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Viewed 1104 times 2017-3-25 23:55 |System category:Economy| commercial, management, currency, designed, reserve

USA is the leader state of the global community and holder of the reserve currency status. It is USA that designed the post-WW2 economic systems - Bretton Woods Systems and USA continues to control the global economy to this day. USA, as leader state, holder of reserve status and the architect of the post-WW2 systems of monetary management and the rules for commercial and financial relations is ultimately responsible for the state of the world today. The world is the way it is today because of the design and management of the USA since WW2.

England and their leading economist John Maynard Keynes suggested a far more fair, just and sustainable plan at the Bretton Woods Conference for how the capitalist economy of the so-called 'free world' ( not Russian/communist ) would be managed after WW2.

Keynes' ideas included a global reserve currency that would have been called the Bancor rather than the US idea of making their own national currency the USD the reserve currency, and Keynes' plan also included an idea for a global bank which would have been called the International Clearing Union that would have helped each nation avoid large surpluses or deficits and encouraged growth and development. Instead of the International Clearing Union the USA decided to create the IMF and World Bank which have both failed miserably to encourage growth and development in so-called 'developing', or what the USA used to refer to as 'Third World Nations'.

Keynes and the rest of the English representatives at the Bretton Woods meeting were shocked when they heard the plans of the Americans because they quite clearly gave USA total control over the so-called capitalist 'free world' but the English were in no position to argue with the Americans since USA was the strongest allied nation left standing after WW2 due to the fact that USA entered the war late against the Nazi after the rest of the allies and Russia had done all the hard fighting and the Nazi were already broken. USA did not have reserve currency status before WW2 and was not the leader state of the global community but the damage suffered to England and the nations of Europe during WW2 made USA the most powerful capitalist nation. The English were shocked by the audacity of the American plan but they had no choice other than to accept it even though the plan gave all the power to the Americans.

By 1971 the USA had bankrupted itself despite the fact that the Americans had given themselves the exorbitant privilege of the reserve currency status and designed all of the international capitalist systems of monetary management and the rules for commercial and financial relations to favour USA at Bretton Woods in 1944.

After WW2 the Russians were the leader state of the communist world and the USA was leader state of the capitalist 'free world'. USA and Russia fought a war against each other in poor 'third world' nations which was a battle between the capitalist and communist worlds - the so-called 'Cold War'. When USA went bankrupt in 1979 they were fighting and losing against communists in Vietnam. To prevent a run on the USD the US President Richard Nixon declared that USA would no longer honour their pledge to capitalist governments to redeem the USD for gold and this declaration is known as 'Nixon Shock'. The Americans pledge to redeem the USD for gold created the fiat currency system of floating currencies that is in place today.

It is claimed that due to the fact that the American pledge to redeem the USD for gold was a key component of the of the Bretton Woods systems, that the US refusal to honour their pledge marked the end of Bretton Woods and while that may be true in some regard the fact is that rest of the US design of the capitalist international economic systems remained intact - we still have the World Bank and IMF for example - but instead of the USD and capitalist nations currencies exchange rates being fixed to gold, Nixon Shock created the fiat system of floating exchange rates. This situation gave USA even more power than they had under their original world monetary management systems design because now USA could use US controlled Credit Ratings Agencies and the World Bank/IMF to decide the value of the currencies of other nations.

With the fall of the USSR in 1991 the capitalist world led by leader state USA had defeated the communist world and the formerly communist nations came under the control and of the American designed economic systems which still included the key Bretton Woods institutions such as the IMF and World Bank and the US controlled floating exchange rate system that USA replaced the fixed exchange rate system with. So with the end of the so-called 'Cold War' the so-called capitalist 'free world' was the entire world apart from some stubborn hold outs like Cuba. USA became leader state of the world and sole 'superpower'.

To ensure that the USD remained the reserve currency the USA sent diplomat Henry Kissinger to the Middle East to convince Middle Eastern nations to only sell their oil in USD in exchange for mafia style US military protection and this system was called the 'petrodollar'. National Governments and corporations were forced to keep reserves of USD to purchase oil and since oil is the most important commodity the reserves of USD led to the USD being the only currency used in all international trade. So under the petrodollar the USD was no longer backed by gold like under the initial Bretton Woods Systems - under the Petrodollar systems the USD became backed by the US military which was giving protection to the Middle Eastern oil producing nations that agreed to sell their oil in USD.

Since the fall of USSR and the communist world in 1991 the 'elite' capitalists led by leader state USA have used the victory of capitalism to promote privatization of the capitalist governments which had achieved essentially all of the socialist ideals under 'democratic capitalism' after WW2 through nationalization of utilities and key industries and the establishment of the welfare state.

The ultra capitalist USA itself was forced to establish a welfare state and to nationalize certain parts of the economy to prevent the masses from revolting but due to their 'libertarian' history and culture, and fact that USA had the reserve status and control over the worlds economic systems - ideas such as single payer universal healthcare and the idea that a citizen has the right to healthcare did not take hold in USA, and USA was able to do a much better job than other capitalist western nations to limit union power and to promote the idea of insurance over welfare.

If you contrast the English union power and the nationalization of national utilities and key industries, and the establishment of the NHS, as well as the development of affordable public housing in England with the welfare state of USA it is very clear that socialist ideals took hold in the UK a lot stronger than they did in USA. The other western capitalist nations of Europe and Australia/New Zealand had societies that valued socialist ideals like the UK before the fall of the USSR but the capitalist ratchet that the victory of the Cold War made possible has allowed capitalists - led by the Americans - to Americanize our societies and break down our welfare states and privatize our national utilities and assets.

So the victory of capitalism that marked the end of the Cold War was used by the 'elite' capitalists led by ultra-capitalist USA to take away the security of the nationalization of national utilities/assets and the welfare states that had been established in non-US western capitalist nations. The victory of capitalism and the wave it created allowed neoliberal capitalist 'elites' to successfully argue that the free market and privatization were God and all western political parties on both the left and right began to reflect that in their policies.

Due to established union power and the fact that the masses of all non-US western nations had embraced socialist ideals under democratic capitalism between the end of WW2 and the fall of the USSR the capitalist ratchet slowed after the initial rush of privatization/Americanization but ideas like universal healthcare funded by single payer systems, and the removal of workers rights and protections, and reduction of lower skilled worker pay rates were far more difficult for the 'elite' capitalists to wind back until the GFC which allowed capitalists to argue that all of our western governments were now bankrupt and the reason was the welfare state and union power, and the only way to fix this was through 'budget repair' or 'austerity' to cut the costs of the welfare state which would finalize the Americanization of our economies. In addition the capitalists came up with this 'shared economy' idea which is a US 'elite' funded global initiative to attack national minimum wages and the rights and protections that workers enjoy in non-western nations due to our histories of embracing socialist ideals under democratic capitalism between the end of WW2 and the end of the 'Cold War'.

So as we all know the USA has used the US military to protect the status of the USD. The US invaded Iraq because of the fact that Saddam was threatening the petrodollar system by deciding to sell Iraqi oil in the Euro instead of the USD. The reason the USA has made war in the Middle East is to protect their status as reserve currency holder and their right to print as much USD as they please. The USD is backed by the US military and that is a fact.

So with all of these wars in the Middle East and Northern Africa the USA has created the refugee crisis that is causing so much trouble in the world. In addition to the millions of refugees fleeing the war and devastation of the Middle Eastern and Northern African nations that US wars are responsible for we also have many millions from developing or 'third world' nations that wish to escape their poor nations and come to the west for better lives and these people are labelled as 'economic migrants' by US 'elites' and friends.

The main reason the nations these people that US 'elites' call 'economic migrants' are coming from are so poor is because of the design and mismanagement of the global economic systems by the USA. The US economic systems for global monetary management are flawed by design to give USA all the advantage and control, and to ensure that USA maintains its status as leader state of the so-called 'free world' and holder of reserve currency status.

The US Bretton Woods Institutions of the IMF and World Bank have failed miserably to reduce poverty and promote growth potential in developing or 'third world' nations and the fact is that the capitalist 'elites use these Bretton Woods institutions to keep poor nations poor and to enslave their citizens as debt slaves owned by the capitalist 'elites' and their capitalist beacon the USA. The IMF keeps bad governments in place by giving them loans as long as the governments agree to do as the capitalist 'elite' tell them and open their nations up to 'free market' exploitation. The USA prefers to keep poor nations poor so that their populations are a source of cheap labour for western capitalists. The IMF and World Bank have zero interest in poverty reduction let alone actually ending global poverty, they exist to protect the power and status of the USA.

USA uses the floating exchange rate system to attack nations that get out of line and to keep the poor developing nations down. Leader of South Africa Jacob Zuma is certainly not the best leader in the world but he is correct that the US controlled Ratings Agencies are used by the western capitalist 'elite' to attack poor nations and to keep them down. Zuma has said that he believes that US controlled Ratings Agencies are used by USA and the capitalist elite to "smash the BRICS alliance' and he is on the money.

The USA and the capitalist elite do use the floating exchange rate system and US controlled Ratings Agencies to attack BRICS nations and of course the Ratings Agencies are used to attack the 'third world' nations of the NAM alliance ( Non Aligned Movement ) and keep them down as well. If the USA gets bad economic data the US economists spin it so that the data is good news and will mean something like stimulus money, and if it is good then it is good. All news is good news for USA. Yet if there is a small protest in a nation like Turkey that has not been doing as USA and capitalist 'elites' tell them then USA will tell us that the Turkish currency just dropped in value due to the 'VIX' or 'volatility'.

Capitalists can argue that citizens of 'third world' nations are poor due to their own fault for electing governments that mismanage their economies and societies but the fact is that the IMF keeps these governments in place by giving them loans as long as the governments do as USA/Capitalist 'elites' tell them. Bad 'third world' governments would fail without IMF loans that prop them up but as long as governments agree to do what USA tells them to do then the IMF will give them a loan. Since the GFC it is no longer just the poor nations that are in this situation but all of us western nations that have bankrupt governments too. Just look at how the IMF treated Greece for one example.

So since the global refugee crisis is ultimately the responsibility of the USA it is incredible that they have elected a US President that does not want to help refugees. After the capitalist 'elites' caused the GFC the USA printed trillions of USD 'QE' ( quantitative easing ) money to keep US stocks up and to create the illusion that the real US economy managed some kind of recovery. The Americans love to tell us that since they have reserve status they can never run out of money so it doesnt matter how many trillions they add to their national debt. USA is abusing the reserve status of the USD to live well beyond their means and they have mismanaged society to the point that they created the global refugee crisis. Yet they do not want to help fix it.

Since it is Europe that is having to deal with the majority of refugees wouldnt it make sense for USA to at least print some USD and send it to European governments in the form of aid to help deal with the refugee crisis? The USA is happy to print trillions so that USA can live beyond its means but if the UN says that it needs $46 billion for the worst humanitarian crisis since WW2 all of out bankrupt western nations that do not have reserve status have to pay?

The way the USA have designed the world economy to give advantage to themselves is not only unfair and unjust but it is a bad design that does more to keep developing 'third world' nations down than help lift them up. The USA has had a long time since WW2 to make the world a better and fairer place for all nations and to help the developing world reach growth and development potentials but all they have created is a global mess that they still sit atop of.

The USA way is not the only way and I have no doubt in my mind that the English plan that Keynes presented at the Bretton Woods Conference after WW2 of a Bancor global currency and an International Clearing Union would have led to a better, fairer, more stable and more prosperous global economy. In my opinion we could find schoolchildren that could come up with better and fairer global economic systems than the ones that the Americans have designed to give advantage to America.

All of a sudden we have the USA acting as if they are a victim of the system that they have designed and sit atop of. All of a sudden USA tells us that we all owe them money for the US protection that they have been giving us with the US military that protects the reserve status of the USD and allows the Americans to run up trillions in national debt and trillions more in unfunded liabilities. All of a sudden it is the USA that is telling us that we must respect their Core Values of all things. And all of a sudden the USA tells us that they do not want to help fix the global refugee crisis that they are responsible for creating. There are just no words for these Americans are there? The Americans are certainly exceptionally ludicrous.

It is a tragedy that the USA used the allied victory in WW2 to take control of the world and it is a tragedy the way they have mismanaged the global economy until now but thankfully there is a new hope in the approach to global trade of China. The Chinese know how it feels to be treated like 'Third World' people by the American capitalist 'elite'. Now that China has lifted itself to the status of global superpower we can see that their 'win-win - no strings attached' approach to global trade reflects the fact that China understand how it feels to be treated as a 'Third World' nation by capitalist 'elites'. It seems quite clear that China wishes to avoid the brutal and uncaring approach to trade with less powerful nations that the imperialist USA embraces.

The internationalization of the Yuan is succeeding but China has no intention of replacing the reserve status of the USD with their own national currency and taking the exorbitant privilege that the USA has enjoyed since WW2 for themselves. China seeks to help to bring about a fair and just basket reserve that does not favour any one nation and that gives all nations a seat at the table. China wants a inclusive globalized economy based on friendly, fair, win-win, no strings attached open trade.

The US way is certainly not the only way thank goodness because the US way is the clearly wrong way. The Chinese way is in the right direction and with the US side threatening tariffs and promoting protectionism the global community is fortunate indeed that China stands ready to take the torch from the USA to champion globalization, open trade and to help push for more fair and just global economic systems that do not give exorbitant privilege to the USA.

(Opinions of the writer in this blog don't represent those of China Daily.)




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  • Pink sunset 2017-12-18 06:24

    You should come and holiday in central western NSW. It is a good place for looking at the sun, moon and stars.

  • Pink sunset 2017-12-17 15:49

    Not in Beijing. There are too many buildings around where I live now. The sun, moon, and stars are hard to trace and the sky is refined to a small area. I guess an open space is necessary to discover the beauty of the sky.

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