In a move that with only intensify the ongoing In the G20 on Friday, China has refused to comply with a demand to place “limits on current account balances or any other form of rules on currency policy.” [1] The G20 has asked for a 4 percent of gross domestic product account surpluses and deficits. This demand came from the United States and it is clearly aimed at China’s trade surplus.
U.S. Treasury Secretary Timothy Geithner said this in a letter to G20 finance chiefs:
“China has clearly said that it will not accept a communiqué that spells out any target on the current account or for that matter any kind of FX norm.”
[2]
The current position of the leading G20 nations is that they want to avoid a currency war. They have set up economic parameters that are supposedly fair to everyone. However this is simply not the case, the US has very definite interests separate from those of China. Obama’s economic policy (along with the rest of the US elites) has been to actually get the US economy going again. There has been a great deal of trouble getting a recovery started. Even The Economist has admitted that there are “structural barriers” to job creation. China by contrast has had to slow the growth of their economy. Their recovery has been fast and more effective than originally expected.
China is doing what is best for its economy, while the US is trying to do what is best for its economy. All countries that are not under imperialist control are doing the same. China will not bend to the will of the US government and its interests, so the US is claiming that China is engaging in “economic warfare”, while dangling the spectre of a currency war over the world’s head.
According to experts, this “currency war” threat has three possible aims:
1. It would effectively paint China as an enemy and portray Western leaders as innocent when things get worse (i.e. it’s all China’s fault).
2. It is a message to everyone else in the G20 who may not cooperate with US interests. The US controls the G20 so if you disagree with a ruling by the G20, you are going to pay. It is a straight intimidation tactic via example to show who has the power.
3. It portrays anyone who goes against the interests of the US by making them seem responsible for further global economic unraveling.
The United States is using the G20 to faint a false picture. A phony “way out of recession” scheme is created, but it is entirely in the Americans interests with no one else’s taken into consideration. The G20 is used to make it look official as possible, the G20 gives it an air of credibility. Thus anyone who refuses to go along with the “US protection plan” is labelled as someone responsible for any further economic break down.
Currently the only policy the US has for ending their recession is to print more money and hand it out to the banks to loan out to get the economy going. The “structural barrier” The Economist alluded to, was the fact that money loaned out will end up in Chinese or now possibly Vietnamese manufacturing. This does and will continue to happen because it is cheaper to produce commodities overseas than domestically. However, these manufacturing jobs are needed domestically to recover the economy. Nothing short of disallowing a transfer of manufacturing overseas will stop this. But it won’t happen because the elite who do this will no longer make the super-profits. In the end they are really just printing money for nothing, well; it causes inflation weakening the dollar.
This is the true insanity of the capitalist system. It will continue doing something harmful that could possibly end up destroying the entire economy just so they don’t lose even a small amount of their profits. The profit motive will eventually kill capitalism and the ruling class itself.
This tense situation with the US dollar losing power is not going unnoticed by other big players in the world economy. “It seems undeniable that countries like Brazil, China and India are now pursuing their own monetary policies extant of the Anglo-American axis. In the 20th century, countries that did this sort of thing were attacked by the CIA and their leaders were overthrown and the nations were brought back into line, often with brutal results.” [3] A real possibility is that maybe these economic powers smell blood. China is already telling America to back off, combine that with two official/three unofficial wars in the Middle East, and they see US military power stretched to the limit. These countries know that US military power is at its limit. So they really can’t afford to step in and d anything. Now it must seem like a good time to break off and do what’s good for them and not act like a puppet.
This economic crisis situation could very well be the end of the US Empire.
[2] Reuters
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