Category Archives: Trade

Wise People Know That Winning a War Is No Better Than Losing One

Liu Bolin (China), Guernica, 2016
Liu Bolin (China), Guernica, 2016

Dedicated to Soni Prashad, 1929-2020, who spent her life looking for a better world.

US President Donald Trump and his ‘war council’ – led by Secretary of State Mike Pompeo – have amplified their aggression against China. What began as a trade dispute in the 1990s has now escalated into the United States making an existential challenge against China.

The threat against China is made not for irrational reasons, but for perfectly rational ones, which are laid out below in our Red Alert no. 9 (also available as a separate download from our website). These have to do with the emergence of China as a major economic and technological power. What most rankles the US ruling class is that the various hybrid war techniques to weaken or overthrow the government are simply not available. The only means at the disposal of the United States to hold on to its power – chillingly – is armed force.

Red Alert no. 9. The US-Imposed Hybrid War on China

Is the United States trying to impose a war on China?

For the past several decades, the US has conducted a trade war against China. There are two key issues that worry the United States: first, a trade imbalance that benefits China, and, second, the growth of the Chinese technology sector. Techniques that the US has used against China include: pressuring China to revalue its currency against the dollar, pressuring China to prevent ‘piracy’ on intellectual property in order to slow down its domestic intellectual property developments, and pressuring China to slow down or cease its Belt and Road Initiative.

The US has now begun a war against the Chinese economy. The attempt to isolate Huawei and ZTE from their suppliers and their markets will have a debilitating impact on the growth potential of the Chinese economy. The US has sanctioned roughly 152 companies that make chips and other products for Huawei and ZTE. Increased bans – through the US government’s Clean Network initiative – would prevent US companies from using Chinese cloud services and undersea cables, and it would ban Chinese apps from appearing on app stores. The US government has increased pressure on other countries to join in this campaign.

The US government has increased its military pressure along the eastern rim of China. This includes the 2017 revival of the Quad (Australia, India, Japan, and the US), the creation of the US’ Indo-Pacific Strategy (its key document from 2020 is called ‘Regain the Advantage’), and the development of a range of new weaponry, including cyberweapons. This military power has come alongside hostile rhetoric against China, with attention focused on Hong Kong, Xinjiang, and Taiwan, and the depiction of the coronavirus pandemic as a ‘China virus’. Evidence is not as important here as the use of older racist and anti-Communist ideas to demonise China.

Liu Xiaodong (China), Wedding Party, 1992.
Liu Xiaodong (China), Wedding Party, 1992

Why is the US increasing its pressure against China?

China’s technological advances could result in a generational advantage over the West. China’s scientific and technological developments came because of the country’s investment in higher education and in its ability to transfer technology from firms that entered the country to manufacture goods. In 2018, Chinese scholars for the first time published more scientific articles than their colleagues in the US, and Chinese firms filed more patent applications than US firms. Chinese tech firms have now produced products that appear to be ahead of US, European, and Japanese products. Examples for this include 5G, BeiDou (a better mapping technology than GPS), high-speed trains, and robots.

Faced with US pressure, China has crafted an independent trade and development agenda. Since the world financial crisis, China began diversifying its economy from reliance upon the US and European markets to build up its own internal market and to increase engagement with the Global South. The immediate projects that developed included the Belt and Road Initiative, the String of Pearls Initiative, the Forum on China-Africa Cooperation, the Shanghai Cooperation Organisation, and the China-Community of Latin American and Caribbean States Forum. The Chinese government has also begun to pay more attention to the Association of South-East Asian Nations (ASEAN). These moves come alongside a remarkable poverty eradication programme.

Currently, China is highly dependent on imported energy – such as gas from ASEAN nations, Australia, and Qatar. The China-Russia 6000kms ‘Power of Siberia’ pipeline will bring 38 billion cubic metres of natural gas, a substantial increase to meet the demands for the 90 billion cubic meters consumed by China. In 2014, Russia’s multinational energy corporation Gazprom and the China National Petroleum Corporation signed a $400 billion for a thirty-year deal.

Increasingly, China has attempted to build institutions outside of Western-controlled trade and development architecture, including the Asian Infrastructure Investment Bank (founded in 2014). As part of this, China has committed to de-dollarisation; China has proposed to hold its reserves and to conduct trade in currencies other than the US dollar. This is a long-term but inevitable development, and one that threatens the overall role of the Wall Street-Dollar complex. China’s cooperation with Russia is most advanced in this arena, with about 50% of Russia-China trade conducted in roubles and yuan (Russia owns about 25% of the global yuan reserves). Both Russia and China are divesting themselves of their dollar reserves. In January 2020, Russia sold $101 billion, or 50%, of its dollar reserves and moved $44 billion into Euros and $44 billion into yuan. The yuan, however, represents only 2% of global currency reserves.

Against the eastward expansion of NATO and the emergence of the Quad, China and Russia have crafted a military and diplomatic Eurasian security bloc. This is evident in the arms deals and the military exercises, but also in diplomatic coordination. For example, Russian and Chinese foreign ministry spokespersons Maria Zakharova and Hua

Chunying said in late July that they would join efforts in combatting the information war against China and Russia. Chinese diplomats have taken a more forthright attitude in their statements; they have been dubbed the ‘wolf warrior diplomats’, an allusion to a popular film where a Chinese soldier from an elite Wolf Warrior troop defeats a group of terrorists led by an ex-US Navy Seal.

Clearly, the US has found that Chinese leadership has been unwilling to go the Gorbachev road – namely, to surrender the Chinese model to the will of the United States. There is no possibility that the Communist Party of China will dissolve itself. The Chinese middle class – possible fodder for a ‘colour revolution’ – does not have any appetite to overthrow the government. It is content with the direction of the government and sees that its government has improved living standards and has been able – unlike Western governments – to tackle the Coronavirus pandemic (as we write about in a series on ‘CoronaShock’). A Harvard University study shows that the government led by the Communist Party of China has increased its approval from 2003 to 2016, largely because of the social welfare programmes and the fight against corruption pushed by both the Communist Party of China and by the Chinese government. The overall approval stands at 93%.

Zhong Biao (China), Paradise, 2007.
Zhong Biao (China), Paradise, 2007

What contradictions does the US war project face?

Chinese economic developments – such as the country’s capacity to outspend the US in development aid to outbid Western firms in trade deals – has produced alliances between China and key capitalist sectors in countries that have otherwise been secure US allies. Examples of this are amongst sections of the capitalist class in the Philippines and Sri Lanka, where Chinese investment has been welcomed.

The Chinese state has intensified its intervention in the tech sector inside China, with a $14 billion private and public fund to support tech developments. Semiconductor Manufacturing International Corporation (SMIC) – China’s top chip company – had an initial public offering (IPO) in Shanghai which netted $7. 5 billion. As a consequence of such funds and its own scientific developments, China will soon be able to bypass the US chip firms.

China’s economic capacity continues to exert pressure on fragments of capital in different countries. For instance, Australian mining companies rely upon China to buy iron ore from Australia. These companies lobby Canberra not to take too hostile a position against China. Roughly one third of Australia’s total exports go to China; these include soy, barley, meat, fruits, gas, and the raw minerals. The Australian government is forced to acknowledge these concerns, even though it has a longer-term perspective than the short-term profit concerns of the mining conglomerates. China has already hedged its bets, increasing purchases of soy and meat from Argentina and Brazil, and it will likely buy more mined goods from Brazil (Brazil’s Vale is using massive ships to carry mined goods to China).

The US military is stretched thin between the conflicts in Venezuela and Iran, and now in China. The US Navy has had four secretaries in a year, part of the chaos in the Trump administration. As a consequence, the US Navy has complained about the lack of ability to handle so many theatres of war at the same time. China has developed sophisticated defence mechanisms, such as cyber warfare techniques that have the ability to shut down US communications, starting with their satellites, and such as their Dongfeng missiles, which are capable of hitting the US navy ships that are in the South China Sea.

The eighth century Chinese poet Li Bai wrote of the ugliness of war; as far as war is concerned, nothing has changed over the centuries.

Soldiers smear their blood on the dry grass
While generals map the next campaign.

Wise people know winning a war
Is no better than losing one.

To break the embargo on factual news on China, please subscribe to receive News on China from the Dong Feng Collective; these weekly digests are the best way to remain informed about developments inside the country.

The post Wise People Know That Winning a War Is No Better Than Losing One first appeared on Dissident Voice.

Why the US Can Keep Increasing its Debt and not Suffer Inflation (Part 2)

The US Still Dominates the World Economy

The US ruling class has dominated the planet since the end of World War II. Key elements of this control include its military superiority in nuclear and conventional weapons, and the stationing of over 900 military bases around the world. In addition, the US presides over the United Nations, the International Monetary Fund (IMF) and the World Bank. It upholds the US dollar as the global currency, and it controls much of the world’s resources, particularly oil.

These factors provide the background to why the US can print, or create, billions and trillions of dollars, running up its national debt, now $25 trillion, yet endure little inflation. The reason for this capacity is only tangentially explained by Modern Monetary Theory. It results from the US position as the imperial superpower, which enables it to export inflation.

Back in 1948 George Kennan wrote:

We have about 50% of the world’s wealth but only 6.3% of its population. This disparity is particularly great as between ourselves and the peoples of Asia. In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity without positive detriment to our national security. To do so, we will have to dispense with all sentimentality and day-dreaming; and our attention will have to be concentrated everywhere on our immediate national objectives. We need not deceive ourselves that we can afford today the luxury of altruism and world-benefaction.

In spite of losing its status as the workshop of the world, the US still enforces this “pattern of relationships” throughout the world. The role of the dollar provides an essential tool.  As pointed out in Modern Monetary Theory (MMT) and the Power of the US Dollar in the World Economy, the dollar is the international reserve currency.  Between 50-70% of trade transactions between nations are calculated in dollar terms even though the US accounts for only 11.5% of world trade.  Most goods, particularly key ones such as oil and food staples are priced in dollars on the world market. It is the chief currency countries use for their central bank reserves, constituting 61% of the holdings.  Of the international debt of the nations of the world, 63% of it must be paid in dollars.  Close to all foreign exchange trading 88%, involves some currency’s exchange with just one, the dollar. About 70% of nations either directly peg their currency to the dollar, use the dollar as their own currency, or keep their currency in tight trading range relative to the dollar.  Contrary to widely held belief, the US grip on the world economy has more adapted than weakened.

Since foreign countries price their imports and exports in dollars and have debts in dollars, they are dependent on the dollar and the value of the dollar. They remain vulnerable to rises in the exchange value of the dollar, as that interferes with their trade and causes the value of their debt burden to grow.

The trillions of US dollars that nations hold make these dollars a captive market for US Treasury bonds. As of April 2020, over 30% of US debt is owed to foreign governmentsThis percent has slowly trended upwards over time.  Since essential commodities are priced in dollars, countries have to accumulate the currency to pay for their imports.  The New York Times reported in 2019, “The dollar has in recent years amassed greater stature as the favored repository for global savings, the paramount refuge in times of crisis and the key form of exchange for commodities like oil.” This allows the US to run giant deficits and borrow on a vast scale with little constraint.

Why the Dollar is the World Currency

The supreme imperial power, the US, imposed the 1944 Bretton Woods agreement on the world, elevating the dollar as the world reserve currency. The US made other states peg their own currencies to the dollar, itself pegged to gold at $35 an ounce. At that time, the US held three-fourths of world gold reserves. The US was the only nation that could print the globally accepted currency. The agreement also created the World Bank and IMF, US-backed organizations that helped oversee the new imperial set-up.

Unsurprisingly, the US did not keep its promise to peg $35 to one ounce of gold, and instead printed more dollars than it had gold to back. The US used these dollars to fund social programs and war spending during the 1950s and 1960s. By 1971, gold was valued at a rate closer to $200 an ounce, causing Nixon to take the dollar off the gold standard.

Ironically, since then, the global role of the dollar has only increased. US has used its power – diplomacy, threats, blackmail, favorable deals, sanctions, tariffs, coups, and military invasion to enforce the dollar role as the international currency.

The Role of the Petrodollar

After Nixon ended the convertibility of dollars into gold, the US needed a compelling new reason for foreign banks and governments to hold dollars. Given the importance of oil to any economy, Nixon replaced “dollars for gold” with “dollars for oil,” black gold, through the petrodollar system. An oil-exporting nation’s rulers get military backing from the US, and in return must price their oil not in their own money, but exclusively in dollars. They must buy US Treasury bonds with profits of their oil sales.

In 1971 the US told Saudi Arabia that it could charge what it wanted for its oil but had to recycle dollars from oil earnings back to the US. It would be considered an act of war if they didn’t comply.  The remaining OPEC countries soon followed suit.

Russia began switching to selling their oil in euros only last year. Venezuela and Iran have already moved off the dollar, but now the US uses cruel sanctions to block their oil’s access to the market. Qaddafi’s Libya and Saddam’s Iraq met a worse fate when they moved to stop selling their oil for dollars.

The US Market Remains the World’s Main Export Market

The US remains the biggest consumer market in the world, more than a quarter of world household consumption, amounting to $14 trillion in goods and services in 2018 (the equivalent of the European Union and China combined).  Much of the Third World counts on the US market to drive their economic growth. These countries rely on cheap exports in order to keep their economy moving, so they cannot let their own currency rise in value relative to the dollar.

How the US Uses the Dollar’s Role as International Currency to Export Inflation

When the Fed opens up its spigot of US dollars, over $10 trillion in the last 10 years, the US can engage in a global spending spree. Dollars travel abroad as foreign loans and investments, and to pay for more imported goods. Since world trade is largely conducted in US currency, the US can easily export the new dollars not backed by any increase in domestic production. This lowers the value of every dollar held around the world. It leads to rising prices abroad while  bringing a net inflow of goods to the US benefiting the US consumer, but at the long-term expense of the countries exporting to the US.

When the dollar drops in real purchasing power, the nominal dollar price of commodities on the world market would go up, hurting vulnerable import dependent poor countries.  The value of foreign currencies rises relative to the declining value of the dollar. The exports of Third World nations, generally valued in US currency, become more expensive, reducing their ability to sell their exports. A 2018 Harvard report points out the weight of the dollar in international trade: “A 1% U.S. dollar appreciation against all other currencies in the world predicts a 0.6% decline within a year in the volume of total trade between countries in the rest of the world.”

Countries on the receiving end of this Fed money-creating policy have two options. They can let the value of their currency rise relative to the new dollars entering their economy.  However, a rising value of their own currency hurts their export industries, on which many Third World countries survive. The alternative involves their central banks printing more of their own currency to buy up the new dollars circulating in their economies. US dollars created out of thin air end up in foreign central banks after these countries print more local currency to buy them up. This pushes up their rate of inflation and increases the local cost of imports, particularly hurting the people’s standard of living in nations that import food stables and other basic necessities.

When countries must print more of their currency, this lowers the dollar price of their goods exported to the US. This helps to limit price increases in the US caused by the Fed creating dollars. Thus, when the Fed conjures up dollars on a large scale, other countries are subject to rising prices, yet help to curtail it in the US market.

China loosely pegs the RMB to the dollar and is now the second largest foreign holder of US debt. This serves to keep its currency cheap relative to the dollar and the prices of its exports competitive. China uses the dollars from its trade surplus to the US  to purchase US Treasury bonds. This way, China has been rapidly developing and exporting by helping strengthen the dollar and lower the RMB’s value.

Secondary imperial powers like Canada or Japan, major exporters to the US, have more of an option of letting the dollar fall and allowing their own currencies to rise. This controls domestic prices, although it hurts exports, and would slow their economic growth. However, since they are already developed countries, they are more able to cope. Third World countries, relying on cheap exports to the massive US consumer market, cannot long tolerate such a hit. It would cause severe social and political difficulties, so they often must devalue their own currencies to stay competitive.

In sum, the US, the imperial superpower, has its hands on Aladdin’s lamp, and can rub it to create hundreds of billions, now trillions of dollars. The US gains by importing at reduced real cost, benefiting the US consumer, and in return sends its inflation abroad. In 2011, the Wall Street Journal noted this in The Latest American Export: Inflation. “What do the years 1971, 2003 and 2010 have in common? In each year, low U.S. interest rates and the expectation of dollar depreciation led to massive ‘hot’ money outflows from the U.S. and world-wide inflation. And in all three cases, foreign central banks intervened heavily to buy dollars to prevent their currencies from appreciating.”  As the Head Economist of Commercial Banking of JPMorgan Chase wrote in 2019, “When foreign central banks stockpiled dollars, they effectively pushed up the purchasing power of American consumers.”

US Economic Control over Third World Economies

Third World countries generally do not possess the requisites of sovereignty: basic food self-sufficiency, energy independence or technological and industrial development. They must import these goods, not with their own currency, but with “hard currency,” a code word for the currency of imperialist countries. Nor can they borrow in their own currencies on the similarly misnamed “international” market and have to rely on “international” capital for their development projects. Consequently, they are reduced to borrowing “hard currency,” usually dollars, and must earn dollars to pay back these debts. They become stuck in a debt trap, subjugated to the US and the lesser imperial countries. The imperialist system is constructed to protect this neo-colonial operation.

The role of World Bank and IMF in enforcing Third World subservience to the US illustrate this.

Michael Hudson, who calls himself a MMT economist, pointed out:

The World Bank has one primary aim, and that’s to make other countries dependent on American agriculture. Its idea is to make Third World countries export plantation crops, especially plantations that are US or foreign owned.” The World Bank encourages exports of foods not grown in the US, and have them import US staples, such as grains. “The US demands foreign dependency on its grain, technology and finance. The purpose of the World Bank is to make other countries’ economies distorted and warped to a degree that they are dependent on the United States for their trade patterns.Essentially, the Bank financed long- investments in the foreign trade sector, in a way that was a natural continuation of European colonialism.

The IMF was in charge of short-term foreign currency loans.…The function of the IMF and World Bank was essentially to make other countries borrow in dollars, not in their own currencies, and to make sure that if they could not pay their dollar-denominated debts, they had to impose austerity on the domestic economy – while subsidizing their import and export sectors and protecting foreign investors, creditors and client oligarchies from loss.

The IMF “uses debt leverage as a way to control the monetary lifeline of financially defeated debtor countries. So if they do something that U.S. diplomats don’t approve of, it can pull the plug financially, encouraging a run on their currency if they act independently of the United States instead of falling in line. This control by the U.S. financial system and its diplomacy has been built into the world system by the IMF and the World Bank…”

Nations relying on staple food imports, such as US grain, are hurt when the US conjures up new quantities of dollars.  When these lands must follow suit, working class purchasing power drops. Workers produce more for less, while those holding dollars receive more for less money.

Forbes pointed out in Fed Exports Inflation, Stokes Revolutions, in reference to what was called the Arab Spring, “The unrest in the Middle East has a lot to do with food and commodity prices, and Fed QE policies [printing trillions of dollars] may have a lot to do with those prices.” Most of these Middle Eastern states had become increasingly reliant on imports for food supply over the past half century. Rami Zurayk noted the high prices for basic food staples like grain led to social unrest across many Middle Eastern states in 2010-2011. “’Bread riots’ have been occurring regularly since the mid-1980s, following policies brought to us by the World Bank and the International Monetary Fund.”

Third World countries are driven to subsidize their export industries to gain the dollars or euros they need for their imports and for their international debts. This sabotages their economic modernization and national independence. Even an oil-producing state like Venezuela never had energy sovereignty, as it produces crude oil, but lacks the technological capacity to refine it, so depended on imports. Third World countries generally export raw materials and cheap low value-added content, and import high value-added content, advanced technology and capital goods. They constantly lose in the transaction. The system keeps them mired in a debt and dependency trap where they must prioritize export industries. MMT economist Fadhel Kaboub says over the last few decades, this has resulted in outflows of $600 billion every year from the Third World to the First.

The US Exports Inflation and in return the World Pays for the US Debt    

When foreign central banks collect new dollars by printing their own money these dollars are not just used to pay off foreign debts. Countries are pressured into loaning their dollar savings to the US, buying Treasury bonds. The US debt continues to this day as the safest haven for countries to store their foreign exchange reserves, especially at times of international economic and political stress. In practice, this means they are driven to make loans to the US so that the US can keep buying their goods. The US government can run up debt by conjuring dollars out of thin air, to be spent on cheapened imports that prop up US consumer society. The foreign central banks recycle dollars back to the US Treasury to maintain their own currencies’ exchange rate with the dollar. This set-up keeps other nations lending the new dollars they gained back to help pay for the ballooning US debt. As Treasury bonds, these dollars are taken out of circulation, so create little inflation at home, although they previously did when the US circulated them overseas.

Through this scheme, foreign countries hold savings as dollar reserves and loans to the US, loans now beyond the ability of the US to repay. The US supports itself by sending paper IOUs abroad to buy other countries’ goods with these unpayable IOUs. Meanwhile, the US keeps its gold reserves intact and prices stable. Already half a century ago, European finance ministers had complained about this export of US inflation, to which Nixon’s Treasury Secretary John Connally responded the “dollar is our currency, but your problem.”

Michael Hudson explains in simple terms the dollar’s role as the international currency:

Let’s suppose that you go to the grocery store and you buy food and then sign an IOU for everything that you buy. You go to a liquor store, IOU. You buy a car, IOU. You get everything you want just for an IOU. But when people try to collect the IOUs, you say, ‘That IOU isn’t for collecting from me. Trade it among yourselves. Think of it as your savings, and trade it among yourselves. Treat it as an asset, just as you treat a dollar bill saved in a cookie jar and not spent.’ Well you’d get a free ride. You’d be allowed to go and write IOUs for everything, and nobody could ever collect. That’s what the United States position is, and that’s what it wants to keep.

Hudson adds, again simplifying it, “That’s what makes the United States the ‘exceptional country.’ The value of our currency is based on other countries’ savings. The money they save has to be held in the form of dollars or securities that we’re never going to repay, even if we could.” The US has established an international system requiring other countries to use the dollar, obliging them to stockpile them in the trillions, and coercing them to make loans to finance a US debt that will never be paid.

The US, protecting the dollar as the world’s reserve currency, is not subject to the same rules other countries are: it can spend more than it produces, maintaining its consumerist lifestyle, by simply printing more dollars. It can use this extra money to gain control of goods and resources, giving them inflation and debt in exchange. Since these exported dollars often return home through now uncollectible loans as Treasury Bonds, they do not remain within the US economy to cause rising prices.

This scheme the preserves what George Kennan delicately labelled the “pattern of relationships” that upholds the “disparity” of the imperial economic system. To enforce this scam, the US has built military bases throughout the world — much of this dollar cost returned to the US through the same operation — ready to act against nations seeking to get off the dollar standard.

The post Why the US Can Keep Increasing its Debt and not Suffer Inflation (Part 2) first appeared on Dissident Voice.

Modern Monetary Theory (MMT) and the Power of the US Dollar in the World Economy (Part 1)

Modern Monetary Theory (MMT) has become popularized by some of the liberal-left because it offers an explanation how to achieve full employment, national health insurance, free college education, and the Green New Deal without raising taxes. Political leaders like Alexandria Ocasio-Cortez and Bernie Sanders have espoused MMT. Economist Stephanie Kelton, a leading spokesperson of the theory, served as chief economic adviser to Sanders during his 2016 presidential campaign.

We summarize the basics of MMT on the significance of a “sovereign” currency and consider which currencies meet the conditions of being sovereign in the existing structure of the world economic system.  This requires a review of the role the US dollar plays in world trade and how the dollar dominates the world trade system. For MMT, the existence of a sovereign currency explains the US capacity to keep pumping dollars into the economy and not experience inflation. In a subsequent article we address the validity of this last claim.

The Essentials of Modern Monetary Theory

The central idea of MMT states that a country that issues its own currency, a “sovereign” currency, can never run out of money or go bankrupt the way households or businesses can. Any government spending can be paid for by the creation of more money. Therefore, national government spending should not be determined by balancing the budget or limiting deficit levels, but only by whether spending is keeping the economy at full employment and at a reasonable level of inflation.

The US government, being a currency issuer, has its own sovereign currency, the dollar, just as Japan has the yen, and Britain the pound. The US, as the exclusive producer of the US dollar, can create more money whenever it needs. That is not the same for countries without their own currency, such as the eurozone nations which are shared users of the euro. In a similar manner, state and local governments in the US do not possess their own currency, and have to keep balanced budgets.

MMT states national government spending does not have to be paid for with taxes. It can print money and not experience inflation. The purpose of taxes, according to MMT, serves to limit inflation, by taking consumers’ money out of the money supply. This goes against the conventional idea that taxes provide the government with money to spend on the military, build infrastructure, fund social welfare programs, etc.

According to MMT, the only limit the government faces when pumping out money is the availability of real resources: raw materials, workers, construction supplies, etc. It is only when an economy hits physical or natural constraints on its productivity, when these resources have been fully put to use, will inflation result if the government continues introducing more money into the economy. Unemployment itself is the result of a government spending too little.

While the theory is controversial, much of what MMT says about US government creation of dollars and inflation is true. MMTers are not the only economists who say it. Former chair of the Federal Reserve Alan Greenspan remarked: “The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.”

Another former Fed chair, Ben Bernanke, likewise commented that the federal government’s $1 trillion bailout of the banks due to the 2008 financial crisis caused by their fraud did not come from raising taxes:

It’s not tax money. The banks have accounts with the Fed, much the same way that you have an account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed. It’s much more akin to printing money than it is to borrowing.  And we need to do that, because our economy is very weak and inflation is very low.

Former IMF chief economist and president of the American Economic Association, Olivier Blanchard declared: “Put bluntly, public debt may have no fiscal cost” given that “The current US situation in which safe interest rates are expected to remain below growth rates for a long time, is more the historical norm than the exception.”

Moreover, the US has run up its national debt, has not reached full employment, nor put in play all economic resources, and has not endured inflation, just as MMT predicted. The US government this spring created $6 trillion out of thin air to fund corporations, banks and to a lesser degree, working people, during the stock market crash and COVID pandemic. Yet the rate of inflation rate is less than 1%, lower than in 2019. The Quantitative Easing program (their term for creating money out of thin air) likewise conjured up $4.5 trillion from 2009-2014, and this also caused little inflation here.

Nations Possessing a Sovereign Currency

The key question for MMT is which nations besides the US have a “sovereign currency.” While definitions of monetary sovereignty provided by MMT authors vary, there are central elements. One, the government issues the national currency and imposes tax liabilities in that currency. Therefore, countries that do not print their own currency, such as those using the euro, do not have a sovereign currency. Two, the currency is fully floating, meaning it has a flexible exchange rate system determined by market forces of demand and supply of foreign and domestic currency, and where government intervention is non-existent. According to the IMF, 31 countries have “free floating currencies;” however, 19 of them use the euro.1  The remaining  12 are Australia, Canada, Chile, Japan, Mexico, Norway, Poland, Russia, Sweden, the UK, Somalia2, and the US. Three, the nation has no debt denominated in foreign currency. It receives foreign loans and repays them in its own currency. A country with an MMT sovereign currency is able to conduct trade with other states in its own currency.

Third World nations, a central MMT economist Randall Wray explains, “are not international reserve currency issuing countries.” If countries peg their currency to the dollar or the euro and if they receive loans payable in foreign currency:

They usually will adopt austerity as a means to obtaining US dollars, and that means that they have slow growth, they’ve failed to develop, and they are dependent on the US, the IMF, and the World Bank. So we recommend moving off the peg and stop issuing government debt in foreign currencies. Now, we know that’s a difficult condition, and it’s only the first step. They’ve got to move toward food independence and energy independence, because those are usually two of the things that they import. And they’ve got many other problems to deal with, political problems, corruption, and possibly foreign intervention.

Fadhel Kaboub, the leading MMT economist on Third World economies, agrees. He points out that Third World nations count on staple food and energy imports and on imported advanced technology. They therefore, accumulate foreign debts, mostly in dollars and euros. When asked if there were any Third World nations follow the conditions MMT recommends to develop,  Kaboub replied, “Unfortunately, not that I know of.” The closest, he said, were South Korea under the military dictatorship, and Singapore at some period in the past.

Given the MMT conditions for a sovereign currency, only 12 nations met the first two conditions. Meeting the further conditions, possessing no debt payable in a foreign currency and conducting its trade with other states in its own currency, requires a study of the role of the dollar in the world economy.

The Role of the US Dollar in World Trade

  1. Most International Trade Takes Place in the Dollar

Most traded commodities in the world, including basic commodities such as oil and food grains, are priced in dollars on the global market. Generally, trade contracts between countries take place in the US currency, followed by the euro and the Japanese yen.

Therefore, foreign nations require dollars to conduct international trade.  Exchange of goods and services among countries amounted to 39.7 trillion in dollar terms, in 2018, 46% of the global economy. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) reports the majority of global trade takes place in dollars. (SWIFT is a key instrument the US uses to enforce its unilateral coercive measures – US imposed sanctions – to disrupt the international trading of a wide variety of countries.) In 2014, SWIFT determined the dollar makes up a 52% share of the value of international currency usage, a share that has been growing. The euro, used in trade in the eurozone region, is second, with a 30.5% share of total value. The British pound is third, with a 5.4% share. Concerning trade between regions of the world, the dollar’s role as payment currency rose to 79.5%.

Claudio Grass, a Swiss banker, gives a higher figure, with around 70% of world trade conducted in US dollars, and excluding trade among European states based on the euro, the percentage goes up to 90%. Forbes noted:

Almost all international transactions are done in US dollars.  Nearly all of the world’s commodities are priced in U.S dollars. So, an auto manufacturer in Korea importing steel from Japan must first convert Korean won into US dollars, pay for the transaction in dollars, and the Japanese exporter, once receiving the payment, must convert the dollars into Japanese yen.  So, the Dollar is key to much of the world’s trade.

Clearly, even the secondary imperial (“developed”) powers rely on the dollar for their economic operations.

A July 2020 IMF study looked at the pricing of worldwide exports and imports in dollars, euros, and other currencies since 1990. The dollar remains the prime currency used to price goods in global trade, even increasingly used for invoicing (as was also the euro) in spite of the decline in US and eurozone international trade, mostly due to the ever-increasing trade of China.

Studies of the Role of the Dollar in Country Imports and Exports

A 2018 Harvard economics report corroborates this: “the vast majority of invoicing is neither in the local currency or in the producer’s currency but instead in a ‘dominant currency’, which is most often the U.S. dollar.” Even other imperial (“developed”) countries’ trade takes place not in their own currencies, but mostly in dollars.  Another Harvard study noted that while only 13% of Japan’s imports come from the US, 71% of Japanese imports are priced in dollars, while only 33% of its exports are actually in Japanese yen. For the eurozone in 2018, 56% of the goods imported and 34% of good exported were calculated in dollars.

The Chinese renminbi (RMB), despite China being the world’s number one trader with 12.4% of world trade in 2018, was used in a mere 2% of international payments. 3   The US, by contrast, is second largest with 11.5%, yet the dollar reigns as the world currency.

For Latin America, 97% of exports and 90% of imports are still made in dollars4  even while China’s trade with Latin America has grown to half the size of US trade with the region.

The United States stands in sharp contrast to other nations, again showing the world power of the dollar. In 2015 93% of US imports were invoiced in the dollar, while 97% of its exports were.

  1. Most Foreign Central Bank Holdings Are in the Dollar

Central banks worldwide hold a considerable portion of their reserves in dollars, using it as their primary reserve currency. As of 2019, foreign government central banks held $6.8 trillion in US dollar reserves, about 61% of combined central bank foreign exchange reserves of $11 trillion. Nearly two-thirds of the world’s currency reserves are held in dollars, more than the combined holdings of all other currencies. The next closest reserve currency is the euro, which makes up 20% of known foreign central bank currency reserves. Japanese yen accounts for 5.7%, British pound 4.4%. Central banks held only 2% of their reserves in Chinese RMB, amounting to $221 billion worth of RMB.

The dollar’s portion of these foreign reserves has remained relatively the same since 2009. The New York Times noted in 2019, “The dollar has in recent years amassed greater stature as the favored repository for global savings, the paramount refuge in times of crisis and the key form of exchange for commodities like oil.”

  1. Almost Two-Thirds of International Debt Held Outside the US Must be Paid in Dollars

In 2018, 63% of international debt was denominated in dollars (to be paid in dollars), a percent that has been slowly rising since 2005. The second most common currency owed for international debt is the euro, at about 23%.5

There is $28 trillion worth of debt, to be paid in dollars, held by governments and private business outside the US. This is said to increase $1.6 trillion to $2 trillion a year. Foreign countries actually issued $11 trillion of this $28 trillion debt in the US currency rather than their own.

Third World government debt was the equivalent of 15 trillion in dollar terms. About 70% of this Third World debt is actually issued and owed in US dollars. This debt in dollars held abroad further serves to entrench the dollar as the world sovereign currency.

  1. Foreign Exchange Trading Dominated by the Dollar

Foreign exchange is the process of changing one currency into another for a variety of reasons, usually for commerce, trading, or tourism. The Foreign Exchange market has an estimated turnover of $6.6 trillion a day. In 2019, 88% of the world’s foreign exchange trading involves exchanging some currency with one in particular, the US dollar.  The euro ranked second with 32%, Japanese yen third at 17%. Chinese RMB ranked eighth at 4%. The dollar’s hold in this measure of the world’s most dependable currency remains the same as in 2004, while the euro, yen and British pound have tended to decline.6

  1. Most Foreign Currencies Rotate around the Dollar

While the US dollar ceased to be pegged to the price of gold, it continued as the monetary standard for other currencies, which revolve around the value of the dollar. At least 155 countries either directly peg their currency to the dollar, use the dollar as their own currency, or keep their currency in a tight trading range relative to the dollar.7 That constitutes just under 80% of the nations of the world. This means the quantity of dollars the US puts into circulation shapes to varying degrees the monetary policy of most other states. To maintain this relation to the dollar other states must keep a sufficient supply of them, undermining any sovereignty their currency may possess.  Nations that peg their currencies to the dollar typically rely on exports to the US. Their companies receive payment in dollars from the US market, which they then normally exchange with their own governments for their national currency.

The US Dollar Dominates the World Trade System

In spite of the US losing the status it held after World War II as workshop of the world, the dollar still exercises control over the world economy. It is the primary currency used in world trade; it is the main currency held in national central bank reserves; it is the currency used for just under two-thirds of all international debt; close to all exchange of world currencies involves one currency’s exchange for the dollar; most currencies’ exchange value is heavily influenced by the value of the dollar. Because foreign nations conduct trade in dollars and have debts in dollars, they are dependent on the dollar and the value of the dollar. This seriously compromises any sovereign power they possess.

Consequently, only in the dollar can we find a currency that meets the MMT conditions for being sovereign. All other countries must rely on the dollar to function, particularly for trade, although the degree of this dependency varies, with the subordinate First World powers exercising more independence than Third World nations. The present set-up of the world economy insures that another currency will not become sovereign like the US dollar. Therefore, the key importance MMT attaches to sovereign currency as a tool for national development loses value given these economic realities.

A gross omission made by MMT — the elephant in the room — is US corporate capital’s rule at home and abroad, which allows it to impose itself and its currency on the world. MMT compounds this weakness by presenting the obstacles nations face in establishing a sovereign currency largely as matters of political will, of choice. Ironically, this may explain MMT’s popularity at home in the liberal-left milieu. Implementing full employment, national health insurance, free college education, and the Green New Deal are presented as choices politicians have not yet made because of their mistaken beliefs concerning the national debt. Just clarify that we do not need to raise taxes and need not worry about inflation and bingo! We have what we want.

The question remains, however, why the US debt has grown over $10 trillion in 10 years with almost no inflation. Is the MMT explanation accurate, that the sovereign nature of the US dollar gives it that power? No. Printing or creating dollars out of thin air, backed by nothing, does create inflation. In Why the US Can Keep Increasing its Debt and not Suffer Inflation we show how the US has been able to export much of it and take many of the new dollars of out circulation. This does result from the US position as sovereign, but not in the sense MMT uses.

  1. Annual Report on Exchange Arrangements and Exchange Restrictions 2018, p. 18-19.
  2. The report notes in 2018 “the Central Bank of Somalia does not have a monetary policy framework”
  3. European Central Bank: The International Role of the Euro (June 2019), Box 1 Chart A.
  4. Ibid., Chart 26.
  5. Ibid., Chart 2 and p.19ff.
  6. Bank for International Settlements: Foreign Exchange Turnover in April 2019, p. 10.
  7. Annual Report on Exchange Arrangements and Exchange Restrictions 2018

The post Modern Monetary Theory (MMT) and the Power of the US Dollar in the World Economy (Part 1) first appeared on Dissident Voice.

Russia:  Nord Stream 2 vs. Poisoning of Alexei Navalny

Wednesday, 2 September, all German TV channels, mainstream media were focused unilaterally on the alleged Novichok poisoning of Russian opposition critic, Alexei Navalny. This “breaking-news” poison discovery was made in Germany two weeks after he has been flown from Tomsk in Siberia to Moscow, when he fell ill on the plane and the airliner had to return to Tomsk for an emergency landing.

Navalny was hospitalized in Tomsk, put in an artificial coma and closely observed. His family wanted him immediately to be flown out of Russia to Berlin, Germany, to get western attention and western treatment. So, the story goes. At first the medical staff at Tomsk hospital said that Navalny’s health was not stable enough for a transport of this kind. A few days later they gave the green light for flying him to Germany. Berlin sent a hospital plane – at German taxpayer’s cost – to fly the “poisoned” political patient to Berlin, where during the last 14 days he has been in an artificial coma in Berlin’s University Hospital “Charité”. At least that’s what the government reports.

After 11 days, finally “scientists” — supposedly military toxicologists — have discovered that Navalny was poisoned with military grade nerve gas Novichok.

Military grade!  It reminds vividly of the other bizarre Novichok case — Sergei and Yulia Skripal, father and daughter, who were found on March 12, 2018 on a park bench in Salisbury, Britain, unconscious. The location was about 12 km down the road from the British top-secret P-4 security military lab Porton Down in Wiltshire, one of the few labs in the world that still are capable to produce Novichok. The immediate reaction of Britain and the world was then, like today: Putin did it! Sergei Skripal was a Russian double agent, who was released from Russia more than a decade earlier and lived peacefully in England.

What interest would Mr. Putin have to poison him? However, the UK and Big Brother Washington had all the interest in the world to invent yet another reason to bash and slander Russia and President Putin. The same as today with Alexei Navalny.

Isn’t it strange that the Skripals as well as Navalny survived? And that after having been poisoned with what military experts claim to be the deadliest nerve agent ever? Although nobody has seen the Skripals after they were hospitalized 2 years ago, it seems they are still alive. Were they perhaps given US-British shelter under the guise of the so-called US-witness protection program – a full new identity, hiding in plain view?

The immediate question was then and is today, why would Mr. Putin poison his adversaries? That would be the most unwise thing to do. Everybody knows much too well that Mr. Putin is the world’s foremost perceptive, incisive and diplomatic statesman. Alexei Navalny wasn’t even a serious contender. His popularity was less than 5%. Compare this with Mr. Putin’s close to 80% approval rating by the Russian population. Navalny is known as a right wing activist and troublemaker. Anybody who suggests such an absurdity, that the Kremlin would poison Navalny, is outright crazy.

If there would have been a plot to get rid of Navalny – why would he be poisoned with the deadliest nerve gas there is – and, as he survives, being allowed to be flown out to the west, literally into the belly of the beast? That would be even more nonsensical.

Yet the mainstream media keep hammering it down without mercy, without even allowing for the slightest doubt, down into the brains of the suspected brainwashed Germans and world populations. But the German population is the least brainwashed of all Europe. In fact, Germans are the most awakened of the globe’s western populace. It clearly shows when they resist their government’s (and the 193 nations governments’ around the world) Covid tyranny with a peaceful Berlin protest of 1 August of 1.3 million people in the streets and a similar one on 29 August.

Nevertheless, Madame Merkel’s reaction was so ferocious on September 2 on TV and with the media, as well as talking to leaders from around the world on how to react to this latest Russian atrocity and how to punish and sanction President Putin, that even conservative politicians and some mainstream journalists started wondering – what’s going on?

It’s a debateless accusation of Russia. There is no shred of evidence and there are no alternatives being considered. The simplest and most immediate question one ought to ask in such circumstances is “cui bono” – who benefits?  But no. The answer to this question would clearly show that President Putin and Russia do not benefit from this alleged poisoning at all. So, who does?

The evolving situation is so absurd that not a single word coming out of the German Government can be believed. It all sounds like a flagrant lie; like an evil act of smearing Russia without a reason, and that exactly at the time when Europe, led by Germany, was about to improve relations with Russia. The gas pipeline Nord Stream 2 is a vivid testimony for closer relations between Germany, and by association Europe, with Russia – or is it?

One of Joseph Goebbels’ (Hitler’s propaganda Minister) famous sayings was, when a lie is repeated enough it becomes the truth.

Peculiarly enough, and without any transit-thought, the German right wing, the CDU-party, in particular, came immediately forward with recommending – no, demanding – an immediate halt of the Nord Stream 2 project – canceling the contract with Russia. The “biggest punishment” for Putin. “It will hurt Russia deep in their already miserable down-trodden economy”, were some comments. Those were angry anti-Russian voices. Another lie. The Russian economy is doing well, very well, as compared to most western economies, despite Covid.

What do Russian health and toxicology authorities say, especially those who treated Mr. Navalny in the hospital of Tomsk?

RT reports, according to Alexander Sabaev, the chief toxicologist who cared for him in Siberia, if Alexey Navalny’s condition were caused by a substance from the ‘Novichok’ group, the people accompanying him should also be suffering from the fallout. Instead, Dr. Sabaev believes that Navalny’s condition was caused by an “internal trigger mechanism.” Novichok is an organophosphorus compound, and, due to its high toxicity, it is not possible to poison just one person. He explained, “As a rule, other accompanying people will also be affected.”

Doctors in the Tomsk Emergency Hospital, where activist Navalny lay in a coma for almost two days, found no traces of toxic substances in his kidneys, liver, or lungs.  Alexander Sabaev, leading the investigation, concluded that Navalny was not poisoned.

So why was Dr. Alexander Sabaev not interviewed on German TV or by the western mainstream media?

Neither were members of other German parties interviewed, for example, Die Linke (the Left), or the SPD – the Social Democratic Party. None.  None of the medical doctors or “scientists” who were treating Alexei Navalny at Charité, and who allegedly discovered the deadly poison (but not deadly enough) in Navalny’s body, were interviewed.

Nor was the former Chancellor, Gerhard Schröder (Ms. Merkel’s predecessor, 1998-2005) interviewed about his opinion. Schroeder, a member of the SPD, is one of the master minds of Nord Stream 2 and is currently the chairman of the board of Nord Stream AG and of Rosneft. Would he think that Mr. Putin was as foolish as to kill this German-Russia unifying project by poisoning a right-wing activist, a non-adversary?

Of course not.

Therefore, who benefits?

The United States has for years been objecting vividly and voraciously against this pipeline. Trump: “Why should we pay for NATO to defend Germany, when Germany buys gas from Russia and makes herself dependent on Russia?” – He added, “We offer Germany and Europe all the gas and energy they need.” Yes, the US is offering “fracking gas” at much higher cost than the Russian gas. There are countries in Europe whose Constitution would not allow buying fracking gas, due to the environmentally damaging fracking process.

Is it possible that this was another one of those brilliant acts of the CIA or other US intelligence agencies?  Or a combination of CIA and the German Bundesnachrichtendienst (German Federal Intelligence Service) or an EU-NATO trick? By now it’s no longer a secret that NATO runs Brussels, or at least calls the shots on issues of US interests concerning the European Union or its member states.

Is it possible that Angela Merkel was chosen by the deep-deep state to combat President Putin and Russia, this time by bashing and smearing them with lies – lies as gross as poisoning an opposition activist? To kill the pipeline? What will it be next time?

Today, the first time, official Germany through Mr. Heiko Haas, Foreign Minister, has questioned and threatened the Nord Stream 2 German-Russian joint venture – “if Moscow does not collaborate.” Mr. Haas knows very well there is nothing to collaborate, as Russia was not involved. It is the same argument, if Moscow does not collaborate (in the case of the Skripals) that was used by Theresa May, then British PM, to punish Russia with further sanctions.

Indeed, all is possible in today’s world, where the Washington empire is faltering by the day and the Powers that Be are desperate that their international fraud base – the US-dollar – may be disappearing. Because, not only are Nord Stream 1 and 2 delivering Russian gas to Germany and Europe, but the gas is traded in euros and rubles and not in US-dollars.

Think about it. Killing (or – so far – poisoning) a Russian opposition leader to demolish the German-Russian Nord Stream 2 project?  This is certainly a crime within the realm and “competence” of the US Government and its western allies.

* First published by the New Eastern Outlook – NEO

The post Russia:  Nord Stream 2 vs. Poisoning of Alexei Navalny first appeared on Dissident Voice.

Post-Brexit Agrochemical Apocalypse for the UK?

The British government, regulators and global agrochemical corporations are colluding with each other and are thus engaging in criminal behaviour. That’s the message put forward in a new report written by environmentalist Dr Rosemary Mason and sent to the UK Environment Agency. It follows her January 2019 open letter to Werner Baumann, CEO of Bayer CropScience, where she made it clear to him that she considers Bayer CropScience and Monsanto criminal corporations.

Her letter to Baumann outlined a cocktail of corporate duplicity, cover-ups and criminality which the public and the environment are paying the price for, not least in terms of the effects of glyphosate. Later in 2019, Mason wrote to Bayer Crop Science shareholders, appealing to them to put human health and nature ahead of profit and to stop funding Bayer.

Mason outlined with supporting evidence how the gradual onset of the global extinction of many species is largely the result of chemical-intensive industrial agriculture. She argued that Monsanto’s (now Bayer) glyphosate-based Roundup herbicide and Bayer’s clothianidin are largely responsible for the destruction of the Great Barrier Reef and that the use of glyphosate and neonicotinoid insecticides are wiping out wildlife species across the globe.

In February 2020, Mason wrote the report ‘Bayer Crop Science rules Britain after Brexit – the public and the press are being poisoned by pesticides’. She noted that PM Boris Johnson plans to do a trade deal with the US that could see the gutting of food and environment standards. In a speech setting out his goals for trade after Brexit, Johnson talked up the prospect of an agreement with Washington and downplayed the need for one with Brussels – if the EU insists the UK must stick to its regulatory regime. In other words, he wants to ditch EU regulations.

Mason pondered just who could be pulling Johnson’s strings. A big clue came in February 2019 at a Brexit meeting on the UK chemicals sector where UK regulators and senior officials from government departments listened to the priorities of Bayer Crop Science. During the meeting (Westminster Energy, Environment & Transport Forum Keynote Seminar: Priorities for UK chemicals sector – challenges, opportunities and the future for regulation post-Brexit), Janet Williams, head of regulatory science at Bayer Crop Science Division, made the priorities for agricultural chemical manufacturers known.

Dave Bench was also a speaker. Bench is a senior scientist at the UK Chemicals, Health and Safety Executive and director of the agency’s EU exit plan and has previously stated that the regulatory system for pesticides is robust and balances the risks of pesticides against the benefits to society.

In an open letter to Bench, Mason responded:

That statement is rubbish. It is for the benefit of the agrochemical industry. The industry (for it is the industry that does the testing, on behalf of regulators) only tests one pesticide at a time, whereas farmers spray a cocktail of pesticides, including over children and babies, without warning.

It seems that post-Brexit the UK could authorise the continued use of glyphosate. Of course, with a US trade deal in the pipeline, there are major concerns about glyphosate-resistant GMOs and the lowering of food standards across the board.

Mason says that glyphosate causes epigenetic changes in humans and animals: diseases skip a generation. Washington State University researchers found a variety of diseases and other health problems in the second- and third-generation offspring of rats exposed to glyphosate. In the first study of its kind, the researchers saw descendants of exposed rats developing prostate, kidney and ovarian diseases, obesity and birth abnormalities.

Glyphosate has been the subject of numerous studies about its health effects. Robert F Kennedy Jr, one of the attorney’s fighting Bayer (which has bought Monsanto) in the US courts, has explained that for four decades Monsanto manoeuvred to conceal Roundup’s carcinogenicity by capturing regulatory agencies, corrupting public officials, bribing scientists and engaging in scientific fraud to delay its day of reckoning.

Kennedy says there is also cascading scientific evidence linking glyphosate to a constellation of other injuries that have become prevalent since its introduction, including obesity, depression, Alzheimer’s, ADHD, autism, multiple sclerosis, Parkinson’s, kidney disease, inflammatory bowel disease, brain, breast and prostate cancer, miscarriage, birth defects and declining sperm counts.

In her new document sent to the UK Environment Agency, Mason argues there is criminal collusion between the Department for Environment and Rural Affairs (Defra), the Chemicals Regulation Division and Bayer over Brexit. She also claims the National Farmers Union has been lying about how much pesticides farmers use and have ignored the side effects of chlorpyrifos, chlorothalonil, glyphosate and neonicotinoids. The NFU says farmers couldn’t do without these inputs, even though they destroy human health and the environment.

Of course, farmers can and do go without using these chemicals. And the shift away from chemical-intensive agriculture is perfectly feasible. In a recent article on the AgWeb site, for instance, US farmer Adam Chappell describes how he made the shift on his 8,000-acre farm. Chappell was not some dyed-in-the-wool organic evangelist. He made the shift for financial and practical reasons and is glad he did. The article states:

He was on the brink of bankruptcy and facing a go broke or go green proposition. Drowning in a whirlpool of input costs, Chappell cut bait from conventional agriculture and dove headfirst into a bootstrap version of innovative farming. Roughly 10 years later, his operation is transformed, and the 41-year-old grower doesn’t mince words: It was all about the money.

Surely there is a lesson there for UK farmers who in 2016 used glyphosate on 2,634,573 ha of cropland. It is not just their bottom line that could improve but the health of the nation. Mason says that five peer-reviewed animal studies from the US and Argentina released in July 2020 have focused minds on the infertility crisis being caused by glyphosate-based herbicides. Researchers at The National University of Litoral in Sante Fe, Argentina, have published three concerning peer-reviewed papers including two studies on ewes and rats and one review. In one study, researchers concluded that glyphosate and glyphosate-based herbicides are endocrine disruptors. They also stated that glyphosate-based herbicides alter reproductive outcomes in females.

But such is the British government’s willingness to protect pesticide companies that it is handing agrochemical giants BASF and Bayer enormous pay-outs of Covid-19 support cash. The announcement came just weeks after Bayer shareholders voted to pay £2.75 billion in dividends. The fact that Bayer then went on to receive £600 million from the government speaks volumes of where the government’s priorities lie.

According to Mason, the new Agriculture Bill provides a real opportunity for the UK to adopt a paradigm shift which embraces non-chemical farming policy. However, Defra has stated that after Brexit Roundup Ready GA21 glyphosate tolerant crops could be introduced.

It is also concerning that a post-Brexit funding gap could further undermine the impartiality of university research. Mason refers to Greenpeace, which notes that Bayer and Syngenta, both sell neonicotinoid insecticides linked to harmful effects on bees, gave a combined total of £16.1m to 70 British universities over five years to fund a range of research. Such private funding could create a conflict of interest for academics and after Brexit a potential shortage of public money for science could force universities to seek more finance from the private sector.

Neonicotinoids were once thought to have little or no negative effects on the environment because they are used in low doses and as a seed coating, rather than being sprayed. But evidence has been mounting that the chemicals harm bees – important pollinators of food crops. As a result, neonicotinoids have been banned by the EU, although they can still be used under license.

According to Bayer’s website, academics who reviewed 15 years of research found “no adverse effects to bee colonies were ever observed in field studies”. Between 2011 and 2016, the figures obtained from the 70 universities – about half the total in the UK – show Bayer gave £9m to fund research, including more than £345,000 on plant sciences. Syngenta spent nearly £7.1m, including just under £2.3m on plant sciences and stated that many years of independent monitoring prove that when used properly neonicotinoids do not damage the health of bee populations.

However, in 2016, Ben Stewart of Greenpeace UK’s Brexit response team, said that the decline in bee populations is a major environmental and food security concern – it’s causes need to be properly investigated.

He added:

But for this research to command public confidence, it needs to be independent and impartial, which is why public funding is so crucial. You wouldn’t want lung cancer studies to be heavily reliant on funds from tobacco firms, nor research on pesticides to be dependent on the companies making them.

Stewart concluded:

As Brexit threatens to cut off vital public funds for this scientific field, our universities need a cast-iron guarantee from our government that EU money will not be replaced by corporate cash.

But Mason notes that the government long ago showed its true colours by refusing to legislate on the EU Directive (2009/128/EC) on the Sustainable Use of Pesticides. The government merely stated that current statutory and voluntary controls related to pesticides and the protection of water, if followed, afford a high degree of protection and it would primarily seek to work with the pesticides industry to enhance voluntary measures.

Mason first questioned the government on this in January 2011. In an open letter to the Chemical Regulation Directorate. The government claimed that no compelling evidence was provided to justify further extending existing regulations and voluntary controls.

Lord Henley, the Under-Secretary of State for Defra, expanded further:

By making a small number of changes to our existing approach we can continue to help feed a growing global population with high-quality food that’s affordable – while minimising the risks of using pesticides.

In her numerous reports and open letters to officials, Mason has shown that far from having ‘high-quality food’, there is an ongoing public health crisis due to the pesticides being used.

She responded to Henley by stating:

… instead of strengthening the legislation, the responses of the UK government and the CRD have considerably weakened it. In the case of aerial spraying, you have opted for derogation.

Mason says that, recently, the day that Monsanto lost its appeal against Dewayne Lee Johnson the sprayers came around the Marina in Cardiff breaking all the rules that the EU had set for Roundup.

We can only wonder what could lie in store for the British public if a trade deal is done with the US. Despite the Conservative government pledging that it would not compromise on the UK’s food and environment standards, it now proposes that chlorine-washed chicken, beef treated with growth hormones, pork from animals treated with ractopamine and many other toxic foods produced in the US will be allowed into the UK. All for the bottom line of US agribusiness corporations. It is also worth mentioning at this point that there are around 2,000 untested chemicals in packaged foods in the US.

Ultimately, the situation comes down to a concentration of power played out within an interlocking directorate of state-corporate interests – in this case, global agrochemical conglomerates and the British government – and above the heads of ordinary people. It is clear that these institutions value the health of powerful corporations at the expense of the health of the population and the state of the environment.

Readers can access Mason’s new paper ‘Criminal collusion between Defra, the Chemicals Regulation Division and Bayer over Brexit Agenda’ via academia.edu website (which cites relevant sources), where all her other documents can also be found.

Australia’s Blind Allegiance to United States Foreign Policy Has a High Price to Pay

Well over a century ago the German statesman Otto von Bismarck remarked that countries have neither friends nor enemies only interests. History since then has done nothing to dispel the wisdom of his observation. There are many people still alive today who were alive when this country fought for its very existence against the two mortal enemies of the day: Germany and Japan.

What is the status of those two countries today? Germany is the most economically powerful nation in Europe, a vital member of the European Union and finally after decades in which its economic power was vastly greater than its political influence, is finally asserting itself politically in a manner commensurate with its economic influence.

Similarly, with Japan whose 10-year reign of terror and unparalleled brutality in Asian countries it invaded and occupied was finally ceased by a new role as the designated guinea pig for the then newly developed atomic bombs. Two different versions of that weapon had been developed and had to be tested on human victims.

Japanese signals of wanting to end the war as early as late 1944 had to be ignored as the bombs were not yet ready for testing. The excuse for rejecting the Japanese overtures for a peace deal were on the grounds that they would not make an unconditional surrender. The sole condition Japan sought was the retention of the role of the Emperor.

After the bombs were successfully tested (from the United States point of view) on Hiroshima and Nagasaki, the Japanese unconditionally surrendered. The occupying United States and Allied forces allowed the Emperor to remain!

Japan now plays the same role in the Asian system of United States alliances that Germany plays in Europe. Despite its power as one of the world’s major economies, Japan has remained politically weak. Both Germany and Japan continue to suffer the continued occupation of their countries 75 years after the war ended. There is no possible military or political justification for the continued United States military presence in either country.

That has not, of course, stopped the United States occupation. In respect of both countries the ostensible justification remains the same: the alleged threat from China and Russia. Part of the irony, and the hypocrisy, is that both those nations were part of the allies that fought Japanese and German militarism respectively.

China’s favoured status as US ally changed abruptly after the Communist party took over the government of China in 1949. As every student of the Korean War knows the sequence of events in Korea after 1945, when the Japanese were expelled, made a military conflict between the North, that had been initially occupied by Russian forces until 1948 and the South, occupied by United States forces in 1945 and still there, almost inevitable.

There were cross-border skirmishes by both sides until in 1950 the North mounted a full-scale invasion of the South. A United Nations Security Council resolution (in the absence of the Russians and with the Chinese Nationalists still occupying China’s seat) authorised military intervention.

The Northern troops were rapidly expelled, which met the terms of the United Nations Security Council resolution. That did not stop the United States and Allied troops who in turn invaded the North and continued all the way to the Chinese border. We now know, although it was never admitted at the time, that the United States intention was to continue across the border with China with the intention of defeating the new Communist government and reinstalling the Nationalist regime of Chiang Kai-Shek that had retreated to the island of Formosa where it was protected by US warships in the relatively narrow strait separating Formosa from the mainland.

We now also know that the United States military leader in Korea, General Douglas MacArthur, had sought Washington’s permission to use nuclear weapons against the Chinese mainland forces. Fortunately, that permission was refused, but the request was a revealing insight into the United States military mindset.

Chinese intervention into the war led to the rapid expulsion of United States and Allied troops back below the 38th parallel. Thereafter military stalemate ensued until a ceasefire was agreed in 1953. No peace treaty has been signed to this day.

The purpose of this brief historical summary illustrates that United States–China animosity has a long history and a military option has always been part of the equation. China today is a vastly different military and economic proposition than it was in the early 1950s. In terms of parity purchasing power China is by far the world’ largest economy and has been for several years. It is also a nuclear power capable of wiping out the United States or any other enemy if it chose to do so.

In a rational world, the enormous economic strength of China and the military strength of its close ally Russia, should have led to at least a modus vivendi being worked out and a peaceful, albeit uneasy, truce determined.

Instead we have witnessed the opposite. Although the Trump administration has increased its belligerent rhetoric and waged an ever-increasing economic war against China, he was not the first US President to exhibit hostility toward China. Even if, as seems increasingly likely, Trump is defeated this November, it would be naïve to assume that a President Biden would be any different.

Not the least of the reasons is that United States foreign policy is not determined by rational political actors, but rather subject to direction and manipulation by the forces the outgoing President Eisenhower described in his farewell address in 1960 as the “military industrial complex.”  A 21st century description would add “intelligence” to the actors that Eisenhower referred to.

One of the more difficult things to understand for those of us who prefer to think that rational self-interest remains a powerful motivating force, is the behaviour of the Australian government. China is Australia’s largest trading partner by a substantial margin, taking more than a third of all Australian exports (about seven times the United States market share).

China is also Australia’s largest source of foreign tourists, largest source of foreign students (both very lucrative markets) and third largest source of foreign investment. In a rational world Australia would be carefully nurturing this golden goose. Instead the current government, with the enthusiastic support of the Labor Opposition, is going out of its way to offend and annoy the Chinese.

There is only one logical explanation for this self-destructive behaviour, and that is Australia places a greater weight on the military alliance with the United States than it does on its own economic well-being and the lives and prosperity of its own citizens. It is difficult to think of a polite way of describing this suicidal conduct.

Australian support goes beyond the merely political level. Australian warships in the Asian region are effectively part of the United States Navy exercises that are as this is being written, taking part in yet another so-called freedom of navigation exercise in the South China Sea. No one has been able to point to a single instance of China disrupting the free flow of civilian ships in the region. Given the economic importance to China of the free flow of trade through the narrow Straits of Hormuz (also subject to United States and Australian military patrols), it is not difficult to comprehend China’s reaction to this blatantly threatening conduct.

Should, as seems increasingly likely, the Chinese choose to exert economic pressure on Australia, the economic pain will be immense. Some restrictions on all Australian exports have already been imposed. These may be interpreted as a warning shot across the bows, encouraging Australia to rethink its manifestly suicidal economic behaviour.

There is no evidence that the message is penetrating the political and mainstream media skulls. There is total silence from those two sources of precisely who will step up to replace China’s crucial economic role as the source of Australia’s wellbeing. Reliance upon the Americans is frankly delusional and there is a conspicuous silence from any other prospective trading partner in the region or even elsewhere.

Not the least of the reasons for this regional silence over Australia’s suicidal policies is that a large proportion of those prospective trading partners are among the 160+ nations and organisations that have signed up to the Chinese-led Belt and Road Initiative and a growing number of other trading arrangements in the region that are rapidly developing.

Australia, again loyally following US directives, has shunned the BRI, again without offering a remotely plausible reason for doing so, and manifestly another example of acting against its national economic self-interest.

A profound lesson in geopolitical realism awaits Australia. When it inevitably comes and imposes its own harsh remedy, Australia will have no one to blame but itself.

Tearing Down the Idols of Colonialism: Why Tunisia, Africa Must Demand French Apology  

The visit by newly-elected Tunisian President Kais Saied to France on June 22 was intended to discuss bilateral relations, trade, etc. But it was also a missed opportunity, where Tunisia could have formally demanded an apology from France for the decades of French colonialism, which has shattered the social and political fabric of this North African Arab nation since the late 19th century.

A heated debate at the Tunisian parliament, prior to Saied’s trip highlighted the significance of the issue to Tunisians, who are still reeling under the process of socio-economic and political transitions following the popular uprising in 2011.

Sadly, the Tunisian parliament rejected a motion forwarded by the centrist Karama coalition calling for a French apology, despite a fifteen hours’ long debate.

“We are not animated by any bitterness or hatred, but such apologies will heal the wounds of the past,” Seifeddine Makhlouf, head of Al-Karama, said during the debate. Makhlouf is under no moral obligation to explain his motives. A French apology to Tunisia, and many other African countries that have endured French colonialism for hundreds of years, is long overdue.

Ravaged by a relentless economic crisis, and still largely dependent on France as a foremost trade partner, Tunisia fears the consequences of such a just demand, which, if officially made, will also include a call for compensation as a result of nearly 75 years of exploitation and the subsequent collective trauma suffered by several generations.

A particular statement made by Osama Khelifi of the Qalb Tounes party delineates the unfortunate reality that continues to govern the thinking of Tunisia’s political elites. “We are not going to feed Tunisians with such notions,” he said.

Inconsequential to Khelifi, and others among the parties that rejected the motion, is that coming to terms with the past is a prerequisite for any nation that wishes to start anew. What would be the point of revolutions and revolutionary discourses if Tunisian politicians insist on merely trying to get along with a status quo that is imposed on them by outside forces?

While Saied was paying his diplomatic dues to Paris, statues were tumbling down across the Western world; some of former slave owners, others of racist ideologues and pioneers of colonialism.

On June 7, the statue of Edward Colston, a 17th century slave trader, was taken down in the English town of Bristol. This was only one of many other monuments that were destroyed or defaced throughout the United States and Europe.

However, across the English Channel, the French government remained obstinate in its refusal to take down any similar statues, as if insisting on its refusal to revisit – let alone take responsibility – for its sinister past, especially the bloody and tragic events that shattered the African continent.

Statues are built to honor individuals for their great contributions in any society. They are also erected as a reminder to future generations that they must emulate these presumably great individuals. France, however, remains the exception.

Unsurprisingly, French government officials are engaging in nonsensical arguments as to why such statues, as that of Jean-Baptiste Colbert — a white aristocrat who, during the 17th century reign of King Louis XIV, established the horrific ‘Black Code’, the rules according to which black slaves were to be treated in the colonies – should remain intact.

Macron himself has made it clear that “the Republic  … won’t remove any statues.”

The collective rethink underway in various Western societies, which have greatly benefited from the exploitation of Africa, was ignited by the brutal murder of George Floyd at the hands of American police officers in Minneapolis.

Spontaneous popular movements, led mostly by the youth, connected the dots between racism, slavery, and colonialism, taking to the streets in their millions to demand a complete overhaul of the status quo.

Yet, France’s political elites continue to embrace French exceptionalism, arguing that, unlike the American experience with race and slavery, French law was never, at any point in the past, purposely racist.

In truth, past arrogance — ‘mission civilisatrice’ — continues to define France’s attitudes towards the present. This is why the French colonial experience was particularly keen on composing a clever discourse to account for its exploitation of Africa and other regions in the world.

In this skewed rationale, France’s invasion of Algeria in 1830 was dubbed as something else entirely. Algeria was now an integral part of France, they argued. Other countries, like Tunisia and Morocco, were made protectorates, ruled indirectly through corrupt local authorities. The rest of France’s African colonies were ravaged mercilessly by greedy French administrators.

Unlike other European experiences, the French colonial connection to Africa did not disintegrate in recent decades. Instead, it took on different forms, known by the now disparaging term ‘Françafrique’.

The expression ‘Françafrique’ was introduced in 1955 to describe the ‘special relations’ between France and the newly-independent African countries, now bound with what France called ‘cooperation agreements’. It was rightly understood that France was entering a new phase of colonialism in Africa: neo-colonialism.

Despite former French president, François Hollande, pledging to eradicate the term ‘Françafrique’ and its practical meaning, little has changed between France and its former African colonies.

Indeed, France can be found in every aspect of life, whether political, military, economic or even cultural, in many African countries. In the cases of Mali and Libya, the French intervention takes on an even more crude manifestation: domineering and violent.

To appreciate French neo-colonialism in Africa, consider this: fourteen African countries are still economically bound to France through the use of special currency, the CFA franc, designed specifically by France to manage the trade and economies of its former colonies. This jarring example of French neo-colonialism in Africa is consistent with France’s colonial and racist past.

Whether France chooses to come to terms with its past is entirely a French affair. It is, however, the responsibility of Tunisia – and the whole of Africa – to confront France and other colonial and neo-colonial regimes, not merely by demanding apologies and compensation, but insisting on a complete change of the present, unequal relations as well.

“In the colonial context the settler only ends his work of breaking in the native when the latter admits loudly and intelligibly the supremacy of the white man’s values,” wrote Frantz Fanon in ‘The Wretched of the Earth’.

The opposite must also be true. Tunisia, and many African countries, must demand a French apology. By doing so, they declare ‘loudly and intelligibly’ that they are finally free from the ‘white man’s (selfish and racist) values,’ and that they truly see themselves as equal. 

From Toxic Food to Agrarian Disaster: Dirty Deals Done Dirt Cheap

During the early days of the coronavirus lockdowns, in some quarters there was a certain degree of optimism around. Although millions of people were suffering, the hope was that the Covid-19 crisis would shine light on societal and economic systems across the world, exposing some of the deep-rooted flaws of capitalism. There was a belief that people working together with their respective governments could start building a fairer capitalism and more sustainable economies.

However, we see exactly the opposite taking place. In the UK, we now witness a post-Brexit trade deal being negotiated behind closed doors with the US that could see a lowering of food and environment standards, despite the Conservative government pledge that it would not compromise on standards in these areas. The government now proposes that chlorine-washed chicken, beef treated with growth hormones, pork from ractopamine-injected animals and many other toxic foods produced in the US will be allowed into the UK. Sanctioning the entry of (chemical-resistant) GM crops and GM food are also likely to be part of any deal.

It would effectively mean sacrificing UK farmers’ livelihoods, the environment and the nation’s health to suit the bottom line of US agribusiness corporations.

The UK isn’t the only country that US agribusiness has set its sights on. World Bank Group President David Malpass has stated that poorer countries will be ‘helped’ to get back on their feet after the various coronavirus lockdowns. This ‘help’ will be on condition that neoliberal reforms are implemented and become further embedded. Ranil Salgado, mission chief for India at the IMF, says that when the economic shock passes, it’s important that India returns to its path of undertaking such long-term reforms.

But haven’t ordinary Indians already had enough of these ‘structural adjustments’ and their impacts? Rural affairs commentator P Sainath has highlighted the desperate plight of migrant workers in India. He notes that millions of rural livelihoods have been deliberately snuffed out over a period of many years, sparking an agrarian crisis. As a result of lockdown, tens of millions went back to their villages but there is no work there because rural jobs have been extinguished – the reason for urban migration in the first place.

The US has been pushing to bring Indian agriculture under corporate control for a long time. Further ‘reforms’ would serve to accelerate this process. US agribusiness wants to force GMO food crops into the country, further displace peasant farmers thereby driving even more people to cities and ensure corporate consolidation and commercialisation of the sector based on industrial-scale monocrop farms incorporated into global supply chains dominated by transnational agribusiness and retail giants.

Like the UK, India is also involved in trade talks with the US. If this deal goes through and India capitulates to US demands, it could devastate the dairy, poultry, soybean, maize and other sectors and severely deepen the crisis in the countryside. India could also see GMO food flooding the country and the further corporate consolidation of the seed sector. The article ‘Perils of the US-India free trade agreement for Indian farmers’ published on the grain.org website highlights what could be in store.

In the wake of India deciding to not participate in the Regional Comprehensive Economic Partnership, another trade deal that would have had devastating consequences for farmers and the food system. the article concludes:

It would be inconsistent, and a slap in the face, to now start US-India trade talks that will pose much bigger challenges for India’s rural communities and agriculture sector. Such a deal would greatly compromise India’s huge diversity of local seeds and plants which are conserved and reused by millions of Indian farmers year after year. It will also destroy India’s hope for food sovereignty.

Any such trade deal will be for the benefit of powerful agribusiness giants and will reinforce the concentration of political and economic power in the hands of these corporations. It would also send millions more to the cities in search of jobs that are just not there. This will be the result of the ‘reforms’ demanded by the World Bank and IMF.

If lockdown has shown anything, it is that many of those who sought better lives in the cities have failed to establish a firm foothold. They are marginalised and employed in the worst jobs working long hours for minimal wages. The fragility of their position is demonstrated by the reverse migrations we have witnessed and the callous treatment they are used to was demonstrated by the government’s attitude to their plight under lockdown.

The various lockdowns around the globe have also exposed the fragility of the global food system, dominated by long-line supply chains and global conglomerates – which effectively suck food and wealth from the Global South to the richer nations.

What we have seen underscores the need for a radical transformation of the prevailing globalised food regime based on a system of agroecology which reduces dependency on external proprietary inputs, distant volatile commodity markets and patented technologies. It would help to shorten chains, increase crop diversity, improve diets, regenerate soils, support food sovereignty, re-localise production and consumption and boost local economies, which in India would stem the flow of people moving to the cities and would even create livelihoods for those who have returned to the countryside.

It is the type of system that Prof Michel Pimbert and Colin Anderson of Coventry University in the UK advocate. In contrast to corporate-driven trade deals, centrally controlled hi-tech innovations, people-free farming, drones replacing bees, genetically engineered crops and a future of synthetic lab-based food, the two academics argue:

Agroecological innovations… are being driven largely from the bottom up by civil society, social movements and allied researchers. In this context, priorities for innovations are ones that increase citizen control for food sovereignty and decentralise power.

Instead of trade deals hammered out behind closed doors above the heads of ordinary people by elite interests, the authors state that deliberative, inclusive processes like citizens’ juries, peoples’ assemblies and community-led participatory actions are urgently needed.

It is these types of processes that should guide all economic sectors, not just agriculture. Processes underpinned by a vision for a better, more just world that can only be delivered by challenging capitalism’s dispossessive strategies which fuel India’s agrarian crisis and the types of human and environmental degradation and exploitation we see across the globe.

China’s new Crypto-Currency:  First Step to Full Dedollarization?

 ‘We’ll cut off the whole relationship’ –Trump threatened China in a recent Fox-Business interview, suggesting he may cut diplomatic relations with China and thereby saving US$ 500 billion. He didn’t say how, though.

Mr. Trump’s anger referred to what he calls China’s “mismanagement” of the corona crisis. This is consistent with the new China bashing hard line being pushed by his administration. “I’m very disappointed in China,” Trump said during the same Fox interview. “We asked to go over and they said no,” he continued, referring to the Centers for Disease Control and Prevention’s (CDC) February offer of assistance to the virus-stricken city of Wuhan. “They didn’t want our help. And I figured that was OK because they must know what they are doing. So, it was either stupidity, incompetence or deliberate.”

These are strong and unsubstantiated words, since there has never been a clearly documented accusation against China in how precisely China mismanaged the COVID-19 outbreak and is supposedly responsible for the COVID crisis in the US where real mismanagement, corruption, conflict of interest and particularly pharma-interests, competing private vaccine company interests  are written all over the walls, the walls of shame, falsifying corona statistics, by falsifying death certificates, paying hospitals for declaring any patient a COVID-patient, even if many of them aren’t, and for using ventilators, though it is widely known that ventilators are causing death in 60% to 80% of patients.

It is almost certain that the virus was created in a US bio-weapons lab from where it escaped deliberately or by accident and that patient zero was in the US and that the virus was brought to China in one way or another. President Trump knows it. He also knows about the real mismanagement of the crisis in his country, the United States. But he has always been good at self-promoting propaganda and slandering perceived enemies, as long as he thinks it may help him being reelected.

It is obvious that the US China bashing has nothing to do with China’s “mismanagement” of the corona epidemic, but rather with China’s bold move a step further away from the dollar-economy, by:

First, using the yuan and local currencies boosting trade among the ASEAN+3 countries (Association of Southeast Asian Nations – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam; plus 3 = Japan, South Korea and China). Monetary transactions will use the CIPS (Cross-Border Interbank Payment System), avoiding the dollar controlled SWIFT payment scheme. This is mostly to prevent US interference in international monetary transactions and also in response to the United States’ threat of cutting off Chinese supply chains.

The cutting off supply chains is, of course, sheer bluff, as literally 80 percent-plus of US industries depend in one way or another on supplies from China. This dependence is particularly significant in medical supplies, where the US depends for 80% to 90% on China. But China is China, and President Xi acted fast calling the bluff and the US may suddenly stand there with an empty cup, since such supply chains are not replaced overnight.

In the first quarter 2020, ASEAN countries have become China’s largest trading partner with 15.1 %, outpacing the European Union (EU). Trade with South Korea and Japan amounted to another 13.7%, bringing the total close to 30%. Adding China’s trade with Russia, another at least 15%, is getting close to a 50% tipping point of China’s closest partners abandoning commercial transactions in US-dollars.

Second, by launching a new People’s Bank of China (PBC = China’s Central Bank) controlled crypto-currency for international trade, thereby further circumventing the US-dollar and SWIFT controlled international money transfer system which makes all transactions vulnerable to US interference and sanctions.

China’s new cyber-money, e-RMB (Ren Min Bi, meaning People’s Money), or Yuan, is currently being tested in several Chinese cities, including Shenzhen, Suzhou, Chengdu, and Xiong’an. In these cities it has almost universal acceptance; i.e., for salary payments, public transportation, food and most retail shopping.

The use of digital money is nothing new in China. Today about 90% of all monetary transactions are electronic, for example, through WeChat and AliPay, but they do not replace the existing cash currency.

Commodity pricing today, mostly dollarized, will be priced by China in yuan and traded in crypto-yuan. Yuan pricing for commodities, such as gold, crude oil and iron ore, has already started. As China is recovering from the pandemic more quickly than the rest of the world, relatively high-returning yuan-denominated investments and commodity assets will become more attractive.

The non-interference factor of a Chinese Central Bank backed crypto-currency is an additional security element that will further boost the Chinese Yuan as a reserve currency. Already now, countries around the globe are sick and tired of US meddling in their international transactions and especially with US sanctions – that may come at a whim – every time a country demonstrates her sovereignty or disobedience to US dictates. This leads many countries that may not speak out publicly for fear of sanctions to gradually and quietly divesting their dollar holdings into Chinese yuan.

A tipping point may be reached when about 50% of world trade and world reserves are denominated in yuan. At this point it would be likely that the worldwide dollar hegemony will be no more, as it may be displaced by the yuan.

Several leaders of countries were killed for attempting to replace the dollar for trading with other currencies. For example, Saddam Hussein, for his intent to use the euro for trading Iraq’s hydrocarbon riches, and Libya’s Gadhafi, when he wanted to introduce the Gold-Dinar as a Pan-African trading currency, thereby freeing Africa from western monetary slavehood. As we all recall, he was literally lynched by NATO on 20 October 2011, at the initiative of Hillary Clinton with the strong support of then French President Sarkozy. By the way, this western monetary stranglehold on Africa prevails as of this day – a new-old kind of colonization, nobody in the western mainstream reports on.

Once the new e-RMB (yuan) has been successfully tested locally it will be launched internationally. While China’s new PBC-backed cyber-currency’s internationalization will make the yuan even more attractive among trading partners, and also as a reserve currency, China may simultaneously divest its huge reserves of US Treasury bonds (about US$1.2 trillion) into purchasing assets abroad paid in US-dollars. The Belt and Road investments maybe a suitable vehicle to reduce dollar holdings at home.

In the current high corona debt-crisis around the world, especially the Global South, China may also consider a program of Debt Jubilee (debt forgiveness) to the poorest partner countries which may be already, or potentially be, future Belt and Road associates.

At present and since October 2016, the Renminbi (Chinese yuan) is part of a 5-currency basket at the IMF that constitutes the Special Drawing Rights (SDR), the world’s ultimate virtual reserve currency. The SDR share distribution is US-dollar 41.73%, euro 30.93%, Chinese yuan 10.92%, Japanese yen 8.33% and the British pound 8.09%. This currency allocation to the SDR is disproportionate with regard to the economic strength of the respective countries, especially China, the world’s second largest economy, rapidly moving towards first place.

China may want to vigorously renegotiate with the IMF her currency proportion in the SDR, as well as reviewing country quotas which by now are out-of-line with member countries’ economic weight. An IMF capital increase is overdue. The IMF capital base today is SDR 477 billion (US$ 677 billion). In addition, there is the temporary New Arrangement to Borrow (NAB) which in January 2020 has been doubled to SDR365 billion (US$ 475 billion), a total resource-base of about US$ 1.15 trillion. Yet, the IMF already today foresees US$ 1 trillion for additional corona debt lending and debt forgiveness. Since the NAB is only a temporary arrangement, a quota increase and review; i.e., a proper adjustment for China’s economy is more than overdue.

A quota adjustment in favor of China and the corresponding adjustment of the yuan’s proportion in the SDR basket would further enhance China’s currency vis-à-vis the rest of the world. This coupled with an incorruptible cryptocurrency controlled by China’s Central Bank and possibly backed by gold, would be a formidable reserve currency that most countries would like as their chief reserve asset. This, of course, is what Washington is afraid of. It would clearly endanger and probably crush the global US-dollar hegemony.

The world would be a better place for it.

Therefore, the current China bashing and attributing guilt for spreading and mismanaging the corona virus is a sheer farce – a treachery of the
world, a deviation of the real reason behind Trump’s attempt to demolish China’s reputation around the globe, namely by doing so, hoping to destroy the rise of China and the appreciation of the Chinese yuan, and thereby the yuan’s attractiveness as an investment currency for most of the rest of the world.

This is pretty similar to the real reason for the 2018-2019 US-China trade war, initiated by President Trump, had the objective of ruining the yuan’s reputation in the world arena. To no avail. Washington eventually quietly and unceremoniously lost the conflict over trade. Despite Trump’s loud declarations to the contrary, the US needs China much more than vice-versa.  Just look at the Chinese supply chain which the west, in particular the US, cannot replace from one day to the other.

Under President Xi Jinping’s leadership, China has switched gears rather fast. Preparations to orient towards Asian markets are in full swing. China is enhancing relations with Asian markets; i.e., the ASEAN countries, plus Japan and South Korea.

Members of the SCO (Shanghai Cooperation Organization) are also a trading market China is already engaged in and may further strengthen it. The SCO, in addition to China and most of the Central Asian countries, include also Russia, India and Pakistan – and Iran is waiting for imminent admission. thers, like Malaysia and Mongolia are in observer status and also slanted to become SCO members in due course.

The combination of SCO, ASEAN-plus 3, amounts to more than half the world population and accounts for more than a third of the world’s economic output. This is a formidable global “market share” and will likely increase with every atrocity – military and economic – Washington is committing around the globe.

With her new crypto-currency, which eventually will be internationalized, China is well on her way to fully dedollarize, with the cyber-yuan replacing the US-dollar as the key trading and main reserve currency and to displace the United States as the world’s financial and economic hegemon.

The current China bashing does not prevent China from forging ahead with her economic activities – trade – and especially the unstoppable Belt and Road Initiative (BRI) via maritime and land routes, already counting on 160 partners (about 120 countries and some 40 multinational organizations) on four continents. This revolutionary global development scheme will require trillions of yuans and dollars for investments. It will also be generating trillions in revenues over time, shared with BRI partners. All towards a common future for mankind – a world moving towards an equilibrium with justice, harmony and peace.

Trump wins! Completing Obama’s Pivot to Asia and the Confrontation with China

Even before becoming the 45th president of the United States, Donald Trump had one consistent foreign enemy – China. Partly fueled by his intrinsic white supremacy and his antipathy for the liberal elite “globalists” who evoked his personal inferiority complex, Trump has never waivered from his fierce opposition to what he saw as the “yellow peril” from China.

So when the Obama Administration announced in 2011 that the US would make “a strategic pivot” in its foreign policy to focus its military and political attention on the Asia-Pacific, particularly Southeast Asia, which meant China, it was one time that Trump supported Obama’s position – but for very different reasons.

For Trump, the problem was the cozy relationship between finance capital and the transnational corporations they funded during the neoliberal period of rapid and deepening globalization of production. The result of that relationship was that much of the industrial base of the U.S. economy was transferred first to Mexico and then mainland China. Altering that relationship and bringing those jobs “back home” as part of his “America first” position became a campaign issue and his intended first order of business once he assumed the presidency.  Shifting trade relations in favor of his capitalist base in the U.S. was a primary objective with Chinese containment being a necessary but almost secondary objective.

Trump’s opposition to the Trans-Pacific Partnership (TPP), the “gold standard of trade deals” according to Hilary Clinton before she pretended to oppose the treaty during her 2016 campaign, was seen by the elite as the signature deal that would provide the leverage to contain China’s ambitions in the Asia-Pacific region and globally, while also ensuring the continuity of economic relationships for U.S. transnational capital to utilize China as a profitable zone for the production of goods and services for the U.S. and European markets.

Trump’s opposition to the TPP and his comments regarding the entire architecture of the global neoliberal project of the last forty years was seen as reckless and made him a threat. The financial and corporate transnational elite moved swiftly operating though the state and media to destabilize his administration, even before he took office. That fraction couldn’t care less about his rhetoric on race, Muslims and immigration; in fact, his theatrics became a very valuable distraction while they completed the strengthening of the national security state under Bush and Obama and plotted to either get rid of Trump or impose the discipline of their agenda on his administration.

As Trump saw it, completing the pivot to Asia required one strategic angle – reducing tensions with Russia with the intent to bring them into the fold of “Europe” in order for the U.S. and Europe to combine forces to discipline China. What Trump hadn’t anticipated and was clearly unprepared for, was the ferocity of the efforts to make it impossible for him to govern. Russiagate became the issue that would block his plan to reconcile with Russia and bring the full force of the state against China.

But, today, after having survived the unprecedented efforts by unelected power to undermine his presidency perhaps in the history of the U.S. nation/state short of actual assassination, Trump has the support of a growing coalition of forces across the ruling class spectrum that represent a new and growing consensus that China is out of control and is a real threat to U.S. global hegemony.

What changed?

Limiting China to a specific role in the international division of labor was always part of the plan even when China received “most favored Nations status” in the 90s and membership in the World trade Organization.

The relationship between U.S. transnational capital and the Chinese state was seen as a win-win. China served as platform to produce goods and services for U.S. markets providing jobs for Chinese labor and revenue for the state while providing price competitive products for U.S. consumers. In the process it was assumed that China’s integration and participation in the global capitalist order would result in the “liberalization” of their economy and political system and open up an enormous new market for U.S. capital.

The problem, of course, was that the Chinese had their own plans.

The new bipartisan, ruling class consensus that more aggressive measures were needed to contain China was captured in the now infamous “pivot to Asia” announced by Barack Obama in 2011.

Today the growing ruling class consensus that has given new life to Trump’s anti-China campaign is reflected in the positions that say economic integration with China did not result in any transformation of China into a “regular” capitalist nation. And with the Chinese Belt and Road Initiative (BRI) introduced by Chinese president Xi Jinping, China is an existential threat that can only be countered by military means.

War Against China, COVID-19, and Black Working-Class Position

“Not One Drop of Blood from the Working Class and Poor to Defend the Interests of the Capitalist Dictatorship” (Black Alliance for Peace (BAP) Slogan)

The psychopathology of white supremacy blinds U.S. policymakers to the political, economic, and geopolitical reality that the U.S. is in irreversible decline as a global power.  The deep structural contradictions of the U.S. economy and state was exposed by the weak and confused response to COVID-19 and the inability of the state to provide minimum protections for its citizens and residents. But even in decline, the U.S. has a vast military structure that it can use to threaten and cause massive death and destruction.

This makes the U.S. a threat to the planet and collective humanity because U.S policy-makers appear to be in the grip of a death-wish in which they are prepared to destroy the world before voluntarily relinquishing power, especially to a non-European power like China.

For example, when Secretary of State, Mike Pompeo declared in public that the United States and its Western European allies must put China in “its proper place,” this represents a white supremacist mindset that inevitably will lead to monumental errors of judgment.

This white supremacist, colonialist mentality is unable to accept the full and equal humanity of non-Europeans and, therefore, are driven to an irrational obsession with preventing what is now inevitable – global hegemony passing to China.

To prevent this objective eventuality, U.S. policymakers are openly advocating war with China. Not only war, but a war that some of them argue must take place before 2025!

And this is not some wild construction from the Trump Administration.

More than a decade ago military strategists war-gamed on how to defeat the Chinese concentrating on fuel supplies and trade routes. The RAND Corporation described during the Obama Administration how the U.S. could defeat China in a conventional war and in 2011, the Council of Foreign Relations began to urge the U.S. to withdraw from the Intermediate-Range Nuclear Forces (INF )Treaty which it did in 2019 in order to redeploy intermediate range missiles off the coast of China.

COVID-19, that the Trump Administration constantly refers to as the Chinese virus, and the blame game being played, is preparing the public to support conflict with China.

However, The Chinese are aware of the dangerous turn of events with COVID-19 and are preparing accordingly. And here is the real danger.  Forces within the Chinese Communist Party and military are warning that the nation must prepare itself for all contingencies, including armed conflict.

For African Americans we must resist all efforts to draw us into a conflict that has nothing to do with us. We must be clear that we are not going to allow our sons and daughters to be sacrificed in yet another war of aggression on behalf of white capitalist/colonial power.

We must reject anti-China propaganda being directed at our communities using lurid stories of Chinese anti-black racism in China and the alleged attempts by the Chinese to “colonize” Africa, a position that is both absurd and insulting in how it trivializes the brutal reality of European colonization that the continent has yet to recovery from.

Trump is winning the propaganda war on the Chinese issue because at its core the U.S. is susceptible to appeals to cross-class white racial solidarity against the uncivilized hordes. Samuel Huntington’s Clash of Civilizations did not just resonate with right-wing audiences but was an acceptable commentary on the challenges of Western modernity.

However, we must remain clear about who our enemy is. It is not the Chinese who are beating us down in the streets for not social distancing, who have denied us medical care, imprisoned us, killed us, poisoned our water, and forced us to face death on a job just to survive.  We got a historical beef, but it ain’t with China, Russia, or any of the enemies of the U.S.