Bulletins and News Discussion from June 3rd to June 9th, 2024 - Morena Reigns More - COTW: Mexico

I think it is a combination of ideological capture by Western neoliberal theories (I genuinely think they don’t understand how money works. MMT is gaining ground in China but for every MMT-literate economist there are probably 9 neoclassical-brained economists pushing back), the impending real estate-local government debt crisis and their inability to give up the export-led economy and expand into its domestic consumption market, of which it has a huge base to rely on.

I have pointed out before that a very simple way to see how China can defend against the US currency warfare is by looking at their deficit spending every year. China has always maintained its deficit spending in the range of 2-3% of its GDP (and only last year raised to 3.5%) and all this suggests that the vast majority of its spending has relied on its huge export revenues. This proportion (net money creation by the government) is way too low to stimulate a domestic consumption-led economy and China will always be reliant on access to international trade markets before they can spend, which explains why they are so reluctant to give up the dollar.

Ultimately, it seems that it is the US that is actively decoupling from China (see the recent tariffs against China’s EV) and is taking the proactive role in reshaping the global economy to regain the footholds that it lost during the 2022 inflation.

This is why Marxism is called scientific socialism. It requires a scientific approach towards solving the problems of our material world, not relying on utopian fantasy that is not grounded in reality. You cannot send a rocket to space without making the necessary advances in physics first.

Dollar hegemony is the reality we live in post-1971, and no amount of wishful thinking can change that. It is fully consistent with what Marx has written in Capital Vol. 3, a work that Marx did not live long enough to finish, and could not possibly see far enough to realize the extent of hyper-financialization that would have been unthinkable for someone his time.

It needs to be reminded that US imperialism is an entire set of global institutions that have stood for over 80 years. Its full control of global trade, investment, and currency liquidity is what allows America to export its own problems to the rest of the world. That’s why it’s called Super Imperialism.

Have you ever watched the movie Train to Busan, where the greedy capitalist, being chased by the zombies, kept throwing innocent people behind him to slow down the zombies in pursuit? That’s what America is doing now, throwing the rest of the world under the problems that the empire itself created. Yes, America will eventually fall, but not before the rest of the world is devastated first.

From the Introduction of Super Imperialism:

This shift from asset money (gold) to debt money (U.S. Government bonds) inverted the traditional relationships between the balance of payments and domestic monetary adjustment. Conventional wisdom prior to 1968 held that countries that ran deficits were obliged to part with their gold until they stemmed their payments outflows by increasing interest rates so as to borrow more abroad, cutting back government spending and restricting domestic income growth. This is what Britain did in its stop–go policies of the 1960s. When its economy boomed, people bought more imports and spent more abroad. To save the value of sterling from declining, the Bank of England raised interest rates. This deterred new construction and other investment, slowing the economy down. At the government level, Britain was obliged to give up its dreams of empire, as it was unable to generate a large enough private sector trade and investment surplus to pay the costs of being a major world military and political power.

But now the world’s major deficit nation, the United States, flouted this adjustment mechanism. It announced that it would not let its domestic policies be “dictated by foreigners.” This go-it-alone policy had led it to refrain from joining the League of Nations after World War I, or to play the international economic game according to the rules that bound other nations. It had joined the World Bank and IMF only on the condition that it was granted unique veto power, which it also enjoyed as a member of the United Nations Security Council. This meant that no economic rules could be imposed that U.S. diplomats judged did not serve American interests.

These rules meant that, unlike Britain, the United States was able to pursue its Cold War spending in Asia and elsewhere in the world without constraint, as well as social welfare spending at home. This was just the reverse of Britain’s stop–go policies or the austerity programs that the IMF imposed on Third World debtors when their balance of payments fell into deficit.

…

This unique ability of the U.S. Government to borrow from foreign central banks rather than from its own citizens is one of the economic miracles of modern times. Without it the war-induced American prosperity of the 1960s and early 1970s would have ended quickly, as was threatened in 1973 when foreign central banks decided to cut their currencies loose from the dollar, letting them float upward rather than accepting a further flood of U.S. Treasury IOUs.

Yes I have a tendency of doing that lol. I have been trying very hard to stay restrained to be honest.