Should the dollar crash...

The big difference in this US doughnut is that both the budget deficit and the $600-billion-plus trade deficit are financed by foreigners, as we have seen. Uncle Sam would exclude most of them as persons, but gladly receives the real goods they produce. As world consumer of last resort, as already suggested, Uncle Sam performs this important function in the present global political economic division of labor: everybody else produces and needs to export and Uncle Sam consumes and needs to import. The crash of the dollar would (will?) crumble this entire world-embracing and -organizing political economic doughnut and throw hundreds of millions of people, not to mention zillions of dollars and their owners, into turmoil, with unforeseen and perhaps unforeseeable consequences.

Many people, high and low on the world totem pole, have a big stake in avoiding that, even if it requires continuing to blow an empty Uncle Sam up like a balloon. Or to refer to a well-know metaphor, to continue to pretend that the emperor with no clothes is dressed up. That still includes China, for which a financial showdown with Uncle Sam would be a blessing in disguise: it would oblige China to change its political economic course, and instead of giving its goods away for free to Uncle Sam, to turn production and consumption inward to its poor interior and outward to its neighbors in East Asia, all of which it could and should be doing already. (The latter China has recently begun to do, but not yet the former.)

Of course, crashing the dollar would finally also in one fell swoop wipe out, that is default, Uncle Sam’s debt altogether. Thereby, it would simultaneously also make all foreigners and rich Americans lose the whole of their dollar-asset shirt, of which they are still desperately trying to save as much as possible by not so doing. In fact, this historically necessary transition out from under the US-run doughnut world could bring the entire world into the deepest depression ever – and in all of them the poorest suffer the most. Only East Asia could save itself with greatest ease, but also after paying a high cost for this transition – toward itself! Thus, the Uncle Sam Ponzi Scheme poses the world’s biggest and craziest Catch-22 since MAD (mutually assured destruction).

However, even this would not be historically new. Recall how much the transition to Uncle Sam cost: another 30 Years’ War from 1914 to 1945 with the intervening second Great Depression in a century that cost 100 million lives lost to war, more than in all of previous world history, not to mention the millions who suffered and died from unnecessary starvation and disease. Or the previous transition to Britain cost the Napoleonic Wars, the Great Depression of 1873-95, colonialism and semi-colonialism, to name a few, and their human costs, especially combined with the most pronounced El Nino climatic changes in two centuries, which ravaged Indians, Chinese and many others with famines. But these were in turn magnified by the imperial colonial powers and used in their own interests, e.g. increased export of wheat from India especially during years of famine.

The parallels with today, including even again taking advantage a century later of renewed stronger El Niños, are too horrifying and guilt-generating for hardly anybody to make with Uncle Sam’s International Monetary Fund-imposed ‘structural adjustment’ that obliges Mexican peasants to have already eaten the belt that the IMF wants them to tighten still further. And that is not to mention 3 million dead in Rwanda and Burundi, and then some in neighboring Congo, first after IMF-imposed strictures and the cancellation primarily by Uncle Sam of the Coffee Agreement that had sustained its price for these producers. And then we get the scramble for and production and sale there of gold for Uncle Sam’s Fort Knox, titanium so we can communicate by mobile telephone, diamonds forever, and so on.

Yet there are also others in the world that do not (yet) feel all caught in this trap. Just before the 2004 US election, one of them said so out loud in a video broadcast to the world. It seems to have been least publicly noted by its principal addressee, Uncle Sam, who should have been the most interested party, for it was none other than Osama bin Laden himself who announced that he was ‘going to bankrupt the Uncle Sam.’ In view of Uncle Sam’s deliberate blindness to the shakiness of his real-world foundation abroad, so massive a collapse may not be more difficult to arrange than it was to topple its Twin Towers symbol.

Date: 2015-12-11; view: 712