Op-Ed: The Beijing Defense vs. America's One Trick Pony

Posted Apr 19, 2012 by Bill Jencks
For the last three or four years we have seen the continual demise of the US dollar's influence and the rapid growth in China currency swaps, currency controls and currency ties as strategies against the dollar's influence. What of the dollar's future?
I laid out all the reasons in an older article in 2009 -- in effect, I said it then and presented all the reasons why America has so much to fear from the rising riches and power of the developing nations. This article is just a gentle prod or a reminder -- a refresher with crisp new evidence if you like, which includes all the new reasons why the dollar is most likely to soon fall from grace as the world's reserve currency and will, at best and perhaps with some luck and compassion from the world community, merely revert to a currency that is equal among peers as the regional currency of the Americas,
For decades -- ever since Nixon took the dollar off the gold standard in 1971, Bretton Woods and the power of the US Dollar has been heavily on the wane -- but never more so than now. The original blooming of the early development of America's economic manipulative dollar power plays stems right back to a National Security Study Report called The Kissinger Report(1974) a.k.a. Implications of Worldwide Population Growth For U.S. Security and Overseas Interests. This report raised dangers and issues regarding America's economic power through her heavy dependencies on commodities such as oil and food versus the the competing and arising problems with world overpopulation. Shortly after the birth of The Kissinger Report and in complete accord with its dark, self-interested recommendations, the Washington Consensus -- essentially an illicit and disguised global compliance document that was thoroughly protectionist in actual policy -- was introduced to ensure that America had easy, cheap and assured access to particularly the essential resources of poorer developing countries. And in this manner and via the US Debt/Treasury Cycle mechanusm, the developing world has been, from that point on, shackled to the forced dedicated purchase of US Treasuries which has delivered trillions in free credit to America over the last 30 years. The real strategy of the Washington Consensus is defined in an article I also wrote in 2009. The Washington Consensus was further quickly embedded into the loan contracts of the IMF and World Bank and as a result, both of these organizations may be simply regarded as merely illicit and covert protectionist corporation tools for promoting America's self-interests purely for economic and political gain or advantage. And, interestingly, all these shenanigans went under the heavy media disguise of helping the developing nations "become civilized and democratic" and helping to promote the policing of the world in order to further "proper global democracy". At this moment there are between 800 and 900 American military bases throughout the world. No wonder China dislikes buying US Treasuries!!
The hottest and most current news concerning the dollar is the new issue, for the first time ever, of renminbi bonds in London by HSBC this week. This is very hot news indeed because the Chinese government are keeping their promises and appear to be right on track with their global economic goals. In a speech early last year, Wen Jiabao openly revealed the Beijing Strategy -- which was that the renminbi should become, at the very least, the regional reserve currency in Asia for trade. True to his word and along the way, China started accumulating gold in earnest and China suddenly became the largest gold miner in the world. The Chinese government then allowed ordinary Chinese People to purchase hard gold from their banks any time they liked and also allowed them to switch their renminbi based bank accounts to gold accounts and back again at will. You cannot do this in either Europe or America very easily(think why!!). With this new issue of renminbi bonds in London and with China opening up the yuan on the forex markets soon, these actions will pave the way for China to issue her own regional or world reserve currency. China's currency is now being used in massive currency swaps with major trading nations like Russia, Japan, India, the ASEAN Nations, the Middle East and Brazil -- throughout the world now. So China is halfway to reaching this goal already. So can you imagine these debilitating economic effects on dollar dominance regarding world trade? For the first time since before the Bretton Woods concorde, there will be another major currency and their own associated Treasury Bonds -- with the Chinese renminbi partially backed by hard gold and a still roaring Chinese economy (when compared to America's limping GDP) -- that will soon be in direct global competition with the world trade dollar and US Treasuries.
And so what effect will these global economic changes(viz The Beijing Strategy) have on the US dollar, American economic power and her ability, now slipping so rapidly away, to generate all that free credit from the Debt/Treasury Cycle (viz America's One Trick Inflation Pony) ?
The past American influential capitalist empire policy tenets of "Do as we say, not as we do..." are fast dying now and whose protectionist and self-promoting rules cannot possibly work anymore against other growing economic powers and forces whose sum is becoming far greater than America's sad puttering excuse for an economy now.