© Sam Seasley/eltps
My book
Super Imperialism was about how the United States has gained a free lunch by establishing the dollar as international reserve currency by replacing gold. I also showed that the
U.S. balance of payments deficit is almost entirely military related to support its 800 bases around the world. Ending the gold-exchange standard in 1971 created a situation in which the excess U.S. dollars thrown of [sic off] by the U.S. payments deficit
end up in foreign central banks.For these central banks, the inflow of surplus dollars poses the problem of what do we do with them. Central banks don't buy stocks and bonds, or control of corporations, because that is risky and also does not directly help their own economy.
So central banks buy US Treasury bonds and bills - IOUs of the U.S. Government. For the United States, the money that is spent on running a balance-of-payments deficit on account of the military and on American investors buying Chinese stocks and Chinese companies,
dollars are recycled back to the United States to buy US Treasury bonds.That is how the U.S. balance of payments deficit serves to finance the domestic government budget deficit.
The larger the U.S. balance of payments deficit grows as the U.S. spends more militarily and politically around the world, the more foreign central banks end up financing the domestic budget deficit.
That frees the United States Treasury from having to balance its budget to avoid having to borrow from US investors. More and more of the U.S. federal debt has been owed to foreign central banks.
That means that foreign countries are, in effect, financing the costs of surrounding them(selves) with the 800 U.S. military bases. This enables the United States to make military threats, in case they cannot conquer you intellectually by making you follow the University of Chicago and IMF financialization policy.
Another reason not to use the dollar is to avoid taking the risk of being victimized in the way that the United States has treated Iran and other countries. U.S. strategists have threatened to isolate foreign banks from using the Swift bank-clearing system. They have imposed sanctions on European investors in the Nordstream gas pipeline, and had imposed unilateral penalties on other governments that do not favor U.S. investors.
The U.S. strategy is to control your economy in order to force you to sell your most profitable industrial sectors to US investors,
to force you to invest in your industry only by borrowing from the United States.So the question is,
how do China, Russia, Iran and other countries break free of this U.S. dollarization strategy? As now constituted, dollarization creates a circular flow that finances American military spending by forcing the costs onto foreign central banks holding dollars.
The solution obviously is to avoid using dollars in order to break free of American control of your economy. To do this, you have to have a non-Dollar currency. This currency alternative has to be
large enough to have a critical mass, so that it can be used internationally. That's why China, Russia, Iran and their allies are trying to create their own currency area, incorporating largely the Shanghai Cooperation Organization.
The aim is denominate your foreign trade, investment and government spending in your own currency.It is necessary to break away not only from the U.S. dollar, but also from the International Monetary Fund.
The objective of U.S. and IMF monetary policy is basically to make your economy much more expensive and inefficient than that of the United States. Its government runs a budget deficit and balance-of-payments deficit by creating its own money.
It does not expect or intend to repay its debt. Other countries are to treat it as their own monetary backing, in place of gold.
But outside the United States, countries are told to finance their budget deficits by selling off whatever is in their public domain - namely, their land, real estate and natural resources, their commanding heights in the form of basic infrastructure and electric utilities.
The ideal the United States would like China to do is to let U.S. investors do to it what they did to Russia after 1991. They told Russia that it needed to back its domestic Ruble issues by holding an equivalent amount of U.S. dollars, in the form of private dollar loans or dollar-denominated U.S. Treasury securities. This involved borrowing dollars from the United States instead of simply issuing domestic rubles.
Russia paid 100 percent interest a year to U.S. investors in 1993-1994.Yet Russia did not have enough foreign exchange to pay domestic ruble-wages or to pay for domestic goods and services. But neoliberal advisors convinced Russia to back all Ruble money or domestic currency credit it created by backing it with U.S. dollars. Obtaining these dollars involved paying enormous interest to the United States for this needless backing. There was no need for such backing.
At the end of this road the United States convinced Russia to sell off its raw materials, its nickel mines, its electric utilities, its oil reserves, and ultimately tried to pry Crimea away from Russia.Suppose China would follow the U.S. plan. At a certain point it will be asked to sell off Macau and Hong Kong as a US military base. It will be advised to sell its information technology to the United States. And politically, U.S. diplomacy would like China to divide itself into three or four countries, starting with Xinjiang as a separate country.
This divide-and-conquer strategy aims at carving up China, and it uses financial policy to do this.The U.S. has discovered that it does not have to militarily invade China. It does not have to conquer China. It does not have to use military weapons, because
it has the intellectual weapon of financialization, convincing you that you need to do this in order to have a balanced economy. So, when China sends its students to the United States, especially when it sends central bankers and planners to the United States to study (and be recruited), they are told by the U.S. "Do as we say, not as we have done."
The United States is not telling China or Russia or third world countries or Europe how to get rich in the way that it did, by protective tariffs, by creating its own money and by making other countries dependent on it. The United States does not want you to be independent and self-reliant. The United States wants China to let itself become dependent on U.S. finance in order to invest in its own industry. It wants Chinese corporations to borrow from the United States, and to sell its stocks to US investors just like Khodorkovsky in Russia was trying to sell Yukos oil to Standard Oil, and essentially turn Russia's oil reserves to U.S. investors.
The United States is trying to convince China that its tax system should be based on raising your cost of labour. The objective of the United States is to injure China, to make it a high-cost economy by imposing the value-added tax, a VAT, which will increase the cost of consumer goods.
The aim of this anti-industrial tax policy is to make you pay your labor a high enough wage to afford to pay the taxes on consumer goods.The United States
could never pass such a tax domestically. There would be a revolution. The amazing thing is that there is no revolution in China. It and other countries have been gullible in accepting the logic of U.S. economists teaching the students you send over, hoping that they will draw up a plan for China along neoliberal lines.
The neoliberal plan is not to make you independent, and not to help you grow except to the extent that your growth will be paid to US investors or used to finance U.S. military spending around the world to encircle you and trying to destabilize you in Sichuan to try to pry China apart.
Look at what the United States has done in Russia, and at what the International Monetary Fund in Europe has done to Greece, Latvia and the Baltic states. It is a dress rehearsal for what U.S. diplomacy would like to do to you, if it can convince you to follow the neoliberal US economic policy of financialization and privatization.
De-dollarization is the alternative to privatization and financialization.
Reader Comments
I posted another Russian joke. Go enjoy!
Russian prosecutors intervene after newspaper kiosks found selling souvenir Hitler stamps in a city occupied by Nazis in WWII
The Russian city of Oryol has removed souvenir postage stamps featuring Adolf Hitler's portrait from local newspaper kiosks. The country has stringent laws on Nazi propaganda, but the producers...Due to this crooked arrangement, we now have some individuals and Corporations, that actually have more money than most Nations on Earth, who dictate their private World changing plans at will.
Surely, it stands to reason, individuals and Corporations, cannot possibly, ethically, own more productive capacity, from where this wealth is derived, land, factories, and people labour, than a Nation of people also possessed of near limitless productive means? Yet that is our situation.
All we need is a system to print and issue money, and to pay it only to those who must spend it immediately , into circulation, in order to live; doing this would not create "inflation", it would not, by it's physical presence alone, cause further increases in the amount of money in circulation (one meaning of inflation), and it would not increase prices ( the other meaning of inflation). Money is and should be recognised for what it truly is; first and foremost, it is the "oil" which allows the economy to work; secondly it facillitates and encourages entreprenueurs to need more of it, in order to give expression, to the urge to grow and get rich.
We need to re-capture the production of money, take it back from those who would, and do, enslave us in debt, debt which is totally unneccesary, because each Nation, or group of co-operating Nations, can provide it for themselves, at no cost,and also rid themselves from the yoke of enslavement.Amen It Is Written.
All Governments and Nations of the world must take back their Sovereign rights that enable them to create their own supply of domestic, Interest free, Debt free, Social Capital; American State North Dakota still does this and they are free of the financial woes depressing the rest. The creation of money and credit must be returned to our Democratic Parliament; Private Banks, Corporations and Financial Institutions, must not control this important economic function.
This first step eliminates untold quanta of inflation (rising prices)and Government debt.
Every Sovereign independent Nation, or co-operating group of Nations, will then use this Social Capital to totally eliminate Poverty and deprivation in their communities by issuing to all that need it a Social Wage, structured to provide a basic break even living standard, a wage that will continue until death. The first duty of Government is to take care of it's population; A Government controlled and issued Social Wage is the only way to successfully do it.
The Government will finance all conceivable Public Support and Infrastructures, Health, Housing, Education, etc.
The Capital so created will be the sole means of financing the Nations Money Supply. This will become a "trickle Up" economy, replacing the nonsense and fraud of trickle down.
No Capital or subsidy will go to Private Enterprise directly, for if it did it would cause serious inflation (in both currency and rising prices). Capital created, issued, and "spent" directly into circulation, as described above, would not create inflation (rising prices).
There would be no interference with Private Free Enterprise. The Private Sector could employ those in receipt of the Social Wage by offering wages, conditions, and hours of employment capable of inducing people to do the work offered; the wage so earned would supplement the Social Wage, not replace it. Thus inducing mutually agreed working conditions at much lower wage costs to employers. This will create a community of independent wage earners , no longer working as wage slaves, always in fear of job loss and penury. Will this not negate the export of jobs to China etc.?
Thus far no or very little taxpayer money has been expended. The burden of support for the poor and the provision of social and community infrastructure has been lifted from the backs of Corporate enterprise and the wealthy.
Control of Social provision has passed out of the hands of those not willing to vote for higher taxation to facilitate it. Working people are no longer at the total mercy of Market forces, that all too often deprive them of livelihood and take away hard won assets such as homes and pension funds. Working people can more easily change employment to escape unsatisfactory masters and conditions.
Price and cost inflation will be substantially reduced by ceasing tax collections from wage and salary earners. Instead individuals will pay tax only once, and that when they are deceased, when the taxman will be empowered to asses deceased estates for tax liability. Avoidance will place the whole estate in danger of confiscation. Is there a better time to pay tax other than when we are dead?
Corporations and all other commercial enterprise will pay an annual flat rate tax levied against total net profits. Avoidance, Tax Havens, and imaginative minimisation schemes will not be allowed. Tax allowances will be strictly limited to running,overheads and development expenditures.
Government will not subsidise free enterprise, this great engine, by it's own rules, must stand or fall on it's own merits, utilising it's own Capital, raised through the "Markets".
The value of Sovereign currencies for international purposes will be decided by co-operating Governments, taking into account the requirements concomitant with considerations related to employment levels and relative standards of living between co-operating Nations, and by Supply and Demand balancing. Exchange rates will be fixed, stable, out of the influences of manipulators and traders, and other market manipulators.
There is much more to be said in explanation, however your own knowledge and experience will enable you to foresee the many attributes such a system delivers. My title for it is "THE UNIVERSAL ECONOMY" for it will work anywhere and for every person, fairly and equitably.
A very small "coterie" of Bankers and money power people is holding the world to ransom, they spend untold quanta of money spreading lies about the evils of Social Capital, and the "Printing" of money, for their own narrow self interested purposes; populations around the world are in mortal danger because they are at mercy and threat of money lenders and commodity traders, or dire poverty, somehow the money power must be diluted.This dilution will come about when we elect independent politicians who will stop our representative system from being dominated by Corporate and private billionaire funding, intended to create and bend the World to their selfish undemocratic intentions; often requiring many death sacrifices, violent destructive War, resource theft , and all without regard for human-rights and the general well-being of innocent civilian populations. We need to change our system from being "representative" to being one of "participatory"; and return the Economy to one operating on sound money. This formula, most importantly,takes care of the constantly increasing costs due to population growth and other demographics.
Have you read this far? then you have my thanks, your commentary would also be most appreciated.
I also agree with independent representatives who could be chosen by random draw. Maybe representatives are voted for at local levels only. That provides a pool for random selection to higher levels of government.
One thing I thought about was a country’s resources (ports railway lines coal oil minerals etc) should be managed for the benefit of all; for which a negotiated management fee is paid.
Another is there must be protection provided to stop corporations producing harmful products (to humans and the environment); in other words a stop to profits without ethics. Putin told his oligarchs in 1990s they could keep their companies as long as they look after employees customers and it is good for the Country. This should be the limit imposed on all corporations.
I am sure there is much more which could be discussed. The more people who start to think this way the better. If we want it it will materialise.
They are anti-human and want most of us gone, along with our cultures and national states.
President Lukashenko of Belarus was offered $940 million by the IMF to impose lockdowns on Belarus and destroy his country's economy, like so many elsewhere have done. He refused.
PUT TWO AND TWO TOGETHER: Suppose the bankers and the IMF, who can create unlimited amounts of money at the stroke of a keyboard, have been handing out money wholesale to all the politicians of the world, to impose lockdowns and destroy their Western economies. (I don't have any proof other than Lukashenko, but I suspect this is so.) The bankers and oligarchs know perfectly well that all those billions are utterly meaningless, they don't exist in reality, and when they crash the economies and "bankrupt" all the banks, anyone with cash in a bank will be left with nothing. Zilch. Nada. Zippo. And there will be scores of millions of homeless people without jobs or any resources to live on. Mass death of the useless eaters.
The only people in a stable situation will be those with tangible, physical resources - land, gold, corporate stock representing corporate assets, and so on. Accounts in banks representing virtual money will be worthless.
Then what happens is, we Build. Back. Better. (You think that is just a vapid and meaningless slogan? Think again. It has meaning.) The Government, (which in reality is just a front for the oligarchs and corporations) nationalizes everything, and the public owns nothing. Wages are fixed for each task one performs, from janitor to computer programmer, and are paid by the State into your State account. From this you pay electronically for everything you buy, from food to vacations. Your every move requiring money is recorded, and approved. No dissident literature, websites, or persons will be allowed - their accounts will simply be frozen.
Your brainwaves will be examined periodically after various stimuli, like a photo of the President, are shown to you, to see if you are harboring anger or any negative emotions. If so, you will be "re-educated." Your children's brainwaves will be examined while they are asked questions about what is said in the family, to see if they are covering up parental dissent. And indoors, your speech will be monitored at all times.
IT WILL FAIL. Why? Because, after they have crashed the economies of the West, and before they can Build. Back. Better, China and its satellites will have overtaken the West and seized economic and moral control of the world. (Five-to-ten years from now. At that time, not a soul on the planet will remember this posting.) Events in China are moving too fast for the Western Oligarchs to succeed in their plan. All they will achieve is the utter destruction of Western Civilization, and its conquest and replacement by Eastern Civilization.
Which is not such a bad thing. China has had a marvelous series of civilizations going back 10,000 years. They will in future collect artifacts of Western civilizations, as we collect their artifacts, and admire them in their museums. America and Europe will be the Third World of the future, a once-glorious culture soon to disappear, like the Incas or the Aztecs.
I'm too old to expect to see it. But others will. And nobody will remember these words.
It is interesting to watch China (together with Russia and others) go from strength to strength while all western states seem hell bent on their own destruction. I guess that is what Empires do when they start to self implode. It is a bit like watching a teenager continue with drug addiction when everyone else can see where that will end.
But we are free will sentient beings and we are capable of so much more. We are now awakened and can see clearly how destructive the plans of the wealthy are. It is time for us who are privileged to know to start focusing on solutions. What do we want? What do we think will work?
True, human beings are capable of so much more. This manifests in the early stages of Empire, before it becomes an Empire. Idealism, generosity, courage, morality, and strength of character - these are manifest in an up-and-coming society, which builds an Empire through setting an example which others (subject societies) are happy to join and become a part of. But this very success causes the greedy to rise up and start the process of corruption, which eventually leads to the situation described above. It happens each and every time. The goodness of human nature is corrupted by the evils of human nature. It's the old parable of God creating good, and Satan working to destroy it. It is the two sides of our nature.
The two sides of human nature is also a choice. What I see as different at this moment is the potential of a great awakening and I believe that can win over the Great reset. It all depends on our desires. But thanks for the conversation.