Prelude: Follow the Money
Compiler W. Antoniotti 9/16/19
Ends, US Dominates
to China: A Plan
Return to Geopolitics
The Gold Standard ruled geopolitics until the mid 20th century.
The steam ship dramatically increase globalization. Gold backing put a limit on printing money. Open capital and current trade accounts were the RULE. Goods and paper currency flowed between countries. Wages were the adjustment mechanism as economic activity with the resulting inflation/deflation were determined by a countries gold supply.
Two Country example:
Slow adjustment OK, but fast/often means employment/political dissatisfaction.
Think Karl Marx
Brittan had all the gold and ruled capitalism. The US grew economically, took control of gold, and after WW 2, ruled capitalism. Economic growth created pressure on US gold reserves so, in 1970, she gave up partially gold backing of the dollar. This US devaluation ended the Brenton Woods monitory order.
A Dollar Standardevolved as the US had enough foreign financed consumer/ business demand to supply the dollars needed to finance world trade. Open current accounts allowed dollars to piled up around the world. But lessons from the 1930's kept capital markets closed. This kept investment home and allow for high wages. Making a profit would require increase profitability.
The goal of Brenton Woods was creating jobs and economic security. US would spend and the dollars would come back to the US as foreigners bought US assets, products and debt. This led to wage/demand led growth rather than the earlier led profit led growth.
Many currencies were pegged to the dollar and in doing so, the new dollar standard had a gold standard affect. Under both systems, a country lost monetary/fiscal control of their domestic economy. Earlier, the Great Depression caused countries to try and increase trade by devaluing their currencies. In doing so, they reneged on their monetary commandments. Mark Blyth - A Brief History of How We Got Here and Why
Pegged countries learned from the Asian crisis that protection from dollar value fluctuations required holding much excess dollar reserves. From the late 1990's to 2014, dollar reserves piled up in developing countries.
As world trade grew, the
need for dollar reserves grew. The US bought much with
borrowed dollars increasing their trade deficit. Dollars
flowed back from around the world as everyone made loans to
US consumers, business and
governmnets, especial when geopolitical trouble increased.
The biggest traders was the US and China. China worked hard,
built good stuff, sold it cheap to the world, and lent their
receipts back to the system. Now trade
Meanwhile, the Euro was created in 1999 as an 11 nation currency controlled by Germany. She kept a tight reign on inflation. Her banks lent to much, especially to the PIGS of Southern Europe. Members who did not manage budgets well soon got into trouble. This coincided with a few European bank controlling worldwide dollar trade flows using Euro's, not dollars, as collateral. But contracts required payment in dollars and the banks, wanting to maximize profit, had borrowed dollars very short term. They were in trouble when the Great Recession created a need for dollars and rolling over dollar loans became impossible. The FED, as lender of last resort, created irregular dollar obligations, first used in the in relation to the Great Depression, to supply liquidity to the world's financial community.
The problem: Unlike the US, Germany believing in austerity, forced debt repayment on failing countries and banks. Cyprus, a very small economy was used as an example. It was immediately devastated.
Germany was also slow to help. Illegal immigrants began arriving throughout Europe, and Populism resulted. Interestingly, Populism had developed in the US where, ironically, illegal immigration had been falling. Note: FED owes the dollar obligations to the Treasury and may or may not repay them. Since 1776, a strong US economy has allowed her to refinance debt. Cost, Interest Payments have been low.
Beginning of a New Post War
1648 Peace of Westphalia
Sovereignty of participants over their lands, people, and agents abroad was established. It as Broken by European Colonialism.
First problem came immediately as Soviets did whatever it took to keep Communists in charge of the buffer state Poland.
The US responded with the Truman Doctrine. Eventually US/Britain sponsored covert activities would try to slow Communist advancement. One such activity was the September of 1953 GB/US sponsored Iranian Coup to keep control Iranian oil/profit. Unintended consequences followed. First came the seizure in 1979 of the Tehran U.S. embassy by Militant Iranian students. Then, 20 years later, the 9/11 Trade Center attacks made many American feel insecure.
The US would try to maintain its sphere of influence throughout Latin America and stop Russia and China spheres of influence. Both groups made the world their spheres.
A 1973 U.S. orchestrated Chilean Coup had set up a new government to follow neoliberal Chicago Boys privation with government disinvestment except copper resource ownership would not change.
Unites States controlled IMF development programs follow similar guidelines in support of a US International Trade Hegemony. But more was involved as independent leaders like Thatcher in the early 1970's and Xiaoping in the late 1970's also embraced neoliberal economics. Then Germany required similar neoliberal economic requirements in response to Great Recession budget and banking problems. .
Iraq's Economic Restructuring Agenda was issued in September of 2003 by Paul Bremmer of the Coalition Provisional Authority. Many felt these dictums were illegal under the Hague and Geneva conventions so an interim sovereign government was created. It had many neoliberal economic requirements. Key among them were 1) Private Property for everything but oil 2) Free Markets with unlimited Foreign Direct Investment/Ownership 3) Unregulated International Trade 4) Unlimited Profit Repatriation. Entrepreneurship was fostered by guaranteed Intellectual Property Rights and a conservative Flat Tax.
US Hegemony 3?
Hegemony 1 was designed to meet Cold War needs by dominating
global manufacturing trade.
First goal was controlling the Supreme Court by
financing conservative law
Then corporate America turned away from local, less profitable US manufacturing and invested in overseas production. They also expanded into corporate financing activities.
Finally, Chairman Greenspan took charge of the lender of last resort Federal Reserve. Keynesian dominance was replaced by neoliberal free unregulated market economics.
Hegemony 2 made Wall Street more important than Main Street as conservative presidents Reagan, Bush I and Bush II combined with business friendly Clinton to provide government business/financial industry support. Obama was also Wall Street friendly. Neoliberal economic dominance was complete.
The stage was set for the public to pay for inevitable market failures caused by Less Financial Regulation. A Great Recession was followed by a European Financial Collapse.
Then the FED created money and paid the entire cost.
1. Post WW 2 American Hegemony
Led to Prosparity, Stability,
|1-1 Great Wars Led a to New International Order||1-2 Six Weeks that Changed the World|
1-1 Great Wars Led to a U.S. Managed International Order
A. New Boarders especial in the Middle East
B. Europeans Faced a Moral Abyss because, believing she was the world's most civilized people— she had killed 100 million people.
C. Nations must be controlled before they destroy each other.
D. Multiple International Organizations were needed to create a unity not coming from the League of Nations. Munich Political Organizations—NATO, European Union ...and Financial Organization —IMF, World Bank...were to do just that.
Success resulted— no major world military conflicts in 70 Years. Moral Justification was provided by this success, organizations represented no one.
Weeks that Changed the World
A. Russia invaded Georgia
B. Financial Organizations failed to stop Lehman Brothers and resulting in the Great Recession.
C. Self-Ruling Technocrats failed
because they did not understand:
A. Unemployment of 20%
was not German pain and
B. Polarization was dramatic
within countries as
European Union was usurping the future
D. Not only did technocrats fail to see the problems,
the nation, and they limited liberal central authority solutions.
E. Hatred, anger and outrange would have to be dealt with.
1-4 Why Populist Win
History Repeating: Why Populists Rise and Fall video
A. Mainstream Elite Establishment Failed and Must be
B. New Communication Creates New Power Source
C. Leader to Protect People from Failed Elites Needed.
D. Elites try to impeach leader rather than fix system failures
1-5 Future of Geopolitics
Dr. George Friedman, Geopolitical Forecaster
A. The 21st century will be politically volatile,
A. Multilateral Organizations Solve All of Problems.
B. Harvard Graduate Manage Organizations Solves Problems.
Source The Creation of a New International Order 20 min video
1-6 Germany wanted high employment, low inflation
and high saving from the editor
To increase employment German favored industry using employee givebacks to help companies compete. The nation's savings was increased by increasing exports and her trade surplus which could not be spent by employees because of industry givebacks.
Unemployment was lowered with job sharing.
Low inflation was maintained by Germany controlling the European Central Bank. Commercial Banks, especially in Germany made cheap loans to poorer countries where loans were used to increase consumption, employment and short-term political stability. They could have chosen capital accumulation and increased infrastructure investment. The resulting consumer debt, especially in housing, caused EU trade imbalances.
German savings increased because of her balanced budget.
was a choice
between loan forgiveness
Problem: Germany created debtor EU to absorber her surplus and balance the Euro's current trade account. Kicking the can down the road only delays loan forgiveness. Economic help for debtor Europe is required or EU evolves into a trading union with more than one currency.
Brussels is dead or the European is dead; choose one.
West Did Not Managing Post WW 1
Europe enjoyed nearly 100 years of peace.
One reason was that after Napoleons march through Europe, the 1815 Treaty of Vienna gave top priority to how various territories were to be ruled.
Second, the new liberal order, powered by the Industrial Revolution, was producing improved and apparent domestic prosperity which reducing the attractiveness of war.
Third, British and European states territorial ambitions and colonial land grabs offered more upside with less risk of manpower and treasure.
By Anatol Lieven. a professor in the War Studies Department of King’s College London and a senior fellow of the New America Foundation in Washington DC. See Anatomy of American Nationalism republished in September 2012. Originally published in The National Interest on December 22, 2018; cross posted from open Democracy
World War 1 caused some 16 million dead Europeans, two great European countries destroyed, and others crippled. WW 1 engendered the scourges of Communism and Nazism. It led to a Second World War and the near destruction of European civilizations. Political and cultural elite were swept away for leading their countries into war nothing could be worth the potential loss.
Western allies portrayed the war as civilizations against German barbarism. Today one can certainly say the British and French Colonial Systems were better than that of Germany; but one must admit that Algerian subjects of the French Empire or African subjects of the British Empire, might have a different perspective. Also, the Russian Empire made for an pretty odd member of the supposed alliance for democracy.
The real 1914 barbaric threat to European civilization was the ruling establishments. It came from decades of social and economic changes which generated hatreds and tensions building within European societies.
Before 1914, the European conservative elites encouraged aggressive nationalism to divert mass support away from socialism. To preserve the old European order, they moved in a most disastrously direction.
Today, the new cold war against China and Russia represent grave threats toward the conservative western establishment. A new geopolitical direction is developing. It is comparable to one taken in during the early 20th century.
This new cold war is serving as a distraction from a vastly graver threats. Western political elites are unwilling to address threats which would involve radical changes to their ideological positions. Their obsession with their own righteousness and civilizational superiority is leading to the moral civilizational fantasies similar to those that helped bring on the 1914-18 disaster. This is liable to engender s distortion of judgment which, in the blindness of crusading frenzy, destroys nations and civilizations.
Ironies abound: The US leading a new “league of democracies” against an “authoritarian alliance” that include the anti-Chinese participation of Vietnamese communists, the murderous Filipino authoritarian populists, and above all, the Indian Hindu neo-fascists. Authoritarian and cultural nationalistic member Poland is bitterly anti-Russian. Add France in 2022 if she elects a president from the National Front.
Diverting domestic discontent into external hostility rarely works because the factors that created the discontent remain unchanged. Does anyone who has interviewed the “Yellow Vests” in France seriously think that they are acting as they do because of manipulation from Moscow? Does anyone who has seriously studied the crisis of the white working classes in the USA believe they have voted for Trump because they have been swayed by Russian propaganda?
A More important link between Russia and America is the rise of Putin and Trump. Another is the rising death rate among working class males since the 1990’s in Russia and recently in America. In addition, it is the diseases and addictions fueled by economic, social and cultural insecurity and despair. In Central America, a far more terrible version of these pathologies is driving millions of people to seek US asylum. This is driving U.S. radicalization. Yet total US aid to Mexico in 2017 was less than that to Ukraine or Egypt, and a fraction of that to Afghanistan. Does any truly responsible national establishment neglect its own neighborhood in this way?
Climate change threatens damage greater than anything the Chinese or Russian governments could or would wish to inflict. Yet media-politically generated hysteria over a minor Russia/Ukrainian clashes in the Sea of Azov could overshadowed close US-Russian co-operation to block the latest UN report on climate change.
There are real threats from Russia and China (notably trade) where the USA needs to push back. But these are limited issues which are negotiable or containable. They do not justifies restructuring western national geopolitical strategies and institutions around a new cold war.
If a 1956 Khrushchev had not transferred Crimea from the Russian Soviet Republic to the Ukrainian of the Soviet Republic, everyone would recognize the Sea of Azov as Russian. This issue would not even exist. In the South China Sea, the USA is pushing back against China in the name of an international Law of the Sea which the USA itself does not recognize. If the Chinese were ever so mad as to use their position in the South China Sea against US trade, the US Navy could block Chinese trade to the whole of the rest of the world.
Serbian nationalist triggered WW 1. Most British soldiers who died in the First World War had never heard of Serbia or of Sarajevo. In the name of God, let us not make this mistake again.
1. The 21st century will
be politically volatile,
2. World is no longer
"hard wired" to a liberal
4. World will revolve around
who faces an equal Turkey,
hopes for coexistence, and
hopes not to react.
1. Multilateral Organizations Solve All of Problems.
2. Harvard Graduate Manage Organizations Solves Problems.
2. Saving Liberal Democracy from Extremes, M. Wolf
Designing a US Foreign Policy
Steps to Determine What We Want
1) Fixing the Political Party Systemat a time when political parties are
in a reinvention process last happened in the 1930's. It took 12 years.
2) Have a Conversationon replacing the Breton Woods trading system
1. It was designed by the U.S. to win the Cold War by fostering world trades.
a. U.S. would open her markets providing friends with export revenue from the U.S.
b. Resulting U.S. trade deficit would provide the world with dollars, a de factor world currency.
c. U.S. Navy would protect trade routes for all her friends.
d. U.S. would have complete freedom when fighting the cold war.
3. Replace Brenton Woods began after the Cold War over by Bush 1 but
it stopped when the American voters elected domestic President Clinton,
Bush 2 who listened to the neocons and went after a few terrorists, and
Obama who knew a lot, but really failed to coordinate anything.
4. Set a Foreign Policy Goals
Productive geography protected from outside forces.
Favorable Demography for high growth has
younger members spending,
U.S. doing well relative to almost everyone as baby boomers had Millennials.
Financial burden of the U.S. relatively small baby boomer demographic will soon end.
China, Japan, Canada, United Kingdom, Germany, Italy,
Only Spain and GB are not
quite past the point of Demographic
Few countries, other than maybe the French and New Zeeland have a favorable demographic
Need for imported energy and reliance on exports slow growth.
This analysis was reported in Accidental Superpower.
agreement of countries that are cultural and
politically similar to U.S.
from a next group countries needing little
U.S. strong and
growing Hegemony allowed a Take It or Leave It
1. Largest strip of high-quality arable land in the world
2. Most Navigable Waterways in the world
3. Control best parts of a continent with moats on either side and open spaces to the North and South
4. If U.S. trading system breaks down, US suffers the least because it exports a small portion of GDP.
5. Trade is how we subsidized the Global system so getting NAFTA correct is important.
6. People thinking
China is the next super power are "delusional" as
she has none of the above advantages
Russia, a seriously terminal country, is our biggest fear
Korean nukes are South
China is Japans concern
Nukes will be used, but not against the U.S.
as no one is close
Eurasian Fringe War with Russia vs. Germans, Poles, Scandinavians and the Brits
Naval conflict between China, Japan, S. Korea and Taiwan
as they try to
See Are We Repeating Post WW 2 Mistakes video
unfolding fast because Obama did less than expected.
But, Obama did not care enough to have related policies.
disengagement, which began before Trump,
Expansion would require taking on Japan's modern navy with almost no chance of success.
Current lock down against corruption was to eliminate possible political opposition.
Liberalism: Focus on individualism and makes allowance for social contracts.
All have inalienable rights, it is universalism.
Nationalism: Focus on social groups, tribalism, and make allowances for individualism.
Realism: Focus on the top of the geopolitical food chain, the state. Balance of Power is
a realist's only concern, political system is irrelevant, a black box approach is taken.
Spreading liberal democracy using a liberal foreign policy to has not been possible.
Defensive Realists seek geopolitical balance by limiting aggression and perpetuating the status quo.
They were against force in Vietnam because balance of power was not at stake.
Nationalism, "the" most powerful geopolitical doctrine, made US Vietnam success problematic.
Unipolar World after collapse of Soviet Union
U.S. Liberal Middle East Foreign Policy
Analysis of U.S. Liberal Foreign Policies
Middle East had few successes because ofArab Nationalism
Zone of Liberal Democracies created by expanding NATO eastward
Western assistance Georgia and Ukraine resulted in Russia reentering geopolitics.
Drove both Russia and Iran toward China
Ignored balance of power concern by creating a Goliath.
National Security State requirements needed to expand Democracy
around the world has
A Foreign Policy aimed at creating a Liberal Hegemony has failed.
A Realist Grand