In my research regarding the USD as global reserve currency, I came across some very telling remarks by US Congressman Juan Vargas, representing California's 51st District, including San Diego. Vargas serves on the Committee on Financial Services and the Committee on Foreign Affairs, so he presumably knows whereof he speaks. Here he is, framing up a question for Mark Zuckerberg regarding Facebook's proposed privatized currency, Libra:
One of the things I think that you're probably sensing from us is that the dollar is very important to us as a tool, a tool of American power and also a tool of American values. So we would much prefer to put sanctions on a country than send our soldiers there. As you know, the power that we have because of that, because the banking system is significant . . . So when something threatens the dollar, we get very nervous, and I think we should be, because that's something that again, has been very useful for foreign . . . How do I say it? Projecting American values in foreign power.The quoted segment begins 45:10 in the testimony.
The Vargas quote comes indirectly via Mike Krieger, whose views on the dollar's reserve currency status mirror my own:
You can't properly discuss the entrenched global paradigm without addressing the American empire, and you can't have a conversation about empire without discussing the monetary and financial system that keeps it all in place. . . . [W]e're already transitioning into a multi-polar world, in other words, the U.S. no longer holds a position of total planetary geopolitical dominance similar to what it enjoyed in the mid-to-late 1990s. Despite proclamations to the contrary, history did not in fact end. U.S. leadership became accustomed to getting virtually whatever it wanted around the world via overt violence, covert intelligence operations or economic coercion, but this is no longer the case in 2019. . . . [I]t's much harder to maintain global empire than to frustrate it at this point, but the U.S. maintains an enormous advantage when making moves on the geopolitical chessboard. It's not the ubiquitous military bases or advanced technology, but a more esoteric and stealth weapon — the U.S. dollar. The USD continues to dominate global financial transactions, which means the world can never truly be multi-polar unless this lopsided structural reality is dealt with. . . . The significance of the USD as a weapon was put into plain view a couple of weeks ago during Congressional hearings on Facebook's Libra project. . . . [N]ations committed to functioning as sovereign states have a clear choice. Figure out a way to transact smoothly on the world stage without touching the USD, or submit to being a client state. Since the latter is seen as unacceptable for an increasing number of nations, I believe the former will be figured out, and that it'll happen by 2025 at the latest. Whenever I say stuff like this people insist there's nothing ready to replace the USD as a global reserve currency. On this front I agree, but my argument isn't that another nation-state fiat is going to totally usurp the USD on the world stage in the years ahead (nor should anyone want that). Rather, my view is competing powers will figure out a way to avoid the dollar in an increasing percentage of global transactions simply because they have no other option in a world where the dollar's been fully weaponized to achieve U.S. geopolitical goals.
In recent research related to the US dollar's status as global reserve currency, I came across a fascinating excerpts from a 2015 speech by Qiao Liang, Major-General of China's People's Liberation Army, strategist, and author. Qiao has concluded that the US enforces the global reserve status of the dollar by any means, including war. Even if you don't find this theory particularly credible, it's still noteworthy that highly placed Chinese officials give it serious consideration.
Here's Qiao on the Iraq war:
Why did the Americans fight a war in Iraq? Many people would answer,For oil.However, did the Americans truly fight for oil? No. If they indeed fought for oil, why didn't they take a single barrel of oil out of Iraq? Also, the crude oil price jumped to US$149 a barrel after the war from a pre-war price of $38 a barrel. The American people didn't get a low oil price after its army occupied Iraq. Therefore, the U.S. fought the war not for oil, but for the dollar. Why? The reason was simple. To control the world, the U.S. needed the whole world to use the dollar. It was a great move in 1973 to force Saudi Arabia and other OPEC countries to install the dollar as the settlement currency for oil trades. Once you understand that, you can understand why the U.S. fought a war in an oil producing country. The direct result of fighting a war in an oil producing country was to increase the price oil. Once the oil price shot up, the demand for the dollar also went up. . . . I also want to tell everyone, the U.S.'s war in Iraq was not only for that goal. It was also to keep the dollar's hegemony. Saddam didn't support terrorists or Al-Qaeda, nor did it have weapons of mass destruction. But why was he still hung? It was because he played a game between the U.S. and EU. After the euro was created in 1999, he announced that Iraq's oil trade would be settled in euros. This angered the Americans, especially when many other countries followed suit. Russian President Putin, Iranian President Ahmadinejad, and Venezuelan President Hugo Chavez all made the same announcement. How could the Americans accept this? Some people may think what I said was a fairy tale. Let's take a look at what the America did after it won the Iraq War. Before they arrested Saddam, the Americans rushed to form the temporary Iraqi government. The first order that the temporary government published was to announce that the Iraqi oil trade switched from the euro back to the dollar for settlement. This showed that America was fighting for its dollar.
The redoubtable satirist CJ Hopkins,
author of the black-comic dystopian classic-to-be Zone 23,
responds to the comforting news that
the US military has opened
a Semantic Forensics research program
with the potential mission
detect malicious intent and prevent viral fake news.
Hopkins glimpses the future:
If you want a vision of the future, don't imaginea boot stamping on a human face — for ever,as Orwell suggested in 1984. Instead, imagine that human face staring mesmerized into the screen of some kind of nifty futuristic device on which every word, sound, and image has been algorithmically approved for consumption by the Defense Advanced Research Projects Agency (DARPA) and itsinnovation ecosystemofacademic, corporate, and governmental partners.The screen of this futuristic device will offer a virtually unlimited range ofnon-divisiveandhate-freecontent, none of which will falsify or distort thetruth,or in any way deviate fromreality.Western consumers will finally be free to enjoy an assortment of news, opinion, entertainment, and educational content (like this Guardian podcast about a man who gave birth, or MSNBC's latest bombshell about Donald Trump's secret Russian oligarch backers) without having their enjoyment totally ruined by discord-sowing alternative journalists like Aaron Mate' or satirists like myself.
Also notable is Caitlin Johnstone's take on DARPA's Semantic Forensics via a swipe at Bezos Shopper (Washington Post) editorialist David Ignatius:
Do you lay awake at night terrified that the Russians are able to control your mind with information warfare while the US government's slavish devotion to democratic values leaves it powerless to stop them? Me neither. But according to The Washington Post, whose sole owner is a CIA contractor and Pentagon board member bent on hijacking the underlying infrastructure of the economy, we should be.
Update 2019-09-06: Matt Taibbi also weighs in with The Pentagon Wants to Use DARPA to Police Internet News:
If there's a fake news story out there, it's the fake news panic itself. It has the hallmarks of an old-school, WMD-style propaganda campaign. It includes terrifying pronouncements by unnamedintelligence officials,unprovable, overblown, or outright fake statistical assertions about the threat (like the oft-cited claim that fake election news had more engagement than real news), open conflation of legitimate domestic dissent with foreign attack, and routine dismissal of experts downplaying the problem (here are two significant studies suggesting thefake newsphenomenon is overstated). Of course, the final, omnipresent ingredient in most major propaganda campaigns is the authoritarian solution. Here, it's unelected, unsupervised algorithmic control over media. We've never had a true news regulator in this country, yet the public is being conditioned now to accept one, without thinking of the consequences.
the central bankers of the world convene
in the scenic Rocky Mountain resort of Jackson Hole, Wyoming,
in furtherance of the challenging task
of sustaining the global hegemony of our plutocratic overlords.
This year, the usual smug
of the meeting was somewhat disturbed
when the Governor of the Bank of England, Mark Carney
proposed the introduction of a Synthetic Hegemonic Currency (seriously!)
to replace the US dollar as the global reserve currency.
The Bank of England governership has served in recent years
as an outlet for what the spooks call a
wherein some truth is allowed to leak into the mainstream discourse
in the service of managing a situation that has gotten out of control.
Mervyn King, previous BoE Governor,
was notable for
of one of the essential tenets of Modern Money Theory,
that banks create money
when they issue loans.
Carney keeps the tradition alive.
Enjoy Carney's entire speech,
which is surprisingly readable for a statement from a central banker.
Here's a snippet:
Technology has the potential to disrupt the network externalities that prevent the incumbent global reserve currency from being displaced. . . . The Bank of England and other regulators have been clear that . . . the terms of engagement for any new systemic private payments system must be in force well in advance of any launch. As a consequence, it is an open question whether such a new Synthetic Hegemonic Currency (SHC) would be best provided by the public sector, perhaps through a network of central bank digital currencies. Even if the initial variants of the idea prove wanting, the concept is intriguing. It is worth considering how an SHC in the [international monetary and financial system (IMFS)] could support better global outcomes, given the scale of the challenges of the current IMFS and the risks in transition to a new hegemonic reserve currency like the Renminbi. An SHC could dampen the domineering influence of the US dollar on global trade. If the share of trade invoiced in SHC were to rise, shocks in the US would have less potent spillovers through exchange rates, and trade would become less synchronised across countries. By the same token, global trade would become more sensitive to changes in conditions in the countries of the other currencies in the basket backing the SHC. The dollar's influence on global financial conditions could similarly decline if a financial architecture developed around the new SHC and it displaced the dollar's dominance in credit markets. By reducing the influence of the US on the global financial cycle, this would help reduce the volatility of capital flows to EMEs. Widespread use of the SHC in international trade and finance would imply that the currencies that compose its basket could gradually be seen as reliable reserve assets, encouraging EMEs to diversify their holdings of safe assets away from the dollar.
Whooee! Dollar death watch, anyone?
Peter Lee (aka China Hand)
has some valuable remarks on US-China policy
that help to put the
trade war in perspective:
There is a certain amount ofOMG how did we get here??handwringing over the escalating trade war between the US and China. BS. The decoupling strategy of the US China hawks is proceeding as planned. And economic pain is a feature, not a bug . . . Failure of trade negotiations was pretty much baked in, thanks to Lightizer's maximalist demands. And that was fine with the China hawks. Because their ultimate goal was to decouple the US & PRC economies, weaken the PRC, and make it more vulnerable to domestic destabilization and global rollback. If decoupling shaved a few points off global GDP, hurt American businesses, or pushed the world into recession, well that's the price o' freedom . . . Between the global economic slowdown and the regional military buildup, I guesstimate the cost of taking on the PRC at a trillion dollars over the next decade. But like they say, War with China: one trillion dollars. Postponing the loss of US hegemony in the Pacific: priceless.
Bankers creating money by lending to speculators is the ultimate source of endemic instability in financial markets. Neoclassical economics entirely erases the role of bankers; hence its dismal record in explaining and predicting financial crises. Hyman Minsky worked out a compelling explanation for intrinsic financial instability quite some time ago. In a paper presented in 2012, notable economist Steve Keen contrasts Minsky's theory of instability to the equilibrium-oriented theories of neoclassical economics. Minsky's theory satisfies by virtue of being easy to understand and providing plausible explanations of such perplexing situations as the stagflation of the 1970s and the suddenness of the contraction after the 2007 debt crisis. Keen does a fine job of presenting Minsky and there's some particularly useful discussion of the possible outcomes to a debt crisis (which we are likely to be facing again in the near future):
As the boom collapses, the fundamental problem facing the economy is one of excessive divergence between the debts incurred to purchase assets, and the cash flows generated by them—with those cash flows depending upon both the level of investment and the rate of inflation. The level of investment has collapsed in the aftermath of the boom, leaving only two forces that can bring asset prices and cash flows back into harmony: asset price deflation, or current price inflation. This dilemma is the foundation of Minsky's iconoclastic perception of the role of inflation, and his explanation for the stagflation of the 1970s and early 1980s. Minsky argues that if the rate of inflation is high at the time of the crisis or the debt level is relatively low, then though the collapse of the boom causes investment to slump and economic growth to falter, rising cash flows rapidly enable the repayment of debt incurred during the boom. The economy can thus emerge from the crisis with diminished growth and high inflation, but few bankruptcies and a sustained decrease in liquidity. Thus, though this course involves the twinbadsof inflation and initially low growth, it is a self-correcting mechanism in that a prolonged slump is avoided. However, the conditions are soon reestablished for the cycle to repeat itself, and the avoidance of a true calamity is likely to lead to a secular decrease in liquidity preference. A secular trend toward rising debt to equity ratios develops, as each new cycle begins before all debt accumulated in the last cycle had been repaid. Colloquially, firms borrow during a boom and repay during a slump, which gives the debt to income ratio a tendency to ratchet up over time, making the system more fragile. If the rate of inflation is low at the time of the crisis and debt levels are very high, then cash flows will remain inadequate relative to the debt structures in place. Firms whose interest bills exceed their cash flows will be forced to under take extreme measures: they will have to sell assets, attempt to increase their cash flows (at the expense of their competitors) by cutting their margins, or go bankrupt. In contrast to the inflationary course, all three classes of action tend to further depress the current price level, thus at least partially exacerbating the original imbalance. The asset price deflation route is, therefore, not self-correcting but rather self-reinforcing, and is Minsky's explanation of a depression.
Retired diplomant M. K. Bhadrakumar has a thoughtful assessment of the imposition of U. S. sanctions on Iranian Foreign Minister Mohammad Javad Zarif. MKB highlights Zarif's capability, erudition, and his solid contacts amongst the U. S. elite. What particularly lifted my spirits was MKB's assertion that there's been a palpable change in American discourse in Iran:
For any longtime observer of the US-Iran standoff, it is obvious that a sea change has appeared in the American discourses on Iran. There is an influential and ever growing body of opinion in the US today, which disagrees with Trump'smaximum pressurestrategy. This constituency rationally argues that Trump shouldn't have dumped the 2015 deal. Equally, there is a far better understanding today in the informed American opinion regarding Iran and its policies, and the zen of dealing with Persian nationalism beneath the veneer of Islamism. The surprising part is that such an awakening has happened despite the Herculean efforts by the Israeli Lobby to demonise Iran and to stymie all contrarian views in the media, think tanks and campuses — and the Hill.
Would that it were so!
Our favorite political economist Michael Hudson has a wide-ranging survey of the current status of the US-led neoliberal struggle for global dominance. Having ceded military and economic supremacy according to many accounts, the tenuous dominance of the almighty Dollar remains the crucial redoubt in the war of the few against the many. But how much longer can it be maintained? Grab a cup of coffee and settle down for a geopolitical deep dive. Much of what he covers will already be familiar to those who follow the sources we like to cite here, but it's handy to have it all tied up and correlated:
[T]he past decade has seen U.S. diplomacy become one-sided in turning the International Monetary Fund (IMF), World Bank, SWIFT bank-clearing system and world trade into an asymmetrically exploitative system. This unilateral U.S.-centered array of institutions is coming to be widely seen not only as unfair, but as blocking the progress of other countries whose growth and prosperity is seen by U.S. foreign policy as a threat to unilateral U.S. hegemony. What began as an ostensibly international order to promote peaceful prosperity has turned increasingly into an extension of U.S. nationalism, predatory rent-extraction and a more dangerous military confrontation.
For those who would like to dig deeper, Hudson's 1972 masterwork Super Imperialism: The Economic Strategy of American Empire (updated in 2003) is available for download as a pdf at the previous link. NOTE: Hudson's web site appears to be offline as of 2019-07-26. Will update when available. Deparate for a copy? Get in touch. I've got a download from 2014.
In the binary corporate electoral arrangement that governs the United States, Black people approach each primary season pondering which Democratic candidate is best equipped to defeat the White Man's Party. Polls and studies have long showed that Blacks are the most left-leaning constituency in the nation on issues of socio-economic justice and peace, but that's not how Black Democrats vote in national primaries, where they tend to support whoever they believe can beat the Republican.Electabilitytrumps and displaces ideology. Given the role that money plays in the U.S. electoral game, Black primary voters intent on choosing anelectableDemocrat will support the corporate candidate — not because these voters arecentristor corporate-minded, but because their overarching priority is beating the GOP. Thus, during Democratic primary season, many Black voters will seem to have no worldview or mission except as soldiers of the Democratic Party.
The Jeffrey Epstein rabbit-hole has become too alluring to resist. What really piqued my interest was when Vicky Ward reported that ex-Labor Secretary Alexander Acosta had told his interviewers in the Trump transition:
He'd cut the non-prosecution deal with one of Epstein's attorneys because he hadbeen toldto back off, that Epstein was above his pay grade.I was told Epstein 'belonged to intelligence' and to leave it alone.
That was quite the powerful attractant, and now we have Robert Willman highlighting Acosta's remarks at his resignation:
. . . we come to the recent fascinating events, in which Epstein was arrested, and the role of Labor Secretary Alexander Acosta in this whole rotten mess was revealed to some extent . . . On Friday, 12 July, when president Trump went outside the White House to talk to the press before leaving on a trip, Acosta went with him. At around 1 minute, 40 seconds into this short video excerpt, Acosta says —I have seen coverage of this case, that is over 12 years old, that had input and vetting at multiple levels of the Department of Justice. And as I look forward, I do not think it is right and fair for this administration's labor department to have Epstein as the focus, rather than the incredible economy that we have today. And so I called the president this morning. I told him that I thought the right thing was to step aside. . . .There you have it:. . . this case . . . had input and vetting at multiple levels of the Department of Justice.The cat was out of the bag. It was a sad sight: Alex Acosta, after achieving two significant positions in the federal government, took a dive to be the fall guy.Multiple levelsofinputandvettingat the DOJ, you say? Who might that be?
Willman also has links to court documents and some discussion of the two civil suits that have helped to bring the focus back to the infamous pedo procurer. Those court documents shine quite some light into that rabbit-hole. Pass the popcorn!
The brilliant and prolific Caitlin Johnstone offers a compelling argument that opposing the endless war should be the highest priority in the struggle against the owners and rulers. She argues that the weakest link in their propoganda narrative (and hence the best place to attack) is the justification for this:
The challenge for the propagandists is that [convincing Americans that it is good and desirable to keep trillions of dollars in military hardware moving around the planet and killing complete strangers who pose no threat to any American] is plainly bat shit crazy. It's an assignment that is both absolutely necessary and extremely difficult. When the entire world order depends on convincing millions of people that something transparently insane and ridiculous is perfectly sane and rational, you're naturally going to have difficulty smoothing over all the plot holes in the narratives you're selling. That's why you're always seeing glaring discrepancies in the narratives used to promote US foreign policy agendas. In retrospect I've pretty much built my career on highlighting these discrepancies.
Russiagate drags on as the 2020 elections loom. Too lazy/busy/indifferent to read the Mueller report? Aaron Mate' read it for you! In CrowdStrikeOut, Mate' examines the two principal allegations of Mueller, that
Russian military intelligence officers hacked and leaked embarrassing Democratic Party documents, and a government-linked troll farm orchestrated a sophisticated and far-reaching social media campaign that denigrated Hillary Clinton and promoted Trump.
Mate' uncovers the dearth of actual evidence and highlights the weasely language that goes with along with the flimsiness of Mueller's claims. He takes note of Mueller's declining to interview Julian Assange, who obviously had first-hand knowledge of the provenance of the leaked DNC documents. Mate' could have also noted that Mueller also declined to interview Craig Murray, former British ambassador to Uzbekistan, who has claimed to have participated personally in the hand-off of the leaked materials to WikiLeaks.
Mate' does a nice job of putting the operations
of the St. Petersburg troll farm in perspective,
citing Facebook general counsel Colin Stretch that
posts from suspected Russian accounts showing up in Facebook's News Feed
approximately 1 out of [every] 23,000 pieces of content.
There's lots more on Guccifer, Crowdstrike, and the logical discrepancies of Mueller's timeline. Most usefully, there's a handy tracing of the roots of the witch hunt back to John Brennan, who appears to have quite a bit of 'splainin to do to the likes of Michael Horowitz, John Huber and John Durham. Of course, all this investigative flutter is unlikely to lead to any genuine consequences, but a guy can hope!
Putting our own Macronies in a wider context,
Nancy Fraser characterizes our
present crisis of widespread disaffiliation
(loss of trust in established institutions)
as an opportunity for experimentation and even emancipation.
But liberal elites, threatened with a new openness
the struggle to build a counterhegemonic left project,
have counter-attacked by trying to build fears of
a new fascism:
I'm focused, rather, in the performative force of the termfascism(ornew fascism) in the present context. As I read it, it's a call to order, to re-affiliation, to re-consolidation, to closure. It's a call above all to close ranks with the liberal elites who present themselves as ourprotectors,but who could more accurately be seen as our predators.
This brief and compelling essay concludes by dismissing the premature branding of disaffiliated citizens:
The present interregnum is the scene of a battle for hegemony in Gramsci's sense. Financialization continues on steroids, but its legitimating ideology lies in tatters. The result is a rare historical moment of political dis-affiliation and mass-psychological experimentalism. It is a moment when critical masses of people no longer believe the ruling commonsense and are willing to think outside the box. It is entirely premature to brand them asregressiveorfascistic.The last thing we need is to allow such scare tactics to close down the space of experimentation that represents our best hope for an emancipatory resolution of the present crisis.
Worried about US war with Iran? Skepticism might be in order. Dmitry Orlov neatly captures the trolling spirit of a sinking hegemon:
The world is on the brink of war, again. And again. And, yes, yet again. And then it's not on the brink of war any more . . . but wait, there's more! Of course there's more, there always is. . . . What's going on is that a has-been country, which can't stop squandering what little resources it has left on a useless but ridiculously bloated military-industrial complex, is trying to generate activity in order to justify continued lavish defense spending. All sorts of experts and pundits play along, claiming that the threat of this or that war is very real and that therefore we should all be paying attention to what's happening. But what's happening is that you are being trolled.
Patrick D. Anderson provides a fascinating riposte to the eclipse of the internal colonialism theory of Black life in the United States. Ranging over half a century of history, with an explication of the origins of the the thesis is not race-centric but anti-colonial, and explains Black elite behavior:
In the 1960s, nearly all Black Civil Rights leaders accepted the view that the oppressive conditions they faced were expressions of a global imperial logic, and the fundamental question confronting Black radical political theory of every kind was the question of Empire. Inspired by the anticolonial theorizing of Aime Cesaire, Frantz Fanon, and Kwame Nkrumah, Black activists and intellectuals of many ideological stripes adopted what is known as the internal colonialism thesis — the idea that Blacks in the United States constitute an internal colony within the borders of the imperial mother country. . . . Fifty years later, the internal colonialism thesis has largely fallen out of favor, and its critics insist that this is for the best[, arguing that] the most serious shortcoming of the internal colonialism thesis is that it fails to account for class divisions within the Black community. On the contrary, the internal colonialism thesis not only accounts for class distinctions among Black Americans but also provides an historical answer to the why and how of Black class antagonism. It illuminates the process of differential segregation under a neocolonial regime of simultaneous middle class integration and working class repression.