the world parks its dollars

Supplying dollars to the world is only half the story. Those dollars must also have a place to go. In the global financial system, that destination is overwhelmingly US Treasury securities.

Treasury Securities are dollar-denominated paper money equivalents, or the US government’s debt, backed by the full faith and credit of the US government. They are issued by the US Department of Treasury, and they offer a return in terms of the interest rates or coupon rates.

US Treasury securities or bonds are not treated like government debt issued by other countries. They function as the world’s primary safe asset: as investment instruments that are deeply liquid, universally accepted, and backed by the taxing power of the world’s strongest nation that supplies the global reserve currency. They are purchased by central banks, sovereign wealth funds, pension funds, and large financial institutions, not for return maximisation, but because of their safe-asset role in global finance.

As a result, the world’s dollar surpluses do not disperse evenly across markets. They concentrate. Foreign governments and investors today hold over $9 trillion in US Treasury securities. This demand is not speculative. It is structural.

In effect, the same mechanism that requires the US to supply dollars to the world also ensures that those dollars flow back into financing the US government’s debt. This creates a massive and perpetual demand for the currency.

This persistent demand allows the US government to keep financing its deficit with ever larger tranches of debt, without triggering the kinds of interest-rate spikes or funding crises that would cripple any other nation.

Consider this: as of early January 2026, the scale of what the world is financing is staggering. Total outstanding US public debt has crossed $38.4 trillion, according to the US Department of the Treasury. Of this, roughly $30.8 trillion is debt held by the public. This stock of debt expanded by around $2.23 trillion between December 2024 and December 2025, even as interest payments on it surged to become the second-largest line item in the US federal budget, overtaking both Medicare and defense.

Yet despite its size and speed of growth, this debt continues to be absorbed by the world with remarkable ease; not because of fiscal restraint, but because US Treasuries remain the default parking place for the world’s dollar savings.

And that, my friends, completes the circle of Exorbitant Privilege of the US, where, as the supplier of US dollars, it reaps all the benefits, while all the risks and pitfalls are borne by the rest of the world.

How the Federal Reserve is the world’s central bank

Control over the world’s safe asset also confers control over the world’s benchmark interest rate, even though no such formal authority exists in the world. Because US Treasury yields anchor global bond markets, the Federal Reserve’s policy decisions ripple far beyond American borders. How does that happen? Through interest rates.

At its core, an interest rate is simply the price of money over time. In the global financial system, the reference price for that money is set by the yield on US Treasury securities.

Because Treasuries are treated as the world’s safest and most liquid assets, their yields function as the baseline against which all other borrowing costs are measured globally. Corporate bonds, mortgage (home loan) rates, sovereign debt, and even emerging-market loans are all priced as a premium or discount relative to US Treasury yields. When Treasury yields move, the entire structure of global interest rates moves with them.

But what happens when financial markets are stressed, and no one wants to buy US debt? When that happens, the Federal Reserve does not act like an onlooker, rather it swings into action.

It is the only institution with the authority to create dollar reserves at will and deploy them to purchase US Treasury securities in unlimited quantities. In practice, this means that when private or foreign demand for US debt weakens, the Fed can step in as the buyer of last resort, absorbing Treasury securities to stabilise prices and prevent yields from spiking.

This backstop is unique. No other government on Earth can guarantee demand for its debt by issuing the very currency in which that debt is denominated. It is like printing money in your home to pay off your bank loan.

But because the Fed can create reserves out of thin air without needing prior savings or foreign funding, US government borrowing is never constrained by market liquidity in the way it is for other countries.

In effect, the Federal Reserve eliminates the risk of a failed Treasury auction; a risk that can bankrupt governments elsewhere.

Another manner in this the Federal Reserve manages this risk for the US is by creating or withdrawing dollar reserves, which is essentially printing or deleting US dollars. The Fed controls the price (interest rate) of short-term money in the US financial system through this mechanism.

When reserves are abundant, borrowing becomes cheaper and interest rates fall; when reserves are scarce, borrowing tightens and rates rise. This is how the Fed translates its ability to create money into control over interest rates.

When the Fed raises or lowers interest rates, it reshapes global capital flows by setting short-term rates and signalling future policy, which influences Treasury yields and investor expectations across the entire yield curve. Higher US yields draw money toward dollar assets, weakening other currencies and tightening financial conditions abroad, while lower US yields do the opposite.

For American households and businesses, this means cheaper mortgages, lower corporate borrowing costs, and the ability of the US government to finance spending, whether on welfare, stimulus, or defence, without immediate financial stress.

But for emerging markets, diverging too far from US monetary policy (in terms of interest rates) risks capital flight, currency depreciation and inflation, because global investors almost invariably shift money into higher-yielding, dollar-denominated assets that offer far lower risk.

In effect, when the Federal Reserve loosens or tightens monetary policy, the adjustment burden is exported abroad to be absorbed by other countries through weaker currencies, volatile capital flows and tighter financial conditions.

In sum, this is how the Federal Reserve—without a formal mandate or global accountability—functions as the world’s central bank.

This is why, in practice, many central banks end up importing US monetary conditions. Even countries with independent monetary authorities are constrained by the gravitational pull of the dollar system.

This monetary insulation does more than just stabilise the US markets. Apart from exporting volatility and inflation, it also removes the financial constraints on US policy that normally limit how aggressively it can borrow, or spend.

More importantly, this is what enables the US’ international adventurism without triggering the kind of financial crises that would cripple any other country.

Externalise Costs, Internalise Benefits

In normal circumstances, for any other country in the world, if they ran a persistent fiscal deficit and kept borrowing from local and international markets, it would push their bond yields higher, and eventually bankrupt them.

This happens because in normal sovereign debt markets, the relationship is straightforward. More supply of government debt means higher interest rates, because first, investors have finite capital. As debt supply rises, governments must offer higher yields to attract buyers, while compensating for inflation, credit, currency and liquidity risks.

As these risks rise, investors demand higher yields, due to which capital may leave their shores entirely and result in a funding crisis where the country is not able to borrow more to spend or roll-over its existing debt. But something peculiar happens in the case of the US.

How the US leverages the world’s addiction to its debt

Because of the Exorbitant Privilege, there is a structural and non-speculative demand for US Treasury securities from investors like governments, foreign central banks, sovereign wealth funds, global financial institutions and private investors. They are therefore price-insensitive buyers, acting out of structural necessity rather than yield considerations.

This structural demand is not hypothetical; it is visible in the massive volume of US debt the rest of the world already holds. Consider this: foreign entities currently hold over $9 trillion in US Treasury securities, accounting for roughly one-third of all Treasury debt held by the public.

This figure has more than doubled over the last two decades, from under $4 trillion in the early 2000s to over $9 trillion by mid-2025, making US Treasury securities one of the deepest, most liquid reserve assets in global finance.

Japan alone holds more than $1.1 trillion of these securities, making it one of the largest foreign holders of US debt, followed by other major investors including the United Kingdom and China.

When a country’s debt is this widely held, the usual mechanisms of market discipline—enforced through the usual tools of higher yields, capital withdrawal or currency pressure—weaken, which sets the stage for consequences beyond finance.

This insulation from financial consequences is what ultimately allows the US to convert military power into political impunity, without bearing the economic costs that would discipline or constrain any other foreign power. This is the structural enabler of the US’ geopolitical audacity in the global arena.

In practical terms, because the United States can sustain its deficits, roll-over debt in its own currency, and absorb external shocks through price-insensitive global demand for its debt, the usual financial constraints that check military adventurism for every other country in the world simply do not apply.

This unique combination dramatically and fundamentally alters the geopolitical risk–reward calculation for Washington in ways that no other country can replicate.

And that, my friends, is why we see the US acting in the way it does.

Why the world is hooked to US debt

Since the demand for Treasury securities is so deep, and because the Federal Reserve stands as the ultimate buyer and liquidity backstop for the government’s debt, Treasury yields do not rise as much as they would in a non-reserve-currency country. In consequence, the US can keep issuing large volumes of debt without triggering a funding crisis.

This aspect of not triggering a funding crisis is a core component of the Exorbitant Privilege associated with the USD. The more important question, however, is not why demand for US debt exists, but why it does not collapse as that debt keeps climbing.

Because global investors need the dollars to park their reserves, stabilise their exchange rates, and meet regulatory liquidity requirements. This means demand for US debt does not fall sharply even when supply rises, and buyers/investors absorb new debt issuance even at lower real yields. Consequently, debt auctions clear smoothly, and demand for USD rises, keeping its prices high.

This allows the country to roll-over its debt continuously at cheaper rates than the rest of the world, resulting in its hawk-like iron-grip on the global financial framework. Put together, this creates a self-reinforcing feedback loop that does not exist for any other country.

This yield stability is not accidental. It is reinforced by a monetary system in which the issuer of the world’s reserve currency also controls the deepest and most liquid bond (safe asset) market in the world.

How this harms other countries

For most countries, exposure to US fiscal and monetary policy affects their capital flows and exchange rates while importing inflation and higher interest rates. If they attempt sustained and higher deficits, their currencies depreciate, inflation rises, interest rates spike, and capital flees from their shores. Consequently, US fiscal expansion usually tightens financial conditions elsewhere.

On the other hand, systemic exposure to a strong US dollar raises debt servicing costs for dollar borrowers in the international arena, while a weaker dollar affects their reserve values and trade competitiveness.

This can create a funding crisis for countries with economies whose spending requirements are greater, or who run large fiscal and current account deficits. A funding crisis occurs when a government cannot pay, refinance or roll-over its existing debt, or it must borrow at prohibitively high interest rates, or when it loses access to global funding markets altogether.

In practice, this happens when bond auctions fail or clear at extremely high yields, or a country’s currency collapses, inflation spikes, and emergency intervention from multilateral lending institutions (like IMF) becomes necessary. Some recent examples of this happening are Greece (2010–2012), Argentina (multiple episodes), and Sri Lanka (2022).

In Greece’s case, the crisis erupted when rising deficits and hidden liabilities triggered a loss of confidence, which spiked bond yields, and, because it lacked its own currency or central-bank backstop due to Euro membership, the state was locked out of markets. Essentially, Greece could not print euros, devalue its currency, or rely on a national central bank to absorb its debt.

Argentina’s repeated crises followed a different but equally structural path. It borrowed heavily in US dollars, while earnings in pesos even as it was suffering from persistent fiscal deficits and inflation. This resulted in a flight of capital when confidence in its economy weakened, resulting in a sharp depreciation in peso which raised the real burden of its dollar debt overnight. This depleted the country’s dollar reserves, and refinancing also become difficult, making the country seek external assistance.

Sri Lanka’s 2022 collapse followed yet another structural path to the same endpoint. The country faced large external dollar debt repayments just as its tourism revenues and exports collapsed during the COVID-19 shock. At the same time, sweeping tax cuts widened the fiscal deficit, forcing the government to use its forex reserves to defend the currency. Once those reserves were exhausted, Sri Lanka could neither service its dollar debt nor finance fuel and food imports, pushing the country into its first sovereign default and forcing it to seek emergency assistance from neighbours and multilateral lending institutions.

These crises are not accidents; they are structural outcomes of the current system. These examples show how other countries lacking reserve-currency demand face currency mismatch, and mostly borrow in foreign currencies for their external needs.

But the US never faces this funding cliff because it borrows in its own currency, issues the world’s reserve currency/asset, and is backed by a central bank that can always create the liquidity needed to roll-over its debt.

How the world’s savings, including India’s, finance the US

The current system’s asymmetry does not only punish small or crisis-prone economies. It operates even on large, fast-growing states with strong domestic fundamentals. To see how, one need only look at India or China, today among the world’s largest economies, yet still structurally constrained by the dollar system.

Countries like India or China do not finance the US out of choice but out of compulsion. Consider this: when the rupee weakens against the dollar, India is forced to draw on its dollars reserves to stabilise its currency.

India holds close to $700 billion in foreign exchange reserves. Once those reserves fall, it must be rebuilt by earning more dollars through exports, borrowing, or attracting foreign investment. Those dollars, in turn, have to be reinvested in US assets to keep them safe and usable in the future.

This dynamic was visible in 2025. Despite strong domestic growth and subdued inflation, the Indian Rupee depreciated by roughly 4.3–5.5% against the US dollar over the year, touching record lows near ₹91 per dollar.

More tellingly, the rupee weakened far more sharply against other major currencies—nearly 19% against the euro and over 12% against the pound and yuan—reflecting the asymmetric pressures faced by emerging market currencies in a dollar-centric system. This is not unique to India.

China’s experience underscores this. Today, China is the world’s second-largest economy, with a GDP exceeding $18 trillion and foreign exchange reserves of roughly $3.2 trillion—the largest stockpile in the world. Yet even China remains structurally locked into the dollar system. Despite repeated efforts to internationalise the yuan, over half of China’s reserves remain invested in dollar-denominated assets, including substantial holdings of US Treasury securities.

In periods of global stress or capital outflow pressure, China, like India, must lean on its dollar reserves to stabilise its currency and financial system. Scale does not confer escape; it merely increases the size of the buffers required.

Across emerging markets, trade surpluses, capital inflows and precautionary savings are systematically and structurally recycled back into the United States. China, oil-exporting states, and export-led Asian economies all follow the same path, regardless of political alignment.

These reserves are not optional cushions; they are structural obligations imposed by dollar dominance. Interest-rate differentials tilt capital toward the US. Global investors treat dollar assets as safe havens during stress. And because trade and debt are dollar-denominated, volatility itself breeds demand for dollars. The result is a self-reinforcing cycle in which emerging-market currencies weaken and surplus savings are pushed back toward the United States.

In effect, the world’s surplus savings—generated through trade, labor and resource extraction—are recycled back into the United States to finance its debt. This is not a market anomaly.

Who pays and who doesn’t

However, for the United States, this system delivers tangible and enduring advantages. The persistent demand for US assets allows it to borrow cheaply, sustain larger deficits, and finance consumption beyond domestic production, while keeping imports cheaper and Interest rates lower than they otherwise would.

In effect, American living standards are underwritten not only by domestic productivity, but by the external savings of the rest of the world.

For much of the rest of the world, however, living standards are constrained by the opposite dynamic: weaker currencies raise the cost of imports, volatile capital flows compress wages and public spending, and a persistent need to defend exchange rates forces governments to prioritise financial stability over consumption and welfare.

During global stress, capital retreats toward dollar assets, tightening financial conditions precisely where relief is most needed.

Emerging economies bear the heaviest cost. They are forced to self-insure by accumulating ever-larger dollar and Treasury reserves, suppressing domestic demand and subordinating monetary policy to external stability.

What appears as prudence is, in reality, a defensive response to a system that shifts risks outward and concentrates stability at the core.

But the paradox of the dollar system is that its apparent stability masks a deep fragility at the core: global financial stability depends on decisions made entirely within the domestic political calculus of the United States, with little regard for the consequences beyond its borders.

Why America’s domestic crisis is the world’s problem

The centrality of US Treasury securities in the global financial system creates a risk that is rarely acknowledged, but impossible to ignore or escape: America’s internal political dysfunction has global consequences.

US Treasury debt is not just American debt. It is the primary reserve asset of the international system, the backbone of foreign exchange reserves, and the foundation on which global financial stability rests. When confidence in US Treasuries is shaken, even temporarily, the effects do not remain contained within US borders.

This is why America’s debt ceiling matters far beyond Washington. The debt ceiling is a self-imposed political constraint on the US government’s ability to borrow and meet obligations it has already incurred. When US lawmakers fail to raise it, they do not merely threaten a government shutdown; they threaten delays in payments on the very asset the world treats as risk-free.

The near-default episodes of 2011, 2013, 2023 and 2025 were not symbolic events. They injected real stress into global markets, disrupted funding conditions, and in one case led to a downgrade of US sovereign credit. Each episode exposed the same contradiction: the world’s safest asset is periodically placed at risk by the domestic politics of a single country.

For most states, such political instability would trigger immediate punishment. Bond yields would spike, currencies would collapse, and access to global funding would evaporate. But the United States is insulated from this discipline. Its debt is so deeply embedded in global finance that markets cannot abandon it without destabilising themselves.

As a result, the costs of American political brinkmanship are not borne by the United States alone. They are diffused across a global system that has no viable alternative reserve asset at comparable scale. Volatility rises elsewhere. Risk premiums increase. Financial stress is exported.

What is framed domestically as partisan theatre is, in reality, a recurring stress event for the global financial order. The paradox is stark: a system that depends on US stability is forced to absorb US instability, again and again, because the architecture of global finance leaves it no other choice.

In this system, even American political dysfunction becomes a global liability.

How this financial power translates into geopolitical impunity

What emerges from this system is not merely economic advantage. It is insulation — financial, political, and strategic — on a scale no other country enjoys.

Because the United States issues the world’s reserve currency, controls the world’s safe asset, and backs its debt with a central bank that can create unlimited liquidity, it operates without the constraints that discipline every other state. Deficits do not trigger punishment. Debt does not provoke flight. Currency weakness does not arrive. Interest rates do not spiral. The adjustment costs that force restraint elsewhere are absorbed by the rest of the world.

Even America’s domestic political failures are absorbed by a global system that has no alternative but to keep financing it.

This insulation fundamentally alters behaviour.

Military interventions, sanctions regimes, trade disruptions, and coercive diplomacy all impose costs. But in the American case, those costs are diluted, deferred, and externalised. They are financed by global savings, cushioned by foreign demand for Treasuries, and stabilised by a monetary system that exports volatility abroad while internalising stability at home.

While other nations must calculate the risk of currency collapse, capital flight, inflation, and balance-of-payments crises before acting, the United States operates behind a financial shield built on global dependence. It can escalate without fear of immediate economic reprisal — because markets do not discipline the issuer of the currency they are forced to hold.

This is how geopolitical risk-taking becomes geopolitical impunity.

Power in this system is not enforced by force alone. It is sustained by structure. Military strength enables action; financial architecture neutralises consequence. When the costs of war, coercion, and instability are absorbed by a global system compelled to hold US liabilities, accountability evaporates.

American Exceptionalism, in practice, is not moral leadership or ideological superiority.

It is cost displacement, made possible by a world that finances America’s freedom of action even as it bears the fallout.

Subscribe now

Share

Share Connecting the Dots 123

For most of our history on Earth, people from across the world, be it from rural areas, urban metropolises, diverse regions, or kingdoms and nations, have had the freedom to travel from one place to another in search of a better life or better prospects.

Despite religious, ethnic, sectarian or racial violence meted out by one group on another, the basic premise of migration—that it holds the promise of a better future—has held true for millennia for most people. It is only in recent times that nations have tried to curtail this natural tendency of humans to travel to look for greener pastures.

The reason for these restrictions are many, most prominent among them being a lack of deeper understanding of other peoples’ history, culture, traditions, nature, or desires. Although, historically, there have been times when these aspects of a group of people have been completely annihilated or exploited to extract land, labour and resources from them.

The point of highlighting migration is this: It creates opportunities for increased trade, development and economic progress across regions around the world. But migration in the modern era is evolving into a fraught space for countries. The reasons being cited are that various differing groups of people have diverse cultures, belief systems, religious orientation, or other differentiating characteristics, which do not integrate with the society of the place they are migrating to. But there’s another, more fundamental and structural reason for that.

That reason is economic. As I outlined in my previous newsletter, ‘Why Financial Security is a Mirage in Today’s World? Who Took Our Freedom? It’s the Economy, Stupid!’ the modern global economic system is rigged to benefit only a very narrow class of people in an outsized manner, while the rest of the people at the bottom of the pyramid suffer the consequences of such a system.

It is a system where no amount of labour, expended over a lifetime of work, can accrue enough resources to give an individual and their family the prosperity, dignity and security every human life deserves.

Such a paradigm creates the very grounds where migration not only becomes necessary, but the only escape route for most people. However, with the state in which the global economy is in right now, even migration does not look like a viable option.

This brings us to the real problem I want to outline in this newsletter. The problem of our current global economic setup. This problem can be outlined into a number of interconnected, interdependent, and cascading problem areas or challenges.

To begin with, let us first define where and how these problem areas are manifesting.

America

Let us start with the world’s biggest economy, The United States of America. It is a country built on immigration, superimposed by robust ideals of freedom of speech, democracy, and other egalitarian principles at its inception. Despite it carrying the bloody history of uprooting and annihilating indigenous people to claim their land, and other such atrocities, the country has managed to establish a truly capitalistic economic nation state.

However, as I outlined in one of me previous newsletters written for Between the Lines, titled ‘When Systems Take Over Life: A look at Capitalism, Socialism and Communism or Something Better - Part 1’, the capitalistic system excludes the worker from the fruits of their labour, in-turn accruing all the benefits to the owner class.

This is one prominent aspect of the purely capitalistic economic system. But that is not under discussion right now. The point of discussion here is the USA as the world’s biggest economy. The question to ask here is how did a country—that was formalized under a constitution some 240 years ago—come to be the biggest economy in the world?

The straightforward answer to that question is: through debt—on such a massive scale and on an institutional and sovereign level, that the labour of multiple future generations to come has been pledged as collateral.

Another aspect of the purely capitalistic system of operating an economy and its perpetual growth model of doing business, has also resulted in most stable jobs being exported to other regions. I have outlined the debt condition of the global economy in my previous newsletter. Read here. ‘Why Financial Security is a Mirage in Today’s World? Who Took Our Freedom? It’s the Economy, Stupid!’.

The problem is not restricted to just massive levels of debt at the sovereign and public levels, or the acute lack of good, stable jobs that people can do to sustain their lives. The strands of this problem extend into various directions. One among them is how the US economy has achieved its pole position as a consumption-fuelled, consumer-based economy. This has been enabled on the back of a massive and cyclical incidence of retail credit by a cohort of people whose jobs have been exported, whose education and skills have been neglected for a long time, and whose well-being has been fundamentally hijacked by corporate profit motive.

Now, this is the system of operating an economy that the US has been trying to export to other regions of the world. To a large extent, they have even been successful. Dollar has become the de-facto global currency being used by countries around the world to trade. Wall Street financial institutions have become the biggest arbitrator of financial flows in the world. They decide everything from which industries will receive the most investment, which companies will get funded or go bankrupt, which regions around the world will receive the financial support needed to elevate the quality of life in those regions, to which countries can access capital for their needs.

Such is the current state of arrangement of global financial flows that on one hand these financial institutions have unprecedented amount of capital at their disposal to do as they please with only one target to achieve: Deliver quarter-after-quarter of profits and growth for their investors and shareholders. It does not matter to these institutions whether the pursuit of these goals destroys economies, industries, regions, jobs, or whole ecosystems and the environment, all in the name of free-market operation. Only the naked pursuit of profit is sufficient.

On the other hand, these doyens of capital have all the resources and connections needed to influence and bend the trajectory of regulations to favour their business interests and goals. And that too is not restricted to within their own nation’s boundaries. Even their government can be arm-twisted to take up their cause on global forums if it suits their business prospects. That is America for you, which despite doing so much financial engineering and financial experiments over the years, has failed to ensure a life of prosperity, dignity and security for the greatest number of its people.

China

Now, let’s look at another economy, just as big, but no less flawed in what it aims to achieve. China is another America in the making, but with some fundamental differences in how it operates. In this country, capital does not rule supreme, the party does. The party decides what will happen, where and how. It has all the levers of the economy under its control. From where capital will be deployed to how it will be deployed, and to what end. Not only capital, but other resources as well, including land and labour.

The country, which started its journey as a giant exploited by outside forces, aimed to ensure it never found itself at the mercy of foreigners again. In aiming to achieve that goal, the country copied wholesale the capitalistic model of manufacturing and growth. While the model delivered the promised growth, the country’s iron grip on other factors of production, particularly labour, has robbed the country’s economy of its necessary vitality.

Here’s how that has worked out. While China has managed to integrate itself closely into the fabric of global manufacturing supply chains, which has made it the largest exporter in the world, it has failed to create a consumer class that can support its economy when global trade is in turmoil, and international demand is sagging.

From whatever little information that trickles out of China regarding its economy, the country is suffering from a typical problem of overcapacity in production and sagging domestic demand. Consequently, here too, the country has failed to ensure a life of prosperity, dignity and security for large chunks of its population. And the risks are only on the downside.

India

Another country on the list is India. A giant by many measures no doubt, but a sleeping one at that. Not because it has failed to adopt or adhere to truly capitalistic tendencies marketed by the West, or the Communist ideologies of Marxist-Leninist or Maoist hue.

The country is failing because it is yet to figure out how it can ensure a life of prosperity, dignity and security for the vast chunk of people in the country who are underemployed, or without a stable source of income.

The problem for India stems not so much from inaction and indecision in settling upon a model of growth, but more from figuring out a model of growth and development that suits its unique requirements of economic progress across a diverse landscape. Moreover, the challenge is even more critical as the model has to account for the unique set of values the country has inherited from history.

It does not lack in expertise, experience, capital or imagination on what is needed and where. What is lacks is a coherent strategy and complementary policy action that can be deployed to ensure that the fruits of modern technology and economy can uplift the lives of the vast majority its population who are still struggling.

Europe

The continent, specifically Western Europe, could be argued as one of the most developed regions of the world. The economies of the countries in this region are largely robust, the public infrastructure functional and the government responsive.

But recently, the region has been facing more challenges in terms of economic stagnation, immigration, and overall disenchantment among the general population about their future. The leading economies in the region and their leaders have failed to articulate what exactly where the lacunae lies in their economies.

In such a situation, where there is no handle on what the problem is, finding a solution is not only foolish but potentially dangerous. Then, there is the threat of war in Europe’s backyard.

Look at it from the perspective of the US, NATO and European nation’s perspective, then Russia is painted as the aggressor. But look at the actions of how NATO has operated in the region in the backdrop of Europe and North America’s imperialistic history, and the answer you get is decidedly different. I wrote about it a few years ago when the conflict started & the problem has dragged on since then. Read here. ‘A crisis of faith: What does Russia want?’

The fact of the matter remains that any attempt at peace and de-escalation in the region will fail if both sides do not climb down from their high horses and pull back simultaneously from the conflict. The de-escalation should aim to address the critical threat perception of both the parties, without trying to extract or exploit any one side to accrue gains for the other.

Moreover, the powers that fan the flames of conflict, or those who aim to benefit from conflict should be prevented from hijacking the agenda of peace to achieve their own narrow goals of hegemony. Only in such a situation can the region ensure that it is ready to build a prosperous future for its people.

Russia

The country serves as a prime example of a nation that has refused to bend to the demands of Western imperialism. Consequently, its economy and people have been paying a heavy price for the country’s refusal to compromise with their security.

As the country and its leadership moves towards securing peace, a more magnanimous approach towards its neighbours can only bode well for the future of its people, and even for the people on the opposite side of the fence.

Being bogged down in a war that only works to sap your resources without solving the real problem of threat perception does not seem like a sustainable situation, despite the support of allies. Consequently, the only sustainable solution in a situation like this is to find common grounds to de-escalate, and ensure that all sides adhere to the consensus.

Rest of the World

These regions, including Eastern Europe, Latin America, South America, Africa, West Asia & South Asia, usually fall under the sphere of influence of one of the bigger economies outlined above. Their problems, of economic stagnation, environmental degradation, political upheaval, etc., are closely tied to how the big economies in their neighbourhood operate.

Consequently, it becomes imperative that the bigger economies of the world get their acts together so the world as a whole can move ahead as a cohesive unit of growth. The primary goal of such a move is to ensure only one thing: the well-being of all the people.

So, how does something like that happen?

The Solution

While countries around the world grapple with the challenges of our times, if you study the problems in their interdependent and interlinked entirety, you will see they have cropped up due to the absence of some fundamental non-negotiables required in every system, especially ones as important as governance, policy formation, finance or economy.

As I outlined in one of my previous newsletters, a prominent missing component in the current structure of how governance, economies and finance operate in the present era, is a lack of robust accountability. ‘Accountability in Systems: Where We Stand & What’s Missing?’

Flowing from that, the structures and systems of governance that govern our lives, from political to economic to financial, are being led without sufficient checks and balance in the system. This in-turn has led the world where vested interests have hijacked the agenda of ensuring a life of prosperity, security and dignity for the greatest number of people in the world.

Now, these systems only serve the interest of the wealthy, the well-connected, or the crooked. For the rest, the world has become a travesty of social justice, economic security, or a fulfilling life.

Consequently the only robust and sure-shot way to get the world out of the current bind is for the people to take back the power to shape the norms that govern our lives. And not just any one group of people, but people young and old, from all walks of lives, profession, class, ethnicity, race, religion, geography or ideology, from around the world and from every strata of life; these are the most affected people from the current state of affairs.

And this must happen not just in one country, region, or level of governance, but from the ground up, starting from neighbourhood councils, right up to the city, state, national and international level. This is necessary to ensure that our governance structures and the systems that frame our norms are made by as diverse and representative a group of people as our world is.

Further, it will ensure that the actual challenges being faced by the people are discussed at the right forums, and the solutions being proposed are plausible and not more harmful.

That is the first part of the solution: that people take back the power to shape norms that govern their lives. And the process through which it is achieved be such that every generation, year after year, learns why upholding and engaging with these norms is necessary. Consequently, they must become a part of the process, to ensure that human life is not reduced to being just a number in some spreadsheet, but a thriving and engaged member of society.

The second part is to come to a conclusion on what will be the common ground on which all of this stands. This common ground can be understood as a framework that ensures the wellbeing of individuals as a sovereign entity and member of society, while being a responsible and contributing member of their local, national and global community.

It is paramount to understand that any attempt to circumvent this requirement will again start taking the world back to where we are right now, where economies are stagnant, norms are broken, and governance has become a chimera.

No, the way the world functions must pivot. The wellbeing of the individual and the society at large must take precedence over corporate interests and hegemonic tendencies of global superpowers.

While competition and profit might be a necessary aspect of doing business, it cannot come at the cost of destroying lives, livelihoods and the very place we call home, our world and its environment. Consequently, any norm that gets implemented must stand true against the rubric of common good for the greatest number of people.

Further, the responsibility of ensuring that these standards are not only met but upheld at all times does not stand on one person, group or region, but on all the people, from all classes of society, and across geographies, at all times.

While achieving these goals does seem like a daunting task, it is a task that must be done, nonetheless. Not making a move towards these goals is only going to exacerbate the problems we are witnessing in the world today.

Only then can the rules of engagement be redefined to ensure that all of us live a rewarding life, in a just and fair world, free from exploitation and coercion.

Let’s start by looking at these numbers:

The International Monetary Fund (IMF) estimates the projected global GDP for 2025 to be around $117.17 trillion.

The projected global gross public (sovereign) debt is estimated to be around $111 trillion for 2025.

Further, the total global debt—which includes debt from governments, non-financial corporations, households, and the financial sector—has reached a staggering record high. According to data from the Institute of International Finance (IIF), the latest figures are:

Total global debt is estimated to be over $338 trillion as of H1 2025 (projected).

Sector Approximate Share of Total Debt

Government (Sovereign Debt) Approx. $111 trillion (2025 projection)

Non-Financial Corporate Over $90 trillion

Household Over $60 trillion

Financial Sector $77 trillion

Then, according to the latest Forbes World’s Billionaires List (April 2025):

The world has 3,028 billionaires.

These 3,028 individuals have a combined wealth of approximately $16.1 trillion.

In that backdrop, note the following. Most people who track trends in the global economy consistently would agree that there are many problems with the global economy at this point in history. But pinning down what these problems are is no simple task. Our global economy has evolved to be far too complex, integrated and interdependent to get a proper handle on things.

Further, due to the nature of things as they stand in the world today, with various actors embedded in this system pulling the economic framework in different directions as per their goals, the whole economic setup of the world looks fragile and brittle, prone to crack under the slightest bit of pressure.

The good thing about the current framework is that it is interlinked and interdependent. This lends the system some flexibility to absorb myriad shocks of various magnitude. Recent history is littered with examples of these shocks and how the global economic framework reacted to it, starting from the 2008 financial crisis to the Covid-19 induced shocks, and currently the ongoing tariff-related uncertainty.

The global economy, as a whole, has remained functioning and operational amid all this and more if you look at it from the top. But drill down and you start seeing the real nature of problems. Jobs have disappeared, or are on the verge of vanishing, economic growth is muted across regions and economies, income inequality is widening, social and political representation is being curbed, curtailed or completely ignored. On top of all that, the recourse available with common people, or forums where these issues can be transparently discussed is choked. Despite that, all of us are affected. Not one person on this planet is immune to these economic forces.

While the rich remain unaffected due obviously to the resources at their disposal, the poor or the average do not have any such recourse or support system. They are at the mercy of the economic forces that most do not understand. As a result, they cannot but feel deeply about the uncertainty of our current times and economic forces.

The problem is even more debilitating because regular white and blue collar jobs are threatened either by technological advances, economic compulsions, trade warfare, or simple corporate compulsion of generating perpetual profits quarter after quarter.

On top of that, there is a deeper malaise plaguing the global economy that seldom gets the attention it deserves, or a transparent look into how these problems affect us common people. Since that is the case, it is no wonder that a robust and holistic solution escapes us, which is just perpetuating the problems we face and kicking the can down the road.

The problem is related to the global debt owed by the whole world. First look at the numbers, and then I will attempt to explain how it affects each one of us.

Here is a breakdown of the rough collective debt owed per individual globally and the estimated timeline for repayment, along with the assumptions and sources used.

Assumptions and Sources

To perform these calculations, two main external pieces of information or assumptions were required: the world population and a realistic annual repayment rate.

Rough Calculation of Debt per Individual

This calculation determines the rough amount of total global debt (government, corporate, household, and financial) that would be owed if it were evenly divided among every person in the world.

Calculation

Debt per Individual = Total Global Debt\World Population

Debt per Individual = $338,000,000,000,000\8,232,000,000

Result

The rough debt owed by each individual in the world is approximately: $41,059.28

Calculation of Repayment Timeline

This calculation estimates the time it would take to pay off the entire $338 trillion in debt, assuming the global economy dedicates 5% of its annual output (GDP) to principal repayment.

Step A: Calculate Annual Principal Repayment Amount

Annual Repayment = Global GDP X Annual Repayment Rate

Annual Repayment = $117.17 trillion X 0.05

Annual Repayment = $5.8585 trillion per year

Step B: Calculate Repayment Timeline

Repayment Timeline (Years) = Total Global Debt \ Annual Repayment Amount

Repayment Timeline (Years) = $338 trillion \ $5.8585 trillion per year

Result

Based on this assumption of dedicating 5% of Global GDP to debt principal repayment each year, the rough timeline to pay back the total global debt is: 57.7 years

Now, let’s factor in the income levels of average people in the world and see how much time it will take all of us collectively to pay back these debts.

Debt Repayment by the “Average, Common Person”

This calculation provides a realistic rough estimate of how long it would take us to pay back the total global debt, based solely on the hypothetical repayment capacity of the world’s common wage earners.

Vetted Assumptions & Sources

Calculation Breakdown

The calculation is based on determining the total annual repayment capacity generated by the Global Middle 40% and dividing the total debt by this figure.

Group’s Total Annual Income

This is the total income earned by the 40% of the global population defined as the “average person.”

Group Annual Income = Global GDP X Group Income Share

$117.17 trillion X 39.5% = $46.28 trillion

Group’s Annual Repayment Capacity

This is the amount dedicated solely to paying down the principal of the $338 trillion debt.

Annual Repayment Capacity = Group Annual Income X Dedication Rate

$46.28 trillion X 10% = $4.63 trillion per year

Repayment Timeline

Repayment Timeline (Years) = Total Global Debt \ Annual Repayment Capacity

$338.00 trillion \ $4.63 trillion per year = 73.0 years

Conclusion and Context

In simple terms, it will take each average person, with a rough annual income of $14,056, 73 years to pay back a total global debt of $338 trillion, at a rate of $4.63 trillion per year, if all of us dedicate 10% of our income every year to paying back this debt.

The Global Financial World: A System of Perpetual Leverage

The global financial world is a vast, interconnected ecosystem of legal frameworks, institutions, and markets that facilitates the international flow of capital for investment and trade financing. At its core, the system acts as an intermediary, channelling funds from savers (individuals, pension funds, etc.) to borrowers (governments, corporations & households).

The Structure and Key Players

The system operates through several interconnected layers:

The Engine of Debt: Perpetual Growth and Leverage

The fundamental objective of modern governments, corporations and major financial institutions is to chase perpetual growth—a core principle followed by them that drives the continuous creation of debt (leverage).

Leverage is the strategic use of debt or borrowed funds to amplify the potential returns from an investment or project.

Who is affected? How?

The Common Person’s Position and Impact

The common, average person stands at the base of this leveraged system, acting primarily as a taxpayer, saver, and consumer/debtor. The cycle of perpetual debt and growth has several significant, often negative, impacts on their finances:

A. Income and Tax Payments

· Higher Tax Burden: Growing Government Debt (often exceeding the $85-100% of GDP threshold where it harms growth) must eventually be serviced through future tax revenues. The common person’s future income is effectively collateral for the sovereign debt accumulated today (Ricardian Equivalence principle).

· Crowding Out: Government borrowing can increase real interest rates as the public sector competes with the private sector for available savings. These higher rates are then passed on to individuals as higher interest on mortgages, credit cards, and business loans, stifling private investment and income growth.

B. Retirement Corpus and Savings

· Impact on Savings: High debt levels can negatively affect private saving.

· Pension Fund Risk: Many retirement accounts and pension funds are managed by large asset managers and are heavily invested in the very same Government Bonds and Corporate Debt instruments that are creating the system’s leverage. While this provides stability (bonds are “safe”), it means the average person’s savings are directly exposed to the systemic risks of a high-debt, slow-growth world.

· Inflation Risk: If high debt burdens are eventually financed by printing money (monetisation), it creates inflation risk. This is a hidden tax on the future that erodes the real value of the average person’s savings and fixed incomes.

C. The Debtor Role

· Household Debt: The common person contributes directly to the total debt through Household Debt (mortgages, auto loans, student loans), which acts as consumer leverage to drive demand and corporate growth, but exposes them to personal financial ruin if income stops.

In essence, the average person’s income and savings serve two primary roles in this system: (1) They provide the tax revenue to service government debt, and (2) Their savings are channeled by financial institutions back to governments and corporations to fuel the growth-through-debt cycle.

The problem does not stop there. It even extends to the sphere of work, workers and their income and livelihoods. Here’s a snapshot of how.

The Common Worker in a System of Perpetual Leverage

The common worker, encompassing both blue-collar (manual, hourly-paid) and white-collar (cognitive, salaried) employees, is fundamentally affected by the economic forces of finance and perpetual growth. Their incomes, job stability, and long-term savings are dictated by the interplay between corporate leverage, technological disruption, and global competition.

1. Impact of Finance and Leverage on Workers

The perpetual growth mandate, fuelled by increasing debt and leverage, transforms business operations in ways that directly pressure the worker’s bottom line.

2. Perpetual Growth Juxtaposed with Global Forces

The corporate mandate for perpetual growth—the continuous need for higher profits—interacts with global economic forces to create a system where worker productivity gains around the world rarely translate into proportionate wage gains.

A. Technological Innovation (Automation and AI)

· The Productivity Paradox: Technological progress, historically, has been the greatest source of economic growth and rising real wages. However, the current wave of digitalisation and AI has intensified labor market polarisation.

o Blue-Collar Effect: Automation (robotics, optimised machinery) displaces jobs in routine manufacturing, logistics, and assembly, leading to a rise in demand for high-skilled trades (electricians, mechanics) but a shrinking of low-skilled production roles (Source 3.4).

o White-Collar Effect: AI and machine learning are increasingly capable of performing routine cognitive tasks (clerical, data entry, basic programming, customer service). This hollows out middle-skilled white-collar jobs, while creating new demand for highly educated workers in specialised STEM fields.

B. Global Competition and Trade Restrictions

· Global Competition & Outsourcing: The pressure for perpetual growth forces corporations to seek the lowest labor costs globally. This incentivises outsourcing of manufacturing (blue-collar) and routine services (white-collar, like call centers and back-office functions) to countries with lower wages. This downward pressure on wages in developed economies is known as the “race to the bottom”.

· Trade Restrictions: Restrictions on digital and traditional trade (e.g., tariffs, data barriers, competition from large corporations or businesses funded by global capital) can inhibit technological innovation and make acquiring knowledge and technology more expensive, particularly in low- and middle-income countries. This can slow productivity gains, meaning less economic output to share with workers, perpetuating jobless growth in developing economies.

3. The Squeeze on the Common Worker

The combined effect of high financial leverage (requiring high short-term returns) and the globalised, technological pressure on costs creates a significant squeeze on the average worker:

These above trends of economic hardship are not restricted to one neighbourhood, region, country, or continent. The problems related to economic hardship are playing out in almost all of the biggest economies of the world, whether it is the US, China, India, Russia, or countries in Latin America and Europe.

Moreover, they are not restricted to any one industry, segment, trade route, supply chain or company. From manufacturing to services, every one’s job, and in turn, their livelihood is threatened by the current situation.

Everyone is grappling with questions like will I have a job tomorrow? Will AI replace my role? Will the trade war make my industry redundant or my employer out of the market. In short, simple words, the future looks very uncertain.

To sum it all up, the global economy is currently a massive, leveraged bet. With total global debt at over $338 trillion against a Global GDP of $117.17 trillion, the system operates on a debt-to-GDP ratio of nearly 289%. This is not growth; it is financialised gambling, and nobody is accountable.

The average person, burdened by a collective per-capita debt of over $41,000, is chained to this casino, at least for the next 73 years. Financial security is not a failing promise; it is a deliberate illusion sustained by policy choices that favor capital over labor.

So, what comes next? That’s the collective question we all need to ask. Fixing these problems at the root is no more a choice or option that can be ignored. It is an imperative that needs to be taken up by leaders at the highest rungs of global power. Only they have the power and resources to move the needle on dealing with these problems.

For the rest of the world, and the vast majority of people around the world who are affected by these economic forces, they do not even have the basic understanding of where these problems originate or how they affect their lives. All they know is that they are affected, and no amount of labour they put in their work is yielding results that can secure their present or enable a more prosperous future.

All because they have come cogs in a machine that looks at them as just factors of production and not real human beings who have needs, wants, desires, or even a life worth living.

While the topic of discussion was Delhi, the problem of pollution is not restricted to only Delhi or the areas around it. It is persistently present in most cities in the North, from industrial belts around Punjab and Haryana to the manufacturing hubs in Western UP. Even urban centres such as Kanpur, Meerut, Lucknow, Varanasi, Patna, etc. are affected by the phenomena.

Although these places do not get the same attention as that reserved for Delhi, the problem is no less severe or critical in these areas. Hence, the situation merits a deeper look into why the problem occurs with so much consistency, across geographic regions, throughout the year.

While in the case of Delhi, the lay of the land serves as a natural sink that exacerbate the problem of air pollution, these other places outlined above do not suffer from the same predicament in terms of geography. However, they do share other similarities with Delhi, albeit on smaller scales, but not by much.

Whether it is in terms of population & population-density, number of vehicles & vehicular emission, industries and their polluting practices, or construction, almost all the urban centers in the Northern part of India have a problem of epic proportions, with negligible checks and balance to manage them or frameworks and policy support to address their root cause.

On top of this, add the problem of congested living spaces in most low- and middle-income residential areas, and the quality of life deteriorates drastically for millions across this region.

Moreover, air pollution is just one symptom or manifestation of the above outlined situation.

Read more

The clamour in India’s capital city for clean air to breath is not an anomaly. It is a symptom—of systemic failure, half measures, misplaced priorities, and misdirected solutions.

The problem is not new. Nor is the desire or will to solve it. But the problem still persists. There are many reasons for it. Primary among them is a comprehensive and holistic misunderstanding of the problem itself.

Pollution, especially air pollution in a geographical region such as Delhi, cannot simply be chalked up to one cause. There are various converging aspects that make the problem so persistent in Delhi.

Start with analyzing the features of the land around Delhi and you will find that it is uniquely located to remain polluted.

Custom Made to Capture Pollution

Sample this: It is a mix of elevated ridge and low plains. On a local level, Delhi is defined by two distinct geological features that create a sharp contrast in elevation:

• The Elevated Part (The Delhi Ridge):

  • What it is: The most dominant feature of Delhi’s geography is the Delhi Ridge, which is the northernmost extension of the ancient Aravalli Mountain Range

  • Effect: This makes a significant portion of the city elevated compared to the surrounding flat plains. It acts as a natural barrier and a watershed, dividing the Indus plains to the west from the Gangetic plains to the east

  • Height: The Ridge reaches heights of about 318 meters (1,043 ft), which is significantly higher than the city’s average elevation of roughly 225 meters

• The Low-Lying Part (The Yamuna Floodplains):

  • What it is: To the east of the Ridge lies the Yamuna River and its floodplains (Khadar)

  • Effect: This area is a geographical depression relative to the Ridge and the older alluvial plains (Bangar). It is prone to flooding and sits at a lower elevation (around 198–210 meters)

Then, there is the ‘Bowl’ effect, due to its regional setting.

While the city has a high ridge running through it, on a regional scale, Delhi is often described as located within a ‘bowl’.

• The “Bowl” Theory: This is less about the land being a crater and more about its enclosure by massive geological features. Delhi is landlocked in the Indo-Gangetic Plain, bounded by the Himalayas to the north and the main body of the Aravalli Range to the south/southwest

• Consequence: This “bowl-like” regional shape is a major reason for Delhi’s pollution crisis. In winter, cold air sinks into this regional basin, and the surrounding highlands prevent the wind from flushing out pollutants, trapping them over the city (a phenomenon known as temperature inversion)

Massively Populated, Densely Packed

Now, on top of this geographical feature, take a look at how big the area of National Capital Region and National Capital Territory is and how many people live here, and you start arriving at a clear picture of where all this pollution is coming from.

It is important to distinguish between NCT (National Capital Territory of Delhi, the city-state) and NCR (National Capital Region, the wider planning zone that includes neighboring states).

The NCR is a massive planning region that spans approximately 55,083 sq. km. It is divided into four distinct sub-regions based on the states they belong to:

• Haryana Sub-region: ~25,327 sq. km (The largest chunk of NCR)

• Uttar Pradesh Sub-region: ~14,826 sq. km

• Rajasthan Sub-region: ~13,447 sq. km

• NCT of Delhi: ~1,484 sq. km (The core city)

Next, the NCR is one of the most populous urban regions in the world.

• 2011 Census (Official): The total population was recorded at roughly 5.81 crore (58.1 million).

• Current Estimates (2024-25): While the official census has been delayed, estimates suggest that the total NCR population now exceeds 7 crore (70 million).

  • Delhi (NCT) alone is estimated to have over 3.3 crore (33 million) people in its metropolitan area as of 2024

Factor into this, the fact that the NCR is not just one city but a cluster of cities and districts across four states.

Here’s a breakdown:

• Delhi (NCT): 11 Districts (Key Centres: New Delhi, North Delhi, South Delhi, Dwarka, Rohini)

• Haryana: 14 Districts (Key Centres: Gurugram/Gurgaon, Faridabad, Sonipat, Panipat, Rohtak)

• Uttar Pradesh: 8 Districts (Key Centres: Noida, Greater Noida, Ghaziabad, Meerut, Muzaffarnagar)

• Rajasthan: 2 Districts (Key Centres: Alwar, Bharatpur)

Further, the Delhi (NCT) area is highly urbanised. About 97.5% of the population lives in urban areas, with only small pockets of rural villages situated on the outskirts.

Meanwhile, the wider NCR area is mixed. While it contains massive modern cities like Gurugram and Noida, a significant portion of the 55,000+ sq. km area (especially in the Rajasthan and outer Haryana sub-regions) remains agricultural and rural.

Pollution on Wheels

Now, factor in such a large number of people living in this region, and almost every family owning at least one vehicle. On top of that, add the number of vehicles that enter the region from its outskirts.

Here’s a breakdown as of late 2024:

• Delhi (NCT) Active Fleet: According to the Delhi Economic Survey (2023-24) and Transport Department data, the actual number of vehicles plying on Delhi’s roads is approximately 79.5 lakh (7.95 million)

• Delhi (NCT) Cumulative Registration: The total cumulative registration figure often cited is higher (around 1.57 crore or 15.7 million), but nearly 50-55% of these are legally “de-registered” or end-of-life vehicles

• Wider NCR: The total registered vehicle count for the entire National Capital Region (including Gurugram, Noida, Ghaziabad, etc.) is estimated at over 3 crore (30 million)

Out of this, the fleet is overwhelmingly dominated by private personal vehicles.

• Private Vehicles account for approximately 90.5% of the total fleet. This includes roughly 2/3rds Two-wheelers (motorcycles/scooters) and 1/3rd Private Cars

• Commercial Vehicles make up the remaining ~9.5%. This includes Auto-rickshaws, Taxis (including app-based cabs), Buses, and Light/Heavy Goods Vehicles

Another aspect of this problem is traffic volume & daily movement in the region. Delhi acts as a major transit hub in the area, resulting in a massive daily influx of vehicles from neighboring states.

• Daily Influx: Approximately 11 lakh (1.1 million) vehicles enter and exit Delhi daily from the NCR borders

• Commercial Traffic: Of this daily influx, roughly 80,000 to 100,000 are commercial trucks and goods carriers

This is on top of all the vehicles that ply within the region every day.

Further, multiple studies conducted by (TERI, CSE, SAFAR, etc.) regarding emission Incidence (contribution to pollution), identify the transport sector as the single largest local source of pollution in Delhi, particularly during winter when atmospheric ‘inversion’ traps pollutants within the region.

• Overall Contribution: Vehicles contribute approximately 40% to 50% of the PM2.5 (fine particulate matter) pollution originating from local sources in Delhi

• NOx Emissions: The transport sector is responsible for a staggering 81% of Nitrogen Oxide (NOx) emissions in the region

Then, there is the impact of winter Impact. While traffic volume remains relatively constant during the season, the incidence of pollution per vehicle rises in winter because cold air and low wind speed prevent tailpipe emissions from dispersing. This “trapping” effect turns the city into a gas chamber even if the number of cars remains the same as in summer.

Manufacturing Pollution

Now, let us look at how Industries play a part in contributing to pollution. Based on reports from the Central Pollution Control Board (CPCB), Commission for Air Quality Management (CAQM), and TERI (The Energy and Resources Institute), the National Capital Region (NCR) is a massive industrial hub containing approximately 1.2 to 1.5 lakh (120,000–150,000) registered industrial units. However, the distribution is uneven, with the vast majority being Small Scale Industries (SSIs).

• Delhi (NCT) – The City:

  • Registered Units: There are 33 planned industrial areas (e.g., Okhla, Naraina, Bawana, Narela, Patparganj) in Delhi NCR containing roughly 25,000 to 30,000 active industrial units

  • The “Hidden” Number: A major issue is ‘non-conforming’ or illegal industries operating in residential areas. A 2018 survey by the Delhi State Industrial and Infrastructure Development Corporation (DSIIDC) identified nearly 51,837 such units operating illegally, often in zones like Vishwas Nagar and Gandhi Nagar

  • Key Sectors include garment/textile dyeing, steel pickling, electroplating, and electronics refurbishment

• Wider NCR – The Industrial Ring:
  The bulk of heavy and polluting industry is located just outside Delhi’s borders in the neighboring states.

  • Haryana Sub-Region: Accounts for the largest share (~50% of NCR’s industries)

    • Hubs include Faridabad, Gurugram, Panipat (Textiles/Dyeing), Sonipat and Rohtak

  • Uttar Pradesh Sub-Region:

    • Hubs include Ghaziabad (Iron & Steel, Engineering), Noida/Greater Noida (Electronics, Manufacturing), Meerut and Muzaffarnagar (Sugar/Paper mills)

  • Rajasthan Sub-Region:

    • Hubs include Bhiwadi and Alwar. Bhiwadi is frequently cited as one of the most polluted industrial towns in the region due to its high concentration of manufacturing units

Industry is the leading source of pollution in the wider NCR, whereas in Delhi city proper, it is secondary to transport and dust.

• Pollution Contribution (In Delhi City): Industries contribute roughly 27% to 30% of the PM2.5 and PM10 load locally. This is lower than transport because Delhi has banned the most polluting fuels

• Pollution Contribution (In Wider NCR): In the surrounding NCR districts, industry is the #1 polluter, contributing approximately 40% to 44% of the total PM2.5 load

• Specific Pollutants:

  • Sulfur Dioxide (SO2): Industries (especially power plants and those using coal/oil) are responsible for over 46% to 70% of the SO2 load in the region

  • Nitrogen Oxides (NOx): Significant contribution, though second to vehicles

However, to combat this, the CAQM (Commission for Air Quality Management) has enforced a strict ban on use of dirty fuels (coal, furnace oil, pet coke). As of 2024, industries in NCR are mandated to switch to Piped Natural Gas (PNG) or Biomass.

Subscribe now

But the pollution incidence remains high during winter because of illegal/unregistered units (the ~50,000 mentioned above), which often continue to use cheap, dirty fuel (waste oil, rubber, plastic) clandestinely to avoid detection.

Building Pollution

Construction is not a ‘silent’ polluter; it is the dominant source of dust in the region. Construction activities are another critical yet often unmanaged source of pollution in the Delhi NCR region. While vehicle emissions and sometimes industries and agriculture grab headlines, Construction and Demolition (C&D) activities are the primary drivers of PM10 (coarse dust particles), which acts as a carrier for other toxic pollutants.

Based on data from TERI (The Energy and Resources Institute), CPCB (Central Pollution Control Board), and CSE (Centre for Science and Environment), here is the breakdown:

• PM10 Contribution: Construction dust, combined with road dust re-suspension, accounts for 30% to 42% of the total PM10 load in Delhi NCR (varying by season). It is the single largest source of coarse particles

• PM2.5 Contribution: While vehicles dominate PM2.5 incidence, construction activities still contribute approximately 15% to 17% to the finer, more deadly PM2.5 levels, primarily through cement dust and diesel emissions from heavy construction machinery (cranes, excavators, generators)

• Seasonal Variance: The impact is higher in summer due to dry conditions and high winds dispersing loose soil. In winter, this dust mixes with moisture and vehicle emissions to form the thick ‘smog’ layer that traps pollutants close to the ground

Moreover, the pollution is not evenly spread; it is concentrated in specific ‘high-growth’ zones where land is being broken for massive infrastructure and real estate projects.

Areas around Dwarka Expressway, Noida, Greater Noida, Ghaziabad, Jewar Airport, and other micro-markets in Delhi NCT are major hotspots adding to this incidence.

So, how much construction waste is produced in Delhi & what is its density?

• Daily Waste Generation: Delhi alone generates approximately 5,500 to 6,000 Metric Tonnes (MT) of C&D waste every day.

• The Recycling Gap: Despite having processing plants (e.g., at Burari, Shastri Park), reports indicate that only about 14% of this waste is effectively recycled or utilised. The rest is often dumped illegally on roadsides or in low-lying areas, where they dry up and become airborne dust again

• Project Density: The scale is massive. As of 2024, CAQM mandates that all projects on a plot area above 500 sq. meters must register on a central web portal for remote monitoring. Thousands of such sites are currently active, creating a ‘dust bowl’ effect in developing sectors.

Critical Factors

Now comes the more critical part. How the urban spaces we live in are designed to store pollutants rather than let nature do its work. In the context of Delhi (NCT) and the wider NCR, population and residential density act as a ‘pollution multiplier.’ While density itself does not emit smoke, it fundamentally alters how pollutants are generated, trapped, and concentrated.

Delhi is one of the most densely populated cities on Earth (average ~11,320 people per sq. km, but reaching ~36,000+ per sq. km in districts like North East Delhi). Here is how this extreme density exacerbates the pollution crisis, based on urban planning assessments and environmental studies (CSE, IIT Kanpur).

The ‘Street Canyon’ Effect (Trapping Pollution)

In high-density residential areas, particularly Delhi’s ‘Unauthorised Colonies’ and ‘Urban Villages’ (such as Shahdara, Uttam Nagar, Sangam Vihar, etc), buildings are constructed with little to no spacing.

• The Mechanism: Narrow streets flanked by continuous multi-story buildings create a ‘Street Canyon’

• The Result: These canyons disrupt natural wind flow. Even if there is a breeze at a higher altitude, the air at street level remains stagnant. Vehicle emissions and dust get ‘locked’ between the buildings, leading to local AQI readings that are often significantly higher than the city average.

The Waste Management Failure (MSW Burning)

High density urban areas directly correlate with high waste generation, but inversely correlate with collection efficiency.

• Logistical Blockage: In extremely dense areas (like Old Delhi or parts of East Delhi), lanes are too narrow for standard municipal garbage trucks to enter

• Consequence: This leads to the piling up of Municipal Solid Waste (MSW) in local dhalaos (open dumps)

• Pollution Link: When waste isn’t collected, it is often burned openly by local residents or sanitation workers to reduce volume or provide warmth in winter

  • Data Point: An IIT Kanpur study identified MSW burning as a key source of toxic chlorides and PM2.5, contributing roughly 5-10% to the city’s pollution load, but creating ‘hyper-local’ toxic zones in dense neighborhoods

Traffic Congestion and Idling Emissions

Further, density dictates traffic flow. In high-density zones, the ‘Road-to-Population’ ratio is extremely poor.

• Stop-and-Go Traffic: High residential density creates massive demand for movement in confined spaces. This leads to chronic congestion.

• Idling Emissions: Vehicles moving at crawling speeds (under 20 km/h) or idling at jams burn fuel inefficiently.

  • Impact: An idling car emits significantly more NOx and Carbon Monoxide than a moving one. In dense zones, the emission intensity per kilometer is 2x to 3x higher than in low-density zones (like Lutyens’ Delhi or Shanti Path).

Domestic Biomass Burning (The Slum/Cluster Factor)

Delhi’s density includes high-density low-income settlements that are called JJ clusters, or slums.

• Fuel Usage: While most of Delhi has shifted to LPG/PNG, the floating population and poorest demographics in these dense pockets often rely on biomass (wood, dry leaves, cow dung) or coal for cooking and specifically for heating during winter.

• The “Hearth” Effect: Because these clusters are packed tightly together, thousands of small fires burning simultaneously create a concentrated ‘smog cloud’ that sits low over the settlement and drifts into neighboring areas.

The Urban Heat Island (UHI) Effect

High residential density means more concrete/asphalt and less green cover.

• Thermal Mass: Dense concrete structures absorb heat during the day and release it slowly at night.

• Meteorological Impact: This creates a ‘Heat Island’ where the city is significantly warmer than the surrounding rural areas.

  • Air Circulation: This temperature differential alters local wind circulation patterns. It can create a localized low-pressure zone that sucks in pollutants from the industrial periphery (NCR) and prevents them from dispersing, effectively creating a ‘pollution dome’ over the densest parts of the city.

The Density-Pollution Correlation

The impact of density is visible when comparing different districts of Delhi:

• Planned / Low Density (e.g., New Delhi/Lutyens):

  • Density Status: High Green Cover, Wide Roads

  • Pollution Characteristic: Pollutants disperse faster; lower local AQI

• High Density / Planned (e.g., Dwarka, Rohini):

  • Density Status: High Rise, Wide Roads

  • Pollution Characteristic: Moderate dispersal, but high vehicle emissions

• High Density / Unplanned (e.g., Anand Vihar, Seelampur):

  • Density Status: Narrow lanes, 100% Concrete

  • Pollution Characteristic: Highest Pollution. Trapped air, waste burning, and congestion create toxic hotspots

The Perfect Storm

Delhi is, in essence, a victim of a fatal collision between its ancient geography and its modern ambition. The capital’s crisis is not merely a seasonal disruption; it is the mathematical inevitability of placing a high-growth engine inside a geological trap.

The evidence outlined above points to a terrifying synergy. We have constructed a megacity of over 7 crore (70 million) people—roughly the population of the United Kingdom—and placed it inside a ‘geological bowl’ that nature designed to capture, not disperse. The Aravalli Ridge acts as a wall, and the Himalayas as a lid, creating a natural atmospheric prison.

Into this stagnant basin, the region pours a relentless toxic cocktail: the exhaust of 30 million vehicles, the sulfur from a ring of 1.5 lakh industrial units, and the silica dust from an endless construction frenzy.

This is a crisis of design as much as it is of regulation. The ‘Street Canyons’ of low-income Delhi and the ‘Heat Islands’ of the concrete expanse ensure that what is emitted locally, stays locally.

We have built a city where the wind cannot flow, where 5,000 tonnes of waste is generated daily with nowhere to go but up in smoke, and where luxury high-rises in Gurugram sit shrouded in the dust of their own creation. The shift to PNG in factories or the banning of old diesel cars are well-intentioned manoeuvres, but they are localised bandages applied on a regional hemorrhage.

Ultimately, Delhi is fighting a war against its own location and lifestyle. The geography—the depression of the Yamuna floodplains and the elevation of the Ridge—cannot be changed. Therefore, the burden falls entirely on the human footprint.

Until the region addresses these root causes and plans for the ‘hidden’ illegal industries, the unpaved dust bowls of new infrastructure, and the crushing density that turns neighbourhoods into gas chambers, the air will remain toxic and heavy with the weight of collective failure. The problem is not insurmountable. What it lacks is a solution designed with a mixture of imagination, innovation, institutional capacity to foster change, and the political will to make sure it happens.

Delhi is not facing an anomaly; it is living in the logical outcome of unplanned urbanisation colliding with un-forgiving geology.

The bowl is full, and we are still pouring.

Subscribe now