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11.20 Dead fish to power cruise ships [using dead fish to ultimately kill more fish, animals and plants but at a slower rate]
11.20 Importing gas to replace domestic supply could push emissions up 20%, AGL says [We have to stop killing everything!!!]
11.20 The arts have a leading role to play in tackling climate change [We have to stop killing everything!!!]
11.20 Indonesia: dead whale had 1,000 pieces of plastic in stomach [We have to stop killing everything!!!]
11.18 Air pollution levels ‘forcing families to move out of cities’ [like from desertification, lack of drinkable water and rising oceans, there will also be pollution-caused immigration until humans fix things]
11.17 Policies of China, Russia and Canada threaten 5C climate change, study finds [Climate catastrophe is increasingly likely without worldwide organization, funding and commitment to winning THE WAR AGAINST GLOBAL WARMING.]
11.16 How pesticide bans can prevent tens of thousands of suicides a year [how many thousands more die early from eating pesticide-laced food?]
11.15 The Earth is in a death spiral. It will take radical action to save us [fossil fuel burning, un-recyclable plastic production/use and methane gas release must cease ASAP.]
11.15 The long read: The plastic backlash: what's behind our sudden rage – and will it make a difference? [the world wants to throw-up...]
11.15 Claws out: crab fishermen sue 30 oil firms over climate change [workers are waking-up...]
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US Politics, Policy & 'Culture'
11.21 With Statement Equal Parts 'Dangerous' and 'Imbecilic,' Trump Smears Khashoggi and Vows to Back Murderous Saudis [Keeping oil prices affordable prolongs its use, its burning and our dying]
11.20 New York City subway and bus services have entered 'death spiral', experts say [death spirals are the end-thing nowadays]
11.19 Last Week Tonight with John Oliver 11/18/2018 (HBO) [29:26 video]
11.19 Trump Says He Was 'Fully Briefed' and Also 'Not Briefed Yet' But Either Way Saudi Crown Prince 'Absolutely' Not Involved Because Trump Knows 'Everything That Went On' Without Listening to Tape of Khashoggi Murder
11.19 'We Need New Leaders, Period': Progressive Newcomers Urge Democrats to Embrace Bold Agenda or Face Primary Challenges [Current Democrat leaders are highly compromised by corporate donations]
11.20 'He may not rewrite immigration laws': Trump's asylum ban blocked by federal judge [Has anyone thought about putting razor-wire around the White House?]
11.21 Saudi Arabia Accused of Torturing Jailed Women’s-Rights Activists [Trump's great friends...]
11.14 The Guardian view on Yemen’s misery: the west is complicit [WAR CRIMES]
Economics, Crony Capitalism
11.19 Bankrupt Sears wants to give executives $19 million in bonuses [blatantly immoral and sick to richly reward those who led the company into the bankruptcy]
11.18 Big Pharma Bankrolled Pro-Trump Group As Trump Pushed Pharma Tax Cut [Corruption Central!]
International & Futurism
11.20 Trump administration hawks putting US on course for war with Iran, report warns [“Stupid is as stupid does.” –Forrest Gump]
11.18 France demands UK climate pledge in return for Brexit trade deal [Excellent!]
11.17 Thousands gather to block London bridges in climate rebellion [We're losing WWIII because the enemy is invisible while we're like frogs slowly cooking. We aren't informed enough to be alarmed, but must get organized and motivated to fight back. We need a War Plan to ruthlessly pursue the fight of our lives!]
TREASON BY OUR ELITES:
Michael Hudson's "Super Imperialism:" The Economic Strategy of Imperial America
Wednesday, 1 July 2009
America's dollarization policy imposes dependency, not self-sufficiency. It drains "the financial resources of its Dollar Bloc allies (and retards) the development of indebted third world raw-materials exporters...." But its gain isn't put to productive use. It's used instead for militarism and financialization at the expense of its former industrial strength.
First written in 1972, it was updated in a 2003 edition that's every bit as relevant now - thus this review focusing on Hudson's new preface, introduction, and detailed account of the book's theme.
He revisited it in his 2008-09 Project Censored award-winning article titled: "Economic Meltdown - The 'Dollar Glut' is What Finances America's Global Military Build-up" in which he explains the following - the "inter-related dynamics" of:
In other words, the global "dollar glut" finances US corporate takeovers, speculative excesses creating bubbles and global economic crises, America's reckless spending, foreign wars, hundreds of bases worldwide, "military build-up," and culture of militarism and belligerence overall at the expense of democratic freedoms, beneficial social change, and human and civil rights.
In softer form, it's what former US diplomat, advisor, father of Soviet containment, and dove compared to others at that time George Kennan believed should be America's post-WW II foreign policy. In his February 1948 "Memo PPS23, he stated:
Yet Kennan advocated diplomacy over force in contrast to Paul Nitze, Dean Atcheson and other Truman and succeeding administration officials favoring hardline militarism, future wars, and National Security Council Report 68 (NSC-68) policies to contain the Soviet Union. In 1962, nuclear disaster nearly resulted. The threat remains, more menacingly than ever by "forc(ing) foreign central banks to bear the costs of America's expanding military empire" through recycling their dollars into US Treasuries - something the mass media call "showing their faith in US economic strength."
Hudson refers to a "sinister dynamic," not involving consumers or private investors, but central banks putting "their money" in US Treasuries, but "it is not 'their money' at all. They are sending back the dollars that foreign exporters and other recipients turn over to their central banks for domestic currency."
"When the US payment deficit pumps dollars into foreign economies, these banks (have) little option except to buy US Treasury bills and bonds which the Treasury spends on financing an enormous, hostile military build-up to encircle (today's) major dollar-recyclers China, Japan and Arab OPEC oil producers" - essentially a process by which they finance their own endangerment.
Up to now it's continued, but, given the reckless dollar glut in recent months, with less enthusiasm by bigger buyers and hints of a possible end game or at least less buying than previously - mostly among BRIC (Brazil, Russia, India and China) and OPEC countries but other emerging economies as well getting more interdependent on themselves than on America.
In his 2002 preface, Hudson noted that "the US Treasury (pursued the same balance-of-payment) 'benign neglect' (strategy as) it did thirty years" earlier. In 1971, it "caused a global crisis when its $10 billion (level) led to a 10 per cent dollar devaluation." Now it's hundreds of billions annually and still high during the current economic crisis when exports and imports are lower.
Earlier and especially now, if Europe and Asia let the dollar deflate, their exporters will be disadvantaged at a time they can least afford it. So they're forced to "support the dollar's exchange rate by recycling their surplus dollars back to the United States" by buying US Treasuries.
Sooner or later, it's a losing proposition, especially in today's climate with the Federal Reserve sacrificing dollar strength to bail out Wall Street and trying to keep long rates low to contain borrowing costs. Yet the greater the dollar erosion, the more losses foreign investors will incur and less likely they'll tolerate more by buying bad assets.
So far, however, they're still recycling their dollar inflows to fund America's budget deficit and global militarism - something Hudson calls a "Free Lunch in the form of compulsory foreign loans to finance US Government policy."
Even so, they have no say over US policies, yet America and international lending agencies, like the IMF and World Bank, "use their dollar claims" on indebted nations to enforce Washington Consensus diktats. Independent-minded states face sanctions, isolation, coups or wars if they refuse.
Until Nixon closed the gold window in August 1971, America couldn't run unlimited balance-of-payments deficits. However without gold convertibility, it's continued for nearly 40 years along with protectionist policies through generous subsidies to US exporters - most notably to agribusiness. As a result, Hudson sees international tensions growing for the next generation, perhaps even greater now given America's reckless monetarism and perpetual wars.
His book "provid(es) the background for US - European and US - Asian financial relations by explaining how (post-1971) the US Treasury-bill standard came to provide America with a Free Lunch." Also how the IMF promoted debtor nations' capital flight and the World Bank supported "foreign trade dependency on US farm exports...."
The early 1970s dollar crisis and balance-of-payments deficits seem small compared to today. Yet the "Treasury-bill standard (frees) the US economy from (doing) what American diplomats (force on) other debtor nations (with) payments deficits: impose austerity to restore balance in its international payments. The United States alone has been free to pursue domestic expansion and foreign diplomacy with hardly a worry about the balance-of-payment consequences." No other nation has that luxury.
Post-WW II, Washington made other countries dependent on America, something it eschewed after WW I, staying isolationist instead to pursue internal development.
In the 1970s, emerging nations proposed a New International Economic Order (NIEO) through the UN Conference on Trade and Development to promote their own trade and other concerns. It "originated as a response to America's aggressive world economic diplomacy, and how US strategy has provided other nations with a learning curve that they may follow in pressing their own national and regional interests."
The more reckless and belligerent America becomes, the more incentive they have to try - and in greater alliance, with BRIC country partners, may have a greater chance for success.
Post-WW II, on the pretext of national security, America pursued "world power....and economic advantage as perceived by American strategists quite apart from the profit motive of private investors."
After WW I, it achieved world creditor status from its "unprecedented terms (in extending) armaments and reconstruction loans to its wartime allies." In 1917, it entered the war late when it felt staying out would "entail at least an interim economic collapse (the result of) American bankers and exporters (getting) stuck with uncollectible loans to Britain and allies." So it joined the Triple Entente as an associate, not a full partner, to protect its $12 billion investment.
Post-war, America was the world's major creditor - but one "to foreign governments with which it felt little brotherhood" and no obligation to stabilize world finance and trade. Unlike its post-WW II policy, it didn't extend loans to foreign countries so they could finance their US-owed debt. Nor did it open its markets to foreign imports. It wanted Europe's empires dissolved, their military spending cut, their wealth "to flow out and their prices to fall" - the idea being in this way to re-establish world payments equilibrium, a very unrealistic notion, but many leading Europeans embraced it. It didn't work and made repayment of foreign debts impossible.
The "world economy emerged from World War I shackled with debts far beyond its ability to pay," except by "borrow(ing) funds from private lenders in the creditor nation to pay the creditor-nation government."
A more enlightened policy would have turned "other countries into (US) economic satellites." But America eschewed European imports, and US investors preferred its own outperforming stock market. On trade and finance, US policies "impelled European countries to withdraw from the world economy and turn within."
America's isolationism prevented it from collecting its foreign debts. "Its status as world creditor proved ultimately worthless as the world broke into nationalist units," and sought independence from foreign trade and payments.
Washington pursued isolationism, thus prompting other nations to seek self-sufficiency. A bankrupt Britain convened the 1932 Ottawa Conference "to establish a system of Commonwealth tariff preferences." By the mid-1930s, Germany began preparing for war. At the same time, the Depression affected one country after another as private capital dried up while at the same time Britain and other nations had mounting debt problems. It begs the question as to why they let them get so onerous in the first place.
American Plans for a Post-WW II "Free-Trade Imperialism"
Early in the war, US officials and economists knew America would prevail and emerge as the world's dominant power. However, transitioning from war to peace needed large export volumes to stimulate economic growth and full employment. "This in turn required that foreign countries be able to earn or borrow dollars to pay" for what they got. So America supplied them through government loans and private investment.
In return, it "name(d) the terms on which" they were provided and structured the IMF and World Bank so countries could "pursue laissez faire policies by insuring adequate resources to finance the international payments imbalances," the result of opening their markets to US imports. It was thought that free trade and investment would result in "balanced international trade and payments....under US leadership."
Post-war, America was the only dominant nation intact, so it alone had enough foreign exchange to invest substantially abroad. Its commercial strength turned other economies into US satellites and assured America achieved maximum world power by:
The goal was short-lived as:
America accumulated a payments surplus. It, in turn, weakened its export potential. The lesson learned was that "Beyond a point, a creditor and payment-surplus status can be decidedly uncomfortable."
At first, the enlightened solution wasn't taken - extended foreign aid for rebalancing as Congress put internal interests ahead of foreign policy.
The Cold War Pushes America's Balance-of-Payments into Deficit
Cold War strategy gave Congress an anti-communist reason to "bribe foreign governments" to fight the red menace as well as open their markets to US exporters. It got the Marshall Plan and other aid agreed on to "keep its fellow capitalist countries solvent" and not tempted to turn left. The possibility continued foreign aid for several decades.
At the same time, America's balance-of-payments reached never before attained levels and needed rebalancing "to promote foreign export markets and world currency stability." To buy US products and services, other countries needed resources to pay for them, something only Washington could arrange at a time when they weren't creditworthy.
However, what worked early on became destabilizing as America began "sink(ing) into the mire that had bankrupted every European power that experimented with colonialism." Unlike foreign investors that cut their losses when necessary, national security interests (and industries profiting from them) trump other considerations even when counterproductive. Once begun, military spending takes on a life of its own - something very apparent given its current out-of-control level and growing.
New Characteristics of America's Financial Imperialism
A growing US balance-of-payments surplus was "incompatible with continued growth in world liquidity and trade." So America had to buy more foreign products, services and capital assets than it supplied to foreign buyers. At the same time, it shifted more dollars abroad through a payments deficit, easily handled in the 1950s and 1960s as long as Washington could redeem them with gold. But that game had a limited life span as "Attempts by governments to repay their debts beyond a point extinguish(es) their monetary base."
...."international money (is also) a debt of the key-currency nation." Providing other countries with assets involves going into debt, and repaying it "extinguish(es) an international monetary asset."
By the early 1960s, America approached "the point at which its debts to foreign central banks soon would exceed the value of the Treasury's gold stock." It happened in 1964 the result of Vietnam War spending at an early stage in the conflict. Just as two world wars bankrupted Europe, Vietnam threatened the same fate for America, but it didn't curtail spending and still doesn't.
Earlier, the result was a run on gold with foreign central banks "cash(ing) in their dollar surpluses for American gold almost on a monthly basis." By March 1968, the US Treasury suspended its sales, and informally world central banks agreed to stop converting dollars into the metal. The result - the dollar gold price link was broken, and in August 1971, Nixon closed its window with an official embargo.
Henceforth, in place of gold, the US Treasury-bill (dollar-debt) standard began. No longer able to buy US gold, substituting Treasuries became the only option and "to a much lesser extent, US corporate stocks and bonds."
From then to now, foreign central banks have recycled their dollars to the US government. "Running a dollar surplus in their balance of payments became synonymous with lending (it) to the US Treasury." For its part, America borrows from other central banks and runs trade deficits. The larger they get, the greater the amount available to be loaned back, so today the volume is enormous.
For both sides, the problem is that Washington's guns and butter economy (including trillions to Wall Street) creates greater deficits and inflated spending. America's dominance is maintained, and foreign economies are obliged to finance it. Failure to support the dollar will inflate their own currencies, give US exporters a competitive edge, and ultimately let the world monetary system break down.
The "unique ability of the US Government to borrow from foreign central banks rather than from its own citizens (through taxes) 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...."
How America's Payment Deficit Became a Source of Strength, not Weakness
It let America achieve what no earlier empires did - "a flexible form of global exploitation that controlled debtor countries by imposing Washington Consensus (diktats)." It's used the IMF, World Bank and other international lending agencies for its purposes, while the Treasury-bill standard "obliged the payments-surplus nations of Europe and East Asia to extend forced loans to the US Government." If they don't, world economies face monetary crisis.
Implications for the Theory of Imperialism
Hudson calls it a "new form of imperialism" under which America exploits other nations "via the central banks (and international lending agencies) rather than via the activities of private corporations seeking profits."
A "Super Imperialism" model "pressed foreign governments to regulate their nations' trade and investment to serve US national objectives...Washington Consensus (diktats) made aid borrowers more dependent on their creditors, worsened their terms of trade by promoting raw materials exports and grain dependency, and forestalled needed social modernization such as land reform and progressive income and property taxation."
US companies thus achieved a competitive advantage, not in the marketplace, but by Washington Consensus rules and the Bretton Woods institutions it controls - the IMF, World Bank, etc. What's good for US business benefits America overall and its Super Imperial ambitions.
Today's Source of Financial Instability Compared to the 1920s
The earlier period had a shortage of liquidity. By the early 1970s, it was in surplus, the result of the enormous volume of dollar inflows in world economies. The Korean War began shifting America's balance-of-payments from surplus to deficit. In 1971, Vietnam forced it off gold and "induced a US debtor-oriented international financial policy (with) the rest of the world" - something other nations have been trapped by ever since.
US deficits have disrupted world economies, but its character has changed. Not only does it finance US militarism, but it also "sustain(s) America's stock market and real estate bubble" while at the same time industrial America erodes. In addition, pressure is applied to privatize public enterprises to let this sector pass "into the hands of global finance capital....controlled and shaped by the Washington Consensus."
Under a "new state-capitalist form of imperialism," central banks, not industry, "are the vehicle for balance-of-payments exploitation" with the dollar as the world's reserve currency. It's Super Imperialism because one nation alone gets a Free Lunch right to benefit by getting others to finance its deficits and reckless spending.
The system's unique feature is that other countries may extract their citizens' wealth, but only America extracts theirs through the sale of its Treasury securities.
The World's Need for Financial Autonomy from Dollarization
In its relationship with client countries, America's dollarization policy imposes dependency, not self-sufficiency. It drains "the financial resources of its Dollar Bloc allies (and retards) the development of indebted third world raw-materials exporters...." But its gain isn't put to productive use. It's used instead for militarism and financialization at the expense of its former industrial strength.
It's an unsustainable system, but for other countries to break away, they'll have to renounce Chicago School alchemy, the austerity programs it imposes, and advantages it gives America in trade and other relations. It drains other nations' resources by trapping emerging economies in chronic debt and developed ones into forced buying of US Treasuries.
In return, America gets a Free Lunch. It rules as world debtor, forces other countries into creditor bondage, and threatens to bring down the global monetary system if enough of them balk. So far it's worked because Europe and Asia lack the political will to devise a "New International Economic Order" so nations producing economic gains can keep them and not let America use them to reinforce its "new kind of centralized global planning" - one based on financialization and a US Treasury securities standard, not industrial mechanisms. In WTO terms, it transfers foreign trade gains from other economies to the US, drains their resources overall, promotes dependency, not self-sufficiency, and backs it with hardline militarism and threats of systemic monetary collapse.
Eventually, exploited countries won't tolerate more "taxation without representation," a "quid without quo," a Free Lunch from "the world's payments-surplus nations." The longer America demands it by glutting world economies with dollars, the more likely disadvantaged nations will object. Hudson put it this way in his Project Censored award-winning article:
"De-Dollarization and the Ending of America's Financial-Military Empire"
In his June 14, 2009 article, Hudson explained that "Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization (SCO)" had a two-day June 15 - 16 meeting in Yekaterinburg, Russia, with Brazil attending on the 16th. SCO countries include Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan, Uzbekistan with Iran, India, Pakistan and Mongolia having observer status.
The meeting's stated purpose was "to discuss mutual aid," not challenge America's financial and military empire. Yet it potentially may be pivotal by doing just that.
On June 5, Medvedev told the St. Petersburg International Economic Forum that Russia, China and India have an opportunity to "build an increasingly multipolar world order" away from America's "artificially maintained unipolar system (based on) one big centre of consumption, financed by a growing deficit, and thus growing debts, one formerly strong reserve currency, and one dominant system of assessing assets and risks."
In other words, America "makes too little and spends too much," especially with regard to its military. It also gluts the world with dollars that end up in foreign central banks. Either they recycle them into US Treasuries or "let the 'free market' force up their currency relative to the dollar - thereby pricing their exports out of world markets, creating domestic unemployment and business insolvency."
Given a choice up to now, they've had to choose the least bad alternative. "Now they want out" as Medvedev explained in St. Petersburg saying: "what we need are financial institutions of a completely new type, where particular political issues and motives, and particular countries will not dominate." How so is the question, and can it work?
"For starters, the six SCO (and other BRIC) countries intend to trade in their own currencies" to benefit by what America "until now has monopolized for itself." China's central bank governor Zhou Xiaochuan wants a new reserve currency "that is disconnected from individual nations." It was discussed in Yekaterinburg.
These and other countries see America as "a lawless nation, not only financially but also militarily." It forces its rules on others but won't abide by them itself - a practice now intolerable, and there's more.
So much of America's budget is for militarism that the Pentagon faces overstretch while the nation is so indebted it's effectively a deadbeat with amounts impossible to repay. For countries like China, the problem is especially acute given its $2 trillion holdings "denominated in yuan."
A "return to the kind of dual exchange rates common between World Wars I and II" may be the solution - "one exchange rate for commodity trade, another for capital movements and investments."
Foreign nations are taking steps to avoid being the unwilling recipients of yet more dollars that face lower valuations the more of them America prints.
With or without these controls, "foreign nations are taking steps to avoid being the unwilling recipients of yet more dollars" that face lower valuations the more of them America prints. If SCO countries and Brazil have their way, America "no longer (will) live off the savings of others....nor have the money for unlimited military expenditures and adventures." For these nations and many others, it can't come a moment too soon.
Also visit his blog site at sjlendman.blogspot.com and listen to The Global Research News Hour on RepublicBroadcasting.org Mondays from 11AM to 1PM US Central time for cutting-edge discussions with distinguished guests on world and national topics. All programs are archived for easy listening.
Mr. Lendman's stories are republished in the Baltimore Chronicle with permission of the author.
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Baltimore News Network, Inc., sponsor of this web site, is a nonprofit organization and does not make political endorsements. The opinions expressed in stories posted on this web site are the authors' own.This story was published on July 1, 2009.
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