While the mainstream news cycle focuses on Ukraine and speculation about when the strategically significant city of Bakhmut, beseiged by the Russian army for months now, will actually fall, with Ukrainian defenders vowing to fight to the last man but gradually being forced into a smaller and smaller area of the city centre, in the more significant economic war Russia, China and Iran, backed by India, Saudi Arabia and many other African and South East Asian nations are pushing ahead with moved to dump the US dollar as the global reserve currency and thus plunge the global economy into chaos and shift the balance of geopolitical power from west to east.
This is not a new concern for western governments, as this blog and our other publications have reported in Currency Wars page, but the diversionary proxy war with Russia being fought by the unfortunate Ukrainians shows leadersd on the USA and their NATO allies don't have a clue how to deal with the economic threat.
It is beyond dispute that the U.S. led the world for most of the 20th century but America's arrogant abuse of its position as the world's leading military power and economic hegemon through its being issuer of the global reserve currency has mad many enemies.
"China is now proposing to replace the U.S. and put itself at the centre of a dominant Asian alliance in the 21st century, but on a much larger scale. It is already building an infrastructure, the Belt and Road Initiative (BRI) which will serve most of the 5 billion people in Eurasia, over 60% of the global population.
Avoiding America's error of trying to dominate and exploit every nation it had a trade deal with, China has ensured that all of the 100+ nations seeking to join the BRI will benefit by their participation, whether building themselves up domestically, or extending their reach internationally.
Chinese propaganda promoting BRI claims, "It is the largest, most compelling, geographically extensive, nationally inclusive, mutually enriching economic enterprise in the history of the world. The U.S. is not part of it...
"...Since the Bretton Woods Agreement of 1944, the global economy has used the dollar as the primary currency of international trade. And This has given the U.S. an exorbitant privilege in all international trades."
Then in the 1970s the "Petrodollar"was created via a 6-page agreement signed by US
President Richard (Tricky Dicky) Nixon and Saudi Prince Fand Ibn Abdel Aziz. Under the terms of the treaty the
US agreed to provide military supplies and equipment to the KSA, in return Saudi Arabia , then by far the biggest exporter of crude oil, the world's most traded commodity by value,
agreed to exclusively use US dollars for oil trades and futures contracts. This enabled America to control the world trade in oil, the only constraint on US malfeasance being the threat of the Saudis halting the pumps if anything displeased them, a power they have used quite ruthlessly at times.
In effect the US weaponisation of the dollar's reserve currency status has meant that it can essentially write an unlimited stream of dodgy cheques to the world, because countries need dollars to be able to conduct international commerce. The U.S. “sells” them dollars by issuing Treasury debt, which is a universally fungible international medium of exchange.
One of the consequences of this arrangement is that it has allowed
the U.S. to spend far beyond its means, running up $32 trillion of debt
since 1980, when its national debt stood at a mere $1 trillion. As US bonds carry an interest rate of 3% this means American taxpayers must find $96 billion per year simply to pay the interest due on this debt.
The U.S. uses the fiat money it creates to, among other things, fund the obscene cost of its 800 military bases around the world, which it uses to do things like destroy Serbia, Libya, Iraq, Afghanistan, Syria, Somalia and a host of lesser predations on other countries. All the world sees this and is repulsed by it.
Dollar hegemony has also enabled the U.S. to effect or attempt regime change in Honduras, Venezuela, Peru, Bolivia, Kazakhstan, Pakistan, Myanmar, Belarus, Egypt, Syria, and, since the CIA egineered coup of 2014, Ukraine, among others. And these are just those in the past two decades.
The same dollar hegemony underwrote U.S. imperialist activity in the latter part of the 20th century against Iran, the Dominican Republic, Guatemala, Vietnam, Nicaragua, Cuba, Chile, Congo, Brazil, Indonesia, and dozens of other countries.
Again, the rest of the world sees this. U.S. citizens, brainwashed by talk of American Exceptionalism and gung ho patriotism and diverted by the decadent LGBT and drug cultures that play such a big role in American society, are blinded to the reality of their government's doomed ambitions to establish global dominance.
"...The U.S.’ military failure agains Russia in Ukrainehas advertised, once again (after Iraq and Afghanistan), the relative impotence of U.S. military solutions. Yes, it can still destroy small, defenseless countries like Serbia, Libya, Afghanistan and Iraq.
"But against a peer competitor that has chosen to stand up to it, the U.S. has shown a pathetic lack of testicular fortitude. The proxy war with Russia that Washington has so long desired was meant to result in a military and economic collapse of the regime in Moscow, as faced with Ukranian forces trained, amed and funded by the USA and its NATO allies since 2014 encountered unexpectedly fierce resistance while economic sanctions caused a rapid and total collapse of the Russian economy.
However since the turn of the century the world has changed greatly, U.S. led trade and military power no longer dominate at they once did. While the threat from the European Union never materialised, China’s economic growth has surpassed that of the U.S. and enabled by growth China has expended its global influence in South East Asia, Africa, South America, Europe and even in the USA itself, where Chinese investment has supported many industries and jobs.
With Russia also having expanded its global influence on the back of its position as a major supplier of natural resources, the resurgence of Islamism this can only mean a big reduction in U.S. power and influence and limitations on the ability to use militarily and economic coercion against smaller nations. And if the Sino Russian plan to launch a new, gold - backed currency for world trade succeeds to any degree we could see over the next decade that the USA will be reduced to a regional power constantly at odds with Mexico and Cuba, ignored by Canada but still able to influence Caribbeasn island nations and a few Central american banana republics.
The future will be very different for the U.S. than it has been for the past 80 years, since the end of World War II when it towered over the rest of the world while former rivals desperately tried to recover from the effects of war. Ukraine will prove to have been the turning point in this transformation,the moment the world ceased to believe in American Exceptionalism and started to stand up to American imperialism.