America’s desire for ‘Global Hegemony’ continues!
Since the end of WWII and the inauguration of the Bretton Woods Monetary Agreement, America has dominated the world militarily and economically. Dollarization of the global markets has allowed America to rule over our planet with no real competitor. Since 1975 America has accumulated a global trade deficit of over $12 trillion. The monthly trade deficit averages around $45 billion and this accounting has resulted from our Reserve Currency status and our ability to price global wealth via our ‘dollar’ (exclusively). America is favored in global trade as we can buy/spend and not worry about payment to our foreign counterparties. Our ‘dollar’ is supreme and running trade deficits allows us to prosper at the expense of our foreign counterparties. Global hegemony has been the result! Can this continue indefinitely?
America’s Chief leader arrives in Great Britain! America is still the ‘supreme’ hegemon over planet Earth!
Professor of economics and public affairs at Princeton University…who now is an adviser to Hillary Clinton!
In today’s Wall Street Journal, Alan Blinder, professor of economics and public affairs at Princeton University and an informal adviser to the Hillary Clinton campaign, gives his rendition of ‘Five Big Truths About Trade’. His view and understanding of events is not fully valid IMO. Let’s briefly review his five big truths. 1. He says most job losses are not due to international trade. I would suggest that this view is not fully valid. Since 1975 America has outsourced our labor and production advantages to the rest of the world. This has helped with internationalization of trade and expanded prosperity, but it has also created an excess consumption society in America which is unjustified. America can build its prosperity on the back of our foreign competitors as our ‘dollar’ allows us this advantage. After the closing of the ‘gold window’ in 1971 America promoted the Petrodollar allowing us further advantages over our foreign competitors.
This trading agreement of 1973-74 initiated huge trading advantages for America and her government!
Mr. Blinder then states…2. Trade is more about efficiency and hence wages than about the number of jobs. He says trade is about using labor more efficiently. This I would agree with. America has created a more efficient world that distributes more goods and services to all consumers. But we also have created our current debt based problems via our policies and our accounting gimmicks. Mr. Blinder than says: 3. Bilateral trade imbalances are inevitable and mostly uninteresting. This is partially valid. But America now has accumulated a trade imbalance with the rest of the world of over $12 trillion. This imbalance creates huge distortions which many now view as unfair. Why should America maintain this unfair trade imbalance with the rest of the world continually and indefinitely? China, Russia, Brazil, India, South Africa (the BRICS) and others now view this imbalance as unjust and unfair going forward!
This chart reveals that our cumulative trade imbalances are much greater than what others have calculated!
Mr. Blinder than says: 4. Running an overall trade deficit does not make us “losers”. He says “a trade imbalance means that foreigners send us more goods and services than we send them. To balance the books, they get our IOU’s, which means they end up holding paper – treasuries, corporate bonds, etc.” That does not sound so terrible for us, does it?” What he does not comprehend is that we get to create our bookkeeping dollar via the computer (‘dollars – out of nothing’) and then consume real goods (wealth) from all these foreigners at no cost to us. We have consumed over $12 trillion of excess goods/services from our counterparties and given ‘nothing’ of substance in return. Is this fair trade from the viewpoint of our counterparties? I don’t think so! Wake-up, Mr. Blinder, to our counterparties situation! They give real wealth to us and we give them computer ‘digits’ in return! The number is now over $12 trillion since 1975! America consumes, spends, creates phony ‘dollars’, and then assumes that this can continue forever!
America’s trade agreements have NOT been fair, just, or based on ‘value for value’!
Nixon closed gold window in 1971 and Putin opened gold window in 2010!
Finally, Mr. Blinder says: 5. Trade agreements barely affect a nation’s trade balance. “America’s chronic trade deficits stem from the dollar’s international role and from Americans’ decisions not to save much, not from trade deals. Trade deficits are not a major cause of either job losses or job gains.” This statement, by Alan, is mostly garbage IMO. Trade agreements going back to the Petrodollar agreement in 1974 are what provided Americans with all our trade advantages. When Nixon closed the gold window, America’s dollar could have totally collapsed from its lack of any perceived psychological ‘value’. But Kissinger flew to Saudi Arabia and negotiated a trade agreement which created this Petrodollar advantage for Americans and our government. Since this agreement America has consumed some $12 trillion of excess wealth which was not technically deserved (under ‘fair trade’). This is ‘unfair’ trade and it all stems from this 1974 political/economic agreement!
America can manipulate trade with all our counterparties as our ‘dollar’ is the reserve currency for settling imbalances! The BRICS and others now desire a New Fair Trade Agreement based upon equality!
BRICS desire some new policies which recognize their interests when trading their wealth! America’s days of trade advantages may soon be over! The ‘dollar’ could soon be replaced by other alternatives!
Mr. Blinder wants Donald Trump and Bernie Sanders to follow his logic so that these BIG TRUTHS can be internalized and adopted as valid truths. I would suggest that these so-called ‘truths’ are really invalid propositions (mostly) when the bigger picture is understood. America received its military and economic advantages mostly after WWII and via the Bretton Woods Monetary Agreement. We need to understand this prior history if we desire to understand why our counterparties (such as the BRICS) desire a New currency system for our planet based upon equality and fairness! The rejection of America’s economic hegemony over our planet needs to change so that FAIR trade can develop for all nations. This is unlikely to occur with logic and thinking like that of Mr. Alan S. Blinder. His view should NOT be followed by our next President IMO! That is my understanding of our situation! Enjoy! I am: https://kingdomecon.wordpress.com.