Tag: economics

Is the Reign of the Dollar Coming to an End?

In early June, a rumour began to circulate – which was widely reported in the Indian press as true – that the government of Saudi Arabia had allowed its petrodollar agreement with the United States to lapse. This agreement, made in 1974, is quite straight-forward and fulfils various needs of the US government: the US purchases oil from Saudi Arabia, and Saudi Arabia uses that money to buy military equipment from US arms manufacturers while holding the income from the oil sales in US Treasury Bills and in the Western financial system. This arrangement to recycle oil profits into the US economy and the Western banking world is known as the petrodollar system.

This non-exclusive arrangement between the two countries never required the Saudis to limit their oil sales to dollars or to recycle their oil profits exclusively in US Treasury Bills (of which it holds a considerable $135.9 billion) and Western banks. Indeed, the Saudis are free to sell oil in multiple currencies, such as the Euro, and participate in digital currency platforms such as mBridge, a trial initiative of the Bank of International Settlements and the central banks of China, Thailand, and the United Arab Emirates (UAE).

Nonetheless, the rumour that this decades-long petrodollar agreement had come to an end reflects the widespread expectation that a seismic shift in the financial system will overturn the rule of the Dollar-Wall Street regime. It was a false rumour, but it carried within it a truth about the possibilities of a post-dollar or de-dollarised world.

The invitation extended to six countries to join the BRICS bloc last August was a further indication that such a shift is underway. Among these countries are Iran, Saudi Arabia, and the UAE, although Saudi Arabia has yet to finalise its membership. With its expanded membership, BRICS would include the two countries with the largest and second largest gas reserves in the world (Russia and Iran, respectively) and the two countries that accounted for nearly a quarter of global oil production (Russia and Saudi Arabia, all figures as of 2022). The political opening between Iran and Saudi Arabia, brokered by Beijing in March 2023, as well as the signs that the US allies UAE and Saudi Arabia seek to diversify their political linkages, demonstrate the possible end of the petrodollar system. That was at the heart of the rumour in early June.

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Civilization Depends Upon Economic Freedom

The BBC recently slapped a “trigger warning” on its popular 1969 series Civilisation, warning that viewers may deem the series objectionable as it presents Eurocentric perspectives. The series is now deemed to be “problematic” because it tells a “European story,” focusing on the Renaissance and the Enlightenment. This is criticized by academics—for example, the classicist Mary Beard—for excluding other cultures and also for excluding women while showcasing the achievements of men in Greece, Rome, France, Italy, Germany, and Britain.

This rejection of Eurocentricity by modern academics pervades the “decolonize” movement that has swept through all scholarly disciplines across the humanities and natural sciences. The science of economics has not been spared. Economic theories that have long been associated with economic progress and civilization are also rejected. The concept of “civilization” itself is rejected on the grounds that all cultures are equal; therefore, all cultures are a form of civilization, and no civilization is superior to any other. In this worldview, there is no particular reason why economic freedom should be prioritized above any other social goal.Jeffries, DonaldBest Price: $15.55Buy New $14.00(as of 11:47 UTC – Details)

Economic freedom concerns the human liberty to engage in the activities necessary to sustain prosperity and civilization, as well as the institutional conditions necessary for human beings to thrive. Economic liberty is therefore subsumed within civilization itself. The two concepts are linked, and the idea that we can choose to reject economic principles while maintaining the level of economic progress to which we have become accustomed is simply wrong. Ludwig von Mises explains this in Human Action:

What is wrong with our age is precisely the widespread ignorance of the role which these policies of economic freedom played in the technical evolution of the last two hundred years. People fell prey to the fallacy that the improvement of the methods of production was contemporaneous with the policy of laissez faire only by accident.

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TGIF: The Economic Is Personal

Contrary to accepted doctrine, we have no grounds for regarding so-called economic liberties as less important or less worthy of protection than so-called personal, or civil, liberties. That’s because we have no essential grounds for distinguishing so-called economic ends from so-called personal ends. (Let’s dispense with the “so-called” qualifier for the sake of fluency.)

Each of us pursues ends, full stop. Our ends vary widely in content and time required for accomplishment. Some are achieved quickly; others require prolonged effort and can be called projects. Some directly involve money-making; others don’t. What could be more personal than deciding how to earn a living? Why should the sort of end sought matter to the discussion of liberty?

Ends imply action, purposeful behavior. The laws and logic of human action — praxeology, Ludwig von Mises called it — thus apply to all action (the word purposeful is redundant) no matter what is sought and by whom, whether it’s Jeff Bezos or whoever succeeded Mother Teresa. The involvement of money is irrelevant. Ends, means, costs (opportunities forgone), profit, loss, and time (explicit or implicit interest) are all relevant concepts regardless of the ends we seek. As the British economist Philip Wicksteed put it, “The general principles which regulate our conduct in business are identical with those which regulate our deliberations, our selections between alternatives, and our decisions, in all other branches of life.”

Economics as an important discipline, Thomas Sowell emphasizes, is a way to analyze action, no matter its objective. It is how we understand the unplanned social consequences and institutions — property, markets, money, prices, and so on — that unfold when diverse people with divergent personal preferences aim at objectives using scarce resources that could be used in multiple ways. It’s the study of the social cooperation that emerges among widely dispersed strangers as an unintended byproduct of individuals’ pursuit of happiness. It’s not the particular objective that makes an activity “economic.” It’s an aspect of human action in itself.

Nevertheless, it is common in government offices and many people’s minds to rank economic liberty below personal liberty. Samuel Johnson said, “There are few ways in which a man can be more innocently employed than in getting money,” but many disagree.

An infamous footnote in a New Deal-era Supreme Court decision, which upheld a federal ban on interstate trade in filled milk, formalized and reinforced the ominous distinction between economic and personal liberty, which had replaced an earlier more fully pro-liberty view. The footnote seemed to say that while the government probably can’t interfere with, for example, the exercise of religion or expression, it probably can interfere with the exercise of commerce and manufacturing. In the latter activities only, the government should be allowed great leeway to interfere.

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Why Mankind Remains So Lost In Economic-Ignorance & Tribalistic-Warmongering

Carl Menger is widely recognized as one of the economists leading the so-called marginalist revolution along with William Stanley Jevons and Léon Walras. There are two other contributions by Menger that are relatively underappreciated and are vital for making sense of the socioeconomic order, including why mankind remains so lost in economic ignorance and tribalistic warmongering.

They are, first, his insights into the proper method or way to study the economy or social order and its emergence-evolution, and second, his application of such wisdom to explain the evolution of money and the entire socioeconomic order that further emerges thanks to money. Let’s further expand on these two.

Menger wrote an entire book devoted to discussing the proper method with which to study the social sciences, aptly titled Investigations into the Methods of the Social Sciences. So how should we study the social sciences according to Menger? He writes,

Natural organisms almost without exception exhibit, when closely observed, a really admirable functionality of all parts with respect to the whole, a functionality which is not, however, the result of human calculation, but of a natural process. Similarly we can observe in numerous social institutions a strikingly apparent functionality with respect to the whole. But with closer consideration they still do not prove to be the result of an intention aimed at this purpose, Le., the result of an agreement of members of society or of positive legislation. They, too, present themselves to us rather as “natural” products (in a certain sense), as unintended results of historical development. One needs, e.g., only to think of the phenomenon of money, an institution which to so great a measure serves the welfare of society, and yet in most nations, by far, is by no means the result of an agreement directed at its establishment as a social institution, or of positive legislation, but is the unintended product of historical development. One needs only to think of law, of language, of the origin of markets, the origin of communities and of states, etc. Now if social phenomena and natural organisms exhibit analogies with respect to their nature, their origin, and their function, it is at once clear that this fact cannot remain without influence on the method of research in the field of the social sciences in general and economics in particular. . . . Now if state, society, economy, etc., are conceived of as organisms, or as structures analogous to them, the notion of following directions of research in the realm of social phenomena similar to those followed in the realm of organic nature readily suggests itself. The above analogy leads to the idea of theoretical social sciences analogous to those which are the result of theoretical research in the realm of the physico-organic world, to the conception of an anatomy and physiology of “social organisms” of state, society, economy, etc.

Like Herbert Spencer, his contemporary and arguably the most famous and influential intellectual of the late 1800s, Menger too felt like the social order was akin to a “social organism” and should be studied using an organic or evolutionary approach similar to how we study the biological order. Menger thus felt like the methods of the physical sciences, like their use of mathematics, was as inappropriate for understanding the monumental complexity and evolution of the social order as it was for the biological one.

He writes, “I do not belong to the believers in the mathematical method as a way to deal with our science. . . . Mathematics is not a method for . . . economic research.”

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When Trade War Threatens Real War

Since the 2020 campaign, President Joe Biden has emphasized that America seeks “competition rather than conflict” with China. In the 2023 State of the Union address, amid tensions with the Chinese government over a spy balloon that floated through American airspace, he returned to the notion, saying his administration was willing to “work with China where it can advance American interests” while also bragging the U.S. was in “the strongest position in decades to compete” with the country.

That message of productive, if a bit unfriendly, economic competition is increasingly at odds with the aggressive trade policies Biden is pursuing behind the scenes. Indeed, it’s at odds with what prominent members of the administration, including the secretary of the treasury and the White House’s top national security adviser, are now openly admitting in public speeches: The United States is escalating its trade war with China, and it is doing so by targeting the free movement of goods and money across the globe in new ways.

“Technology export controls can be more than just a preventative tool,” national security adviser Jake Sullivan told a small crowd gathered at the Capital Hilton, just blocks from the White House, in a speech delivered last September. “If implemented in a way that is robust, durable, and comprehensive, they can be a new strategic asset in the U.S. and allied toolkit to impose costs on adversaries, and even over time degrade their battlefield capabilities.”

Sullivan said the theory had already been put to the test once. After Russia rolled tanks and troops into Ukraine in early 2022, the United States responded with financial sanctions aimed at Russian President Vladimir Putin and his cronies. It also imposed severe export controls meant to hobble Russia’s industrial and military might. In Sullivan’s telling, this represented “the most stringent technology restrictions ever imposed on a major economy.”

“Those measures have inflicted tremendous costs,” Sullivan continued, “forcing Russia to use chips from dishwashers in its military equipment.”

The “adversaries” that could be targeted with that “new strategic asset” would not be limited to those that had invaded their neighbors. For Sullivan, the apparent success of the export restrictions targeting Russia meant we might reshape how America conducts foreign policy, particularly with regard to China. America should abandon the idea that it must only maintain a relative lead over China in the development of key technologies, he said. Instead, the tools and tactics of an international trade war could be used as an economic complement to America’s military arsenal—one that could effectively serve as an opening salvo in a real war.

Sullivan was speaking at a gathering of the Special Competitive Studies Project, a joint venture of tech and national security experts funded by a private foundation created by former Google CEO Eric Schmidt. Four days before the summit, the group published a lengthy report, co-authored by Schmidt and Robert Work, a deputy defense secretary under both President Barack Obama and President Donald Trump. The report crystallized many bipartisan worries about how China’s technological advances might factor into a future war, and its conclusions mirrored Sullivan’s: “Warfare will be waged with and against industrial and financial power and pit innovation ecosystems against each other.”

What both Sullivan and the report describe could be called a total trade war: a conflict where the exchange of goods and money across borders is viewed through a military lens.

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World War III Has Already Started, and It’s an Economic War

In an article I published in April of 2018, titled World War III Will Be An Economic War, I outlined a number of factors that portend a large-scale conflict between East and West and why this war would be mainly economic in nature. I investigated how this conflict would actually benefit globalists and globalist institutions seeking to bring down multiple nations’ economies while hiding the engineered crisis behind a wall of geopolitical chaos and noise.

The goal? To convince the masses that national sovereignty is a plague that only leads to widespread death and that the “solution” is a one-world system – conveniently managed by the globalists, of course. That is to say, more centralization is always offered as the solution to every problem.

Furthermore, the war itself acts as a cover for the inflationary collapse that our central bank and government has created. We are already seeing fraud propagandists like White House Press Secretary Jen Psaki attempting to mislead the public into believing all our current inflation problems stem from the Ukraine war. This claim requires some impressive mental gymnastics and an epic level of ignorance, but Psaki seems to have no shame about her role as a soulless Goebbels-like figure.

One issue which I used to get a lot of arguments over was the idea that countries like Russia and China would end up so closely aligned. People claimed there were too many disparities and that the countries would ultimately turn on each other in the middle of a financial crisis.

Well, it’s four years later and now we’re going to see if that is true or not. So far, it looks like I was correct.

My position has long been that certain nations have been preparing for a collapse of the U.S. dollar as the world reserve currency (the primary currency used in the majority of trade around the world). My belief is that America’s top economic position is actually an incredible weakness; the dollar’s hegemony is not a strength, but an Achilles heel. If the dollar was to lose reserve status, the whole of the U.S. economy and parts of the global economy would implode, leaving behind only those who prepared – those who saw the writing on the wall and planned ahead.

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80% of All US Dollars in Existence Have Been Printed in Just the Last Two Years

Since March of 2020, Americans and the world alike have watched from the sidelines as power hungry politicians have ushered in draconian lockdowns, shutdowns, police state measures, and brought the economy to its knees. While governments around the planet used their central banks to devalue their currencies by printing money to fund their tyranny, the US led the way down this road to fiscal horror.

Thanks to the trillions of dollars the Federal Reserve has printed over the last two years, America is currently in an inflation crisis. One need only look at the price of groceries over the last two years to realize just how bad of a crisis we are currently experiencing.

As the Biden Administration blames high prices on greedy industries, this is little more than a distraction from the actual perpetrator. Nevertheless, the left continues to attribute soaring costs on businesses making “too much profit.”

While these corporations are not innocent in this debacle, the role of America’s central bank is far more insidious. As government spending has skyrocketed over the last two years, they have financed their massive expenditures by stealing value from your savings by printing more money through the central bank.

When you print more money it means there are more dollars chasing the same amount of goods and services, which causes prices to rise. In just the past three fiscal years, federal spending has swollen to nearly $7 trillion a year, up from about $4.4 trillion in fiscal year 2019. Spending was $6.6 trillion in 2020, and $6.8 trillion in 2021.

If we want to put this into perspective, we can take a look at the monetary supply at the beginning of 2020, which showed just $4.0192 trillion in circulation. By January 2021, that number had jumped up to $6.7 trillion — but this was only the beginning.

By November of last year, that number climbed to $20.354 trillion dollars in circulation — meaning that since January 2020, the United States has printed nearly 80% of all US dollars in existence. 

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